UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 1996
-----------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 333-06609-01
SPRINT SPECTRUM L.P.
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(Exact name of registrant as specified in its charter)
DELAWARE 48-1165245
(State or other jurisdiction of incorporation (IRS Employer
or organization) Identification No.)
4900 Main Street, Kansas City, Missouri, 64112
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(Address of principal executive offices)
(816) 559-1000
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
<PAGE>
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SPRINT SPECTRUM L.P.
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FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1996
INDEX
Page
Number
-------------
Part I - Financial Information................................... 1 - 8
Item 1. Financial Statements............................... 1 - 3
Consolidated Condensed Balance Sheets................... 1
Consolidated Condensed Statements of Operations......... 2
Consolidated Condensed Statements of Cash Flows......... 3
Notes to Consolidated Condensed Financial Statements.... 4 - 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations..................... 9 - 12
Part II - Other Information
Item 1. Legal Proceedings.................................. 13
Item 2. Changes in Securities.............................. 13
Item 3. Defaults On Senior Securities...................... 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information.................................. 13
Item 6. Exhibits and Reports on Form 8-K................... 13 - 14
Signature........................................................ 15
Exhibits
<PAGE>
<TABLE>
<CAPTION>
PART I.
Item 1.
SPRINT SPECTRUM L.P.
(As Reorganized)
(A Development Stage Enterprise)
CONSOLIDATED CONDENSED BALANCE SHEETS
(In Thousands)
September 30, December 31,
1996 1995
-------------- --------------
(Unaudited)
ASSETS
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents......................................... $ 460,296 $ 1,123
Receivable from affiliates........................................ 8,124 340
Other receivables................................................. 1,176 -
Prepaid expenses and other assets................................. 7,889 188
----------------- -----------------
Total current assets............................................ 477,485 1,651
INVESTMENT IN PCS LICENSES........................................... 2,124,594 2,124,594
INVESTMENT IN UNCONSOLIDATED PARTNERSHIP............................. - 85,546
NOTE RECEIVABLE--UNCONSOLIDATED PARTNERSHIP........................... - 655
PROPERTY, PLANT AND EQUIPMENT, Net................................... 1,087,111 31,897
MICROWAVE RELOCATION COSTS, Net...................................... 72,039 -
OTHER ASSETS......................................................... 15,035 -
================= =================
TOTAL ASSETS......................................................... $ 3,776,264 $ 2,244,343
================= =================
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Current maturities of long-term debt--affiliate.................... $ 5,000 $ -
Current maturities of long-term debt--other........................ 48 -
Accounts payable.................................................. 87,208 47,503
Accrued expenses.................................................. 25,890 1,700
Accrued interest--affiliate........................................ 460 214
----------------- -----------------
Total current liabilities....................................... 118,606 49,417
DEFERRED COMPENSATION................................................ 8,981 1,856
NOTE PAYABLE--AFFILIATE............................................... - 5,000
SENIOR NOTES PAYABLE................................................. 250,000 -
SENIOR DISCOUNT NOTES PAYABLE, net of unamortized discount of
$222,984 at September 30, 1996................................... 277,016 -
CONSTRUCTION OBLIGATIONS............................................. 700,990 -
OTHER LONG TERM DEBT................................................. 706 -
COMMITMENTS AND CONTINGENCIES
LIMITED PARTNER INTEREST IN CONSOLIDATED
SUBSIDIARY........................................................ 5,000 5,000
PARTNERS' CAPITAL AND ACCUMULATED DEFICIT:
Partners' capital................................................. 2,781,383 2,296,806
Deficit accumulated during the development stage.................. (366,418) (113,736)
----------------- -----------------
Total partners' capital......................................... 2,414,965 2,183,070
================= =================
TOTAL LIABILITIES AND PARTNERS' CAPITAL.............................. $ 3,776,264 $ 2,244,343
================= =================
See accompanying notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PART I.
Item 1.
SPRINT SPECTRUM L.P.
(As Reorganized)
(A Development Stage Enterprise)
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
(In Thousands)
Cumulative
Period from
October 24,
1994 (date of
inception) to
Three Months Ended September 30, Nine Months Ended September 30, September 30,
------------------------------------------------------------------------------------
1996 1995 1996 1995 1996
- -------------------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES:
<S> <C> <C> <C> <C> <C>
Operating expenses............... $ 3,850 $ - $ 6,949 $ - $ 6,949
Selling, general and
administrative................ 82,088 11,782 156,227 19,927 223,830
Depreciation..................... 1,197 62 1,835 161 2,084
--------------- ---------------- --------------- -------------- ---------------
Total operating expenses....... 87,135 11,844 165,011 20,088 232,863
LOSS FROM OPERATIONS................ (87,135) (11,844) (165,011) (20,088) (232,863)
OTHER INCOME (EXPENSE):
Interest income.................. 3,545 - 4,485 - 4,768
Interest expense................. (100) - (442) - (442)
Other income..................... 355 (161) 570 306 608
Equity in loss of unconsolidated
partnership.................... (11,152) (7,483) (92,284) (16,213) (138,489)
--------------- ---------------- --------------- -------------- ---------------
Total other income (expense)... (7,352) (7,644) (87,671) (15,907) (133,555)
--------------- ---------------- --------------- -------------- ---------------
NET LOSS............................ $ (94,487) $ (19,488) $ (252,682) $ (35,995) $ (366,418)
=============== ================ =============== ================ ===============
See accompanying notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Part I.
Item 1.
SPRINT SPECTRUM L.P.
(As Reorganized)
(A Development Stage Enterprise)
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In Thousands)
Cumulative
Period from
October 24,
1994 (date of
Nine Months Ended inception) to
September 30, September 30,
-------------------------------------------------
1996 1995 1996
- ---------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net loss................................................ $ (252,682) $ (35,995) $ (366,418)
Adjustments to reconcile net loss to net cash provided
by (used in) operating activities:
Equity in loss of unconsolidated partnership.......... 92,284 16,213 138,489
Depreciation and amortization........................ 5,541 161 5,791
Loss on equipment..................................... - 31 31
Changes in assets and liabilities:
Receivables, prepaid expenses and other assets...... (19,052) (1,083) (19,580)
Accounts payable and accrued expenses............... 64,141 15,649 113,558
Deferred compensation............................... 7,125 - 8,981
--------------- ---------------- ---------------
Net cash used in operating activities............. (102,643) (5,024) (119,148)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures.................................... (356,059) (10,483) (388,273)
Proceeds on sale of equipment........................... - 37 37
Microwave relocation costs.............................. (72,039) - (72,039)
Purchase of PCS licenses................................ - (2,006,156) (2,124,594)
Investment in unconsolidated partnership................ - (117,407) (131,752)
Loan to unconsolidated partnership...................... (172,000) - (172,655)
--------------- ---------------- ---------------
Net cash used by investing activities............. (600,098) (2,134,009) (2,889,276)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt................ 524,200 - 524,200
Payments on long-term debt.............................. (11) (11)
Debt issuance costs..................................... (12,769) - (12,769)
Limited partner interest in consolidated subsidiary..... - 5,000 5,000
Borrowings from affiliates.............................. - 5,000 5,000
Partner capital contributions........................... 669,509 2,125,125 2,966,315
Dividends paid.......................................... (19,015) - (19,015)
--------------- ---------------- ---------------
Net cash provided by financing activities......... 1,161,914 2,135,125 3,468,720
INCREASE (DECREASE) IN CASH AND CASH --------------- ---------------- ---------------
EQUIVALENTS............................................. 459,173 (3,908) 460,296
CASH AND CASH EQUIVALENTS, Beginning of period............. 1,123 5,014 -
=============== ================ ===============
CASH AND CASH EQUIVALENTS, End of period................... $ 460,296 $ 1,106 $ 460,296
=============== ================ ===============
NON-CASH INVESTING ACTIVITIES
- The interest in an unconsolidated subsidiary of
$165,917 was transferred to Sprint Spectrum Holding
Company on August 31, 1996
- Capital expenditures of $356,059 for the nine months
ended September 30, 1996 are net of construction
obligations of $700,990 to be financed
See accompanying notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
PART I.
Item 1.
SPRINT SPECTRUM L.P.
(As Reorganized)
(A Development Stage Enterprise)
Notes to Consolidated Condensed Financial Statements (Unaudited)
The information contained in this Form 10-Q for the three and nine-month interim
periods ended September 30, 1996 and 1995 and the cumulative period from October
24, 1994 (date of inception) to September 30, 1996 has been prepared in
accordance with instructions to Form 10-Q and Rule 10-01 of Regulation S-X. In
the opinion of management, all adjustments considered necessary, consisting only
of normal recurring accruals, to present fairly the consolidated financial
position, results of operations, and cash flows for such interim periods have
been made (See Note 1).
Certain information and footnote disclosures normally included in consolidated
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. The results of operations for the
nine months ended September 30, 1996 are not necessarily indicative of the
operating results that may be expected for the year ended December 31, 1996.
1. Basis of Presentation
Prior to July 1, 1996, substantially all wireless operations of Sprint Spectrum
L.P. and subsidiaries and Sprint Spectrum Holding Company, L.P. and subsidiaries
("Holdings") were conducted at Holdings and substantially all operating assets
and liabilities, with the exception of the interest in an unconsolidated
subsidiary and the ownership interest in PCS licenses, were held at Holdings. As
of July 1, 1996, Holdings transferred these net assets, and assigned agreements
related to the wireless operations to which it was a party to Sprint Spectrum
L.P. (the "Reorganization").
For purposes of these financial statements, these transactions have been treated
as transactions between entities under common control and accounted for in a
manner similar to a pooling of interest ("As Reorganized").
Accordingly, for periods prior to July 1, 1996, Sprint Spectrum L.P.'s
historical financial statements have been restated to reflect those operations
of Holdings that were transferred on July 1, 1996 on a pooled basis. Information
with respect to the financial position and results of operations of the separate
operations pooled herein is as follows (in thousands):
<TABLE>
<CAPTION>
Sprint
Spectrum L.P. Holdings Combined
Total Assets
<S> <C> <C> <C>
December 31, 1995........................................ $ 2,211,918 $ 2,244,343 $ 2,244,343
June 30, 1996............................................ 2,268,805 2,561,328 2,561,328
Partners' Capital & Accumulated Deficit
December 31, 1995........................................ 2,201,704 2,178,069 2,183,070
June 30, 1996............................................ 2,258,426 2,469,529 2,472,384
Net Loss
December 31, 1995........................................ (49,531) (110,429) (110,428)
June 30, 1996............................................ (81,278) (158,195) (158,195)
</TABLE>
The Partnership, as used in these financial statements, refers to Sprint
Spectrum L.P. and subsidiaries inclusive of those operations of Holdings
combined therewith through June 30, 1996.
<PAGE>
Use of Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and reported amounts of revenues and expenses during the reporting
period. In addition, the Partnership estimates its share of the losses in an
unconsolidated partnership based on expected allocation percentages. Actual
results could differ from those estimates.
Paging Services: The Company has commenced paging services pursuant to
agreements with Paging Network Equipment Company ("PageNet") and Sprint
Communications Company, L.P. ("Sprint"). Through September 30, 1996, paging
revenues were approximately $2,502,000 and were offset in Other Income by an
equal amount of operating expenses and management fees paid to Sprint.
2. Organization
Sprint Spectrum L.P. is a limited partnership formed in Delaware on March 28,
1995, by Sprint Spectrum Holding Company, L.P. ("Holdings") and MinorCo, L.P.
both of which were formed by Sprint Enterprises, L.P., TCI Telephony Services,
Inc. (as successor in interest to TCI Network Services), Comcast Telephony
Services and Cox Telephony Partnership (collectively, the "Partners"). The
Partners are subsidiaries of, respectively, Sprint Corporation ("Sprint"),
Tele-Communications, Inc. ("TCI"), Comcast Corporation ("Comcast") and Cox
Communications, Inc. ("Cox", and together with Sprint, TCI and Comcast, the
"Parents"). The Partnership was formed pursuant to a reorganization of the
operations of an existing partnership, WirelessCo, L.P. In March 1995, the
partners of WirelessCo, L.P. transferred their interest in WirelessCo, L.P. to
Holdings. The Partnership and certain other affiliated partnerships are doing
business as Sprint Spectrum and will offer services as Sprint PCS.
On May 15, 1996, Sprint Spectrum Equipment Company, L.P. ("EquipmentCo") and
Sprint Spectrum Realty Company, L.P. ("RealtyCo") were organized as subsidiaries
of Sprint Spectrum L.P. and MinorCo, L.P. for the purpose of holding PCS
network-related assets. On May 20, 1996, an additional subsidiary of Sprint
Spectrum L.P., Sprint Spectrum Finance Corporation ("FinCo"), was also formed to
be a co-obligor of the debt obligations discussed in Note 4.
The Partnership is consolidated with its subsidiaries, WirelessCo, L.P.,
EquipmentCo, RealtyCo and FinCo. These entities are development stage
enterprises. The partners of Sprint Spectrum L.P. have the following ownership
interests as of December 31, 1995:
Sprint Spectrum Holding Company, L.P. (general partner)........greater than 99%
MinorCo, L.P. (limited partner)....................................less than 1%
The Partnership and its subsidiaries are development stage enterprises. The
success of their development is dependent on a number of business factors,
including securing financing to complete network construction and fund initial
operations, successfully deploying the PCS network and attaining profitable
levels of market demand for Partnership products and services. The Partnership
and its subsidiaries have not yet generated operating revenues from PCS
services.
3. Investment in Unconsolidated Partnership
On January 9, 1995, WirelessCo, L.P., acquired a 49% limited partnership
interest in American PCS, L.P. ("APC"). American Personal Communications, Inc.
("APC, Inc.") holds a 51% partnership interest in APC and is the general
managing partner. Effective August 31, 1996, WirelessCo's partnership interest
in APC, the existing loans to APC, and obligations to provide additional funding
to APC were transferred to Holdings pursuant to an amendment to the partnership
agreement.
<PAGE>
August 31, 1996 December 31, 1995
------------------ ------------------
Total assets........................ $ 293,914 $ 237,326
Total liabilities................... 341,432 171,180
Total revenues...................... 41,555 5,153
Net loss............................ 120,547 51,551
4. Senior Notes and Senior Discount Notes
In August 1996, Sprint Spectrum L.P. and Sprint Spectrum Finance Corporation
(together, the "Issuers") issued $250 million aggregate principal amount of 11%
Senior Notes due 2006 ("the Senior Notes"), and $500 million aggregate principal
amount at maturity of 12 1/2% Senior Discount Notes due 2006 (the "Senior
Discount Notes" and, together with the Senior Notes, the "Notes"). The Senior
Discount Notes were issued at a discount to their aggregate principal amount at
maturity and generated proceeds of approximately $273 million. Cash interest on
the Senior Notes will accrue at a rate of 11% per annum and is payable
semi-annually in arrears on each February 15 and August 15, commencing February
15, 1997. Cash interest will not accrue or be payable on the Senior Discount
Notes prior to August 15, 2001. Thereafter, cash interest on the Senior Discount
Notes will accrue at a rate of 12 1/2% per annum and will be payable
semi-annually in arrears on each February 15 and August 15, commencing February
15, 2002.
On August 15, 2001, the Issuers will be required to redeem an amount equal to
$384.772 per $1,000 principal amount at maturity of each Senior Discount Note
then outstanding ($192 million in aggregate principal amount at maturity,
assuming all of the Senior Discount Notes remain outstanding at such date).
The Senior Notes and Senior Discount Notes are redeemable at the option of the
Issuers, in whole or in part, at any time on or after August 15, 2001 at the
redemption prices set forth below, respectively, plus accrued and unpaid
interest, if any, to the redemption date, if redeemed during the 12 month period
beginning on August 15 of the years indicated below:
Senior Discount
Senior Notes Notes
Year Redemption Price Redemption Price
------ ---------------- ----------------
2001 105.500% 110.000%
2002 103.667% 106.500%
2003 101.833% 103.250%
2004 and thereafter 100.000% 100.000%
In addition, prior to August 15, 1999, the Issuers may redeem up to 35% of the
originally issued principal amount of Senior Notes and Senior Discount Notes (at
maturity). The redemption price of the Senior Notes is equal to 111.0% of the
principal amount of the Senior Notes so redeemed, plus accrued and unpaid
interest, if any to the redemption date with the net proceeds of one or more
public equity offerings (as defined), provided that at least 65% of the
originally issued principal amount of Senior Notes would remain outstanding
immediately after giving effect to such redemption. The redemption price of the
Senior Discount Notes is equal to 112.5% of the accreted value at the redemption
date of the Senior Discount Notes so redeemed, with the net proceeds of one or
more public equity offerings (as defined), provided that at least 65% of the
originally issued principal amount at maturity of the Senior Discount Notes
would remain outstanding immediately after giving effect to such redemption.
The Notes contain certain restrictive covenants, including (among other
requirements) limitations on additional indebtedness, limitations on restricted
payments, limitations on liens, and limitations on dividends and other payment
restrictions affecting restricted subsidiaries (as defined).
<PAGE>
5. Commitments
Handset Purchase Agreement: In September 1996, the Company entered into a
three-year contract for the purchase of handsets totaling more than $600
million. Under the terms of this agreement, the purchase of handsets will
commence on or after April 1, 1997.
6. Subsequent Events
Vendor Financing: As of October 2, 1996, the Company entered into financing
agreements with Northern Telecom Inc. ("Nortel") and Lucent Technologies Inc.
("Lucent", and together with Nortel, the "Vendors") for multiple drawdown term
loan facilities totaling $1.3 billion and $1.8 billion, respectively. The
proceeds of such facilities are to be used to finance the purchase of goods and
services provided by the Vendors.
Nortel has committed to provide financing in two phases. During the first phase,
Nortel will finance up to $800 million. Once the full $800 million has been
utilized and the Company obtains additional equity commitments and/or
subordinated unsecured loans of at least $400 million and achieves certain
operating conditions, Nortel will finance up to an additional $500 million. In
addition, the Company will be obligated to pay origination fees on the date of
the initial draw down loan under the first and second phases. The Nortel
agreement terminates on the earliest of (a) the date the availability under the
commitments is reduced to zero, (b) December 31, 2000, or (c) March 31, 1997 if
no borrowings under the agreements have been drawn.
Lucent has committed to financing up to $1 billion through December 31, 1996, up
to $1.5 billion through December 31, 1997, and up to an aggregate of $1.8
billion thereafter; however, availability will be limited to $1 billion if the
Standard & Poor's rating of the Senior and Senior Discount Notes is lower than B
at any time prior to January 1, 1997. The Company pays a facility fee on the
daily amount of loans outstanding under the agreement, payable quarterly. The
Lucent agreement terminates June 30, 2001.
The principal amounts of the loans drawn under both the Nortel and Lucent
agreements are due in twenty consecutive quarterly installments, commencing on
the date which is thirty-nine months after the last day of such "Borrowing Year"
(defined in the agreements as any one of the five consecutive 12-month periods
following the date of the initial drawdown of the loan). The aggregate amount
due each year is equal to the percentages below multiplied by the total
principal amount of loans during each Borrowing Year:
Year Percentage
4 10%
5 15
6 20
7 25
8 30
The agreements provide two borrowing rate options. During the first phase of the
Nortel agreement and throughout the term of the Lucent agreement "ABR Loans"
bear interest at the greater of the prime rate, or 0.5% plus the Federal Funds
effective rate, plus 2%. "Eurodollar Loans" bear interest at the London
interbank (LIBOR) rate (any one of the 30-, 60- or 90-day rates, at the
discretion of the Company), plus 3%. During the second phase of the Nortel
agreement, ABR Loans bear interest at the greater of the prime rate, or 0.5%
plus the Federal Funds effective rate, plus 1.5%; and Eurodollar loans bear
interest at the LIBOR rate plus 2.5%. Interest from the date of each loan
through one year after the last day of the Borrowing Year is added to the
principal amount of each loan. Thereafter, interest is payable quarterly.
Bank Credit Facility: Sprint Spectrum L.P. entered into an agreement with The
Chase Manhattan Bank ("Chase") as agent for a group of lenders for a $2 billion
bank credit facility dated October 2, 1996. The proceeds of this facility are to
be used to finance working capital needs, subscriber acquisition costs, capital
expenditures and other general partnership purposes.
<PAGE>
The facility consists of a revolving credit commitment of $1.7 billion and a
$300 million term loan commitment, $150 million of which was drawn down upon
closing and $150 million of which is to be drawn down within 90 days after
closing. The amount available under the revolving credit facility was $450
million on October 11, 1996. The availability will be increased upon the
achievement of certain financial and operating conditions as defined in the
agreement. Commitment fees for the revolving portion of the agreement are
payable quarterly based on average unused revolving commitments.
The revolving credit commitment expires July 13, 2005. Availability will be
reduced in quarterly installments ranging from $75 million to $175 million
commencing January 11, 2002. In addition, beginning January 1, 2000, the Company
will be required to apply a portion of excess cash flow (as defined) to equally
and ratably reduce commitments and loans under the agreement.
The term loans are due in sixteen consecutive quarterly installments beginning
January 11, 2002 in aggregate principal amounts of $125,000 for each of the
first fifteen payments with the remaining aggregate outstanding principal amount
of the term loans due as the last installment.
Interest on the term loans and/or the revolving credit loans is at the
applicable LIBOR rate plus 2.5% ("Eurodollar Loans"), or the greater of the
prime rate, or 0.5% plus the Federal Funds effective rate, plus 1.5% ("ABR
Loans"), at the Company's option. The interest rate may be adjusted downward for
improvements in the bond rating and/or leverage ratios. Interest on ABR Loans
and Eurodollar Loans with interest period terms in excess of 3 months is payable
quarterly. Interest on Eurodollar Loans with interest period terms of less than
3 months is payable on the last day of the interest period.
Common Terms of Vendor Financing and Bank Credit Facility: The term "Secured
Financing," as used herein, refers to the Vendor Financing and Bank Credit
Facility.
Borrowings under the Secured Financing are secured by the partnership interests
in WirelessCo, RealtyCo and EquipmentCo and certain other personal and real
property (the "Shared Lien"). The Shared Lien equally and ratably secures the
Secured Financing and certain other indebtedness of the Company. The Secured
Financing is jointly and severally guaranteed by WirelessCo, RealtyCo and
EquipmentCo. The Secured Financing is non-recourse to the Parents and the
Partners.
The Secured Financing agreements contain certain restrictive financial and
operating covenants, including (among other requirements) maximum debt ratios
(including debt to total capitalization), limitations on capital expenditures,
and limitations on additional indebtedness. The loss of the right to use the
Sprint trademark, the termination or non-renewal of any FCC license that reduces
population coverage below specified limits, or changes in controlling interest
in the Company, as defined, among other provisions, constitute events of
default.
<PAGE>
PART I.
Item 2.
SPRINT SPECTRUM L.P.
(As Reorganized)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with Sprint
Spectrum's (As Reorganized) consolidated financial statements and notes thereto.
The term "Company" refers to Sprint Spectrum L.P. and its direct and indirect
subsidiaries, including Sprint Spectrum Finance Corporation ("FinCo"),
WirelessCo, L.P. ("WirelessCo"), Sprint Spectrum Realty Company, L.P.
("RealtyCo") and Sprint Spectrum Equipment Company, L.P. ("EquipmentCo"). The
Company's consolidated financial information has not been separately included
for the period presented because it would not reflect the financial condition of
the Company following the transfer of all of Sprint Spectrum Holding Company,
L.P.'s ("Holdings") assets used in the Company's PCS business and the
distribution of the Company's interest in APC to Holdings. The Sprint Spectrum
(As Reorganized) financial information that is presented reflects the transfer
of the operations of Holdings to the Company which took place on July 1, 1996.
The Company includes certain estimates, projections and other forward-looking
statements in its reports as well as in presentations to analysts and others and
in other material disseminated to the public. There can be no assurances of
future performance and actual results may differ materially from those in the
forward-looking statements. Factors which could cause actual results to differ
materially from estimates or projections contained in forward-looking statements
include:
- the effects of vigorous competition in the markets in which the
Company will operate;
- the cost of entering new markets necessary to provide services;
- the impact of any unusual items resulting from ongoing evaluations
of the Company's business strategies;
- requirements imposed on the Company and its competitors by
the Federal Communications Commission ("FCC") and state regulatory
commissions under the Telecommunications Act of 1996;
- the possibility of one or more of the markets in which the Company
will compete being impacted by variations in political, economic
or other factors over which the Company has no control; and
- unexpected results in litigation.
General
The Company is a development stage enterprise formed for the purpose of
establishing a nationwide personal communications service ("PCS") wireless
telecommunications network. The Company acquired PCS licenses in the FCC's A
Block and B Block PCS auction, which concluded in March 1995, to provide service
to 29 major trading areas ("MTAs") covering 150.3 million Pops. Additionally,
Cox has agreed to contribute to the Company, upon FCC approval, which is
pending, a PCS license for the Omaha MTA. The Company has also affiliated and
expects to continue to affiliate with other PCS providers. Pursuant to
affiliation agreements, each affiliated PCS service provider will use the
Sprint(R) (a registered trademark of Sprint Communications Company, L.P.) brand
name. Holdings owns a 49% limited partnership interest in American PCS, L.P.
("APC"), which owns a PCS license for, and operates a broadband GSM PCS system
in, the Washington D.C./Baltimore MTA. APC has affiliated with the Company and
is marketing its products and services under the Sprint brand name. Holdings
also expects to acquire a 49% limited partnership interest in Cox Communication
PCS, L.P., a partnership that will be formed to hold a PCS license for the Los
Angeles-San Diego MTA covering 21.5 million Pops. Cox, which currently owns this
license, has agreed to contribute the license to Cox Communication PCS, L.P. and
will manage and control Cox Communication PCS, L.P. The Company expects to sign
an affiliation agreement with Cox Communication PCS, L.P. during the fourth
quarter of 1996. At the same time, the Company also expects to affiliate with,
and provide various services to, PhillieCo, L.P. ("PhillieCo"), a limited
partnership organized by and among subsidiaries of Sprint, TCI and Cox that owns
a PCS license for the Philadelphia MTA covering 9.1 million Pops. In addition,
Sprint is currently participating in the FCC's D and E Block auction and is
actively bidding on licenses for markets where the Company does not currently
have
<PAGE>
license coverage. The Company expects to enter into affiliation agreement(s)
with Sprint to provide service in license areas where Sprint successfully
obtains PCS licenses.
To date, the Company has incurred expenditures in conjunction with PCS license
acquisitions, initial design and construction of the PCS network, engineering,
marketing, administrative and other start up related expenses. The Company has
not yet commenced commercial operations for its PCS services and, as a result,
has not yet generated operating revenue or earnings. The Company intends to
initiate the commercial launch of its service in the fourth quarter of 1996 with
service in most MTAs by the end of the first half of 1997. Pop coverage at the
end of the initial launch period (approximately the end of the first half of
1997) is expected to reach approximately 57% of the Pops in all of the Company's
license areas with coverage in the individual license areas ranging from 19% to
90%. The timing of launch in individual markets will be determined by various
factors, principally zoning and microwave relocation factors, equipment delivery
schedules and local market and competitive considerations. The Company intends
to continue to expand its coverage in its PCS markets in its existing license
areas based on actual market experience, customer demand, and reductions in the
cost of technology. The extent to which the Company is able to generate
operating revenue and earnings is dependent on a number of business factors,
including securing financing to complete network construction and fund initial
operations and operating losses, successfully deploying the PCS network and
attaining profitable levels of market demand for the Company's products and
services.
Liquidity and Capital Resources
The buildout of the Company's PCS network and the marketing and distribution of
the Company's PCS products and services will require substantial capital. The
Company currently estimates that its capital requirements (capital expenditures,
the cost of its existing licenses, working capital, debt service requirements
and anticipated operating losses) for the period from inception through the end
of 1998 (based on the Company's current plans for its network buildout in its
current license areas) will total approximately $8.9 billion (of which
approximately $3.0 billion had been expended as of September 30, 1996). The
Company will also require substantial additional capital for new license
acquisitions or investments in entities making license acquisitions (if any)
and, after 1998, for coverage expansion, volume-driven network capacity and
other capital expenditures for existing and new license areas (if any), working
capital, debt service requirements and anticipated further operating losses.
Costs associated with the network buildout include switches, base stations,
towers, antennae, radio frequency engineering, cell site construction and
microwave relocation. Management estimates that capital expenditures associated
with the buildout will total approximately $3.8 billion through 1997, including
$2.1 billion in 1996. Estimated capital expenditures have increased due to
changes in the nature of certain network elements, actual construction
experience to date and additional network capacity requirements. Actual amounts
of the funds required may vary materially from these estimates and additional
funds would be required in the event of significant departures from the current
business plan, new license acquisitions, unforeseen delays, cost overruns,
unanticipated expenses, regulatory changes, engineering design changes and other
technological risks.
The Company currently has no sources of revenue to meet its capital requirements
and has relied upon capital contributions and advances from Holdings and third
party and public debt. Holdings also requires capital for its affiliate
investments and other partnership purposes. The Partners have agreed to
contribute up to an aggregate of $4.2 billion of equity to Holdings (to the
extent required by the annual budgets of Holdings as approved by the Partners)
through fiscal 1999. As of September 30, 1996, approximately $3.0 billion had
been contributed to Holdings, of which $2.7 billion had been contributed to the
Company and the remaining $0.3 billion had been contributed or advanced to APC.
The Company currently intends to obtain up to $0.9 billion of additional equity
following September 30, 1996, resulting in $3.6 billion in aggregate invested
equity capital in the Company, although there can be no assurance that any
additional capital will be obtained in the form of equity from the Parents or
otherwise. The Parents have committed to make available to the Company or cause
Holdings to make available to the Company up to $1.0 billion of such additional
equity, to the extent required by the Company to fund any projected cash
shortfall, under a Capital Contribution Agreement among the Company and the
Parents that provides for $1.0 billion in aggregate equity commitments (less,
subject to certain exceptions, amounts of cash equity contributed to the Company
after December 31, 1995). The Company's business plan and the financial
covenants and other terms of the Secured Financing (defined below) will require
such additional
<PAGE>
equity financing prior to the end of 1998, absent a new financing source. The
$1.0 billion portion of the $4.2 billion not invested in the Company that may be
available to Holdings from the Partners may be used by Holdings to fund
Holdings' other affiliate commitments, to make other wireless investments and/or
to make new license acquisitions. Amounts budgeted by the Partners in future
years will determine the extent to which the commitments will actually be
utilized.
The Company has entered into financing agreements for up to an aggregate of $5.1
billion of senior secured loans from certain third parties. Nortel has committed
to provide up to $1.3 billion in senior secured loans to finance purchases of
Nortel's PCS equipment and related services, Lucent has committed to provide up
to $1.8 billion in senior secured loans (together with the Nortel commitment,
the "Vendor Financing"). Under the related procurement contracts with Lucent and
Nortel, the Company is required to purchase minimum amounts of equipment and
services from each vendor. The Company will use the proceeds from the Vendor
Financing to fund the purchase of the equipment and software manufactured by the
vendors as well as substantially all of the construction and ancillary equipment
(e.g., towers, antennae, cable) required to construct the Company's PCS network.
These facilities will serve as the primary financing mechanism for the buildout
of the network. The Company has entered into a credit agreement with The Chase
Manhattan Bank ("Chase") in which Chase has committed to provide a fully
underwritten $2.0 billion bank credit facility (the "Bank Credit Facility" and,
together with the Vendor Financing, the "Secured Financing") to finance working
capital, capital expenditures, operating losses and other partnership purposes.
In August 1996, the Issuers issued $250 million aggregate principal amount of
the 11% Senior Notes and $500 million aggregate principal amount at maturity of
12 1/2% Senior Discount Notes. The Senior Discount Notes were issued at a
discount to their aggregate principal amount at maturity and generated proceeds
of approximately $273 million. Cash interest on the Senior Notes will accrue at
a rate of 11% per annum and is payable semi-annually in arrears on each February
15 and August 15, commencing February 15, 1997. Cash interest will not accrue or
be payable on the Senior Discount Notes prior to August 15, 2001. Thereafter,
cash interest on the Senior Discount Notes will accrue at a rate of 12 1/2% per
annum and will be payable semi-annually in arrears on each February 15 and
August 15, commencing February 15, 2002. On August 15, 2001, the Issuers will be
required to redeem an amount equal to $384.772 per $1,000 principal amount at
maturity of each Senior Discount Note then outstanding ($192 million in
aggregate principal amount at maturity, assuming all of the Senior Discount
Notes remain outstanding at such date). The proceeds of approximately $509
million from the issuance of the Notes (net of approximately $14 million of
underwriting discounts, commissions, and offering expenses) will be used to fund
capital expenditures, including the buildout of the nationwide PCS network, to
fund working capital as required, to fund operating losses and for other
partnership purposes.
Sources of funding for the Company's further financing requirements may include
additional vendor financing, public offerings or private placements of equity
and/or debt securities, commercial bank loans and/or capital contributions from
Holdings or the Partners. There can be no assurance that any additional
financing can be obtained on a timely basis and on terms acceptable to the
Company and within limitations contained in the Note indentures, the agreements
governing the Secured Financing and any new financing arrangements. Failure to
obtain any such financing could result in the delay or abandonment of the
Company's development and expansion plans and expenditures or the failure to
meet regulatory requirements. It also could impair the Company's ability to meet
its debt service requirements and could have a material adverse effect on its
business.
For the year-to-date period ended September 30, 1996, Sprint Spectrum (As
Reorganized) used cash of $103 million in operating activities, which consisted
of the operating loss of $253 million which is offset, in part, by the equity in
the loss of APC and increased payables and other accruals. Cash used in
investing activities totaled $600 million, consisting of capital expenditures
and microwave relocation costs of $428 million and advances to APC of $172
million.
<PAGE>
Results of Operations
For the Three Months Ended September 30, 1996
Sprint Spectrum (As Reorganized) incurred a loss of $94 million for the three
months ended September 30, 1996, which includes equity in APC loss of $11
million through August 31, 1996. There was no amortization of licenses during
the period as PCS service had not been launched commercially.
For the Nine Months Ended September 30, 1996
Sprint Spectrum (As Reorganized) incurred a loss of $253 million for the nine
months ended September 30, 1996, which includes equity in APC loss of $92
million. There was no amortization of licenses during the period as PCS service
had not been launched commercially.
<PAGE>
PART II.
Other Information
Item 1. Legal Proceedings
There were no reportable events during the quarter ended September 30,
1996.
Item 2. Changes in Securities
There were no reportable events during the quarter ended September 30,
1996.
Item 3. Defaults On Senior Securities
There were no reportable events during the quarter ended September 30,
1996.
Item 4. Submission of Matters to Votes of Security Holders
There were no reportable events during the quarter ended September 30,
1996.
Item 5. Other Information
As of September 17, 1996, the Company entered into an agreement
with Samsung Electronics Co., Ltd. ("Samsung") pursuant to which
Samsung will provide handsets to the Company for a three-year term
commencing on or around April 1, 1997, for an aggregate purchase price
of approximately $600 million.
As of September 10, 1996, the Company entered into a 10-year
agreement with Sprint Communications Company, L.P. and Tandy
Corporation, acting by and through its Radio Shack division ("Radio
Shack"), pursuant to which Radio Shack will provide a nationwide
distribution outlet for Sprint and Sprint PCS products and services.
The agreement may be terminated after three years', with six months'
prior notice.
As of July 15, 1996, the Company entered into an amendment to its
procurement and services agreement with Lucent Technologies Inc.
("Lucent") pursuant to which the Company agrees to purchase additional
equipment and services, including related software, from Lucent for
approximately $14 million.
Copies of the foregoing agreements have been filed as exhibits to
this Form 10-Q for the period ended September 30, 1996. The foregoing
summaries of certain provisions of the agreements do not purport to be
complete and are subject to, and qualified in their entirety by
reference to, all of the provisions of such respective agreements.
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are filed as part of this report:
3.1 Certificate of Limited Partnership of Sprint Spectrum L.P.
(incorporated by reference to Form S-1 Registration State- ment,
Registration No. 333-06609, filed on June 21, 1996).
3.2 Agreement of Limited Partnership of MajorCo Sub, L.P. (renamed Sprint
Spectrum L.P.) dated as of March 28, 1995, among MajorCo, L.P. and
MinorCo L.P. (incorporated by reference to Form S-1 Registration
Statement, Registration No. 333-06609, filed on June 21, 1996).
4.1 Senior Note Indenture, dated August 23, 1996, between Sprint Spectrum
L.P., Sprint Spectrum Finance Corporation, and The Bank of New York,
as Trustee.
4.2 Form of Senior Note (included in Exhibit 4.1)
<PAGE>
4.3 Senior Discount Note Indenture, dated August 23, 1996, between Sprint
Spectrum L.P., Sprint Spectrum Finance Corporation, and The Bank of
New York, as Trustee.
4.4 Form of Senior Discount Note (included in Exhibit 4.3).
10.1 Amendment No. 2 to the Lucent Technologies/Sprint Spectrum Procurement
and Services Contract, dated as of July 15, 1996 between Sprint
Spectrum Equipment Company, L.P. and Lucent Technologies, Inc. The
omitted portions indicated by brackets have been separately filed with
the Securities and Exchnage Commission pursuant to a request for con-
fidential treatment under Rule 24b-2 of the Securities and Exchange
Act of 1934, as amended.
10.2 First Amendment to Amended and Restated Trademark License Agreement,
dated as of September 26, 1996, between Sprint Communications Company,
L.P. and Sprint Spectrum Holding Company, L.P.
10.3 Assignment and Acceptance Agreement (regarding the Amended and
Restated Trademark License Agreement, as amended) dated as of
September 30, 1996 between Sprint Spectrum Holding Company, L.P. and
Sprint Spectrum L.P.
10.4 Amended and Restated Assignment and Assumption Agreement (Leases),
dated as of July 1, 1996, between Sprint Spectrum Holding Company,
L.P., Sprint Spectrum L.P. and Sprint Spectrum Realty Company, L.P.
10.5 Employment Agreement, dated as of July 29, 1996, between Sprint
Spectrum Holding Company, L.P. and Andrew Sukawaty (incorporated by
reference to Form S-1 Registration Statement, Registration No.
333-06609, filed on August 12, 1996).
10.6 Registration Rights Agreement, dated as of August 23, 1996 among
Sprint Spectrum L.P., Sprint Spectrum Finance Corporation and Sprint
Corporation.
10.7 Amended and Restated Capital Contribution Agreement, dated as of
October 2, 1996, among Sprint Corporation, Tele-communications, Inc.,
Comcast Corporation, Cox Communications, Inc. and Sprint Spectrum L.P.
10.8 Letter Agreement, dated as of August 31, 1996, between American PCS,
L.P., American Personal Communications Inc., WirelessCo, L.P., Sprint
Spectrum L.P. and Sprint Spectrum Holding Company, L.P. [Exhibits
omitted] (incorporated by reference to Form 10-Q, filed on September
26, 1996).
10.9 Subscriber Unit Equipment Purchase and Supply Agreement, dated as of
September 17, 1996, between Sprint Spectrum L.P. and Samsung
Electronics Co., Ltd. The omitted portions indicated by brackets have
been separately filed with the Securities and Exchange Commission pur-
suant to a request for confidential treatment under Rule 24b-2 of the
Securities Exchange Act of 1934, as amended.
10.10 Letter Agreement dated as of September 17, 1996, from Sprint Spectrum
L.P. to Samsung Electronics Co., Ltd. and Samsung Electronics Co.,
Ltd/Samsung Telecommunications America, Inc.
10.11 Master Agreement, dated as of September 1996, between Sprint
Communications Company, L.P., Sprint Spectrum L.P., Sprint United
Management Company and Tandy Corporation, a Delaware corporation
acting by and through its Radio Shack division. The omitted por-
tions indicated by brackets have been separately filed with the Secu-
rities and Exchange Commission pursuant to a request for confidential
treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.
27 Financial data schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended September
30, 1996.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SPRINT SPECTRUM L.P.
(Registrant)
By /s/ John W. Meyer
John W. Meyer
Vice President and Controller
Dated: February 7, 1997
Exhibit 4.1
SPRINT SPECTRUM L.P.
SPRINT SPECTRUM FINANCE CORPORATION,
as Issuers,
and
THE BANK OF NEW YORK,
as Trustee
----------------------------
INDENTURE
Dated as of August 15, 1996
-----------------------
$250,000,000
11% Senior Notes due 2006
<PAGE>
-i-
CROSS-REFERENCE TABLE
TIA Section Indenture Section
ss. 310(a)(1) ............................................... 7.10; 11.1
(a)(2) ............................................... 7.10; 11.1
(a)(3) ............................................... N.A.
(a)(4) ............................................... N.A.
(b) ............................................... 7.8; 7.10; 11.2
(c) ............................................... N.A.
ss. 311(a) ............................................... 7.11
(b) ............................................... 7.11
(c) ............................................... N.A.
ss. 312(a) ............................................... 2.5
(b) ............................................... 11.3
(c) ............................................... 11.3
ss. 313(a) ............................................... 7.6
(b)(1) ............................................... 7.6
(b)(2) ............................................... 7.6
(c) ............................................... 7.6; 11.2
(d) ............................................... 7.6
ss. 314(a) ............................................... 4.6; 4.7; 11.2
(b) ............................................... N.A.
(c)(1) ............................................... 11.4
(c)(2) ............................................... 11.4
(c)(3) ............................................... 11.4
(d) ............................................... N.A.
(e) ............................................... 11.5
(f) ............................................... N.A.
ss. 315(a) ............................................... 7.1(b)
(b) ............................................... 7.5; 11.2
(c) ............................................... 7.1(a)
(d) ............................................... 7.1(c)
(e) ............................................... 6.11
ss. 316(a) (last sentence) ................................... 2.9
(a)(1)(A) ............................................... 6.5
(a)(1)(B) ............................................... 6.4
(a)(2) ............................................... N.A.
(b) ............................................... 6.7
ss. 317(a)(1) ............................................... 6.8
(a)(2) ............................................... 6.9
(b) ............................................... 2.4
ss. 318(a) .............................................. 11.1
- --------------------
N.A. means Not Applicable.
NOTE: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of this Indenture.
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS AND
INCORPORATION BY REFERENCE
Section Page
1.1 Definitions.......................................... 1
1.2 Incorporation by Reference of Trust
Indenture Act.................................... 24
1.3 Rules of Construction................................ 25
ARTICLE II
THE SECURITIES
2.1 Form and Dating...................................... 25
2.2 Execution and Authentication......................... 25
2.3 Registrar and Paying Agent........................... 26
2.4 Paying Agent To Hold Money in Trust.................. 27
2.5 Securityholder Lists................................. 27
2.6 Transfer and Exchange................................ 28
2.7 Replacement Securities............................... 28
2.8 Outstanding Securities............................... 29
2.9 Treasury Securities.................................. 29
2.10 Temporary Securities................................. 29
2.11 Cancellation......................................... 30
2.12 Defaulted Interest................................... 30
2.13 CUSIP Number......................................... 30
2.14 Deposit of Moneys.................................... 31
ARTICLE III
REDEMPTION
3.1 Election To Redeem; Notices to Trustee............... 31
3.2 Selection of Securities To Be Redeemed............... 31
3.3 Notice of Redemption................................. 32
3.4 Effect of Notice of Redemption....................... 33
3.5 Deposit of Redemption Price.......................... 33
3.6 Securities Redeemed in Part.......................... 34
ARTICLE IV
COVENANTS
4.1 Payment of Securities................................ 34
4.2 Maintenance of Office or Agency...................... 34
4.3 Corporate or Partnership Existence................... 35
4.4 Payment of Taxes and Other Claims.................... 35
4.5 Maintenance of Properties; Insurance;
Books and Records; Compliance with Law........... 36
4.6 Compliance Certificates.............................. 36
4.7 Reports.............................................. 37
4.8 Limitation on Additional Indebtedness................ 38
4.9 Limitation on Restricted Payments.................... 40
4.10 Limitation on Liens Securing Certain
Indebtedness..................................... 43
4.11 Limitation on Issuance of Certain Guarantees
by, and Debt Securities of, Restricted
Subsidiaries..................................... 43
4.12 Limitation on Dividends and Other Payment
Restrictions Affecting Restricted
Subsidiaries..................................... 44
4.13 Disposition of Proceeds of Asset Sales............... 44
4.14 Limitation on Transactions with Equityholders
and Affiliates................................... 48
4.15 Change of Control.................................... 50
4.16 Limitation on Designations of Unrestricted
Subsidiaries..................................... 52
4.17 Limitation on Activities of the Issuers and the
Restricted Subsidiaries.......................... 54
4.18 Limitation on Ownership of Equity Interests
of Restricted Subsidiaries....................... 54
4.19 Amendments to Capital Contribution Agreement......... 54
4.20 Waiver of Stay, Extension or Usury Laws.............. 55
ARTICLE V
SUCCESSOR CORPORATION
5.1 Consolidation, Merger, Sale of Assets, Etc........... 55
5.2 Successor Entity Substituted......................... 57
5.3 Status of Subsidiaries............................... 58
ARTICLE VI
DEFAULT AND REMEDIES
6.1 Events of Default.................................... 58
6.2 Acceleration......................................... 60
6.3 Other Remedies....................................... 61
6.4 Waiver of Past Default............................... 61
6.5 Control by Majority.................................. 62
6.6 Limitation on Suits.................................. 62
6.7 Rights of Holders To Receive Payment................. 63
6.8 Collection Suit by Trustee........................... 63
6.9 Trustee May File Proofs of Claim..................... 63
6.10 Priorities........................................... 64
6.11 Undertaking for Costs................................ 65
ARTICLE VII
TRUSTEE
7.1 Duties of Trustee.................................... 65
7.2 Rights of Trustee.................................... 66
7.3 Individual Rights of Trustee......................... 68
7.4 Trustee's Disclaimer................................. 68
7.5 Notice of Defaults................................... 68
7.6 Reports by Trustee to Holders........................ 68
7.7 Compensation and Indemnity........................... 69
7.8 Replacement of Trustee............................... 70
7.9 Successor Trustee by Merger, Etc..................... 71
7.10 Eligibility; Disqualification........................ 71
7.11 Preferential Collection of Claims Against
Issuers.......................................... 72
7.12 Money Held in Trust.................................. 72
7.13 Preferred Collection of Claims....................... 72
ARTICLE VIII
DISCHARGE OF INDENTURE; DEFEASANCE
8.1 Satisfaction and Discharge........................... 72
8.2 Legal Defeasance and Covenant Defeasance............. 73
8.3 Application of Trust Money........................... 76
8.4 Repayment to the Issuers or a Subsidiary
Guarantor........................................ 77
8.5 Reinstatement........................................ 77
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
9.1 Without Consent of Holders........................... 78
9.2 With Consent of Holders.............................. 79
9.3 Compliance with Trust Indenture Act.................. 80
9.4 Revocation and Effect of Amendments and
Consents......................................... 80
9.5 Notation on or Exchange of Securities................ 81
9.6 Trustee To Sign Amendments, Etc...................... 82
ARTICLE X
GUARANTEE
10.1 Unconditional Guarantee.............................. 82
10.2 Severability......................................... 83
10.3 Limitation of Liability.............................. 83
10.4 Subsidiary Guarantors May Consolidate, etc.,
on Certain Terms................................. 84
10.5 Contribution......................................... 84
10.6 Waiver of Subrogation................................ 85
10.7 Execution of Guarantee............................... 86
10.8 Waiver of Stay, Extension or Usury Laws.............. 86
ARTICLE XI
MISCELLANEOUS
11.1 Trust Indenture Act Controls......................... 87
11.2 Notices.............................................. 87
11.3 Communications by Holders with Other Holders.......... 88
11.4 Certificate and Opinion of Counsel as to
Conditions Precedent............................. 88
11.5 Statements Required in Certificate and Opinion
of Counsel....................................... 88
11.6 Rules by Trustee, Paying Agent, Registrar............ 89
11.7 Legal Holidays....................................... 89
11.8 Governing Law........................................ 89
11.9 No Recourse Against Others........................... 89
11.10 Successors........................................... 90
11.11 Duplicate Originals.................................. 90
11.12 Joint and Several Obligations........................ 90
11.13 Separability......................................... 90
11.14 Table of Contents, Headings, Etc..................... 91
SIGNATURES ..................................................... 92
EXHIBIT A - Form of Security
EXHIBIT B - Form of Subsidiary Guarantee
<PAGE>
INDENTURE dated as of August 15, 1996 by and among SPRINT
SPECTRUM L.P., a Delaware limited partnership (the "Company"), SPRINT SPECTRUM
FINANCE CORPORATION, a Delaware corporation ("FinCo" and, together with the
Company, the "Issuers"), and THE BANK OF NEW YORK, a New York banking
corporation, as Trustee (the "Trustee").
The Issuers have duly authorized the execution and delivery of
this Indenture to provide for the issuance of the Securities to be issued as
provided for in this Indenture. All things necessary to make the Securities the
valid and binding obligations of the Issuers, and to make this Indenture a valid
and binding agreement of each of the Issuers, have been done.
The parties hereto agree as follows for the benefit of each
other and for the equal and ratable benefit of the Holders of the Securities:
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION I.1 Definitions.
"Accreted Value" as of any date (the "Specified Date") means,
with respect to each $1,000 principal amount at maturity of the Senior Discount
Notes:
(i) if the Specified Date is one of the following dates
(each a "Semi-Annual Accrual Date"), the amount set forth opposite such
date below:
Semi-Annual Accreted
Accrual Date Value
Issue Date......................................... $546.87
February 15, 1997.................................. 579.48
August 15, 1997.................................... 615.70
February 15, 1998.................................. 654.18
August 15, 1998.................................... 695.07
February 15, 1999.................................. 738.51
August 15, 1999.................................... 784.66
February 15, 2000.................................. 833.71
August 15, 2000.................................... 885.81
February 15, 2001.................................. 941.18
August 15, 2001.................................... $1,000.00;
(ii) if the Specified Date occurs between two Semi-Annual
Accrual Dates, the sum of (a) the Accreted Value for the Semi-Annual
Accrual Date immediately preceding the Specified Date and (b) an amount
equal to the product of (x) the Accreted Value for the immediately
following Semi-Annual Accrual Date less the Accreted Value for the
immediately preceding Semi-Annual Accrual Date and (y) a fraction, the
numerator of which is the number of days actually elapsed from the
immediately preceding Semi-Annual Accrual Date to the Specified Date
and the denominator of which is 180; and
(iii) if the Specified Date is after August 15, 2001, $1,000.
"Acquired Indebtedness" means Indebtedness of a Person
existing at the time such Person becomes a Restricted Subsidiary or assumed in
connection with an Asset Acquisition by such Person and not incurred in
connection with, or in anticipation of, such Person becoming a Restricted
Subsidiary or such Asset Acquisition.
"Affiliate" of any specified Person means any other Person
which, directly or indirectly, controls, is controlled by or is under direct or
indirect common control with, such specified Person. For the purposes of this
definition, (i) "control" when used with respect to any Person means the power
to direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing and (ii) each of the Partners shall be deemed an Affiliate of the
Company.
"Affiliate Transaction" has the meaning provided in Section
4.14.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Annualized Pro Forma Consolidated Operating Cash Flow" means
Consolidated Operating Cash Flow for the latest two full fiscal quarters for
which consolidated financial statements of the Company are available multiplied
by two. For purposes of calculating "Consolidated Operating Cash Flow" for any
period for purposes of this definition only, (i) any Subsidiary of the Company
that is a Restricted Subsidiary on the date of the transaction giving rise to
the need to calculate "Annualized Pro Forma Consolidated Operating Cash Flow"
(the "Transaction Date") shall be deemed to have been a Restricted Subsidiary at
all times during such period and (ii) any Subsidiary of the Company that is not
a Restricted Subsidiary on the Transaction Date shall be deemed not to have been
a Restricted Subsidiary at any time during such period. In addition to and
without limitation of the foregoing, for purposes of this definition only,
"Consolidated Operating Cash Flow" shall be calculated after giving effect on a
pro forma basis for the applicable period to, without duplication, any Asset
Sales or Asset Acquisitions (including, without limitation, any Asset
Acquisition giving rise to the need to make such calculation as a result of the
Company or one of the Restricted Subsidiaries (including any Person who becomes
a Restricted Subsidiary as a result of the Asset Acquisition) incurring,
assuming or otherwise being liable for Acquired Indebtedness) occurring during
the period commencing on the first day of such two fiscal quarter period to and
including the Transaction Date (the "Reference Period"), as if such Asset Sale
or Asset Acquisition occurred on the first day of the Reference Period.
"APC" means American PCS, L.P., a Delaware limited partner-
ship.
"Asset Acquisition" means (i) any purchase or other
acquisition (by means of transfer of cash or other property to others or payment
for property or services for the account or use of others, or otherwise) of
Equity Interests of any Person by the Company or any Restricted Subsidiary, in
either case, pursuant to which such Person shall become a Restricted Subsidiary
or shall be merged with or into the Company or any Restricted Subsidiary or (ii)
any acquisition by the Company or any Restricted Subsidiary of the assets of any
Person which constitute substantially all of an operating unit or line of
business of such Person.
"Asset Sale" means any direct or indirect sale, conveyance,
transfer, lease or other disposition to any Person other than the Company or a
Wholly-Owned Restricted Subsidiary, in one transaction or a series of related
transactions, of (i) any Equity Interests of any Restricted Subsidiary, (ii) any
FCC license for the provision of wireless telecommunications services held by
the Company or any Restricted Subsidiary (whether by sale of Equity Interests or
otherwise) or (iii) any other property or asset of the Company or any Restricted
Subsidiary outside of the ordinary course of business. For the purposes of this
definition, the term "Asset Sale" shall not include any disposition of
properties or assets of the Company or one or more of the Restricted
Subsidiaries in a transaction that either (x) involves aggregate consideration
of $5.0 million or less or (y) is governed by and complies with Section 5.1.
"Asset Sale Offer" has the meaning provided in Section 4.13.
"Asset Sale Payment Date" has the meaning provided in Section
4.13.
"Available Operating Cash Flow" means, for any period, the
positive cumulative Consolidated Operating Cash Flow realized during such period
or, if such cumulative Consolidated Operating Cash Flow for such period is
negative, the negative amount by which cumulative Consolidated Operating Cash
Flow is less than zero.
"Average Life to Stated Maturity" means, with respect to any
Indebtedness, as at any date of determination, the quotient obtained by dividing
(i) the sum of the products of (a) the number of years (or any fraction thereof)
from such date to the date or dates of each successive scheduled principal
payment (including, without limitation, any sinking fund requirements) of such
Indebtedness multiplied by (b) the amount of each such principal payment by (ii)
the sum of all such principal payments.
"Bank Credit Facility" means the credit facilities
contemplated by the Commitment Letter dated June 7, 1996 among the Company,
Chase Securities Inc. and Chemical Bank, as the same may be amended, modified,
renewed, refunded, replaced or refinanced from time to time.
"Bankruptcy Law" means Title 11 of the U.S. Code or any other
similar Federal, state or foreign law for the relief of debtors.
"Board" of any Person means the board of directors, management
committee or other governing body of such Person. For purposes of this
definition, while the Company is a partnership, "Board" shall mean, with respect
to the Company, the Partnership Board established under the Holdings Partnership
Agreement and any Person to whom appropriate authority has been delegated by
such Partnership Board.
"Business Day" means any day except a Saturday, a Sunday or
any day on which banking institutions in New York, New York or Kansas City,
Missouri, are required or authorized by law or other governmental action to be
closed.
"Cable Partner" means TCI Telephony Services, Inc., Com-
cast Telephony Service and Cox Telephony Partnership.
"Capitalized Lease Obligation" means any obligation to pay
rent or other amounts under a lease of (or other agreement conveying the right
to use) any property (whether real, personal or mixed) that is required to be
classified and accounted for as a capital lease obligation under GAAP and, for
the purpose of this Indenture, the amount of such obligation at any date shall
be the capitalized amount thereof at such date, determined in accordance with
GAAP.
"Cash Equivalents" means (i) any evidence of Indebtedness with
a maturity of 365 days or less issued by or directly, fully and unconditionally
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof); (ii) deposits, certificates of
deposit or acceptances with a maturity of 365 days or less of any institution
that is a member of the Federal Reserve System having combined capital and
surplus and undivided profits of not less than $500.0 million; (iii) commercial
paper with a maturity of 365 days or less issued by a corporation (other than an
Affiliate of the Company) incorporated or organized under the laws of the United
States or any state thereof or the District of Columbia and rated at least "A-1"
by S&P or "P-1" by Moody's; (iv) repurchase agreements and reverse repurchase
agreements relating to marketable direct obligations issued by or directly,
fully and unconditionally guaranteed or insured by the United States of America
or any agency or instrumentality thereof (provided that the full faith and
credit of the United States of America is pledged in support thereof), in each
case, maturing within 365 days from the date of of acquisition and (v) any "Cash
Equivalents" as defined in the Bank Credit Facility as in effect on the Issue
Date.
"Change of Control" means the occurrence of any of the
following events: (i) any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act) other than a Permitted Holder or
Permitted Holders or a Person or a group controlled by a Permitted Holder or
Permitted Holders is or becomes the "beneficial owner" (as defined in Rules
13d-3 and 13d-5 under the Exchange Act, except that a Person shall be deemed to
have "beneficial ownership" of all securities that such Person has the right to
acquire, whether such right is exercisable immediately or only after the passage
of time, upon the happening of an event or otherwise), directly or indirectly,
of more than 40% of the total Voting Equity Interests of the Company or
Holdings; provided a Permitted Holder or Permitted Holders or a group controlled
by a Permitted Holder or Permitted Holders does not own a greater percentage of
the total Voting Equity Interests of the Company or Holdings, as the case may
be; (ii) the Company or Holdings consolidates with, or merges with or into,
another Person or sells, assigns, conveys, transfers, leases or otherwise
disposes of all or substantially all of its assets to any Person, or any Person
consolidates with, or merges with or into, the Company or Holdings, in any such
event pursuant to a transaction in which the outstanding Voting Equity Interests
of the Company or Holdings are converted into or exchanged for cash, securities
or other property, and immediately after such transaction a "person" or "group"
(as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) other
than a Permitted Holder or Permitted Holders or a Person or group controlled by
a Permitted Holder or Permitted Holders is the "beneficial owner" (as defined in
Rules 13d-3 and 13d-5 under the Exchange Act, except that a person shall be
deemed to have "beneficial ownership" of all securities that such Person has the
right to acquire, whether such right is exercisable immediately or only after
the passage of time, upon the happening of an event or otherwise), directly or
indirectly, of more than 40% of the total Voting Equity Interests of the
surviving or transferee Person; provided a Permitted Holder or Permitted Holders
or a Person or group controlled by a Permitted Holder or Permitted Holders does
not own a greater percentage of the total Voting Equity Interests of such
Person; and (iii) the approval by the holders of Equity Interests of the Company
or Holdings of any plan or proposal for the liquidation or dissolution of the
Company or Holdings.
"Change of Control Date" has the meaning provided in Section
4.15.
"Change of Control Offer" has the meaning provided in Section
4.15.
"Change of Control Payment Date" has the meaning provided in
Section 4.15.
"Commission" means the Securities and Exchange Commission.
"Common Equity Interests" means (i) with respect to a Person
which is a corporation, any and all shares, interests or other participations
in, and other equivalents (however designated and whether voting or nonvoting)
of, such Person's common stock and includes, without limitation, all series and
classes of such common stock and (ii) with respect to a Person which is not a
corporation, Equity Interests which have characteristics similar in all material
respects to those of common stock of a corporation.
"Company" means the party named as such in this Indenture
until a successor replaces it in accordance with the provisions of this
Indenture and, thereafter, means the successor.
"Consolidated Income Tax Expense" means, with respect to any
period, the provision for Federal, state, local, foreign and other income taxes
of the Company and the Restricted Subsidiaries for such period as determined on
a consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" means, with respect to any
period, without duplication, the sum of (i) the interest expense of the Company
and the Restricted Subsidiaries for such period as determined on a consolidated
basis in accordance with GAAP and shall, in any event, include, without
limitation, (a) any amortization of debt discount, (b) the net cost or net
benefit, as the case may be, under any Currency Agreements and Interest Rate
Protection Obligations (including any amortization of discounts), (c) the
interest portion of any deferred payment obligation, (d) all commissions,
discounts and other fees and charges owed with respect to letters of credit,
bills of exchange, promissory notes and bankers' acceptance financing and (e)
all accrued interest, (ii) all but the principal component of Capitalized Lease
Obligations paid, accrued and/or scheduled to be paid or accrued by the Company
and the Restricted Subsidiaries during such period as determined on a
consolidated basis in accordance with GAAP and (iii) the aggregate amount of
dividends and distributions paid or accrued during such period in respect of
Preferred Equity Interests of the Company and the Restricted Subsidiaries (other
than such dividends or distributions paid or accrued on or with respect to
Preferred Equity Interests owned by the Company or a Wholly-Owned Restricted
Subsidiary) determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, with respect to any period,
the net income (loss) of the Company and the Restricted Subsidiaries for such
period as determined on a consolidated basis in accordance with GAAP, adjusted,
to the extent included in calculating such net income, by excluding, without
duplication, (i) all extraordinary gains or losses, (ii) the portion of net
income (but not losses) of the Company allocable to minority interests in
unconsolidated Persons, except to the extent that cash dividends or
distributions have actually been received by the Company or any Restricted
Subsidiary, (iii) net income (or loss) of any Person combined with the Company
or a Restricted Subsidiary on a "pooling of interests" basis attributable to any
period prior to the date of combination, (iv) gains in respect of any Asset
Sales, (v) the net income of any Unrestricted Subsidiary, except to the extent
that cash dividends or distributions have actually been received by the Company
or a Restricted Subsidiary, (vi) the portion of net income (but not losses) of
the Company allocable to minority interests in Restricted Subsidiaries (other
than a Subsidiary Guarantor) of such person and (vii) the net income of any
Restricted Subsidiary (other than a Subsidiary Guarantor) for such period to the
extent the declaration of dividends or similar distributions by that Restricted
Subsidiary is not at the time permitted, directly or indirectly, by the terms of
its charter or any agreement, instrument, judgment, decree, order, statute, rule
or regulation applicable to that Restricted Subsidiary.
"Consolidated Operating Cash Flow" means, with respect to any
period, the Consolidated Net Income of the Company and the Restricted
Subsidiaries for such period (i) increased by (to the extent included in
computing Consolidated Net Income) the sum of (a) Consolidated Income Tax
Expense for such period; (b) Consolidated Interest Expense for such period; (c)
depreciation of the Company and the Restricted Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP; (d) amortization of
the Company and the Restricted Subsidiaries for such period, including, without
limitation and without duplication, amortization of any Consolidated Interest
Expense and amortization of capitalized debt issuance costs for such period, all
determined on a consolidated basis in accordance with GAAP; and (e) any other
non-cash charges that were deducted in computing Consolidated Net Income
(excluding any non-cash charge which requires an accrual or reserve for cash
charges for any future period) of the Company and the Restricted Subsidiaries
for such period in accordance with GAAP and (ii) decreased by any non-cash gains
that were included in computing Consolidated Net Income.
"consolidation" means, with respect to the Company, the
consolidation of the accounts of the Restricted Subsidiaries with those of the
Company, all in accordance with GAAP; provided that "consolidation" will not
include consolidation of the accounts of any Unrestricted Subsidiary with the
accounts of the Company.
The term "consolidated" has a correlative meaning to the foregoing.
"covenant defeasance" has the meaning provided in Section 8.2.
"Currency Agreement" means any foreign exchange contract,
currency swap agreement or other similar agreement or arrangement designed to
protect against fluctuations in currency values.
"Debt Instrument" has the meaning provided in Section 6.1.
"Debt Securities" means any debt securities (including any
guarantee of such securities) issued by any Issuer and/or any Restricted
Subsidiary in connection with a public offering (whether or not underwritten) or
a private placement (provided such private placement is underwritten for resale
pursuant to Rule 144A, Regulation S or otherwise under the Securities Act or
sold on an agency basis by a broker-dealer or one of its Affiliates to 10 or
more beneficial holders), it being understood that the term "Debt Securities"
shall not include any evidence of Indebtedness under any of the Vendor Credit
Facilities or the Bank Credit Facility or any other commercial bank borrowings
or similar borrowings, recourse transfers of financial assets, capital leases or
other types of borrowings incurred in a manner not customarily viewed as a
"securities offering."
"Default" means any event that is, or after notice or passage
of time or both would be, an Event of Default.
"Default Amount" means 100% of the principal amount of all
outstanding Securities, plus accrued and unpaid interest, if any, thereon.
"Designation" has the meaning provided in Section 4.16.
"Designation Amount" has the meaning provided in Section 4.16.
"Disinterested Director" means, with respect to any
transaction or series of transactions, a member of the Board of the Company or
Holdings, as the case may be, other than any such Board member who has any
material direct or indirect financial interest in or with respect to such
transaction or series of transactions.
"Disqualified Equity Interest" means, with respect to any
Person, any Equity Interest that, by its terms (or by the terms of any security
into which it is convertible or for which it is mandatorily exchangeable), or
upon the happening of any event, matures or is mandatorily redeemable, pursuant
to a sinking fund obligation or otherwise, or is exchangeable for Indebtedness
at the option of the holder thereof, or is redeemable at the option of the
holder thereof, in whole or in part, on or prior to the final maturity date of
the Securities.
"EquipmentCo" means Sprint Spectrum Equipment Company, L.P., a
Delaware limited partnership.
"Equity Interest" in any Person means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) corporate stock or other
equity participations, including partnership interests, whether general or
limited, in such Person.
"Event of Default" has the meaning provided in Section 6.1.
"Excess Proceeds" has the meaning provided in Section 4.13.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Excluded Cash Proceeds" means (i) any net cash proceeds used
to make a concurrent Investment constituting a Restricted Payment pursuant to
clause (iv) of the third paragraph of Section 4.9 and (ii) the first $1.4
billion of net cash proceeds received by the Company after December 31, 1995
from capital contributions in respect of existing Equity Interests (other than
Disqualified Equity Interests) of the Company or from the issue or sale (other
than to a Restricted Subsidiary) of Equity Interests (other than Disqualified
Equity Interests) of the Company; provided that (A) net cash proceeds referred
to in the immediately preceding clause (i), (B) net cash proceeds used to make
an Investment in APC or (C) net cash proceeds used to make an investment
pursuant to clauses (ii) or (iii)(a) of the third paragraph of Section 4.9 shall
not be included as part of the first $1.4 billion referred to in this clause
(ii).
"Fair Market Value" means, with respect to any asset or
property, the price that could be negotiated in an arms'-length free market
transaction, for cash, between a willing seller and a willing buyer, neither of
whom is under pressure or compulsion to complete the transaction. Unless
otherwise specified in this Indenture, Fair Market Value shall be determined by
the Board of the Company acting in good faith.
"FinCo" means the party named as such in this Indenture until
a successor replaces it in accordance with the provisions of this Indenture and,
thereafter, means the successor.
"FCC" means the Federal Communications Commission.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession of the United States of America, which are applicable
on the Issue Date.
"guarantee" means, as applied to any obligation, (i) a
guarantee (other than by endorsement of negotiable instruments for collection in
the ordinary course of business), directly or indirectly, in any manner, of any
part or all of such obligation and (ii) an agreement, direct or indirect,
contingent or otherwise, the effect of which is to assure in any way the payment
or performance (or payment of damages in the event of non-performance) of all or
any part of such obligation (other than an agreement to make a capital
contribution that otherwise is permitted by Section 4.9), including, without
limiting the foregoing, the payment of amounts drawn down under letters of
credit.
"Holder" or "Securityholder" means the Person in whose name a
Security is registered on the Registrar's books.
"Holdings" means Sprint Spectrum Holding Company, L.P., a
Delaware limited partnership.
"Holdings Partnership Agreement" means the Amended and
Restated Agreement of Limited Partnership of Holdings dated as of January 31,
1996.
"incur" has the meaning provided in Section 4.8.
"Indebtedness" means, with respect to any Person, without
duplication, (i) any liability, contingent or otherwise, of such Person (a) for
borrowed money (whether or not the recourse of the lender is to the whole of the
assets of such Person or only to a portion thereof), whether as a cash advance,
bill, overdraft or money market facility loan, or (b) evidenced by a note,
debenture or similar instrument or letters of credit (including a purchase money
obligation) or by any book-entry mechanism or (c) for the payment of money
relating to a Capitalized Lease Obligation or other obligation relating to the
deferred purchase price of property or (d) in respect of any Interest Rate
Protection Obligation or any Currency Agreement; (ii) any liability of others of
the kind described in the preceding clause (i) which the Person has guaranteed
or which is otherwise its legal liability; (iii) any obligation secured by a
Lien to which the property or assets of such Person are subject, whether or not
the obligations secured thereby shall have been assumed by or shall otherwise be
such Person's legal liability; and (iv) the greater of the maximum repurchase or
redemption price or liquidation preference of any Disqualified Equity Interests
of such Person or, with respect to any Restricted Subsidiary of such Person, of
any Equity Interests (other than Common Equity Interests) of such Restricted
Subsidiary. In no event shall "Indebtedness" include trade payables incurred in
the ordinary course of business. For purposes of Section 4.8 and for purposes of
Section 6.1, in determining the principal amount of any Indebtedness (l) to be
incurred by the Company or a Restricted Subsidiary or which is outstanding at
any date, (x) the principal amount of any Indebtedness which provides that an
amount less than the principal amount thereof shall be due upon any declaration
of acceleration thereof shall be the accreted value thereof at the date of
determination and (y) effect shall be given to the impact of any Currency
Agreements with respect to such Indebtedness and (2) outstanding at any time
under any Currency Agreement of the Company or any Restricted Subsidiary, the
principal amount shall be the net payment obligation under such Currency
Agreement at such time.
"Indenture" means this Indenture as amended or supplemented
from time to time pursuant to the terms hereof.
"Independent Financial Advisor" means an investment banking
firm of national standing in the United States which, in the good faith judgment
of the Board of the Company, is independent with respect to the Company and its
Affiliates and qualified to perform the task for which it is to be engaged.
"Interest Payment Date," when used with respect to any
Security, means the stated maturity of an installment of interest specified in
such Security.
"Interest Rate Protection Obligation" means the obligation of
any Person pursuant to any arrangement with any other Person whereby, directly
or indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such Person
calculated by applying a fixed or a floating rate of interest on the same
notional amount and shall include, without limitation, interest rate swaps,
caps, floors, collars, forward interest rate agreements and similar agreements.
"Investment" means, with respect to any Person, any advance,
loan or other extension of credit (including, without limitation, by means of
any guarantee) or any capital contribution to (by means of transfer of property
to others, payment for property or services for the account or use of others, or
otherwise), or any purchase or other acquisition of any Equity Interests, bonds,
notes, debentures or other securities of, any such Person. In addition, any
foreign exchange contract, currency swap agreement or other similar agreement
made or entered into by any Person shall constitute an Investment by such
Person.
"Issue Date" means the date of original issuance of Securities
under this Indenture.
"Issuers" means the Company and FinCo.
"legal defeasance" has the meaning provided in Section 8.2.
"Legal Holiday" means any day other than a Business Day.
"Lien" means any mortgage, charge, pledge, lien (statutory or
other), security interest, hypothecation or assignment for security.
"Lucent Credit Facility" means the credit facility
contemplated by the commitment letter dated June 21, 1996 between the Company
and Lucent Technologies, Inc., as the same may be amended, modified, renewed,
refunded, replaced or refinanced from time to time.
"Material Restricted Subsidiary" means any Restricted
Subsidiary which, at any date of determination, is (i) a "Significant
Subsidiary" (as that term is defined in Regulation S-X, as in effect on the
Issue Date, issued under the Securities Act), and/or (ii) holds any FCC license
for the transmission of wireless telecommunications services and/or (iii) any of
WirelessCo, RealtyCo or EquipmentCo.
"Maturity Date" means, with respect to any Security, the date
specified in such Security as the fixed date on which principal of such Security
is due and payable.
"Moody's" means Moody's Investors Service, Inc.
"Net Cash Proceeds" means, with respect to any Asset Sale, the
proceeds therefrom in the form of cash or Cash Equivalents, including payments
in respect of deferred payment obligations when received in the form of cash or
Cash Equivalents, net of (i) brokerage commissions and other fees and expenses
(including fees and expenses of legal counsel and investment bankers) related to
such Asset Sale, (ii) provisions for all taxes payable as a result of such Asset
Sale, (iii) amounts required to be paid to any Person (other than the Company or
any Restricted Subsidiary) owning a beneficial interest in or having a Lien on
the assets subject to the Asset Sale and (iv) appropriate amounts to be provided
by the Company or any Restricted Subsidiary, as the case may be, as a reserve
required in accordance with GAAP against any liabilities associated with such
Asset Sale and retained by the Company or any Restricted Subsidiary, as the case
may be, after such Asset Sale, including, without limitation, pension and other
post-employment benefit liabilities and liabilities under any indemnification
obligations associated with such Asset Sale.
"Nortel Credit Facility" means the credit facility
contemplated by the commitment letter dated June 11, 1996 between the Company
and Northern Telecom Inc., as the same may be amended, modified, renewed,
refunded, replaced or refinanced from time to time.
"Obligations" means any principal of and interest on, and any
other amounts owing in respect of, the Securities payable pursuant to the terms
of the Securities or this Indenture or upon acceleration, including amounts
received upon the exercise of rights of rescission or other rights of action
(including claims for damages) or otherwise, to the extent relating to the
purchase price of the Securities or amounts corresponding to such principal of,
interest on, or other amounts owing with respect to, the Securities.
"Officer" means the Chief Executive Officer, Chairman of the
Partnership Board, the President, any Vice President, the Chief Financial
Officer, the Treasurer, the Secretary, the Chief Technology Officer, the Chief
Business Development Officer, the Chief Public Relations Officer or any Director
or Partnership Board Representative of either of the Issuers or any Subsidiary
Guarantor, as the case may be.
"Officers' Certificate" means a certificate signed by two
Officers or by an Officer and an Assistant Treasurer or Assistant Secretary of
either of the Issuers or any Subsidiary Guarantor, as the case may be.
"Opinion of Counsel" means a written opinion from legal
counsel who is acceptable to the Trustee, which may include an individual
employed as counsel to an Issuer or a Subsidiary Guarantor.
"Other Senior Debt Pro Rata Share" means the amount of the
applicable Excess Proceeds obtained by multiplying the amount of such Excess
Proceeds by a fraction, (i) the numerator of which is the aggregate accreted
value and/or principal amount, as the case may be, of all Indebtedness (other
than (x) the Securities and (y) Subordinated Indebtedness) of an Issuer and any
Subsidiary Guarantor outstanding at the time of the Asset Sale with respect to
which an Issuer or a Subsidiary Guarantor, as the case may be, is required to
use Excess Proceeds to repay or make an offer to purchase or repay and (ii) the
denominator of which is the sum of (a) the aggregate principal amount of all
Securities outstanding at the time of the Asset Sale, (b) the aggregate Accreted
Value of all Senior Discount Notes outstanding at the time of the Asset Sale and
(c) the aggregate principal amount or the aggregate accreted value, as the case
may be, of all other Indebtedness (other than Subordinated Indebtedness) of an
Issuer or a Subsidiary Guarantor outstanding at the time of the Asset Sale with
respect to which an Issuer or a Subsidiary Guarantor, as the case may be, is
required to use the Excess Proceeds to offer to repay or make an offer to
purchase or repay.
"Pari Passu Debt Securities" means any Debt Securities (and
any guarantee of any Debt Security) which would not constitute Subordinated
Indebtedness.
"Partners" means, collectively, Sprint Enterprises, L.P., TCI
Telephony Services, Inc., Comcast Telephony Service and Cox Telephony
Partnership, to the extent they are Partners in Holdings and any permitted
transferee of such Partner's interest pursuant to the Holdings Partnership
Agreement.
"Paying Agent" has the meaning provided in Section 2.3.
"Permitted Assets" means property or assets that will be used
in a Permitted Business referred to in clause (i) of the definition of
"Permitted Business" (or Equity Interests of any Person that will become a
Restricted Subsidiary as a result of the applicable Asset Sale to the extent
such Person's operations consist of such a Permitted Business).
"Permitted Business" means (i) the delivery or distribution of
telecommunications, voice, data or video services, (ii) any business or activity
reasonably related thereto, including, without limitation, any business
conducted by the Company or any Restricted Subsidiary on the Issue Date and the
acquisition, holding or exploitation of any license relating to the delivery of
the services described in clause (i) of this definition or (iii) any other
business or activity in which the Company and the Restricted Subsidiaries are
expressly contemplated to be engaged pursuant to the provisions of the Holdings
Partnership Agreement as in effect on the Issue Date.
"Permitted Holder" means (i) each of Sprint Corporation,
Tele-Communications, Inc., Comcast Corporation and Cox Communications, Inc. and
the respective successors (by merger, consolidation, transfer or otherwise) to
all or substantially all of the respective businesses and assets of the
foregoing, (ii) any transferee of the assets resulting from a Permitted
Transaction and (iii) each Person controlled by one or more Persons identified
in clause (i) or (ii) of this definition.
"Permitted Investments" means any of the following: (i)
Investments in any Restricted Subsidiary (including any Person that pursuant to
such Investment becomes a Restricted Subsidiary) and any Person that is merged
or consolidated with or into, or transfers or conveys all or substantially all
of its assets to, the Company or any Restricted Subsidiary at the time such
Investment is made; (ii) Investments in Cash Equivalents; (iii) Investments in
Currency Agreements and Interest Rate Protection Obligations permitted by
Section 4.8; (iv) loans or advances to officers or employees of the Company and
the Restricted Subsidiaries in the ordinary course of business for bona fide
business purposes of the Company and the Restricted Subsidiaries (including
travel and moving expenses) not in excess of $5.0 million in the aggregate at
any one time outstanding; (v) Investments in evidences of Indebtedness,
securities or other property received from another Person by the Company or any
of the Restricted Subsidiaries in connection with any bankruptcy proceeding or
by reason of a composition or readjustment of debt or a reorganization of such
Person or as a result of foreclosure, perfection or enforcement of any Lien in
exchange for evidences of Indebtedness, securities or other property of such
Person held by the Company or any of the Restricted Subsidiaries, or for other
liabilities or obligations of such other Person to the Company or any of the
Restricted Subsidiaries that were created in accordance with the terms of this
Indenture; and (vi) Investments made by the Company and the Restricted
Subsidiaries as a result of consideration received in connection with an Asset
Sale made in compliance with Section 4.13.
"Permitted Transaction" with respect to a Partner means a
transaction or series of related transactions in which (i) such Partner ceases
to be a Subsidiary of its Parent or such Partner Transfers its Interest to a
Person that is not a Controlled Affiliate of such Partner and (ii) the new
Parent of such Partner (or such Partner if it is its own Parent) or the Parent
of the transferee of the Interest after giving effect to such transaction, or
the last transaction in a series of related transactions, owns, directly and
indirectly through its Controlled Affiliates, all or a Substantial Portion of
the cable television system assets (in the case of a Cable Partner) or long
distance telecommunications business assets (in the case of Sprint Corporation)
owned by the Parent of such Partner, directly and indirectly through its
Controlled Affiliates, immediately prior to the commencement of such transaction
or series of transactions. As used herein, "Substantial Portion" means (x) in
the case of a Cable Partner, cable television systems serving 75% or more of the
aggregate number of basic subscribers served by cable television systems in the
United States of America (including its territories and possessions other than
Puerto Rico) owned by the Parent of such Cable Partner, directly and indirectly
through its Controlled Affiliates, and (y) in the case of Sprint Corporation,
long distance telecommunications business assets serving 75% or more of the
aggregate number of customers served by the long distance telecommunications
business in the United States of America (including its territories and
possessions other than Puerto Rico) owned by the Parent of Sprint Corporation,
directly and indirectly through its Controlled Affiliates. All capitalized terms
used in this definition and not otherwise defined in this Indenture shall have
the meanings ascribed to them in the Holdings Partnership Agreement.
"Person" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"principal" of a debt security (including the Securities)
means the principal amount of the security plus, when appropriate, the premium,
if any, on the security. Such amount shall, if applicable, be calculated by
reference to the last sentence of "Indebtedness."
"Public Equity Offering" means an underwritten public offering
of Common Equity Interests made on a primary basis by the Company, Holdings or a
Special Purpose Corporation pursuant to a registration statement filed with, and
declared effective by, the Commission in accordance with the Securities Act;
provided that Holdings or the Special Purpose Corporation, as the case may be,
shall contribute as equity to, or purchase Common Equity Interests in, the
Company with proceeds from the Initial Public Offering of not less than the
greater of (x) $100.0 million or (y) the amount required to effect any
redemption pursuant to Paragraph 7 of the Securities.
"RealtyCo" means Sprint Spectrum Realty Company, L.P., a
Delaware limited partnership.
"Redemption Date" means, with respect to any Security, the
date on which such Security is to be redeemed by the Company pursuant to the
terms of the Securities.
"Refinancing Indebtedness" means (i) Indebtedness of the
Company to the extent the proceeds thereof are used solely to refinance (whether
by amendment, renewal, extension or refunding) Indebtedness of the Company or
any of the Restricted Subsidiaries and (ii) Indebtedness of any Restricted
Subsidiary to the extent the proceeds thereof are used solely to refinance
(whether by amendment, renewal, extension or refunding) Indebtedness of such
Restricted Subsidiary, in each such event, incurred under the first paragraph of
Section 4.8 or clause (a) of the second paragraph of such Section; provided that
(a) the principal amount of Refinancing Indebtedness incurred pursuant to this
definition (or, if such Refinancing Indebtedness provides for an amount less
than the principal amount thereof to be due and payable upon a declaration of
acceleration of the maturity thereof, the accreted value of such Indebtedness)
shall not exceed the principal amount or accreted value, as the case may be, of
the Indebtedness refinanced, plus the amount of any premium required to be paid
in connection with such refinancing pursuant to the terms of such Indebtedness
or the amount of any premium reasonably determined by the Board of the Company
as necessary to accomplish such refinancing by means of a tender offer or
privately negotiated purchase, plus the amount of reasonable expenses in
connection therewith and (b) in the case of Refinancing Indebtedness incurred by
an Issuer or a Subsidiary Guarantor, such Indebtedness has an Average Life to
Stated Maturity greater than or equal to either (A) the Average Life to Stated
Maturity of the Indebtedness refinanced or (B) the remaining Average Life to
Stated Maturity of the Securities and (iii) if the Indebtedness to be refinanced
is Subordinated Indebtedness of an Issuer or a Subsidiary Guarantor, the
Indebtedness to be incurred pursuant to this definition shall also be
Subordinated Indebtedness of the Issuer or the Subsidiary Guarantor, as
applicable, whose Indebtedness is to be refinanced.
"Registrar" has the meaning provided in Section 2.3.
"Replacement Assets" has the meaning provided in Section 4.13.
"Resolution" means, with respect to any Person, a copy of a
resolution certified by the Secretary or Assistant Secretary of such Person to
have been duly adopted by its Board and to be in full force and effect on the
date of such certification, and delivered to the Trustee.
"Restricted Payment" means any of the following: (i) the
declaration or payment of any dividend or distribution on Equity Interests of
the Company or any Restricted Subsidiary or any payment made to the direct or
indirect holders (in their capacities as such), including any Special Purpose
Corporation, of Equity Interests of the Company or any Restricted Subsidiary
(other than dividends or distributions) (a) payable solely in Equity Interests
(other than Disqualified Equity Interests) of the Company or in options,
warrants or other rights to purchase Equity Interests (other than Disqualified
Equity Interests) of the Company, (b) paid to the Company or a Wholly-Owned
Restricted Subsidiary or (c) paid in respect of Equity Interests of a Restricted
Subsidiary to Persons other than the Company or Wholly-Owned Restricted
Subsidiaries (on not more favorable than a pro rata basis with dividends or
distributions then being paid in respect of Equity Interests held by the Company
or a Wholly-Owned Restricted Subsidiary); (ii) the purchase, redemption or other
acquisition or retirement for value of any Equity Interests of the Company or a
Restricted Subsidiary (other than any such Equity Interests owned by the Company
or a Wholly-Owned Restricted Subsidiary); (iii) the making of any principal
payment on, or the purchase, redemption, defeasance or other acquisition or
retirement for value, prior to any scheduled maturity, scheduled repayment or
scheduled sinking fund payment, of any Subordinated Indebtedness of an Issuer or
any Subsidiary Guarantor (other than any such subordinated Indebtedness owned by
the Company or a Restricted Subsidiary); or (iv) the making of any Investment
(other than a Permitted Investment) in any Person (other than an Investment by a
Restricted Subsidiary in the Company or an Investment by the Company or a
Restricted Subsidiary in either (x) a Restricted Subsidiary or (y) a Person that
becomes a Restricted Subsidiary as a result of such Investment).
"Restricted Subsidiary" means any Subsidiary of the Company
that has not been designated by the Board of the Company, by a Resolution
delivered to the Trustee, as an Unrestricted Subsidiary pursuant to and in
compliance with Section 4.16. Any such Designation may be revoked by a
Resolution of the Company delivered to the Trustee, subject to the provisions of
such Section.
"Revocation" has the meaning provided in Section 4.16.
"S&P" means Standard & Poor's Corporation.
"Securities" means the 11% Senior Notes Due 2006 issued,
authenticated and delivered under this Indenture, as amended or supplemented
from time to time pursuant to the terms of this Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Discount Notes" means the 12 1/2% Senior Discount
Notes due 2006 of the Issuers.
"Senior Discount Notes Indenture" means the indenture
governing the Senior Discount Notes dated as of August 15, 1996 by and among the
Issuers and The Bank of New York, as Trustee, as amended or supplemented from
time to time.
"Special Purpose Corporation" means a corporation formed to
own Common Equity Interests of the Company or Holdings.
"Subordinated Debt Securities" means any Debt Securities (and
any guarantee of any Debt Security) that would constitute Subordinated
Indebtedness.
"Subordinated Indebtedness" of any Person means any
Indebtedness of such Person that is expressly subordinated in right of payment
to any other Indebtedness of such Person.
"Subsidiary" means, with respect to any Person, (i) any
corporation of which the outstanding Equity Interests having at least a majority
of the votes entitled to be cast in the election of directors shall at the time
be owned, directly or indirectly, by such Person, or (ii) any other Person of
which at least a majority in value of Equity Interests or Voting Equity
Interests is at the time, directly or indirectly, owned by such Person.
"Subsidiary Guarantee" has the meaning provided in Section
4.11.
"Subsidiary Guarantor" means a Restricted Subsidiary that
issues a Subsidiary Guarantee pursuant to Section 4.11.
"Surviving Entity" has the meaning provided in Section 5.1.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code
ss.ss. 77aaa-77bbbb) as in effect on the date of this Indenture.
"Total Consolidated Indebtedness" means, at any date of
determination, an amount equal to the aggregate principal amount of all
Indebtedness of the Company and the Restricted Subsidiaries outstanding as of
the date of determination.
"Total Invested Capital" means, at any time of determination,
the sum of, without duplication, (i) the total amount of equity contributed to
the Company as set forth on the March 31, 1996 consolidated balance sheet of the
Company, plus (ii) the aggregate net cash proceeds received by the Company from
capital contributions or the issuance or sale of Equity Interests (other than
Disqualified Equity Interests but including Equity Interests issued upon the
conversion of convertible Indebtedness or from the exercise of options, warrants
or rights to purchase Equity Interests (other than Disqualified Equity
Interests)) subsequent to the Issue Date, other than to a Restricted Subsidiary,
plus (iii) the aggregate net cash proceeds received by the Company or any
Restricted Subsidiary from the sale, disposition or repayment of any Investment
made after the Issue Date and constituting a Restricted Payment in an amount
equal to the lesser of (a) the return of capital with respect to such Investment
and (b) the initial amount of such Investment, in either case, less the cost of
the disposition of such Investment, plus (iv) an amount equal to the
consolidated net Investment on the date of Revocation made by the Company and/or
any of the Restricted Subsidiaries in any Subsidiary that has been designated as
an Unrestricted Subsidiary after the Issue Date upon its redesignation as a
Restricted Subsidiary in accordance with Section 4.16, plus (v) Total
Consolidated Indebtedness, minus (vi) the aggregate amount of all Restricted
Payments (including any Designation Amount, but other than a Restricted Payment
of the type referred to in clause (iii)(b) of the third paragraph of Section
4.9) declared or made from and after the Issue Date.
"Trust Officer" means an officer or assistant officer of the
Trustee assigned to the corporate trustee department (or any successor group) of
the Trustee, or any successor to such department or, in the case of a successor
trustee, an officer or assistant officer assigned to the department, division or
group performing the corporate trust work of such successor.
"Trustee" means the party named as such in this Indenture
until a successor replaces it in accordance with the provisions of this
Indenture and thereafter means such successor.
"Unrestricted Subsidiary" means any Subsidiary of the Company
(other than FinCo, WirelessCo, RealtyCo and EquipmentCo) designated after the
Issue Date as such pursuant to and in compliance with Section 4.16. Any such
designation may be revoked by a Resolution of the Company delivered to the
Trustee, subject to the provisions of such Section 4.16.
"U.S. Government Obligations" has the meaning provided in
Section 8.2(d).
"U.S. Legal Tender" means such coin or currency of the United
States of America as at the time of payment shall be legal tender for the pay-
ment of public and private debts.
"Vendor Credit Facilities" means, collectively, (i) the Lucent
Credit Facility; (ii) the Nortel Credit Facility; and (iii) any other credit
facility entered into with any vendor or supplier (or any financial institution
acting on behalf of such a vendor or supplier); provided that, in the case of
each of clauses (i), (ii) and (iii), the Indebtedness thereunder is incurred
solely for the purpose of financing the cost (including the cost of design,
development, site acquisition, construction, integration, handset manufacture or
acquisition or microwave relocation) of wireless telecommunications networks or
systems or for which the Company or any Restricted Subsidiary has obtained the
applicable licenses or authorizations to utilize the radio frequencies necessary
for the operation of such systems or networks.
"Voting Equity Interests" means, with respect to any Person,
Equity Interests of any class or kind ordinarily having the power to vote for
the election of directors, managers or other voting members of the governing
body of such Person.
"Wholly-Owned Restricted Subsidiary" means any Restricted
Subsidiary of which 100% of the outstanding Equity Interests is owned by the
Company or another Wholly-Owned Restricted Subsidiary. For purposes of this
definition, (i) any directors' qualifying shares or investments by foreign
nationals mandated by applicable law and (ii) Equity Interests of a Person not
to exceed 1% of the total voting power of all outstanding Equity Interests of
such Person and representing a right to receive not greater than 1% of the
profits of such partnership shall be disregarded in determining the ownership of
a Restricted Subsidiary.
"Wholly-Owned Subsidiary" means, with respect to any Person,
any other Person 100% of whose outstanding Equity Interests are owned by such
Person or another Wholly-Owned Restricted Subsidiary of such Person. For
purposes of this definition, (i) any directors' qualifying shares or investments
by foreign nationals mandated by applicable law and (ii) Equity Interests of a
Person not to exceed 1% of the total voting power of all outstanding Equity
Interests of such Person and representing a right to receive not greater than 1%
of the profits of such partnership shall be disregarded in determining the
ownership of a Subsidiary.
"WirelessCo" means WirelessCo, L.P., a Delaware limited part-
nership.
SECTION I.2 Incorporation by Reference
of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the
provision shall be deemed incorporated by reference in and made a part of this
Indenture. The following TIA terms used in this Indenture have the following
meanings:
(a) "indenture securities" means the Securities;
(b) "indenture security holder" means a Holder or Securi-
tyholder;
(c) "indenture to be qualified" means this Indenture;
(d) "indenture trustee" or "institutional trustee" means
the Trustee; and
(e) "obligor" on the indenture securities means the Company,
FinCo, each Subsidiary Guarantor, if any, or any other obligor on the
Securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by Commission
rule and not otherwise defined herein have the meanings so assigned to them
therein.
SECTION I.3 Rules of Construction.
Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) "or" is not exclusive;
(c) words in the singular include the plural, and words
in the plural include the singular;
(d) "herein," "hereof" and other words of similar import
refer to this Indenture as a whole and not to any particular Article, Section or
other Subsection; and
(e) unless otherwise specified herein, all accounting terms
used herein shall be interpreted, all accounting determinations
hereunder shall be made, and all financial statements required to be
delivered hereunder shall be prepared in accordance with GAAP.
ARTICLE II
THE SECURITIES
SECTION II.1 Form and Dating.
The Securities and the Trustee's certificates of
authentication with respect thereto shall be substantially in the form set forth
in Exhibit A, which is annexed hereto and hereby incorporated in and expressly
made a part of this Indenture. The Securities may have notations, legends or
endorsements (including notations relating to any Subsidiary Guarantee) required
by law, rule or usage to which the Issuers or any Subsidiary Guarantor are
subject. Each Security shall be dated the date of its authentication. The terms
and provisions contained in the Securities shall constitute, and are expressly
made, a part of this Indenture.
SECTION II.2 Execution and Authentication.
Two Officers (each of whom shall have been duly authorized by
all requisite partnership or corporate action, as the case may be) shall execute
the Securities on behalf of each of the Issuers by manual or facsimile
signature.
If an Officer whose signature is on a Security no longer holds
that office at the time the Trustee authenticates the Security or at any time
thereafter, the Security shall be valid nevertheless.
A Security shall not be valid until an authorized officer of
the Trustee manually signs the certificate of authentication on the Security.
Such signature shall be conclusive evidence that the Security has been
authenticated under this Indenture.
The Trustee shall authenticate Securities for original issue
in an aggregate principal amount not to exceed $250,000,000 upon receipt of the
Officers' Certificates of each of the Issuers signed by two Officers of each of
the Issuers directing the Trustee to authenticate the Securities and certifying
that all conditions precedent to the issuance of the Securities contained herein
have been complied with. The aggregate principal amount of Securities
outstanding at any time may not exceed $250,000,000, except as provided in
Section 2.8.
The Trustee may appoint an authenticating agent acceptable to
the Issuers to authenticate Securities. Unless limited by the terms of such
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. Such authenticating agent shall
have the same rights as the Trustee in any dealings hereunder with the Issuers
or with any of the Issuers' Affiliates.
The Securities shall be issuable in fully registered form
only, without coupons, in denominations of $1,000 principal amount and any
integral multiple thereof.
SECTION II.3 Registrar and Paying Agent.
The Issuers shall maintain an office or agency (which shall be
located in the Borough of Manhattan in The City of New York, State of New York)
where (a) Securities may be presented for registration of transfer or for
exchange (the "Registrar"), (b) Securities may be presented for payment (the
"Paying Agent") and (c) notices and demands to or upon the Issuers and any
Subsidiary Guarantor in respect of the Securities, the Subsidiary Guarantees and
this Indenture may be served. The Registrar shall keep a register of the
Securities and of their transfer and exchange. The Issuers may have one or more
co-registrars and one or more additional paying agents. The term "Paying Agent"
includes any additional paying agent. Neither the Issuers nor any Affiliate
thereof may act as Paying Agent.
The Issuers shall enter into an appropriate agency agreement
with any Agent not a party to this Indenture that shall incorporate the
provisions of the TIA. The agreement shall implement the provisions of this
Indenture that relate to such Agent. The Issuers shall notify the Trustee of the
name and address of any such Agent. If the Issuers fail to maintain a Registrar
or Paying Agent, or fail to give the foregoing notice, the Trustee shall act as
such.
The Company initially appoints the Trustee located at the
address set forth in Section 11.2 as Registrar, Paying Agent and agent for
service of notices and demands in connection with the Securities, any Subsidiary
Guarantee and this Indenture.
SECTION II.4 Paying Agent To Hold Money in Trust.
Each Paying Agent shall hold in trust for the benefit of the
Securityholders or the Trustee all money held by the Paying Agent for the
payment of principal of or interest on the Securities (whether such money has
been paid to it by the Issuers or any other obligor on the Securities), and the
Issuers and the Paying Agent shall notify the Trustee of any default by the
Issuers (or any other obligor on the Securities) in making any such payment.
Money held in trust by the Paying Agent need not be segregated except as
required by law and in no event shall the Paying Agent be liable for any
interest on any money received by it hereunder. The Issuers at any time may
require the Paying Agent to pay all money held by it to the Trustee and account
for any funds disbursed and the Trustee may at any time during the continuance
of any Event of Default specified in Section 6.1(a)(i) or (ii), upon written
request to the Paying Agent, require such Paying Agent to pay forthwith all
money so held by it to the Trustee and to account for any funds disbursed. Upon
making such payment, the Paying Agent shall have no further liability for the
money delivered to the Trustee.
SECTION II.5 Securityholder Lists.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of the Holders of Securities. If the Trustee is not the Registrar, the
Issuers shall furnish to the Trustee at least five Business Days before each
Interest Payment Date, and at such other times as the Trustee may request in
writing, a list in such form and as of such date as the Trustee may reasonably
require of the names and addresses of the Holders of Securities, if any.
<PAGE>
SECTION II.6 Transfer and Exchange.
(a) When Securities are presented to the Registrar or a
co-registrar with a request from the Holder of such Securities to register a
transfer, the Registrar shall register the transfer as requested. Every Security
presented or surrendered for registration of transfer or exchange shall be duly
endorsed or be accompanied by a written instrument of transfer in form
satisfactory to the Issuers and the Registrar, duly executed by the Holder
thereof or his attorneys duly authorized in writing.
At the option of the Holder, Securities may be exchanged for
other Securities of any authorized denomination or denominations, of a like
aggregate principal amount, upon surrender of the Securities to be exchanged at
the office or agency maintained for such purpose pursuant to Section 2.3.
To permit registrations of transfers and exchanges, the
Issuers shall issue and execute and the Trustee shall authenticate new
Securities evidencing such transfer or exchange at the Registrar's request.
SECTION II.7 Replacement Securities.
If a mutilated Security is surrendered to the Registrar or the
Trustee or if the Holder of a Security claims that the Security has been lost,
destroyed or wrongfully taken, the Issuers shall issue and the Trustee shall
authenticate a replacement Security. If required by the Trustee or the Issuers,
an indemnity bond shall be posted, sufficient in the judgment of each of the
Issuers and the Trustee to protect the Issuers, the Trustee or any Paying Agent
from any loss that any of them may suffer if such Security is replaced. The
Issuers may charge such Holder for the Issuers' reasonable out-of-pocket
expenses in replacing such Security and the Trustee may charge the Issuers for
the Trustee's expenses in replacing such Security. Every replacement Security
shall constitute an additional obligation of each of the Issuers.
SECTION II.8 Outstanding Securities.
Securities outstanding at any time are all Securities that
have been authenticated by the Trustee except for (a) those cancelled by it, (b)
those delivered to it for cancellation, (c) to the extent set forth in Sections
8.1 and 8.2, on or after the date on which the conditions set forth in Section
8.1 or 8.2 have been satisfied, those Securities theretofore authenticated and
delivered by the Trustee hereunder and (d) those described in this Section 2.8
as not outstanding. Subject to Section 2.9, a Security does not cease to be
outstanding because the Issuers or one of their Affiliates holds the Security.
If a Security is replaced pursuant to Section 2.7, it ceases
to be outstanding unless the Trustee receives an Officer's Certificate stating
that the replaced Security is held by a bona fide purchaser in whose hands such
Security is a legal, valid and binding obligation of each of the Issuers.
If the Paying Agent holds, in its capacity as such, on any
Maturity Date or on any optional redemption date, money sufficient to pay all
accrued interest and principal with respect to such Securities payable on that
date and is not prohibited from paying such money to the Holders thereof
pursuant to the terms of this Indenture, then on and after that date such
Securities cease to be outstanding and interest on them ceases to accrue.
SECTION II.9 Treasury Securities.
In determining whether the Holders of the required principal
amount of Securities have concurred in any declaration of acceleration or notice
of default or direction, waiver or consent or any amendment, modification or
other change to this Indenture, Securities owned by the Issuers or an Affiliate
of an Issuer shall be disregarded as though they were not outstanding, except
that for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, waiver or consent or any amendment, modification
or other change to this Indenture, only Securities that the Trustee actually
knows are so owned shall be so disregarded.
<PAGE>
SECTION II.10 Temporary Securities.
Until definitive Securities are prepared and ready for
delivery, the Issuers may prepare and the Trustee shall authenticate temporary
Securities. Temporary Securities shall be substantially in the form of
definitive Securities but may have variations that the Issuers consider
appropriate for temporary Securities. Without unreasonable delay, the Issuers
shall prepare and the Trustee shall authenticate definitive Securities in
exchange for temporary Securities. Until such exchange, temporary Securities
shall be entitled to the same rights, benefits and privileges as definitive
Securities.
SECTION II.11 Cancellation.
The Issuers at any time may deliver Securities to the Trustee
for cancellation. The Registrar and the Paying Agent shall forward to the
Trustee any Securities surrendered to them for registration of transfer,
exchange or payment or purchase. The Trustee shall cancel all Securities
surrendered for registration of transfer, exchange, payment, replacement or
cancellation or purchase and return such Securities to the Issuers. The Issuers
may not reissue or resell, or issue new Securities to replace, Securities that
the Issuers have redeemed or paid or purchased, or that have been delivered to
the Trustee for cancellation.
SECTION II.12 Defaulted Interest.
If the Issuers default on a payment of interest on the
Securities, they shall pay the defaulted interest, plus (to the extent permitted
by law) any interest payable on the defaulted interest, in accordance with the
terms hereof, to the Persons who are Holders of Securities on a subsequent
special record date, which date shall be at least five Business Days prior to
the payment date. The Issuers shall fix such special record date and payment
date in a manner satisfactory to the Trustee. At least 15 days before such
special record date, the Issuers shall mail to each Holder of Securities a
notice that states the special record date, the payment date and the amount of
defaulted interest, and interest payable on such defaulted interest, if any, to
be paid.
SECTION II.13 CUSIP Number.
The Issuers in issuing the Securities may use a "CUSIP"
number, and if so, such CUSIP number shall be included in notices of redemption
or exchange as a convenience to Holders; provided that any such notice may state
that no representation is made as to the correctness or accuracy of the CUSIP
number printed in the notice or on the Securities and that reliance may be
placed only on the other identification numbers printed on the Securities. The
Issuers will promptly notify the Trustee of any change in the CUSIP number.
SECTION II.14 Deposit of Moneys.
On each Interest Payment Date and Maturity Date and on any
Business Day immediately following any acceleration of the Securities pursuant
to Section 6.2, the Issuers shall have deposited with the Paying Agent in
immediately available funds money sufficient to make cash payments, if any, due
on such Interest Payment Date, Maturity Date or Business Day, as the case may
be, in a timely manner that permits the Trustee to remit payment to the Holders
on such Interest Payment Date, Maturity Date or Business Day, as the case may
be.
ARTICLE III
REDEMPTION
SECTION III.1 Election To Redeem; Notices to Trustee.
If the Issuers elect to redeem Securities pursuant to
Paragraph 6 or 7 of the Securities, they shall notify the Trustee and the Paying
Agent in writing of the Redemption Date and the principal amount of Securities
to be redeemed.
The Issuers shall give each notice provided for in this
Section 3.1 at least 30 days before the Redemption Date (unless a shorter notice
shall be agreed to by the Trustee in writing), together with an Officers'
Certificate of each of the Issuers stating that such redemption will comply with
the conditions contained herein and in the Securities.
SECTION III.2 Selection of Securities To Be Redeemed.
If less than all of the Securities are to be redeemed, the
Trustee shall select the Securities to be redeemed in compliance with the
requirements of the principal national securities exchange, if any, on which the
Securities are listed or, if the Securities are not then listed on a national
securities exchange, on a pro rata basis, by lot or by such other method as the
Trustee deems fair and appropriate; provided that any redemption pursuant to
Paragraph 7 of the Securities shall be made on a pro rata basis or on as nearly
a pro rata basis as is practicable (subject to the procedures of The Depository
Trust Company) based on the aggregate principal amount of Securities held by
each Holder. The Trustee shall make the selection from the Securities
outstanding and not previously called for redemption. The Trustee shall promptly
notify the Issuers in writing of such Securities selected for redemption and, in
the case of Securities selected for partial redemption, the principal amount to
be redeemed. The Trustee may select for redemption portions of the principal
amount of Securities that have denominations equal to or larger than $1,000
principal amount. Securities and portions of them the Trustee selects shall be
in amounts of $1,000 principal amount or integral multiples thereof. Provisions
of this Indenture that apply to Securities called for redemption also apply to
portions of Securities called for redemption.
SECTION III.3 Notice of Redemption.
At least 30 days but not more than 60 days before a Redemption
Date, the Issuers shall mail or cause the mailing of a notice of redemption by
first-class mail to each Holder of Securities to be redeemed at such Holder's
registered address. A copy of such notice shall be mailed to the Trustee on the
same day the notice is mailed to Holders of Securities.
The notice shall identify the Securities to be redeemed and
shall state:
(a) the Redemption Date;
(b) the paragraph of the Securities pursuant to which the
Securities are being redeemed;
(c) the redemption price and the amount of accrued
interest, if any, to be paid;
(d) the name and address of the Paying Agent;
(e) that Securities called for redemption must be
surrendered to the Paying Agent to collect the redemption price and accrued
interest, if any;
(f) that, unless the Issuers default in making the redemption
payment, interest on Securities called for redemption ceases to accrue
on and after the Redemption Date and the only remaining right of the
Holders of such Securities is to receive payment of the redemption
price upon surrender to the Paying Agent of the Securities redeemed;
(g) if any Security is to be redeemed in part, the portion of
the principal amount (equal to $1,000 or any integral multiple thereof)
of such Security to be redeemed and that, on or after the Redemption
Date, upon surrender of such Security, a new Security or Securities in
aggregate principal amount equal to the unredeemed portion thereof will
be issued without charge to the Securityholder;
(h) if less than all of the Securities are to be redeemed, the
identification of the particular Securities (or portion thereof) to be
redeemed, as well as the aggregate principal amount of Securities to be
redeemed and the aggregate principal amount of Securities to be
outstanding after such partial redemption; and
(i) the CUSIP number, if any, pursuant to Section 2.13.
At the Issuers' request, the Trustee shall give the notice of
redemption in the Issuers' name and at the Issuers' expense.
SECTION III.4 Effect of Notice of Redemption.
Once notice of redemption is mailed, Securities called for
redemption become due and payable on the Redemption Date and at the redemption
price. Upon surrender to the Paying Agent, such Securities shall be paid at the
redemption price plus accrued interest, if any, to the Redemption Date, but
interest installments whose maturity is on or prior to such Redemption Date will
be payable on the relevant Interest Payment Dates to the Holders that would
otherwise have been entitled thereto pursuant to this Indenture and the
Securities.
SECTION III.5 Deposit of Redemption Price.
At least one Business Day prior to the Redemption Date, the
Issuers shall deposit with the Paying Agent U.S. Legal Tender sufficient to pay
the redemption price of and accrued interest, if any, on all Securities or
portions thereof to be redeemed on that date.
If any Security surrendered for redemption in the manner
provided in the Securities shall not be so paid on the Redemption Date due to
the failure of the Issuers to deposit with the Paying Agent U.S. Legal Tender,
the principal and accrued and unpaid interest, if any, thereon shall, until paid
or duly provided for, bear interest as provided in Section 4.1 with respect to
any payment default.
SECTION III.6 Securities Redeemed in Part.
Upon the surrender to the Paying Agent of a Security that is
redeemed in part, the Issuers shall execute and the Trustee shall authenticate
for the Holder a new Security equal in principal amount to the principal amount
of the unredeemed portion of the Security surrendered.
ARTICLE IV
COVENANTS
SECTION IV.1 Payment of Securities.
The Issuers shall pay the principal of and interest on the
Securities on the dates and in the manner provided in the Securities and this
Indenture.
An installment of principal or interest shall be considered
paid on the date due if the Trustee or the Paying Agent holds on such date U.S.
Legal Tender designated for and sufficient to pay such installment.
The Issuers shall pay cash interest on overdue principal and
(to the extent permitted by law) on overdue installments of interest at the rate
borne by the Securities. Interest will be computed on the basis of a 360-day
year comprised of twelve 30-day months.
SECTION IV.2 Maintenance of Office or Agency.
The Issuers shall maintain the office or agency required under
Section 2.3. The Issuers will give prompt written notice to the Trustee of the
location, and any change in the location, of each such office or agency. If at
any time the Issuers shall fail to maintain any such required office or agency
or shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
address of the Trustee set forth in Section 11.2.
The Issuers may also from time to time designate one or more
other offices or agencies where the Securities may be presented or surrendered
for any or all such purposes and may from time to time rescind such
designations; provided that no such designation or rescission shall in any
manner relieve the Issuers of their obligation to maintain an office or agency
in the Borough of Manhattan, The City of New York, for such purposes. The
Issuers will give prompt written notice to the Trustee of any such designation
or rescission and of any change in the location of any such other office or
agency.
The Issuers hereby initially designate the corporate trust
office of the Trustee set forth in Section 11.2 as an agency of the Issuers with
respect to the Securities in accordance with Section 2.3.
SECTION IV.3 Corporate or Partnership Existence.
Subject to Article V, the Issuers shall do or cause to be
done, at their own cost and expense, all things necessary to, and will cause
each Restricted Subsidiary to, preserve and keep in full force and effect the
corporate or partnership existence and rights (charter and statutory), licenses
and/or franchises of each of the Issuers and each Restricted Subsidiary;
provided that none of the Issuers or any Restricted Subsidiaries shall be
required to preserve any such rights, licenses or franchises if such rights,
licenses or franchises will be replaced or if the Board of the Company shall
reasonably determine that the preservation thereof is no longer desirable in the
conduct of the business of the Issuers or such Restricted Subsidiary, as the
case may be, and the loss thereof is not adverse in any material respect to the
Holders; provided, further, that any Restricted Subsidiary may be wound up and
liquidated into an Issuer or any other Restricted Subsidiary.
SECTION IV.4 Payment of Taxes and Other Claims.
The Issuers shall pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (a) all taxes, assessments
and governmental charges levied or imposed upon their or their Subsidiaries'
income, profits or property and (b) all lawful claims for labor, materials and
supplies that, if unpaid, might by law become a Lien upon the property of an
Issuer or a Restricted Subsidiary; provided that the Issuers shall not be
required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim whose amount, applicability or validity is being
contested in good faith by appropriate negotiations or proceedings and for which
disputed amounts any reserves required in accordance with GAAP have been made.
SECTION IV.5 Maintenance of Properties; Insurance;
Books and Records; Compliance with Law.
(a) Each of the Issuers shall, and shall cause each of the
Restricted Subsidiaries to, at all times cause all properties used or useful in
the conduct of its business to be maintained and kept in good condition, repair
and working order (reasonable wear and tear excepted) and supplied with all
necessary equipment, and shall cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereto.
(b) Each of the Issuers shall, and shall cause each of the
Restricted Subsidiaries to, maintain insurance (which may include
self-insurance) in such amounts and covering such risks as are usually and
customarily carried with respect to similar facilities according to their
respective locations.
(c) Each of the Issuers shall, and shall cause each of the
Subsidiaries to, keep proper books of record and account, in which full and
correct entries shall be made of all of its financial transactions and the
assets and business, in accordance with GAAP consistently applied.
(d) Each of the Issuers shall and shall cause each of the
Subsidiaries to comply with all statutes, laws, ordinances, or government rules
and regulations to which it is subject, non-compliance with which would
materially adversely affect the business, earnings, properties, assets or
financial condition of the Issuers and the Restricted Subsidiaries, taken as a
whole.
SECTION IV.6 Compliance Certificates.
(a) Each of the Issuers shall deliver to the Trustee, within
45 days after the end of each of the first three quarters of the Issuers' fiscal
year, and within 90 days after the end of such fiscal year, an Officers'
Certificate stating (i) that a review of the activities of the respective Issuer
during the preceding fiscal quarter or year, as the case may be, has been made
under the supervision of the signing Officers with a view to determining whether
the respective Issuer has kept, observed, performed and fulfilled its
obligations under this Indenture and (ii) that, to the best knowledge of each
Officer signing such certificate, the respective Issuer has kept, observed,
performed and fulfilled each and every covenant and condition contained in this
Indenture and is not in default in the performance or observance of any of the
terms, provisions, conditions and covenants hereof (or, if a Default or Event of
Default shall have occurred, describing all such Defaults or Events of Default
of which such Officers may have knowledge, their status and what action the
defaulting Issuer is taking or proposes to take with respect thereto).
(b) The annual financial statements delivered pursuant to
Section 4.7 shall be accompanied by a written statement of the Company's
independent public accountants that in making the examination necessary for
certification of such annual financial statements nothing as to which such
accountants have professional competence has come to their attention that would
lead them to believe that either of the Issuers has violated any provisions of
this Indenture as to which such accountants have professional competence, or, if
any such violation has occurred, specifying the nature and period of existence
thereof, it being understood that such accountants shall not be liable directly
or indirectly to any Person for any failure to obtain knowledge of any such
violation.
(c) Each of the Issuers shall, so long as any of the
Securities are outstanding, deliver to the Trustee, promptly after any Officer
of either of the Issuers becomes aware of any Default or Event of Default, an
Officers' Certificate specifying such Default or Event of Default and what
action the applicable Issuer is taking or proposes to take with respect thereto.
SECTION IV.7 Reports.
So long as any of the Securities are outstanding, the Company
will file with the Commission the annual reports, quarterly reports and other
documents that the Company would have been required to file with the Commission
pursuant to Sections 13(a) and 15(d) of the Exchange Act whether or not the
Company is then obligated to file reports pursuant to such Sections, and the
Company will promptly provide to all registered Holders of the Securities and
file, within 30 days of filing with the Commission, with the Trustee copies of
such reports and documents.
Delivery of such reports, information and documents to the
Trustee is for informational purposes only and the Trustee's receipt of such
shall not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Issuers'
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
SECTION IV.8 Limitation on Additional
Indebtedness.
The Company will not, and will not permit any Restricted
Subsidiary to, create, incur, assume, issue, guarantee or in any other manner
become directly or indirectly liable, contingently or otherwise, for or with
respect to (in any such case, to "incur") any Indebtedness (including any
Acquired Indebtedness); provided that the Issuers and the Restricted
Subsidiaries may incur Indebtedness (including Acquired Indebtedness) if after
giving pro forma effect to such incurrence (including the application or use of
the net proceeds therefrom to repay Indebtedness or make any Restricted Payment)
either (a) the ratio of (x) Total Consolidated Indebtedness to (y) Annualized
Pro Forma Consolidated Operating Cash Flow would be less than (A) 7.0 to 1.0, if
the Indebtedness is to be incurred prior to July 1, 2002, or (B) 6.0 to 1.0, if
the Indebtedness is to be incurred on or after July 1, 2002, or (b) in the case
of any incurrence of Indebtedness prior to July 1, 2002 only, Total Consolidated
Indebtedness would be equal to or less than 70% of Total Invested Capital.
Notwithstanding the foregoing, the Issuers and, to the extent
specified, the Restricted Subsidiaries will be permitted to incur each and all
of the following (each of which shall be given independent effect):
(a) Indebtedness under the Securities, any Subsidiary
Guarantee and this Indenture;
(b) Indebtedness of the Issuers and the Restricted Sub-
sidiaries outstanding from time to time pursuant to any of the Vendor Credit
Facilities;
(c) Indebtedness of the Issuers and the Restricted
Subsidiaries outstanding from time to time pursuant to the Bank Credit
Facility in an aggregate principal amount at any one time outstanding
not to exceed $2.0 billion;
(d) Indebtedness of an Issuer or a Restricted Subsidiary owed
to and held by an Issuer or another Restricted Subsidiary so long as
any such Indebtedness owing by an Issuer is unsecured and subordinated
in right of payment to the Securities, except that (x) any direct or
indirect transfer of such Indebtedness by an Issuer or a Restricted
Subsidiary (other than to an Issuer or a Restricted Subsidiary), as the
case may be, or (y) any direct or indirect sale, transfer or other
disposition by an Issuer or a Restricted Subsidiary of Equity Interests
of a Restricted Subsidiary that is owed Indebtedness of an Issuer or a
Restricted Subsidiary such that it ceases to be a Restricted Subsidiary
shall, in each such event, be an incurrence of Indebtedness by the
Issuer or such Restricted Subsidiary, as the case may be, subject to
the other provisions of this Section 4.8;
(e) Interest Rate Protection Obligations of an Issuer or a
Restricted Subsidiary relating to Indebtedness of an Issuer or a
Restricted Subsidiary otherwise permitted under this Indenture that are
entered into for the purpose of protecting against fluctuations in
interest rates in respect of such Indebtedness and not for speculative
purposes;
(f) Indebtedness of an Issuer or a Restricted Subsidiary under
Currency Agreements; provided that (x) such Currency Agreements relate
to Indebtedness otherwise permitted under this Indenture or the
purchase price of goods purchased or sold by an Issuer or a Restricted
Subsidiary in the ordinary course of its business and (y) such Currency
Agreements do not increase the Indebtedness or other obligations of an
Issuer or a Restricted Subsidiary outstanding other than as a result of
fluctuations in foreign currency exchange rates or by reason of fees,
indemnities and compensation payable thereunder;
(g) Indebtedness of an Issuer or a Restricted Subsidiary
represented by letters of credit for the account of an Issuer or a
Restricted Subsidiary in order to provide security for workers'
compensation claims, payment obligations in connection with
self-insurance or similar requirements in the ordinary course of
business;
(h) other Indebtedness of the Issuers and the Restricted
Subsidiaries in an aggregate principal amount not to exceed $100 million at any
one time outstanding; and
(i) Refinancing Indebtedness.
Indebtedness of a Person existing at the time such Person
becomes a Restricted Subsidiary or which is secured by a Lien on an asset
acquired by the Company or a Restricted Subsidiary (whether or not such
Indebtedness is assumed by the acquiring Person) shall be deemed incurred at the
time the Person becomes a Restricted Subsidiary or at the time of the asset
acquisition, as the case may be.
SECTION IV.9 Limitation on Restricted Payments.
The Company will not, and will not permit any of the
Restricted Subsidiaries to, make, directly or indirectly, any Restricted Payment
on or prior to December 31, 1999; and, thereafter, will not, and will not permit
any of the Restricted Subsidiaries to, make, directly or indirectly, any
Restricted Payments unless:
(i) no Default shall have occurred and be continuing at
of or after giving effect to such Restricted Payment;
(ii) immediately after giving effect to such Restricted
Payment, the Company would be able to incur $1.00 of additional
Indebtedness under clause (a) of the proviso to the first paragraph of
Section 4.8; and
(iii) immediately after giving effect to such Restricted
Payment, the aggregate amount of all Restricted Payments declared or
made on or after the Issue Date (including any Designation Amount)
would not exceed an amount equal to the sum of, without duplication,
(1) the amount of (x) the Available Operating Cash Flow of the Company
after December 31, 1999 through the end of the latest full fiscal
quarter for which consolidated financial statements of the Company are
available preceding the date of such Restricted Payment (treated as a
single accounting period) less (y) 150% of the cumulative Consolidated
Interest Expense of the Company after December 31, 1999 through the end
of the latest full fiscal quarter for which consolidated financial
statements of the Company are available preceding the date of such
Restricted Payment (treated as a single accounting period), plus (2)
the aggregate net cash proceeds (other than Excluded Cash Proceeds)
received by the Company as a capital contribution in respect of
existing Equity Interests (other than Disqualified Equity Interests) of
the Company made after the Issue Date or from the issue or sale (other
than to a Restricted Subsidiary) by the Company of its Equity Interests
(other than Disqualified Equity Interests) made after the Issue Date,
plus (3) the aggregate net cash proceeds received by the Company or any
Restricted Subsidiary from the sale, disposition or repayment (other
than to the Company or a Restricted Subsidiary) of any Investment
(other than an Investment made pursuant to clause (vi) of the following
paragraph) made after the Issue Date and constituting a Restricted
Payment in an amount equal to the lesser of (x) the return of capital
with respect to such Investment and (y) the initial amount of such
Investment, in either case, less the cost of disposition of such
Investment, plus (4) an amount equal to the consolidated net Investment
on the date of Revocation made by the Company and/or any of the
Restricted Subsidiaries in any Subsidiary that has been designated as
an Unrestricted Subsidiary after the Issue Date upon its redesignation
as a Restricted Subsidiary in accordance with Section 4.16. For
purposes of the preceding clause (2), the value of the aggregate net
cash proceeds received by the Company upon the issuance of Equity
Interests either upon the conversion of convertible Indebtedness or in
exchange for outstanding Indebtedness or upon the exercise of options,
warrants or rights will be the net cash proceeds received upon the
issuance of such Indebtedness, options, warrants or rights plus the
incremental amount received by the Company upon the conversion,
exchange or exercise thereof.
For purposes of determining the amount expended for Restricted
Payments, cash distributed shall be valued at the face amount thereof and
property other than cash shall be valued at its Fair Market Value.
The provisions of this Section 4.9 shall not prohibit (i) the
payment of any dividend or distribution within 60 days after the date of
declaration thereof, if at such date of declaration such payment would comply
with the provisions of this Indenture; (ii) so long as no Default shall have
occurred and be continuing, the purchase, redemption, retirement or other
acquisition of any Equity Interests of the Company out of the net cash proceeds
of the substantially concurrent capital contribution in respect of existing
Equity Interests (other than Disqualified Equity Interests) of the Company or
from the issue or sale (other than to a Restricted Subsidiary) of Equity
Interests (other than Disqualified Equity Interests) of the Company; provided
that any such net cash proceeds are excluded from clause (iii)(2) of the second
preceding paragraph; (iii) so long as no Default shall have occurred and be
continuing, the purchase, redemption, retirement, defeasance or other
acquisition of Subordinated Indebtedness of an Issuer made by exchange for or
conversion into, or out of the net cash proceeds of, a concurrent issue and sale
(other than to a Restricted Subsidiary) of (a) Equity Interests (other than
Disqualified Equity Interests) of the Company (provided that any such net cash
proceeds are excluded from clause (iii)(2) of the second preceding paragraph) or
(b) other Subordinated Indebtedness of an Issuer that has an Average Life to
Stated Maturity equal to or greater than the Average Life to Stated Maturity of
the Subordinated Indebtedness being purchased, redeemed, retired, defeased or
otherwise acquired; (iv) so long as no Default shall have occurred and be
continuing, the making of a direct or indirect Investment constituting a
Restricted Payment out of the proceeds of a concurrent capital contribution in
respect of existing Equity Interests (other than Disqualified Equity Interests)
of the Company or from the issue or sale (other than to a Restricted Subsidiary)
of Equity Interests (other than Disqualified Equity Interests) of the Company;
provided that any such net cash proceeds are excluded from clause (iii)(2) of
the second preceding paragraph; (v) so long as no Default shall have occurred or
be continuing and provided the Company is then a partnership for federal income
tax purposes, distributions in respect of, and repurchases of, Equity Interests
of the Company owned by the Partners, to the extent necessary to pay current tax
liabilities payable in respect of income of the Company in an amount not to
exceed in any calendar year the product of (a) the ordinary income from trade or
business activities and giving effect to other items of income, loss and
deduction reported by the Company for the most recently ended tax year for
federal income tax purposes multiplied by (b) a percentage equal to the sum of
(x) the highest applicable federal corporate income tax rate for such tax year
(expressed as a percentage) plus (y) 5% multiplied by the excess of 100% over
the highest applicable federal corporate income tax rate for such tax year
(expressed as a percentage); provided that nothing in this clause (v) shall be
redeemed to permit any such distribution or repurchase to pay any tax
liabilities of the Company's partners resulting from the conversion of the
Company from partnership to corporate form; (vi) so long as no Default shall
have occurred and be continuing, any direct or indirect Investment constituting
a Restricted Payment by the Company or any Restricted Subsidiary in any Person
(including any Unrestricted Subsidiary) whose operations consist principally of,
or has been formed principally to operate, a Permitted Business in an amount not
to exceed $100 million in the aggregate at any time outstanding; or (vii) any
transfer of any Investment in APC held by the Company or any Restricted
Subsidiary to Holdings or any Wholly-Owned Subsidiary of Holdings; provided APC
has not been made a Restricted Subsidiary under Section 4.16.
Restricted Payments made pursuant to clause (i) of the
immediately preceding paragraph shall be included in making the determination of
available amounts under clause (iii) of the third preceding paragraph and
Restricted Payments made pursuant to clauses (ii), (iii), (iv), (v) and (vii) of
the immediately preceding paragraph shall not be included in making the
determination of available amounts under clause (iii) of the third preceding
paragraph.
SECTION IV.10 Limitation on Liens Securing
Certain Indebtedness.
The Company will not, and will not permit any Restricted
Subsidiary to, create, incur, assume or suffer to exist any Liens upon any
property or assets of the Company or any Restricted Subsidiary securing either
(i) Subordinated Debt Securities unless the Securities and the Subsidiary
Guarantees, as applicable, are secured by a Lien on such property or assets that
is senior in priority to the Liens securing such Subordinated Debt Securities or
(ii) Pari Passu Debt Securities unless the Securities and the Subsidiary
Guarantees, as applicable, are equally and ratably secured with the Liens
securing such Pari Passu Debt Securities.
SECTION IV.11 Limitation on Issuance of Certain
Guarantees by, and Debt Securities
of, Restricted Subsidiaries.
The Company will not permit (i) any Restricted Subsidiary to,
directly or indirectly, guarantee any Debt Securities of any of the Issuers or
(ii) any Restricted Subsidiary to issue any Debt Securities, unless, in either
such case, such Restricted Subsidiary simultaneously executes and delivers a
guarantee (a "Subsidiary Guarantee") of the Securities in accordance with
Article X. Any such Subsidiary Guarantee shall not be subordinate in right of
payment to any Indebtedness of the Restricted Subsidiary providing the
Subsidiary Guarantee.
SECTION IV.12 Limitation on Dividends and Other
Payment Restrictions Affecting
Restricted Subsidiaries.
The Company will not, and will not permit any Restricted
Subsidiary to, directly or indirectly, create or otherwise enter into or cause
to become effective any consensual encumbrance or restriction of any kind on the
ability of any Restricted Subsidiary to (i) pay dividends, in cash or otherwise,
or make any distributions on its Equity Interests or any other interest or
participation in, or measured by, its profits owned by the Company or any
Restricted Subsidiary, (ii) pay any Indebtedness owed to the Company or a
Restricted Subsidiary, (iii) make any Investment in the Company or any
Restricted Subsidiary or (iv) transfer any of its property or assets to the
Company or any Restricted Subsidiary, except for (a) any such customary
encumbrance or restriction contained in a security document creating a Lien
permitted under this Indenture to the extent relating to the property or asset
subject to such Lien (including, without limitation, customary restrictions
relating to assets securing any indebtedness under any of the Vendor Credit
Facilities or the Bank Credit Facility under the applicable security documents),
(b) any such encumbrance or restriction with respect to a Restricted Subsidiary
that is not a Restricted Subsidiary on the Issue Date, which encumbrance or
restriction is in existence at the time such Person becomes a Restricted
Subsidiary but not created in contemplation thereof and which encumbrance or
restriction pertains only to that Restricted Subsidiary and (c) any such
encumbrance or restriction imposed pursuant to an agreement that has been
entered into for the sale or disposition of all or substantially all of the
Equity Interests or assets of such Restricted Subsidiary.
SECTION IV.13 Disposition of Proceeds of
Asset Sales.
The Company will not, and will not permit any Restricted
Subsidiary to, make any Asset Sale unless (i) the Company or such Restricted
Subsidiary, as the case may be, receives consideration at the time of such Asset
Sale at least equal to the Fair Market Value of the assets sold or otherwise
disposed of and (ii) at least 80% of such consideration consists of cash or Cash
Equivalents; provided that the amount of any liabilities of the Company or such
Restricted Subsidiary that are assumed (and from which the Company or such
Restricted Subsidiary is unconditionally released) in connection with such Asset
Sale by the transferee or purchaser of such assets or on behalf of such
transferee or purchaser by a third party shall be deemed to be cash for purposes
of this clause (ii); provided, further, that up to $25.0 million of
consideration in the aggregate that is not in the form of cash or Cash
Equivalents may be received in excess of the amount permitted by the foregoing
provisions during the term of the Securities. The Company or the applicable
Restricted Subsidiary, as the case may be, may (i) apply such Net Cash Proceeds
within 365 days of receipt thereof to repay an amount of Indebtedness (other
than Subordinated Indebtedness) of an Issuer or any Subsidiary Guarantor of the
Company or any Subsidiary Guarantor in an amount not exceeding the Other Senior
Debt Pro Rata Share of Excess Proceeds and elect to permanently reduce the
amount of the commitments thereunder by the amount of the Indebtedness so
repaid, (ii) apply such Net Cash Proceeds within 365 days of the receipt thereof
to to repay Indebtedness (other than Subordinated Indebtedness) of any
Restricted Subsidiary (other than a Subsidiary Guarantor) and elect to
permanently reduce the amount of the commitments thereunder by the amount of the
Indebtedness so repaid or (iii) apply such Net Cash Proceeds within 365 days of
receipt thereof to an investment in properties and assets that will be used in a
Permitted Business (or in Equity Interests of any Person that will become a
Restricted Subsidiary as a result of such investment to the extent such Person's
operations consist of Permitted Businesses) of the Company or any Restricted
Subsidiary ("Replacement Assets"). Net Cash Proceeds from any Asset Sale that
are neither used as set forth in clause (ii) of the preceding sentence nor
invested in Replacement Assets within such 365-day period shall constitute
"Excess Proceeds." Any Excess Proceeds not used as set forth in clause (i) of
the second preceding sentence within such 365-day period shall constitute "Offer
Excess Proceeds" subject to disposition as set forth below.
When the aggregate amount of Offer Excess Proceeds equals or
exceeds $20.0 million, the Issuers shall make an offer to purchase Securities
(an "Asset Sale Offer"), on a Business Day not more than 60 days after the day
the amount of Offer Excess Proceeds equals or exceeds $20.0 million (an "Asset
Sale Payment Date") from all holders of Securities, at a price in cash equal to
100% of the principal amount of the Securities, plus accrued and unpaid
interest, if any, thereon to the applicable Asset Sale Payment Date. Each Asset
Sale Offer shall remain open for a period of 20 Business Days or such longer
period as may be required by law. To the extent that the aggregate purchase
price for the Securities tendered pursuant to an Asset Sale Offer is less than
the Offer Excess Proceeds available for such offer, the Company and the
Restricted Subsidiaries may use such deficiency for general partnership or
corporate purposes, as the case may be, including to repay after Indebtedness.
It is agreed that, notwithstanding anything herein to the contrary, if holders
of other Debt Securities (including the Senior Notes, but other than
Subordinated Indebtedness) of the Issuers or any Subsidiary Guarantor are
entitled to have a similar offer to purchase their Debt Securities made to them,
such other offer shall be conducted and consummated simultaneously with the
Asset Sale Offer for the Securities. If the aggregate Accreted Value and/or
principal amount of the Securities and other Debt Securities (other than
Subordinated Indebtedness) validly tendered pursuant to an Asset Sale Offer or
contractually required offer to purchase under this Indenture, the Senior
Discount Note Indenture or any instrument or agreement governing Debt Securities
(other than Subordinated Indebtedness) exceeds the Offer Excess Proceeds, the
Securities to be purchased will be selected on a pro rata basis among the
holders of Securities, Senior Discount Notes and such Debt Securities (based
upon the principal amount of the Securities, the Accreted Value of, the Senior
Discount Notes and/or the principal amount or accreted value, as the case may
be, of such Debt Securities tendered by each holder thereof). Upon completion of
such Asset Sale Offer, the amount of Excess Proceeds shall be reset to zero.
Notwithstanding the two immediately preceding paragraphs, the
Company and the Restricted Subsidiaries shall be permitted to consummate an
Asset Sale without complying with such paragraphs to the extent (i) at least 80%
of the consideration for such Asset Sale consists of cash, Cash Equivalents
and/or Permitted Assets and (ii) such consideration at the time of such Asset
Sale is at least equal to the Fair Market Value of the assets sold or otherwise
disposed of; provided that (x) any Net Cash Proceeds received by the Company or
any of the Restricted Subsidiaries in connection with any such Asset Sale shall
be subject to the provisions of the two immediately preceding paragraphs and (y)
if any of the assets disposed of are assets otherwise required to be held by
WirelessCo, RealtyCo or EquipmentCo under Section 4.18, the Permitted Assets
received shall be held by, or promptly transferred to, WirelessCo, RealtyCo or
EquipmentCo.
Not less than 30 nor more than 60 days before the Asset Sale
Payment Date, the Issuers shall send, by first class mail, a notice to every
Holder of Securities, with a copy to the Trustee and Paying Agent. The notice,
which shall govern the terms of the Asset Sale Offer, shall include such
disclosures as are required by law and shall state:
(1) that the Asset Sale Offer is being made pursuant to
this Section 4.13;
(2) the purchase price to be paid for Securities purchased
pursuant to the Asset Sale Offer (including the amount of accrued
interest, if any) and the Asset Sale Payment Date;
(3) that any Security not tendered will continue to
accrue interest;
(4) that, unless the Company defaults in making payment
therefor, any Security accepted for payment pursuant to the Asset Sale
Offer shall cease to accrue interest after the Asset Sale Payment Date;
(5) that Holders electing to have a Security purchased
pursuant to the Asset Sale Offer will be required to surrender the
Security, with the form entitled "Option of Holder to Elect Purchase"
on the reverse of the Security completed, to the Paying Agent at the
address specified in the notice prior to the close of business on the
Asset Sale Payment Date;
(6) that Holders will be entitled to withdraw their election
if the Paying Agent receives, not later than the second Business Day
prior to the Asset Sale Payment Date, a facsimile transmission or
letter setting forth the name of the Holder, the principal amount of
the Security the Holder delivered for purchase and a statement that
such Holder is withdrawing his election to have such Security
purchased; and
(7) that Holders whose Securities are purchased only in part
will be issued new Securities in a principal amount equal to the
unpurchased portion of the Securities surrendered.
On or before the Asset Sale Payment Date, the Company shall
(i) accept for payment Securities or portions thereof tendered pursuant to the
Asset Sale Offer in accordance with this Section 4.13, (ii) deposit with the
Paying Agent U.S. Legal Tender sufficient to pay the purchase price, plus
accrued interest, if any, of all Securities to be purchased in accordance with
this Section 4.13 and (iii) deliver to the Trustee Securities so accepted
together with an Officers' Certificate stating the Securities or portions
thereof being purchased by the Company. The Paying Agent shall promptly mail to
the Holders of Securities so accepted payment in an amount equal to the purchase
price, plus accrued interest, if any, thereon. For purposes of this Section
4.13, the Trustee shall act as the Paying Agent.
If the Company is required to make an Asset Sale Offer, the
Company will comply with all applicable tender offer laws and regulations,
including, to the extent applicable, Section 14(e) and Rule 14e-1 under the
Exchange Act, and any other applicable Federal or state securities laws and
regulations and any applicable requirements of any securities exchange on which
the Securities are listed.
SECTION IV.14 Limitation on Transactions with
Equityholders and Affiliates.
The Company will not, and will not permit, cause, or suffer
any Restricted Subsidiary to, conduct any business or enter into, renew or
extend any transaction or series of related transactions (including, without
limitation, the purchase, sale, lease or exchange of property or assets, or the
rendering of any service) with or for the benefit of any of their respective
Affiliates or any beneficial holder of 5% or more of any class of Equity
Interests of the Company (each an "Affiliate Transaction"), except on terms that
are no less favorable to the Company or such Restricted Subsidiary than those
that could reasonably be obtained in a comparable arm's-length transaction with
a Person that is not such a holder or Affiliate. Each Affiliate Transaction
involving aggregate payments or other Fair Market Value in excess of $15.0
million shall be approved by (i) if the Company is a Wholly-Owned Subsidiary of
Holdings, either (a) if the current provisions of Section 8.6 ("Interested Party
Transactions") of the Holdings Partnership Agreement are in effect, members of
the Board of Holdings exercising votes representing at least a majority (or such
other percentage vote as required by the Holdings Partnership Agreement) of
votes entitled to be exercised by members of such Board selected by the Partners
not having any financial interest in any such Affiliate Transaction, or (b) if
the current provisions of Section 8.6 ("Interested Party Transactions") of the
Holdings Partnership Agreement are not in effect, a majority of the
Disinterested Directors of Holdings, in each case, as evidenced by a Resolution
of the Board of Holdings and (ii) if the Company is not a Wholly-Owned
Subsidiary of Holdings, a majority of the Disinterested Directors of the Company
as evidenced by a Resolution of the Company. In the event the Company obtains a
written opinion from an Independent Financial Advisor stating that the terms of
an Affiliate Transaction are fair to the Company or a Restricted Subsidiary, as
the case may be, from a financial point of view, it shall conclusively meet the
requirements of the first sentence of this paragraph and there shall be no need
to comply with the second sentence of this paragraph.
Notwithstanding the foregoing, the restrictions set forth in
this Section 4.14 shall not apply to (i) transactions between or among the
Company and/or any of the Restricted Subsidiaries, (ii) any dividend or
distribution permitted by Section 4.9, (iii) directors' fees, indemnification
and similar arrangements, officers' indemnification, employee stock option or
employee benefit plans and employee salaries and bonuses paid or created in the
ordinary course of business, (iv) any Affiliate Transaction pursuant to any
agreement in effect on the Issue Date, as the same shall be amended from time to
time; provided that any material amendment shall be required to comply with the
provisions of the preceding paragraph of this Section 4.14, (v) transactions
involving the marketing of products and services of the Company or any
Restricted Subsidiary jointly with products and services of an Affiliate of the
Company or a beneficial holder of 5% or more of any class of Equity Interests of
the Company (such holder or Affiliate bring a "Related Party"); provided all
payments made by the Company or any Restricted Subsidiary to the Related Party
are made to reimburse the Related Party for its share of any expenses incurred
by the Related Party on behalf of the Company or any Restricted Subsidiary, (vi)
transactions involving the leasing or sharing or other use by the Company or any
Restricted Subsidiary of communications network facilities (including, without
limitation, cable or fiber lines, equipment or transmission capacity) of a
Related Party on terms that are no less favorable (when taken as a whole) to the
Company or such Restricted Subsidiary, as applicable, than those available from
such Related Party to unaffiliated third parties, (vii) transactions involving
the provision of telecommunication services by a Related Party in the ordinary
course of its business to the Company or any Restricted Subsidiary, or by the
Company or any Restricted Subsidiary to a Related Party, on terms that are no
less favorable (when taken as a whole) to the Company or such Restricted
Subsidiary, as applicable, than those available from such Related Party to
unaffiliated third parties, and (viii) any sales agency agreements pursuant to
which a Partner or any of its Affiliates has the right to market any or all of
the products or services of the Company or any of the Restricted Subsidiaries on
a "most favored nation" basis (without regard to volume), as contemplated by the
Holdings Partnership Agreement as in effect on the Issue Date.
SECTION IV.15 Change of Control.
(a) Upon the occurrence of a Change of Control (the date of
such occurrence being the "Change of Control Date"), the Issuers shall notify
the holders of the Securities, in the manner prescribed by this Indenture, of
such occurrence and shall make an offer to purchase (a "Change of Control
Offer"), on a Business Day (the "Change of Control Payment Date") not later than
60 days following the Change of Control Date, all Securities then outstanding at
a purchase price equal to 101% of the principal amount of the Securities, plus
accrued and unpaid interest, if any, thereon to the Change of Control Payment
Date. The Change of Control Offer shall remain open for at least 20 Business
Days or such longer period as may be required by law and until the close of
business on the Change of Control Payment Date. The Issuers' obligations under
this Section 4.15 may be satisfied if a third party makes the Change of Control
Offer in the manner, at the times and otherwise in compliance with the
requirements applicable to a Change of Control Offer made by the Issuers and
purchases all Securities validly tendered and not withdrawn under such Change of
Control Offer.
(b) Not less than 30 days nor more than 60 days before the
Change of Control Payment Date, the Issuers shall send, by first class mail, a
notice to each Holder of Securities, with a copy to the Trustee and the Paying
Agent. The notice, which shall govern the terms of the Change of Control Offer,
shall include such disclosures as are required by law and shall state:
(i) that a Change of Control Offer is being made pursuant to
this Section 4.15 and that all Securities tendered will be accepted for
payment;
(ii) the purchase price (including the amount of accrued
interest, if any) for each Security and the Change of Control Payment
Date;
(iii) that any Security not tendered for payment will con-
tinue to accrue interest in accordance with the terms thereof;
(iv) that, unless the Issuers default on making the payment,
any Security or portion thereof accepted for payment pursuant to the
Change of Control Offer shall cease to accrue interest after the Change
of Control Payment Date;
(v) that Holders electing to have Securities or any portion
thereof purchased pursuant to a Change of Control Offer will be
required to surrender their Securities to the Paying Agent at the
address specified in the notice prior to 5:00 p.m., New York City time,
on the Business Day preceding the Change of Control Payment Date with
the "Option of Holder to Elect Purchase" on the reverse thereof
completed and must complete any form of letter of transmittal proposed
by the Issuers and acceptable to the Trustee and the Paying Agent;
(vi) that Holders of Securities will be entitled to withdraw
their election if the Paying Agent receives, not later than 5:00 p.m.,
New York City time, on the Business Day preceding the Change of Control
Payment Date, a tested telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of Securities the
Holder delivered for purchase and a statement that such Holder is
withdrawing his election to have such Securities purchased; and
(vii) that Holders whose Securities are purchased only in part
will be issued Securities equal in principal amount to the unpurchased
portion of the Securities surrendered.
On the Change of Control Payment Date, the Issuers shall (i)
accept for payment Securities or portions thereof tendered pursuant to the
Change of Control Offer, (ii) deposit with the Paying Agent U.S. Legal Tender
sufficient to pay the purchase price of all Securities or portions thereof so
tendered and accepted and (iii) deliver to the Trustee the Securities so
accepted together with an Officers' Certificate of each of the Issuers setting
forth the Securities or portions thereof tendered to and accepted for payment by
the Issuers. The Paying Agent shall promptly (but in any case no later than 10
calendar days after the Change of Control Payment Date) mail or deliver to the
Holders of Securities so accepted payment in an amount equal to the purchase
price, and the Trustee shall promptly authenticate and mail or deliver to such
Holders a new Security equal in principal amount to any unpurchased portion of
the Security surrendered. Any Securities not so accepted shall be promptly
mailed or delivered by the Issuers to the Holder thereof.
For purposes of this Section 4.15, the Trustee shall act as
Paying Agent.
In connection with the purchase of Securities pursuant to a
Change of Control Offer, the Issuers shall comply with all applicable tender
offer laws and regulations, including, to the extent applicable, Section 14(e)
and Rule 14(e)-1 under the Exchange Act, and any other applicable Federal or
state securities laws and regulations and any applicable requirements of any
securities exchange on which the Securities are listed.
SECTION IV.16 Limitation on Designations of
Unrestricted Subsidiaries.
The Company may designate any Subsidiary of the Company (other
than FinCo, WirelessCo, RealtyCo and EquipmentCo) as an "Unrestricted
Subsidiary" under this Indenture (a "Designation") only if:
(i) no Default shall have occurred and be continuing at the
time of or after giving effect to such Designation; and
(ii) the Company would be permitted under this Indenture to
make an Investment at the time of Designation (assuming the
effectiveness of such Designation) in an amount (the "Designation
Amount") equal to the Fair Market Value of the aggregate amount of its
Investments in such Subsidiary on such date; and
(iii) except in the case of a Subsidiary in which an
Investment is being made pursuant to and as permitted by the third
paragraph of Section 4.9, the Company would be permitted to incur $1.00
of additional Indebtedness pursuant to clause (a) of the proviso to the
first paragraph of Section 4.8 at the time of Designation (assuming the
effectiveness of such Designation).
In the event of any such Designation, the Company shall be
deemed to have made an Investment constituting a Restricted Payment pursuant to
Section 4.9 for all purposes of this Indenture in the Designation Amount. The
Company shall not, and shall not permit any Restricted Subsidiary to, at any
time (x) provide direct or indirect credit support for or a guarantee of any
Indebtedness of any Unrestricted Subsidiary (including of any undertaking,
agreement or instrument evidencing such Indebtedness), (y) be directly or
indirectly liable for any Indebtedness of any Unrestricted Subsidiary or (z) be
directly or indirectly liable for any Indebtedness which provides that the
Holder thereof may (upon notice, lapse of time or both) declare a default
thereon or cause the payment thereof to be accelerated or payable prior to its
final scheduled maturity upon the occurrence of a default with respect to any
Indebtedness of any Unrestricted Subsidiary (including any right to take
enforcement action against such Unrestricted Subsidiary), except, in the case of
clause (x) or (y), to the extent permitted under Section 4.9.
Notwithstanding anything herein to the contrary, APC shall
not, at any time, be considered a Restricted Subsidiary absent a Revocation in
compliance with the following paragraph.
The Company may revoke any Designation of a Subsidiary as an
Unrestricted Subsidiary (a "Revocation"), whereupon such Subsidiary shall then
constitute a Restricted Subsidiary, if:
(a) no Default shall have occurred and be continuing at
the time of and after giving effect to such Revocation; and
(b) all Liens and Indebtedness of such Unrestricted Subsidiary
outstanding immediately following such Revocation would, if incurred at
such time, have been permitted to be incurred for all purposes of this
Indenture.
All Designations and Revocations must be evidenced by
Resolutions of the Company delivered to the Trustee certifying compliance with
the foregoing provisions.
SECTION IV.17 Limitation on Activities of
the Issuers and the Restricted
Subsidiaries.
(i) The Company will not, and will not permit any Restricted
Subsidiary to, engage in any business other than a Permitted Business and (ii)
FinCo will not own any operating assets or other properties or conduct any
business other than to serve as an Issuer and obligor on the Securities and
other Indebtedness permitted under this Indenture.
SECTION IV.18 Limitation on Ownership of Equity
Interests of Restricted Subsidiaries.
Notwithstanding any other provision of this Indenture to the
contrary, (i) each of WirelessCo, RealtyCo, EquipmentCo and FinCo shall at all
times remain a direct Wholly-Owned Restricted Subsidiary of the Company (except
that FinCo may be merged with and into the Company or a Wholly-Owned Restricted
Subsidiary if the Company or such Wholly-Owned Restricted Subsidiary is then a
corporation) and (ii) none of WirelessCo, RealtyCo or EquipmentCo will, directly
or indirectly, sell, convey, transfer, lease or otherwise dispose of any assets
or property used or useful in the operation of the business of the Company and
the Restricted Subsidiaries in the geographic areas for which the Company or a
Restricted Subsidiary owns or holds an FCC license for the transmission of
wireless telecommunications services on the Issue Date other than, in the case
of this clause (ii), to a Person not an Affiliate of the Company or any of the
Restricted Subsidiaries or to a Wholly-Owned Subsidiary if all of the
outstanding Equity Interests of such Wholly-Owned Subsidiary are concurrently
sold to a Person that is not an Affiliate of the Company or any of the
Restricted Subsidiaries, in each case in compliance with Section 4.13.
Notwithstanding the foregoing, WirelessCo, RealtyCo, EquipmentCo and FinCo may
issue Disqualified Equity Interests that do not entitle the Holders thereof to
participate in the earnings, profits or cash flow of such Restricted Subsidiary
pursuant to and in compliance with Section 4.8.
SECTION IV.19 Amendments to Capital
Contribution Agreement.
The Company will not amend, modify or waive, or refrain from
enforcing, any provision of the Capital Contribution Agreement dated as of July
15, 1996 among Sprint Corporation, Tele-Communications, Inc., Comcast
Corporation, Cox Communications, Inc. and the Company in any manner adverse to
the Company or the holders of the Securities in any material respect.
SECTION IV.20 Waiver of Stay, Extension
or Usury Laws.
Each of the Issuers covenants, and each Subsidiary Guarantor
shall be deemed to covenant, (to the extent permitted by law) that it will not
at any time insist upon, plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law or any usury law or other law
that would prohibit or forgive the Issuers or such Subsidiary Guarantor, as the
case may be, from paying all or any portion of the principal of or interest on
the Securities as contemplated herein, wherever enacted, now or at any time
hereafter in force, or that may affect the covenants or the performance of this
Indenture; and (to the extent permitted by law) each of the Issuers hereby
expressly waives and each Subsidiary Guarantor shall be deemed to expressly
waive, all benefit or advantage of any such law, and covenants, and each
Subsidiary Guarantor shall be deemed to covenant, that it will not hinder, delay
or impede the execution of any power herein granted to the Trustee, but will
suffer and permit the execution of every such power as though no such law had
been enacted.
ARTICLE V
SUCCESSOR CORPORATION
SECTION V.1 Consolidation, Merger, Sale
of Assets, Etc.
The Company will not, in any transaction or series of
transactions, merge or consolidate with or into, or sell, assign, convey,
transfer, lease or otherwise dispose of all or substantially all of its
properties and assets as an entirety to, any Person or Persons, and the Company
will not permit any of the Restricted Subsidiaries to enter into any such
transaction or series of transactions if such transaction or series of
transactions, in the aggregate, would result in a sale, assignment, conveyance,
transfer, lease or other disposition of all or substantially all of the
properties and assets of the Company and the Restricted Subsidiaries, taken as a
whole, to any other Person or Persons, unless at the time of and after giving
effect thereto:
(i) either (a) if the transaction or series of transactions is
a merger or consolidation, the Company shall be the surviving Person of
such merger or consolidation, or (b) the Person formed by any such
consolidation or into which the Company or such Restricted Subsidiary
is merged or to which the properties and assets of the Company and/or
any Restricted Subsidiary, as the case may be, are transferred (any
such surviving Person or transferee Person being a "Surviving Entity")
shall be a partnership or corporation organized and existing under the
laws of the United States of America, any state thereof or the District
of Columbia and shall expressly assume by a supplemental indenture
executed and delivered to the Trustee, in form reasonably satisfactory
to the Trustee, all the obligations of the Company under the Securities
and this Indenture, and, in each case, this Indenture shall remain in
full force and effect;
(ii) immediately before and immediately after giving effect to
such transaction or series of transactions on a pro forma basis
(including, without limitation, any Indebtedness incurred or
anticipated to be incurred in connection with or in respect of such
transaction or series of transactions), no Default shall have occurred
and be continuing;
(iii) immediately after giving effect to such transaction or
series of transactions on a pro forma basis (including, without
limitation, any Indebtedness incurred or anticipated to be incurred in
connection with or in respect of such transaction or series of
transactions), the Company or the Surviving Entity, as the case may be,
could incur $1.00 of additional Indebtedness pursuant to the proviso to
the first paragraph of clause (a) of Section 4.8; provided that in the
event of a conversion of the Company from partnership to corporate form
in a transaction the primary purpose of which is to effect such
conversion and in which no additional Indebtedness is incurred or
anticipated to be incurred by the Company, the Surviving Entity or any
Restricted Subsidiary, the Surviving Entity shall not be required to be
able to incur such $1.00 of additional Indebtedness; and
(iv) the Company or its surviving entity, as the case may be,
shall deliver, or cause to be delivered, to the Trustee, in form and
substance reasonably satisfactory to the Trustee, an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, transfer, lease, assignment or other disposition
and the supplemental indenture in respect thereof comply with the
requirements of this Indenture.
Each Subsidiary Guarantor (other than any Subsidiary Guarantor
whose Subsidiary Guarantee is to be released in accordance with the terms of the
Subsidiary Guarantee and this Indenture in connection with any transaction
complying with the provisions of Section 4.17) will not, and the Company will
not cause or permit any Subsidiary Guarantor to, consolidate with or merge with
or into any Person other than the Company or another Subsidiary Guarantor
unless: (a) the entity formed by or surviving any such consolidation or merger
(if other than the Subsidiary Guarantor) is a corporation or partnership
organized and existing under the laws of the United States or any state thereof
or the District of Columbia; (b) such entity assumes by supplemental indenture
all of the obligations of the Subsidiary Guarantor under its Subsidiary
Guarantee; (c) immediately after giving effect to such transaction, no Default
or Event of Default shall have occurred and be continuing; and (d) immediately
after giving effect to such transaction and the use of any net proceeds
therefrom on a pro forma basis, the Company could satisfy the provisions of
clause (iii) of the first paragraph of this Section. Any merger or consolidation
of a Subsidiary Guarantor with and into the Company (with the Company being the
Surviving Entity) or another Subsidiary Guarantor need only comply with clause
(ii) of the first paragraph of this Section.
SECTION V.2 Successor Entity Substituted.
Upon any consolidation, combination, merger or any transfer of
all or substantially all of the assets of a Person subject to, and in accordance
with Section 5.1, the Surviving Entity formed by such consolidation or
combination or into which the Company is merged or to which such transfer is
made shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under this Indenture with the same effect as if such
Surviving Entity had been named as the Company herein; provided that, solely for
purposes of computing Available Operating Cash Flow for purposes of clause (iii)
of the first paragraph of Section 4.9, the Available Operating Cash Flow of any
Persons other than the Company and the Restricted Subsidiaries shall only be
included for periods subsequent to the effective time of such consolidation,
combination, merger or transfer of assets.
SECTION V.3 Status of Subsidiaries.
For all purposes of this Indenture and the Securities
(including the provisions of this Article V and Sections 4.8, 4.9 and 4.10),
Subsidiaries of any Surviving Entity will, upon such transaction or series of
transactions, become Restricted Subsidiaries or Unrestricted Subsidiaries as
provided pursuant to Section 4.16 and all Indebtedness, and all Liens on
property or assets, of the Company and the Restricted Subsidiaries immediately
prior to such transaction or series of transactions will be deemed to have been
incurred to upon such transaction or series of transactions; provided that in
the event of a conversion of the Company from partnership to corporate form in a
transaction the purpose of which is to effect such conversion and in which no
additional Indebtedness is incurred or anticipated to be incurred by the
Company, the Surviving Entity or any Restricted Subsidiary, no Indebtedness of
the Company and the Restricted Subsidiaries shall be deemed to have been
incurred upon such transaction or series of transactions.
ARTICLE VI
DEFAULT AND REMEDIES
SECTION VI.1 Events of Default.
(a) An "Event of Default" occurs if:
(i) there is a default in the payment of the principal of the
Securities when due, at maturity, upon redemption or otherwise
(including pursuant to a Change of Control Offer or an Asset Sale
Offer); or
(ii) there is a default in the payment of interest on the
Securities when it becomes due and payable and continuance of such
default for a period of 30 days; or
(iii) there is a default in the performance, or breach, of
any covenant described in Section 5.1; or
(iv) there is a default in the performance of or compliance
with, or breach of, any term, covenant, condition or provision of the
Securities or this Indenture (other than those specified in clause (i),
(ii) or (iii) above) and such default continues for a period of 30 days
after written notice to the Company thereof by the Trustee or holders
of at least 25% of the aggregate principal amount of the Securities
then outstanding; or
(v) either (a) one or more default or defaults in the payment
of any principal under one or more agreements, instruments, mortgages,
bonds, debentures or other evidences of Indebtedness (each, a "Debt
Instrument") under which the Company or one or more Restricted
Subsidiaries or the Company and one or more Restricted Subsidiaries
then have outstanding Indebtedness in excess of $50.0 million,
individually or in the aggregate, or (b) any other default or defaults
under one or more Debt Instruments under which the Company or one or
more Restricted Subsidiaries or the Company and one or more Restricted
Subsidiaries then have outstanding Indebtedness in excess of $50.0
million, individually or in the aggregate, and, in the case of this
clause (b), either (x) such Indebtedness is already due and payable in
full by its terms or (y) such default or defaults have resulted in the
acceleration of the maturity of such Indebtedness; or
(vi) one or more judgments, orders or decrees of any court or
regulatory or administrative agency of competent jurisdiction for the
payment of money in excess of $50.0 million, either individually or in
the aggregate, shall be entered against the Company or any Restricted
Subsidiary or any of their respective properties and shall not be
discharged or fully bonded and there shall have been a period of 60
days after the date on which any period for appeal has expired and
during which a stay of enforcement of such judgment, order or decree
shall not be in effect; or
(vii) any holder of at least $50.0 million in aggregate
principal amount of Indebtedness of the Company or any of the
Restricted Subsidiaries, or its trustee, agent or representative, shall
commence (or have commenced on its behalf) judicial proceedings to
foreclose upon assets of the Company or any of the Restricted
Subsidiaries having an aggregate Fair Market Value, individually or in
the aggregate, in excess of $50.0 million or shall have exercised any
right under applicable law or applicable security documents to take
ownership of any such assets in lieu of foreclosure; or
(viii) any Subsidiary Guarantee ceases to be in full force and
effect or is declared null and void or a Subsidiary Guarantor denies
that it has any further liability under its Subsidiary Guarantee or
gives notice to such effect; or
(ix) an Issuer, any Subsidiary Guarantor or any Material
Restricted Subsidiary (a) admits in writing its inability to pay its
debts generally as they become due, (b) commences a voluntary case or
proceeding under any Bankruptcy Law with respect to itself, (c)
consents to the entry of a judgment, decree or order for relief against
it in an involuntary case or proceeding under any Bankruptcy Law, (d)
consents to the appointment of a Custodian (as defined below) of it or
for substantially all of its property, (e) consents to or acquiesces in
the institution of a bankruptcy or an insolvency proceeding against it,
(f) makes a general assignment for the benefit of its creditors or (g)
takes any partnership or corporate action, as the case may be, to
authorize or effect any of the foregoing;
(x) a court of competent jurisdiction enters a judgment,
decree or order for relief in respect of an Issuer, any Subsidiary
Guarantor or any Material Restricted Subsidiary in an involuntary case
or proceeding under any Bankruptcy Law, which shall (a) approve as
properly filed a petition seeking reorganization, arrangement,
adjustment or composition in respect of an Issuer, any Subsidiary
Guarantor or any Material Restricted Subsidiary, (b) appoint a
Custodian of an Issuer, a Subsidiary Guarantor or any Material
Restricted Subsidiary or for substantially all of any of their property
or (c) order the winding-up or liquidation of its affairs; and such
judgment, decree or order shall remain unstayed and in effect for a
period of 60 consecutive days.
(b) For purposes of this Article VI: the term "Custodian"
means any receiver, interim receiver, receiver and manager, trustee, assignee,
liquidator, sequestrator or similar official charged with maintaining possession
or control over property for one or more creditors, whether under any Bankruptcy
Law or otherwise.
SECTION VI.2 Acceleration.
If an Event of Default (other than an Event of Default
specified in Section 6.1(a)(ix) or (x) with respect to an Issuer) occurs and is
continuing, the Holders of at least 25% in principal amount of the outstanding
Securities may, by written notice to the Issuers and the Trustee, and the
Trustee upon the request of the Holders of not less than 25% in principal amount
of the outstanding Securities shall by written notice to the Issuers, declare
the Default Amount to be due and payable immediately. Upon any such declaration
such amounts shall become due and payable immediately. If an Event of Default
specified in Section 6.1(a)(ix) or (x) occurs and is continuing with respect to
an Issuer, then the Default Amount shall ipso facto become and be immediately
due and payable without any declaration or other act on the part of the Trustee
or any Holder. The Holders of a majority in aggregate principal amount of
outstanding Securities may, by notice to the Trustee, rescind such declaration
of acceleration if all existing Events of Default have been cured or waived,
other than the non-payment of the Default Amount and any accrued interest on the
Securities that has become due solely as a result of such acceleration and if
the rescission of acceleration would not conflict with any judgment or decree.
No such rescission shall affect any subsequent default or impair any right
consequent thereto.
SECTION VI.3 Other Remedies.
If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy by proceeding at law or in equity to collect the
payment of principal of or interest on the Securities, or to enforce the
performance of any provision of the Securities, this Indenture or any Subsidiary
Guarantee.
All rights of action and claims under this Indenture, or the
Securities or any Subsidiary Guarantee may be enforced by the Trustee even if
the Trustee does not possess any of the Securities or does not produce any of
them in the proceeding. A delay or omission by the Trustee or any Securityholder
in exercising any right or remedy accruing upon an Event of Default shall not
impair the right or remedy or constitute a waiver of or acquiescence in the
Event of Default. No remedy is exclusive of any other remedy. All available
remedies are cumulative to the extent permitted by law.
SECTION VI.4 Waiver of Past Default.
Subject to Sections 6.7 and 9.2, the Holders of, in the
aggregate, a majority in aggregate principal amount of the outstanding
Securities by notice to the Trustee may waive an existing Default or Event of
Default and its consequences, except a Default specified in Section 6.1(a)(i) or
(ii) or in respect of any provision hereof that cannot be modified or amended
without the consent of the Holder so affected pursuant to Section 9.2. When a
Default or Event of Default is so waived, it shall be deemed cured and shall
cease to exist.
SECTION VI.5 Control by Majority.
The Holders of at least a majority in principal amount of the
outstanding Securities may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on it; provided that the Trustee may refuse to follow any
direction that (i) conflicts with law or this Indenture, (ii) the Trustee
determines may be unduly prejudicial to the rights of another Securityholder, or
(iii) may involve the Trustee in personal liability unless the Trustee has
indemnification satisfactory to it in its sole discretion against any loss or
expense caused by its following such direction; and provided, further, that the
Trustee may take any other action deemed proper by the Trustee that is not
inconsistent with such direction.
SECTION VI.6 Limitation on Suits.
A Securityholder may not pursue any remedy with respect to
this Indenture, the Securities or any Subsidiary Guarantee unless:
(a) the Holder gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% in principal amount of
the outstanding Securities make a written request to the Trustee to
pursue a remedy;
(c) such Holder or Holders offer and, if requested, provide to
the Trustee security or indemnity reasonably satisfactory to the
Trustee against any loss, liability or expense;
(d) the Trustee does not comply with the request within
30 days after receipt of the request and the offer and, if requested,
provision of indemnity; and
(e) during such 30-day period the Holders of a majority in
principal amount of the outstanding Securities do not give the Trustee
a direction inconsistent with the request.
The foregoing limitations shall not apply to a suit instituted
by a Holder for the enforcement of the payment of the Default Amount, principal
of or accrued interest on the Securities on or after the respective due dates
set forth or provided for in the Securities.
A Securityholder may not use this Indenture to obtain a
preference or priority over any other Securityholder.
SECTION VI.7 Rights of Holders To Receive Payment.
Notwithstanding any other provision of this Indenture, the
right of any Holder to receive payment of the Default Amount, principal of and
interest on a Security, on or after the respective due dates expressed or
provided for in the Security, or to bring suit for the enforcement of any such
payment on or after such respective dates, is absolute and unconditional and
shall not be impaired or affected without the consent of such Holder.
SECTION VI.8 Collection Suit by Trustee.
If an Event of Default specified in Section 6.1(a)(i) or (ii)
occurs and is continuing, the Trustee may recover judgment in its own name and
as trustee of an express trust against the Issuers or any other obligor on the
Securities for the whole amount of principal and accrued interest remaining
unpaid, together with interest overdue on principal and, to the extent that
payment of such interest is lawful, interest on overdue installments of
interest, in each case at the interest rate borne by the Securities and such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
SECTION VI.9 Trustee May File Proofs of Claim.
The Trustee shall be entitled and empowered to file such
proofs of claim and other papers or documents as may be necessary or advisable
in order to have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel) and the Securityholders allowed in any judicial
proceedings relative to the Issuers or any Subsidiary Guarantor (or any other
obligor upon the Securities), their creditors or their property and shall be
entitled and empowered to collect and receive any monies or other property
payable or deliverable on any such claims and to distribute the same, and any
Custodian in any such judicial proceedings is hereby authorized by each
Securityholder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the
Securityholders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agent and
counsel, and any other amounts due the Trustee under Section 7.7. Nothing herein
contained shall be deemed to authorize the Trustee to authorize or consent to or
accept or adopt on behalf of any Securityholder any plan of reorganization,
arrangement, adjustment or composition affecting the Securities or the rights of
any Holder thereof, or to authorize the Trustee to vote in respect of the claim
of any Securityholder in any such proceeding.
SECTION VI.10 Priorities.
If the Trustee collects any money pursuant to this Article VI,
it shall pay out such money in the following order:
First: to the Trustee for amounts due under Section 7.7;
Second: to Holders for interest accrued on the Securities,
ratably, without preference or priority of any kind, according to the
amounts due and payable on the Securities for interest;
Third: to Holders for principal amounts owing under the
Securities, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Securities for
principal; and
Fourth: to the Issuers or any Subsidiary Guarantor, as their
respective interests may appear.
The Trustee, upon prior written notice to the Issuers, may fix
a record date and payment date for any payment to Securityholders pursuant to
this Section 6.10.
SECTION VI.11 Undertaking for Costs.
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as Trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by a
Holder pursuant to Section 6.7 or a suit by Holders of more than 10% in
aggregate principal amount of the outstanding Securities.
ARTICLE VII
TRUSTEE
SECTION VII.1 Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture and use the same degree of care and skill in its exercise as a prudent
person would exercise or use under the circumstances in the conduct of such
person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) The Trustee undertakes to perform such duties as are
specifically set forth in this Indenture and no implied covenants or
obligations shall be read into this Indenture against the Trustee.
(ii) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b)
of this Section 7.1;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith and reasonably believed
by it to be authorized or within the discretion or rights or powers
conferred upon it by this Indenture.
(d) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or in the exercise of any of its
rights or powers if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(e) Every provision of this Indenture that in any way relates
to the Trustee is subject to paragraphs (a), (b), (c) and (d) of this Section
7.1.
(f) The Trustee may refuse to perform any duty or exercise any
right or power unless it is provided adequate funds to enable it to do so and it
receives indemnity satisfactory to it in its sole discretion against any loss,
liability, fee or expense.
SECTION VII.2 Rights of Trustee.
Subject to TIA ss.ss. 315(a)-(d) and except as provided in
Section 7.1:
(a) The Trustee may rely upon any document believed by it to
be genuine and to have been signed or presented by the proper Person.
The Trustee shall not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other
paper or document, but the Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it may
see fit, and, if the Trustee shall determine to make such further
inquiry or investigation, it shall be entitled, upon reasonable notice,
to examine the books, records and premises of the Issuers, personally
or by agent or attorney at the sole cost of the Company and shall incur
no liability or additional liability of any kind by reason of such
inquiry or investigation.
(b) Before the Trustee acts or refrains from acting with
respect to any matter contemplated by this Indenture, it may require an
Officers' Certificate from each of the Issuers or an Opinion of Counsel
from each of the Issuers, that shall conform to the provisions of
Section 11.5. The Trustee shall not be liable for any action it takes
or omits to take in good faith in reliance on such certificate or
opinion.
(c) The Trustee may act through its attorneys and agents and
shall not be responsible for the misconduct or negligence of any agent
(other than the negligence or willful misconduct of an agent who is an
employee of the Trustee) appointed with due care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith that it reasonably believes to be
authorized or within its rights or powers; provided, however, that the
foregoing shall apply only if the Trustee's conduct does not constitute
negligence or bad faith.
(e) The Trustee may consult with counsel of its selection and
the advice or opinion of such counsel as to matters of law shall be
full and complete authorization and protection from liability in
respect of any action taken, omitted or suffered by it hereunder in
good faith and in accordance with the advice or opinion of such
counsel.
(f) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request
or direction of any Holder pursuant to this Indenture, unless such
Holder shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction.
SECTION VII.3 Individual Rights of Trustee.
The Trustee in its individual capacity or any other capacity
may become the owner or pledgee of Securities and may otherwise deal with the
Issuers or their Affiliates with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights. However, the Trustee is
subject to Sections 7.10 and 7.11.
SECTION VII.4 Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture, the Securities
or any Subsidiary Guarantee, it shall not be accountable for the Company's use
of the proceeds from the issuance of the Securities and it shall not be
responsible for any statement of the Issuers in this Indenture or any document
issued in connection with the sale of Securities or any statement in the
Securities other than the Trustee's certificate of authentication.
SECTION VII.5 Notice of Defaults.
If a Default or an Event of Default with respect to the
Securities occurs and is continuing and is known to the Trustee, the Trustee
shall give notice of the Default or Event of Default within 30 days after the
Trustee acquires knowledge of the occurrence thereof to all Holders as their
names and addresses appear on the Register, unless such Default shall have been
cured or waived before the mailing of such notice. Except in the case of a
Default or an Event of Default in payment of principal of or interest on any
Security, the Trustee may withhold the notice to the Securityholders if a
committee of its Trust Officers in good faith determines that withholding the
notice is in the interest of Securityholders.
SECTION VII.6 Reports by Trustee to Holders.
To the extent required by TIA ss. 313(a), within 60 days after
May 15 of each year commencing with 1997 and for as long as there are Securities
outstanding hereunder, the Trustee shall mail to each Securityholder the
Trustee's brief report dated as of such date that complies with TIA ss. 313(a).
The Trustee also shall comply with TIA ss. 313(b) and TIA ss. 313(c) and (d). A
copy of such report at the time of its mailing to Securityholders shall be filed
with the Commission, if required, and each stock exchange, if any, on which the
Securities are listed.
SECTION VII.7 Compensation and Indemnity.
The Issuers shall pay to the Trustee, the Paying Agent and the
Registrar from time to time such compensation as shall be agreed to in writing
from time to time by the Trustee and the Issuers for their respective services
rendered hereunder. The Trustee's, the Paying Agent's and the Registrar's
compensation shall not be limited by any law on compensation of a trustee of an
express trust. The Issuers shall reimburse the Trustee, the Paying Agent and the
Registrar upon request for all reasonable out-of-pocket disbursements, expenses
and advances (including reasonable fees and expenses of counsel) incurred or
made by each of them in addition to the compensation for their respective
services. Such expenses shall include the reasonable compensation, out-of-pocket
disbursements and expenses of the Trustee's, the Paying Agent's and the
Registrar's agents and counsel.
The Issuers shall indemnify each of the Trustee, any
predecessor Trustee, the Paying Agent and the Registrar for, and hold each of
them harmless against, any claim, demand, expense (including but not limited to
their respective reasonable attorneys' fees and expenses), loss or liability,
including taxes (other than taxes based upon, measured by or determined by the
income of the Trustee) incurred by each of them arising out of or in connection
with the administration of this Indenture and their respective duties hereunder
or thereunder. Each of the Trustee, the Paying Agent and the Registrar shall
notify the Issuers promptly of any claim asserted against it for which it may
seek indemnity. However, failure by the Trustee, the Paying Agent or the
Registrar to so notify the Issuers shall not relieve the Issuers of their
obligations hereunder. The Issuers need not reimburse any expense or indemnify
against any loss or liability incurred by the Trustee, the Paying Agent or the
Registrar through the Trustee's, the Paying Agent's or the Registrar's, as the
case may be, own willful misconduct, negligence or bad faith.
To secure the Issuers' payment obligations in this Section 7.7
and in Section 6.9 (insofar as the Trustee is concerned), each of the Trustee,
the Paying Agent and the Registrar shall have a lien prior to the Securities on
all money or property held or collected by it, in its capacity as Trustee,
Paying Agent or Registrar, as the case may be, except money or property held in
trust to pay principal of or interest on particular Securities. Such lien shall
survive the satisfaction and discharge of this Indenture or any other
termination under the Bankruptcy Law.
Subject to any other rights available to the Trustee, the
Registrar and the Paying Agent under any Bankruptcy Law, when any of the
Trustee, the Paying Agent and the Registrar incurs expenses or renders services
after an Event of Default specified in Section 6.1(a)(ix) or (x) with respect to
an Issuer occurs, the parties hereto and the Securityholders, by acceptance of
the Securities, hereby agree that the expenses and the compensation for the
services are intended to constitute expenses of administration under any
Bankruptcy Law.
The provisions of this Section 7.7 shall survive the
termination of this Indenture.
SECTION VII.8 Replacement of Trustee.
The Trustee may resign at any time by so notifying the Issuers
in writing, such resignation to be effective upon the appointment of a successor
Trustee. The Holders of a majority in principal amount of the outstanding
Securities may remove the Trustee by so notifying the Trustee in writing and may
appoint a successor Trustee with the Issuers' consent, which consent shall not
be unreasonably withheld. The Issuers may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10;
(b) the Trustee is adjudged a bankrupt or an insolvent;
(c) a receiver or other public officer takes charge of
the Trustee or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of the Trustee for any reason (the Trustee in such event being
referred to herein as the retiring Trustee), the Issuers shall promptly appoint
a successor Trustee. Within one year after the successor Trustee takes office,
the Holders of a majority in principal amount of the Securities may appoint a
successor Trustee to replace the successor Trustee appointed by the Issuers.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuers. Immediately after that,
the retiring Trustee shall transfer all property held by it as Trustee to the
successor Trustee (subject to the lien provided in Section 7.7), the resignation
or removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. A successor Trustee shall mail notice of its succession to each
Securityholder.
If a successor Trustee does not take office within 30 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Issuers or the Holders of at least 25% in principal amount of the outstanding
Securities may petition any court of competent jurisdiction for the appointment
of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any
Securityholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this
Section 7.8, the Issuers' obligations under Section 7.7 shall continue for the
benefit of the retiring Trustee.
SECTION VII.9 Successor Trustee by Merger, Etc.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation or national banking association, the resulting, surviving or
transferee corporation or national banking association without any further act
shall be the successor Trustee provided such corporation shall be otherwise
qualified and eligible under this Article VII.
SECTION VII.10 Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss. 310(a)(1) and (2). The Trustee shall have a combined
capital and surplus of at least $50,000,000 as set forth in its most recent
published annual report of condition. The Trustee shall comply with TIA ss.
310(b) subject to its rights to apply for a stay of its duty to resign under the
penultimate paragraph of TIA ss. 310(b). The provisions of TIA ss. 310 shall
refer to the Issuers and any Subsidiary Guarantor as obligors in respect of the
Securities.
SECTION VII.11 Preferential Collection of
Claims Against Issuers.
The Trustee shall comply with TIA ss. 311(a), excluding any
creditor relationship listed in TIA ss. 311(b). A Trustee who has resigned or
been removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
The provisions of TIA ss. 311 shall refer to the Issuers and any Subsidiary
Guarantor, if applicable, as obligors in respect of the Securities.
SECTION VII.12 Money Held in Trust.
Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required by law. The Trustee
shall be under no liability for interest on any money received by it hereunder
except as otherwise agreed in writing with the Issuers.
SECTION VII.13 Preferred Collection of Claims.
If and when the Trustee shall be or become a creditor of the
Issuers (or any other obligor upon the Securities), the Trustee shall be subject
to the provisions of the TIA regarding the collection of claims against the
Issuers (or any such other obligor).
ARTICLE VIII
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION VIII.1 Satisfaction and Discharge.
This Indenture will be discharged and will cease to be of
further effect (except as to surviving rights of registration of transfer or
exchange of the Securities, as expressly provided for in this Indenture) as to
all outstanding Securities when:
(1) either (a) all the Securities, theretofore authenticated
and delivered (except lost, stolen or destroyed Securities that have
been replaced or paid and Securities for whose payment money has
theretofore been deposited in trust or segregated and held in trust by
the Issuers and thereafter repaid to the Issuers or discharged from
such trust) have been delivered to the Trustee for cancellation or (b)
all Securities not theretofore delivered to the Trustee for
cancellation have become due and payable and the Issuers have
irrevocably deposited or caused to be deposited with the Trustee U.S.
Legal Tender in an amount sufficient to pay and discharge the entire
Indebtedness on the Securities not theretofore delivered to the Trustee
for cancellation, for principal of and interest on the Securities to
the date of deposit together with irrevocable instructions from the
Issuers directing the Trustee to apply such funds to the payment
thereof at maturity or redemption, as the case may be;
(2) the Issuers have paid all other sums payable under
this Indenture by them; and
(3) each of the Issuers has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel stating that all
conditions precedent under this Indenture relating to the satisfaction
and discharge of this Indenture have been complied with.
SECTION VIII.2 Legal Defeasance and Covenant
Defeasance.
(a) The Issuers may, at their option by Resolution, at any
time, with respect to the Securities, elect to have either paragraph (b) or
paragraph (c) below be applied to the outstanding Securities upon compliance
with the conditions set forth in paragraph (d).
(b) Upon the Issuers' exercise under paragraph (a) of the
option applicable to this paragraph (b), the Issuers and any Subsidiary
Guarantor, if any, shall be deemed to have been released and discharged from its
obligations with respect to the outstanding Securities on the date the
conditions set forth below are satisfied (hereinafter, "legal defeasance"). For
this purpose, such legal defeasance means that the Issuers shall be deemed to
have paid and discharged the entire indebtedness represented by the outstanding
Securities, which shall thereafter be deemed to be "outstanding" only for the
purposes of paragraph (e) below and the other Sections of and matters under this
Indenture referred to in (i) and (ii) below, and to have satisfied all its other
obligations under such Securities and this Indenture insofar as such Securities
are concerned (and the Trustee, at the expense of the Issuers, shall execute
proper instruments acknowledging the same), except for the following that shall
survive until otherwise terminated or discharged hereunder: (i) the rights of
Holders of outstanding Securities to receive solely from the trust fund
described in paragraph (d) below and as more fully set forth in such paragraph,
payments in respect of the principal of and interest on such Securities when
such payments are due, (ii) the Issuers' obligations with respect to such
Securities under Sections 2.2, 2.3, 2.6, 2.7, 2.8, 4.1, 4.2 and 4.19, and, with
respect to the Trustee, under Sections 7.7 and 7.8, (iii) the rights, powers,
trusts, duties and immunities of the Trustee hereunder and (iv) this Section 8.2
and Sections 8.3, 8.4 and 8.5. Subject to compliance with this Section 8.2, the
Issuers may exercise their option under this paragraph (b) notwithstanding the
prior exercise of their option under paragraph (c) below with respect to the
Securities.
(c) Upon the Issuers' exercise under paragraph (a) of the
option applicable to this paragraph (c), the Issuers shall be released and
discharged from their obligations under any covenant contained in Article V and
in Sections 4.4 through 4.18 (except for obligations mandated by the TIA) with
respect to the outstanding Securities on and after the date the conditions set
forth below are satisfied (hereinafter, "covenant defeasance"), and the
Securities and each Subsidiary Guarantee, if any, shall thereafter be deemed to
be not "outstanding" for the purpose of any direction, waiver, consent or
declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder. For this purpose, such covenant defeasance
means that, with respect to the outstanding Securities, the Issuers and any
Subsidiary Guarantor, if any, may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event of Default under Sections
6.1(a)(iii) or 6.1(a)(iv), but, except as specified above, the remainder of this
Indenture and such Securities shall be unaffected thereby.
(d) The following shall be the conditions to application
of either paragraph (b) or paragraph (c) above to the outstanding Securities:
(i) the Issuers must irrevocably deposit with the Trustee, in
trust, for the benefit of the holders of the Securities, cash in United
States Dollars, direct non-callable obligations of, or non-callable
obligations guaranteed by, the United States of America for the payment
of which obligation or guarantee the full faith and credit of the
United States is pledged ("U.S. Government Obligations"), or a
combination thereof, in such amounts as will be sufficient to pay the
principal of and interest on the outstanding Securities to redemption
or maturity (except lost, stolen or destroyed Securities that have been
replaced or paid);
(ii) each of the Issuers shall have delivered to the Trustee
an Opinion of Counsel to the effect that the holders of the outstanding
Securities will not recognize income, gain or loss for Federal income
tax purposes as a result of such legal defeasance or covenant
defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been
the case if such legal defeasance or covenant defeasance had not
occurred (in the case of legal defeasance, such opinion must refer to
and be based upon a ruling of the Internal Revenue Service or a change
in applicable Federal income tax laws);
(iii) no Default under this Indenture shall have occurred and
be continuing on the date of such deposit;
(iv) such legal defeasance or covenant defeasance shall not
cause the Trustee to have a conflicting interest with respect to any
securities of the Issuers;
(v) such legal defeasance or covenant defeasance shall not
result in a breach or violation of, or constitute a default under, any
agreement or instrument to which the Issuers or any of their
Subsidiaries is a party or by which it is bound;
(vi) each of the Issuers shall have delivered to the Trustee
an Opinion of Counsel to the effect that after the 91st day following
their deposit, the trust funds will not be subject to the effect of any
applicable bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally or to the rights of any creditor
of the Issuers or any Subsidiary Guarantor other than those continuing
rights of the applicable holders of Securities; and
(vii) each of the Issuers shall have delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel, each stating that
all conditions precedent under this Indenture to either legal
defeasance or covenant defeasance, as the case may be, have been
complied with.
(e) All United States Dollars and U.S. Government Obligations
(including the proceeds thereof) deposited with the Trustee (or other qualifying
trustee, collectively for purposes of this paragraph (e), the "Trustee")
pursuant to paragraph (d) above in respect of the outstanding Securities shall
be held in trust and applied by the Trustee, in accordance with the provisions
of such Securities and this Indenture, to the payment, either directly or
through any Paying Agent as the Trustee may determine, to the Holders of such
Securities of all sums due and to become due thereon in respect of principal and
interest, but such money need not be segregated from other funds except to the
extent required by law.
The Issuers shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to paragraph (d) above or the principal and
interest received in respect thereof other than any such tax, fee or other
charge that by law is for the account of the Holders of the outstanding
Securities.
Anything in this Section 8.2 to the contrary notwithstanding,
the Trustee shall deliver or pay to the Issuers from time to time upon the
request, in writing, by the Issuers any money or U.S. Government Obligations
held by it as provided in paragraph (d) above that, in the opinion of a
nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, are in excess of the
amount thereof that would then be required to be deposited to effect an
equivalent legal defeasance or covenant defeasance.
SECTION VIII.3 Application of Trust Money.
The Trustee shall hold in trust money or U.S. Government
Obligations deposited with it pursuant to Sections 8.1 and 8.2, and shall apply
the deposited money and the money from U.S. Government Obligations in accordance
with this Indenture to the payment of principal of and interest on the
Securities.
SECTION VIII.4 Repayment to the Issuers or a
Subsidiary Guarantor.
Subject to Sections 7.7, 8.1 and 8.2, the Trustee and the
Paying Agent shall promptly pay to the Issuers, or if deposited with the Trustee
by any Subsidiary Guarantor, to such Subsidiary Guarantor upon receipt by the
Trustee and the Paying Agent of Officers' Certificates stating the amount to
which each of the Issuers or such Subsidiary Guarantor, as the case may be, is
entitled, any excess money, determined in accordance with Section 8.2(e), held
by it at any time. The Trustee and the Paying Agent shall pay to the Issuers or
such Subsidiary Guarantor, as the case may be, upon receipt by the Trustee or
the Paying Agent, as the case may be, of Officers' Certificates stating the
amount to which the Issuers or such Subsidiary Guarantor, as the case may be, is
entitled, any money held by it for the payment of principal or interest that
remains unclaimed for two years after payment to the Holders is required;
provided, however, that the Trustee and the Paying Agent before being required
to make any payment may, but need not, at the expense of the Issuers, mail by
first-class mail to each Holder of Securities entitled to such money at such
Holder's address as set forth on the Register notice that such money remains
unclaimed and that after a date specified therein, which shall be at least one
year from the date of such publication or mailing, any unclaimed balance of such
money then remaining will be repaid to the Issuers or such Subsidiary Guarantor,
as the case may be. After payment to the Issuers or such Subsidiary Guarantor,
as the case may be, Securityholders entitled to money must look solely to the
Issuers and such Subsidiary Guarantor for payment as general creditors unless an
applicable abandoned property law designates another Person, and all liability
of the Trustee or Paying Agent with respect to such money shall thereupon cease.
SECTION VIII.5 Reinstatement.
With respect to the circumstances referred to in Section 8.1
and 8.2, if the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with this Indenture by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, then
and only then the Issuers' and any Subsidiary Guarantor's (if any) obligations
under this Indenture and the Securities shall be revived and reinstated as
though no deposit had been made pursuant to this Indenture until such time as
the Trustee or Paying Agent is permitted to apply all such money or U.S.
Government Obligations in accordance with this Indenture; provided, that if the
Issuers or any such Subsidiary Guarantor has made any payment of principal of or
interest on any Securities because of the reinstatement of its obligations, the
Issuers or any such Subsidiary Guarantor, as the case may be, shall be
subrogated to the rights of the Holders of such Securities to receive such
payment from the money or U.S. Government Obligations held by the Trustee or
Paying Agent.
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION IX.1 Without Consent of Holders.
The Issuers and any Subsidiary Guarantors, when authorized by
Resolutions of their respective Boards, and the Trustee may amend, waive or
supplement this Indenture and the Securities without notice to or consent of any
Securityholder:
(a) to cure any ambiguity, defect or inconsistency, pro-
vided that such amendment or supplement does not adversely affect the
rights of any Holder;
(b) to comply with any requirements of the Commission
under the TIA;
(c) to evidence the succession in accordance with Article V
hereof of another Person and the assumption by any such successor of
the covenants of any of the Issuers or any Subsidiary Guarantor herein
and in the Securities;
(d) to evidence and provide for the acceptance of
appointment hereunder by a successor Trustee with respect to the
Securities;
(e) to make any change that does not adversely affect the
rights of any Holder; or
(f) to add a Subsidiary Guarantor pursuant to Section
4.11.
SECTION IX.2 With Consent of Holders.
Subject to Section 6.7 and the provisions of this Section 9.2,
the Issuers and any Subsidiary Guarantors, when authorized by Resolutions of
their respective Boards, and the Trustee may amend or supplement this Indenture
or the Securities in any respect with the written consent of the Holders of not
less than a majority in aggregate principal amount of the Securities then
outstanding. Subject to Section 6.7 and the provisions of this Section 9.2, the
Holders of, in the aggregate, at least a majority in aggregate principal amount
of the outstanding Securities affected may waive compliance by the Issuers or
any Subsidiary Guarantor with any provision of this Indenture, the Securities or
any Subsidiary Guarantee, as the case may be, without notice to any other
Securityholder.
Notwithstanding the foregoing, without the consent of each
Securityholder affected, an amendment, supplement or waiver, including a waiver
pursuant to Section 6.4, may not:
(a) reduce the principal amount of, extend the fixed
maturity of, or alter the redemption provisions of, the Securities;
(b) change the currency in which any Securities or the
accrued interest thereon is payable;
(c) reduce the percentage in principal amount of outstanding
Securities which must consent to an amendment, supplement or waiver or
consent to take any action under this Indenture, the Securities or any
Subsidiary Guarantees;
(d) impair the right to institute suit for the enforce-
ment of any payment on or with respect to the Securities or any Subsid-
iary Guarantee;
(e) waive a default in payment with respect to the
Securities;
(f) reduce the rate or extend the time for payment of in-
terest on the Securities;
(g) alter the obligation to purchase the Securities in
accordance with this Indenture following the occurrence of an Asset
Sale or a Change of Control or waive any default in the performance
thereof;
(h) adversely affect the ranking of the Securities or any
Subsidiary Guarantees;
(i) release any Subsidiary Guarantee other than in accor-
dance with this Indenture; or
(j) modify this Section 9.2 or Section 6.4.
It shall not be necessary for the consent of the Holders under
this Section 9.2 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment or waiver under this Section 9.2 becomes
effective, the Issuers shall mail to the Holders affected thereby a notice
briefly describing the amendment or waiver. Any failure of the Issuers to mail
such notice, or any defect therein, shall not, however, in any way impair or
affect the validity of any such amendment or waiver.
Promptly after the execution by the Issuers and any Subsidiary
Guarantors and the Trustee of any supplemental indenture pursuant to the
provisions of this Section 9.2, the Trustee shall give notice thereof, at the
expense of the Issuers, to the Holders of then outstanding Securities, by
mailing a notice thereof by first-class mail to such Holders at their addresses
as they shall appear on the books of the Registrar, and such notice shall set
forth in general terms the substance of such supplemental indenture. Any failure
of the Trustee to give such notice, or any defect therein, shall not, however,
in any way impair or affect the validity of any such supplemental indenture.
SECTION IX.3 Compliance with Trust Indenture Act.
Every amendment to or supplement of this Indenture or the
Securities or any Subsidiary Guarantee shall comply with the TIA as then in
effect.
SECTION IX.4 Revocation and Effect of Amendments
and Consents.
Until an amendment or waiver becomes effective, a consent to
it by a Holder is a continuing consent by the Holder and every subsequent Holder
of that Security or portion of that Security that evidences the same debt as the
consenting Holder's Security, even if notation of the consent is not made on any
Security. Any such Holder or subsequent Holder, however, may revoke the consent
as to his Security or portion of a Security. Such revocation shall be effective
only if the Trustee receives the notice of revocation before the date the
amendment, supplement or waiver becomes effective. Notwithstanding the above,
nothing in this paragraph shall impair the right of any Securityholder under ss.
316(b) of the TIA.
The Issuers may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders of Securities entitled to
consent to any amendment, supplement or waiver. If a record date is fixed, then
notwithstanding the second and third sentences of the immediately preceding
paragraph, those Persons who were Holders of Securities at such record date (or
their duly designated proxies), and only those Persons, shall be entitled to
consent to such amendment, supplement or waiver or to revoke any consent
previously given, whether or not such Persons continue to be Holders of
Securities after such record date. Such consent shall be effective only for
actions taken within 90 days after such record date.
After an amendment, supplement or waiver becomes effective, it
shall bind every Securityholder (and every subsequent Securityholder), unless it
makes a change described in any of clauses (a) through (j) of Section 9.2; if it
makes such a change, the amendment, supplement or waiver shall bind every Holder
consenting thereto and every subsequent Holder of a Security or portion of a
Security that evidences the same debt as the consenting Holder's Security.
SECTION IX.5 Notation on or Exchange of Securities.
If an amendment, supplement or waiver changes the terms of a
Security, the Trustee shall (in accordance with the specific direction of the
Issuers) request the Holder of the Security to deliver it to the Trustee. The
Trustee shall (in accordance with the specific direction of the Issuers) place
an appropriate notation on the Security about the changed terms and return it to
the Holder. Alternatively, if the Issuers or the Trustee so determines, the
Issuers in exchange for the Security shall issue and the Trustee shall
authenticate a new Security that reflects the changed terms. Failure to make the
appropriate notation or issue a new Security shall not affect the validity and
effect of such amendment, supplement or waiver.
SECTION IX.6 Trustee To Sign Amendments, Etc.
The Trustee shall sign any amendment, supplement or waiver
authorized pursuant to this Article IX if the amendment, supplement or waiver
does not adversely affect the rights, duties or immunities of the Trustee. If it
does, the Trustee may, but need not, sign it.
ARTICLE X
GUARANTEE
SECTION X.1 Unconditional Guarantee.
Each Subsidiary Guarantor, if any, hereby unconditionally
guarantees in accordance with the provisions of Section 4.11, to each Holder of
a Security authenticated and delivered by the Trustee and to the Trustee and its
successors and assigns, that: (i) the principal of and interest on the
Securities will be promptly paid in full when due, subject to any applicable
grace period, whether at maturity, by acceleration or otherwise and interest on
the overdue principal, if any, and interest on any interest, to the extent
lawful, of the Securities to the Holders or the Trustee will be promptly paid in
full or performed, all in accordance with the terms hereof and thereof; and (ii)
in case of any extension of time of payment or renewal of any Securities, the
same will be promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, subject to any applicable grace period,
whether at stated maturity, by acceleration or otherwise, subject, however, in
the case of clauses (i) and (ii) above, to the limitations set forth in Section
10.03. Each Subsidiary Guarantor, if any, hereby agrees that its obligations
hereunder shall be unconditional, irrespective of the validity, regularity or
enforceability of the Securities or this Indenture, the absence of any action to
enforce the same, any waiver or consent by any Holder of the Securities with
respect to any provisions hereof or thereof, the recovery of any judgment
against the Issuers, and action to enforce the same or any other circumstance
that might otherwise constitute a legal or equitable discharge or defense of a
guarantor. Each Subsidiary Guarantor, if any, hereby waives diligence,
presentment, demand of payment, filing of claims with a court in the event of
insolvency or bankruptcy of the Issuers, any right to require a proceeding first
against the Issuers, protest, notice and all demands whatsoever and covenants
that its Subsidiary Guarantee will not be discharged except by complete
performance of the obligations contained in the Securities, this Indenture and
in its Subsidiary Guarantee. If any Securityholder or the Trustee is required by
any court or otherwise to return to the Issuers, any Subsidiary Guarantor or any
custodian, trustee, liquidator or other similar official acting in relation to
the Issuers or any such Subsidiary Guarantor, any amount paid by the Issuers or
any such Subsidiary Guarantor to the Trustee or such Securityholder, each
Subsidiary Guarantee to the extent theretofore discharged, shall be reinstated
in full force and effect. Each Subsidiary Guarantor further agrees that, as
between it and all other Subsidiary Guarantors, on the one hand, and the Holders
and the Trustee, on the other hand, (x) the maturity of the obligations
guaranteed hereby may be accelerated as provided in Article VI for the purposes
of a Subsidiary Guarantee notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any acceleration of such obligations
as provided in Article VI, such obligations (whether or not due and payable)
shall forthwith become due and payable by the Subsidiary Guarantors for the
purpose of the Subsidiary Guarantees.
SECTION X.2 Severability.
In case any provision of this Article X shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
SECTION X.3 Limitation of Liability.
Each Subsidiary Guarantor, and by its acceptance hereof each
Holder, hereby confirms that it is the intention of all such parties that the
guarantee by each Subsidiary Guarantor pursuant to its Subsidiary Guarantee not
constitute a fraudulent transfer or conveyance for purposes of any Bankruptcy
Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act
or any similar Federal or state law. To effectuate the foregoing intention, the
Holders and each Subsidiary Guarantor hereby irrevocably agree that the
obligations of each Subsidiary Guarantor under its Subsidiary Guarantee shall be
limited to the maximum amount as will, after giving effect to all other
contingent and fixed liabilities of such Subsidiary Guarantor and after giving
effect to any collections from or payments made by or on behalf of any of the
other Subsidiary Guarantors in respect of the obligations of such other
Subsidiary Guarantors under the other Subsidiary Guarantees or pursuant to
Section 10.05, result in the obligations of such Subsidiary Guarantor under its
Subsidiary Guarantee not constituting such fraudulent transfer or conveyance.
SECTION X.4 Subsidiary Guarantors May
Consolidate, etc., on Certain Terms.
(a) Nothing contained in this Indenture or in the Securities
shall prevent any consolidation or merger of a Subsidiary Guarantor with or into
an Issuer or another Subsidiary Guarantor or shall prevent any sale of assets or
conveyance of the property of a Subsidiary Guarantor as an entirety or
substantially as an entirety, to an Issuer or another Subsidiary Guarantor. Upon
any such consolidation, merger, sale or conveyance, the Subsidiary Guarantee
given by such Subsidiary Guarantor shall no longer have any force or effect.
(b) Upon the sale or disposition as an entirety (whether by
merger, stock purchase, asset sale or otherwise) of a Subsidiary Guarantor (or
all or substantially all its assets) to a Person that is not a Subsidiary of the
Company and which sale or disposition is otherwise in compliance with Section
4.17 and the other terms of this Indenture, such Subsidiary Guarantor shall be
deemed released from all obligations under this Article X without any further
action required on the part of the Trustee or any Holder.
The Trustee shall deliver an appropriate instrument evidencing
such release upon receipt of a request by the Issuers accompanied by Officers'
Certificates and Opinions of Counsel certifying as to the compliance with this
Section 10.04. Any Subsidiary Guarantor not so released remains liable for the
full amount of principal of and interest on the Securities as provided in this
Article X.
SECTION X.5 Contribution.
In order to provide for just and equitable contribution among
the Subsidiary Guarantors, the Subsidiary Guarantors agree, inter se, that in
the event any payment or distribution is made by any Subsidiary Guarantor (a
"Funding Guarantor") under any of the Subsidiary Guarantees, such Funding
Guarantor shall be entitled to a contribution from all other Subsidiary
Guarantors in a pro rata amount based on the Adjusted Net Assets (as defined
below) of each of the Subsidiary Guarantors (including the Funding Guarantor)
for all payments, damages and expenses incurred by that Funding Guarantor in
discharging the Issuers' obligations with respect to the Securities or any
obligations of any of the other Subsidiary Guarantors with respect to any of the
Subsidiary Guarantees. "Adjusted Net Assets" of any Person at any date shall
mean the lesser of the amount by which (x) the fair value of the property of
such Person exceeds the total amount of liabilities, including, without
limitation, contingent liabilities (after giving effect to all other fixed and
contingent liabilities incurred or assumed on such date), but excluding
liabilities under a Subsidiary Guarantee of such Person at such date and (y) the
present fair salable value of the assets of such Person at such date exceeds the
amount that will be required to pay the probable liability of such Person on its
debts (after giving effect to all other fixed and contingent liabilities
incurred or assumed on such date), excluding debt in respect of the Subsidiary
Guarantee of such Person, as they become absolute and matured.
SECTION X.6 Waiver of Subrogation.
Until all Obligations under each of the Subsidiary Guarantees,
the Securities and this Indenture are paid in full, each of the Subsidiary
Guarantors hereby irrevocably waives any claims or other rights that it may now
or hereafter acquire against the Issuers that arise from the existence, payment,
performance or enforcement of its obligations under its Subsidiary Guarantee and
this Indenture, including, without limitation, any right of subrogation,
reimbursement, exoneration, indemnification and any right to participate in any
claim or remedy of any Holder of Securities against the Issuers, whether or not
such claim, remedy or right arises in equity, or under contract, statute or
common law, including, without limitation, the right to take or receive from the
Issuers, directly or indirectly, in cash or other property or by set-off or in
any other manner, payment or security on account of such claim or other rights.
If any amount shall be paid to any of the Subsidiary Guarantors in violation of
the preceding sentence and the Securities shall not have been paid in full, such
amount shall have been deemed to have been paid to such Person for the benefit
of, and held in trust for the benefit of, the Holders of the Securities, and
shall, forthwith be paid to the Trustee for the benefit of such Holders to be
credited and applied upon the Securities, whether matured or unmatured, in
accordance with the terms of this Indenture. Each of the Subsidiary Guarantors
acknowledges that it will receive direct and indirect benefits from the
financing arrangements contemplated by this Indenture and that the waiver set
forth in this Section 10.06 is knowingly made in contemplation of such benefits.
SECTION X.7 Execution of Guarantee.
To evidence their guarantee to the Securityholders set forth
in this Article X, each Subsidiary Guarantor hereby agrees to execute a
Subsidiary Guarantee in substantially the form of Exhibit B to this Indenture,
which shall be endorsed on each Security ordered to be authenticated and
delivered by the Trustee. Each Subsidiary Guarantor hereby agrees that its
Subsidiary Guarantee set forth in this Article X shall remain in full force and
effect notwithstanding any failure to endorse on each Security a notation of a
Subsidiary Guarantee. A Subsidiary Guarantee shall be signed on behalf of a
Subsidiary Guarantor by two Officers, or an Officer and an Assistant Secretary,
or one Officer shall sign and one Officer or an Assistant Secretary (each of
whom shall, in each case, have been duly authorized by all requisite corporate
or partnership actions) shall attest to the Subsidiary Guarantee prior to the
authentication of the Security on which it is endorsed, and the delivery of such
Security by the Trustee, after the authentication thereof hereunder, shall
constitute due delivery of the Subsidiary Guarantee on behalf of such Subsidiary
Guarantor. Such signatures upon a Subsidiary Guarantee may be by manual or
facsimile signature of such officers and may be imprinted or otherwise
reproduced on the Subsidiary Guarantee and in case any such officer who shall
have signed a Subsidiary Guarantee shall cease to be such officer before the
Security on which the Subsidiary Guarantee is endorsed shall have been
authenticated and delivered by the Trustee or disposed of by the Issuers, such
Security nevertheless may be authenticated and delivered or disposed of as
though the Person who signed the Subsidiary Guarantee had not ceased to be such
officer of the Subsidiary Guarantor.
SECTION X.8 Waiver of Stay, Extension or Usury
Laws.
Each Subsidiary Guarantor, if any, covenants (to the extent
that it may lawfully do so) that it will not at any time insist upon, plead, or
in any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law or any usury law or other law that would prohibit or forgive such
Subsidiary Guarantor from performing a Subsidiary Guarantee as contemplated
herein, wherever enacted, now or at any time hereafter in force, or which may
affect the covenants or the performance of this Indenture; and (to the extent
that it may lawfully do so) each Subsidiary Guarantor, if any, hereby expressly
waives all benefit or advantage of any such law, and covenants that it will not
hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.
ARTICLE XI
MISCELLANEOUS
SECTION XI.1 Trust Indenture Act Controls.
If and to the extent that any provision of this Indenture
limits, qualifies or conflicts with the duties imposed by, or with another
provision (an "incorporated provision") included in this Indenture by operation
of, Sections 310 to 318, inclusive, of the TIA, such imposed duties or
incorporated provision shall control.
SECTION XI.2 Notices.
Any notice or communication shall be deemed given if in
writing and delivered in Person or mailed by first-class mail, addressed as
follows, and received by the addressee:
(a) if to the Issuers or any Subsidiary Guarantor:
Sprint Spectrum L.P.
4900 Main Street
12th Floor
Kansas City, Missouri 64112
Attention: Joseph M. Gensheimer, Esq.
(b) if to the Trustee:
The Bank of New York
101 Barclay Street
Floor 21 West
New York, New York 10286
Attention: Corporate Trust Trustee Administration
The Issuers or the Trustee by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Holder of a Security,
including any notice delivered in connection with TIA ss. 310(b), TIA ss.
313(c), TIA ss. 314(a) and TIA ss. 315(b), shall be mailed to him, first-class
postage prepaid, at his address as it appears on the registration books of the
Registrar and shall be deemed given to him if so mailed within the time
prescribed.
Failure to mail a notice or communication to a Securityholder
or any defect in it shall not affect its sufficiency with respect to other
Securityholders. Except for a notice to the Trustee, which is deemed given only
when received, if a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION XI.3 Communications by Holders with Other
Holders.
Securityholders may communicate pursuant to TIA ss. 312(b)
with other Securityholders with respect to their rights under this Indenture or
the Securities. The Issuers, the Trustee, the Registrar and any other Person
shall have the protection of TIA ss. 312(c).
SECTION XI.4 Certificate and Opinion of Counsel
as to Conditions Precedent.
Upon any request or application by the Issuers or any
Subsidiary Guarantor to the Trustee to take any action under this Indenture, the
Issuers or any Subsidiary Guarantor, as the case may be, shall furnish to the
Trustee (a) Officers' Certificates in form and substance satisfactory to the
Trustee stating that, in the opinion of the signers, all conditions precedent,
if any, provided for in this Indenture relating to the proposed action have been
complied with, (b) Opinions of Counsel in form and substance satisfactory to the
Trustee stating that, in the opinion of such counsel, all such conditions have
been complied with and (c) where applicable, a certificate or opinion by an
accountant that complies with TIA ss. 314(c).
SECTION XI.5 Statements Required in Certificate
and Opinion of Counsel.
Each certificate and Opinion of Counsel with respect to
compliance with a condition or covenant provided for in this Indenture shall
include:
(a) a statement that the Person making such certificate
or Opinion of Counsel has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements contained in
such certificate or Opinion of Counsel are based;
(c) a statement that, in the opinion of such Person, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(d) a statement as to whether or not, in the opinion of
such Person, such condition or covenant has been complied with.
SECTION XI.6 Rules by Trustee, Paying Agent,
Registrar.
The Trustee may make reasonable rules in accordance with the
Trustee's customary practices for action by or at a meeting of Securityholders.
The Paying Agent or Registrar may make reasonable rules for its functions.
SECTION XI.7 Legal Holidays.
If a payment date is a Legal Holiday at a place of payment,
payment may be made at that place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period.
SECTION XI.8 Governing Law.
The internal laws of the State of New York shall govern this
Indenture, the Securities and any Subsidiary Guarantees without regard to
principles of conflict of laws.
SECTION XI.9 No Recourse Against Others.
A trustee, director, officer, employee, stockholder, partner,
organizer or incorporator, as such, of the Issuers or a Subsidiary Guarantor
(including Sprint Spectrum Holding Company, L.P. and the Partners (and the
Affiliates of the Partners)) shall not have any liability for any obligations
of the Issuers or a Subsidiary Guarantor under the
Securities, this Indenture or any Subsidiary Guarantee or for any claim based
on, in respect of or by reason of such obligations or their creation. Each
Securityholder by accepting a Security waives and releases all such liability.
SECTION XI.10 Successors.
All agreements of the Issuers and any Subsidiary Guarantors in
this Indenture, the Securities and any Subsidiary Guarantees shall bind their
respective successors. All agreements of the Trustee in this Indenture shall
bind its successor.
SECTION XI.11 Duplicate Originals.
The parties may sign any number of copies of this Indenture.
Each signed copy shall be an original, but all of them together represent the
same agreement.
SECTION XI.12 Joint and Several Obligations.
Each of the Issuers shall have joint and several liability in
respect of all obligations hereunder. Each Issuer hereby acknowledges that this
Agreement is the independent and several obligation of each of the Issuers and
may be enforced against either Issuer separately, whether or not enforcement of
any right or remedy hereunder has been sought against any other party hereto.
Each Issuer hereby expressly waives, with respect to any of the amounts owing
hereunder by any other Issuer in respect of the obligations (collectively, the
"Other Obligations"), diligence, presentment, demand of payment, protest and all
notices whatsoever, and any requirement that any other party exhaust any right,
power or remedy or proceed against such other Issuer under this Indenture or
against any other Person under any other guarantee of, or security for, any of
such Other Obligations.
SECTION XI.13 Separability.
In case any provision in this Indenture, the Securities or in
any Subsidiary Guarantee shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby, and a Holder shall have no claim
therefor against any party hereto.
SECTION XI.14 Table of Contents, Headings, Etc.
The table of contents, cross-reference sheet and headings of
the Articles and Sections of this Indenture have been inserted for convenience
of reference only, and are not to be considered a part hereof, and shall in no
way modify or restrict any of the terms or provisions hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed as of the date first written above.
SPRINT SPECTRUM L.P., as
Co-Issuer
By: Sprint Spectrum Holding
Company, L.P., its
General Partner
By: /s/ Robert M. Neumeister, Jr.
Name: Robert M. Neumeister, Jr.
Title: Chief Financial Officer
SPRINT SPECTRUM FINANCE
CORPORATION, as Co-Issuer
By: /s/ Robert M. Neumeister, Jr.
Name: Robert M. Neumeister, Jr.
Title: Chief Financial Officer
THE BANK OF NEW YORK,
as Trustee
By: /s/ Paul J. Schmalzel
Name: Paul J. Schmalzel
Title: Assistant Treasurer
<PAGE>
A-5
Exhibit A
SPRINT SPECTRUM L.P.
SPRINT SPECTRUM FINANCE CORPORATION
Cusip No.: 85207FAA6
No. $
11% SENIOR NOTE DUE 2006
Each of SPRINT SPECTRUM L.P. and SPRINT SPECTRUM FINANCE CORPORATION
promises to pay to Cede & Co. or registered assigns upon surrender hereof the
principal sum of Two Hundred and Fifty Million Dollars on August 15, 2006.
Interest Payment Dates: February 15, August 15 and at stated maturity.
By: Sprint Spectrum L.P.
By: Sprint Spectrum Holding
Company, L.P., its General
Partner
By:
Name:
Title:
By:
Name:
Title:
By: Sprint Spectrum Finance
Corporation
By:
Name:
Title:
By:
Name:
Title:
Dated:
<PAGE>
Certificate of Authentication
This is one of the Senior Notes due 2006 referred to in the
within-mentioned Indenture.
THE BANK OF NEW YORK, as Trustee
By:
Authorized Signatory
<PAGE>
(REVERSE OF SECURITY)
SPRINT SPECTRUM L.P.
SPRINT SPECTRUM FINANCE CORPORATION
11% SENIOR NOTE DUE 2006
1. Interest. SPRINT SPECTRUM L.P., a Delaware limited
partnership (the "Company"), and SPRINT SPECTRUM FINANCE CORPORATION, a Delaware
corporation ("FinCo" and, together with the Company, the "Issuers"), promise to
pay to the registered holder of this Security, until the principal hereof is
paid or duly provided for, interest on the principal amount set forth on the
face of this Security at a rate of 11% per annum. Interest on the Securities
will accrue from and including the most recent date to which interest has been
paid or duly provided for or, if no interest has been paid or duly provided for,
from and including August 23, 1996 through but excluding the date on which
interest is paid or duly provided for. Interest shall be payable in arrears on
each February 15 and August 15 and at stated maturity, commencing February 15,
1997. Interest will be computed on the basis of a 360-day year of twelve 30-day
months. Interest on overdue principal and on overdue installments of interest
will accrue at the rate of interest borne by this Security. Interest on any
overdue principal or interest shall be payable on demand.
2. Method of Payment. The Issuers will pay interest on the
Securities (except defaulted interest) to the registered Holder of this
Security. Holders must surrender Securities to a Paying Agent to collect
principal payments. The Issuers will pay principal and interest in money of the
United States that at the time of payment is legal tender for the payment of
public and private debts ("U.S. Legal Tender"). However, the Issuers may pay
principal and interest by wire transfer of Federal funds or interest by check
payable in U.S.
Legal Tender.
3. Paying Agent. Initially, The Bank of New York (the
"Trustee") will act as a Paying Agent. The Issuers may change any Paying Agent
without notice. Neither the Issuers nor any of their Affiliates may act as Pay-
ing Agent.
4. Indenture. The Issuers issued the Securities under an
Indenture dated as of August 15, 1996 (the "Indenture") among the Issuers and
the Trustee. This Security is one of an issue of Securities of the Issuers
issued, or to be issued, under the Indenture. Capitalized terms herein are used
as defined in the Indenture unless otherwise defined herein. The terms of the
Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S. Code ss.ss.
77aaa-77bbbb), as amended from time to time. The Securities are subject to all
such terms, and Holders are referred to the Indenture and such Act for a
statement of them. The Securities are senior obligations of the Issuers limited
in aggregate principal amount to $250,000,000.
5. Subsidiary Guarantees. This Security may after the
date hereof be entitled to certain Subsidiary Guarantees made for the benefit of
the Holders pursuant to Section 4.11 of the Indenture.
6. Optional Redemption. The Issuers, at their option, may
redeem all or any of the Securities, in whole or in part, at any time on or
after August 15, 2001, at the redemption prices (expressed as percentages of
principal amount) set forth below, plus accrued and unpaid interest, if any, to
the redemption date, if redeemed during the 12-month period beginning on August
15 of the years indicated below:
Year Redemption Price
2001.................................... 105.500%
2002.................................... 103.667%
2003.................................... 101.833%
2004 and thereafter..................... 100.00%
7. Redemption Upon Public Equity Offering. Prior to August 15,
1999, the Issuers may redeem up to 35% of the originally issued principal amount
of the Securities at a redemption price equal to 111% of the principal amount of
the Securities so redeemed with the net proceeds of one or more Public Equity
Offerings of Common Equity Interests of (i) the Company, (ii) Holdings or (iii)
a Special Purpose Corporation, in any case, resulting in gross proceeds to (or
contributed to the Company in respect of Common Equity Interests) of at least
$100 million in the aggregate; provided that at least 65% of the originally
issued principal amount of the Securities would remain outstanding immediately
after giving effect to such redemption.
8. Notice of Redemption. Notice of redemption will be mailed
at least 30 days but not more than 60 days before the redemption date to each
Holder of Securities to be redeemed. On and after the Redemption Date, unless
the Issuers default in making the redemption payment, interest ceases to accrue
on Securities or portions thereof called for redemption.
9. Offers To Purchase. The Indenture provides that upon the
occurrence of a Change of Control or an Asset Sale and subject to further
limitations contained therein, the Issuers shall make an offer to purchase
outstanding Securities in accordance with the procedures set forth in the
Indenture.
10. Denominations. The Securities are in registered form
without coupons and only in denominations of $1,000 of principal amount and in-
tegral multiples thereof.
11. Persons Deemed Owners. The registered Holder of this
Security may be treated as the owner of this Security for all purposes.
12. Unclaimed Money. If money for the payment of principal or
interest remains unclaimed for one year, the Trustee or Paying Agent will pay
the money back to the Issuers or a Subsidiary Guarantor, as the case may be, at
its request. After that, Holders entitled to the money must look to the Issuers
or a Subsidiary Guarantor for payment as general creditors unless an "abandoned
property" law designates another Person.
13. Amendment, Supplement, Waiver, Etc. The Issuers, any
Subsidiary Guarantors and the Trustee (if a party thereto) may, without the
consent of the Holders of any outstanding Securities, amend, waive or supplement
the Indenture, the Securities or any Subsidiary Guarantee for certain specified
purposes, including, among other things, curing ambiguities, defects or
inconsistencies, maintaining the qualification of the Indenture under the Trust
Indenture Act of 1939, as amended, and making any change that does not adversely
affect the rights of any Holder. Other amendments and modifications of the
Indenture, the Securities or any Subsidiary Guarantee may be made by the
Issuers, any Subsidiary Guarantor and the Trustee with the consent of the
Holders of not less than a majority of the aggregate principal amount of the
outstanding Securities, subject to certain exceptions requiring the consent of
the Holders of the particular Securities to be affected.
14. Successor Corporation. When a successor corporation or
partnership, as the case may be, assumes all the obligations of its predecessor
under the Securities or a Subsidiary Guarantee, as the case may be, and the
Indenture and the transaction complies with the terms of Article V of the
Indenture, the predecessor corporation or partnership, as the case may be, will,
except as provided in Article V, be released from those obligations.
15. Restrictive Covenants. The Indenture contains certain
covenants that, among other things, limit the ability of the Company and the
Restricted Subsidiaries to make restricted payments, to incur indebtedness, to
create liens, to sell assets, to permit restrictions on dividends and other
payments by Restricted Subsidiaries to the Company, to consolidate, merge or
sell all or substantially all of its assets, to engage in transactions with
affiliates or to engage in certain businesses. The limitations are subject to a
number of important qualifications and exceptions. The Company must annually
report to the Trustee on compliance with such limitations.
16. Defaults and Remedies. Events of Default are set forth in
the Indenture. Subject to certain limitations in the Indenture, if an Event of
Default (other than an Event of Default specified in Section 6.1(a)(ix) or (x)
of the Indenture with respect to an Issuer) occurs and is continuing, then the
Holders of not less than 25% in aggregate principal amount of the outstanding
Securities may, and the Trustee upon the request of the Holders of not less than
25% in aggregate principal amount of the outstanding Securities shall, declare
the Default Amount of and any accrued interest on all of the Securities to be
due and payable immediately. If an Event of Default specified in Section
6.1(a)(ix) or (x) of the Indenture occurs with respect to an Issuer, the Default
Amount shall ipso facto become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Holder. Holders may
not enforce the Indenture, the Securities or any Subsidiary Guarantee except as
provided in the Indenture. The Trustee may require indemnity satisfactory to it
before it enforces the Indenture, the Securities or any Subsidiary Guarantee.
Subject to certain limitations, Holders of a majority in principal amount of the
then outstanding Securities may direct the Trustee in its exercise of any trust
or power. The Trustee may withhold from Holders notice of any continuing default
(except a default in payment of the Default Amount, principal or interest) if it
determines that withholding notice is in their interests.
17. Trustee Dealings with Issuers. The Trustee, in its
individual or any other capacity, may make loans to, accept deposits from, and
perform services for the Issuers or their Affiliates, and may otherwise deal
with the Issuers or their Affiliates, as if it were not Trustee.
18. No Recourse Against Others. A director, officer, employee,
partner, stockholder or incorporator, as such, of the Issuers or any Subsidiary
Guarantor (including Holdings and the Partners (and the Affiliates of the
Partners)) shall not have any liability for any obligations of the Issuers or
any such Subsidiary Guarantor under the Indenture, the Securities or any
Subsidiary Guarantee or for any claim based on, in respect of, or by reason of,
such obligations or their creation. Each Holder by accepting a Security waives
and releases all such liability. The waiver and release are part of the
consideration for the issue of the Securities and any Subsidiary Guarantee.
19. Discharge. The Issuers' and any Subsidiary Guarantor's
obligations pursuant to the Indenture will be discharged, except for obligations
pursuant to certain sections thereof, subject to the terms of the Indenture,
upon the payment of all the Securities or upon the irrevocable deposit with the
Trustee of U.S. Legal Tender or U.S. Government Obligations sufficient to pay
when due principal of and interest on the Securities to maturity or redemption,
as the case may be.
20. Authentication. This Security shall not be valid un-
til the Trustee signs the certificate of authentication on the other side of
this Security.
The internal laws of the State of New York shall govern this
Security without regard to principles of conflict of laws.
The Company will furnish to any Holder upon written request
and without charge a copy of the Indenture. Requests may be made to:
SPRINT SPECTRUM L.P.
4900 Main Street
12th Floor
Kansas City, Missouri 64112
Attention: Joseph M. Gensheimer, Esq.
<PAGE>
ASSIGNMENT FORM
If you the Holder want to assign this Security, fill in the form below and have
your signature guaranteed:
I or we assign and transfer this Security to
(Insert assignee's social security or tax ID number) __________
(Print or type assignee's name, address and zip code)
and irrevocably appoint
agent to transfer this Security on the books of the Issuers. The agent may sub-
stitute another to act for him.
Date:______________ Your Signature:
(Sign exactly as your name appears on the
other side of this Security)
Signature Guarantee:
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Security purchased by the Issuers pursuant to
Section 4.13 or 4.15 of the Indenture, check the Box: [ ]
If you wish to have a portion of this Security purchased by
the Issuers pursuant to Section 4.13 or 4.15 of the Indenture, state the amount:
$------------
Date: ________________ Your Signature: ____________________
Signature Guarantee: _______________________
<PAGE>
EXHIBIT B
SUBSIDIARY GUARANTEE
The undersigned hereby unconditionally guarantees on a senior
unsecured basis to the Holder of this Security the payments of principal of and
interest on this Security in the amounts and at the time when due and interest
on the overdue principal and interest, if any, of this Security, if lawful, and
the payment or performance of all other obligations of the Issuers under the
Indenture or the Securities, to the Holder of this Security and the Trustee, all
in accordance with and subject to the terms and limitations of this Security,
Article X of the Indenture and this Subsidiary Guarantee. This Subsidiary
Guarantee will become effective in accordance with Article X of the Indenture
and its terms shall be evidenced therein. The validity and enforceability of any
Subsidiary Guarantee shall not be affected by the fact that it is not affixed to
any particular Security.
The obligations of the undersigned to the Holders of
Securities and to the Trustee pursuant to this Subsidiary Guarantee and the
Indenture are expressly set forth in Article X of the Indenture and reference is
hereby made to the Indenture for the precise terms of this Subsidiary Guarantee
and all of the other provisions of the Indenture to which this Subsidiary
Guarantee relates.
The internal laws of the State of New York shall govern this
Subsidiary Guarantee without regard to principles of conflict of laws.
[ ]
By:
Name:
Title:
By:
Name:
Title:
Exhibit 4.3
SPRINT SPECTRUM L.P.
SPRINT SPECTRUM FINANCE CORPORATION,
as Issuers,
and
THE BANK OF NEW YORK,
as Trustee
----------------------------
INDENTURE
Dated as of August 15, 1996
-----------------------
$500,000,000 Principal Amount at Maturity
12 1/2% Senior Discount Notes due 2006
<PAGE>
CROSS-REFERENCE TABLE
TIA Section Indenture Section
ss. 310(a)(1) .............................................. 7.10; 11.1
(a)(2) ................................................ 7.10; 11.1
(a)(3) ................................................ N.A.
(a)(4) ................................................ N.A.
(b) ................................................ 7.8; 7.10; 11.2
(c) ................................................ N.A.
ss. 311(a) .............................................. 7.11
(b) ................................................ 7.11
(c) ................................................ N.A.
ss. 312(a) .............................................. 2.5
(b) ................................................ 11.3
(c) ................................................ 11.3
ss. 313(a) .............................................. 7.6
(b)(1) ................................................ 7.6
(b)(2) ................................................ 7.6
(c) ................................................ 7.6; 11.2
(d) ................................................ 7.6
ss. 314(a) .............................................. 4.6; 4.7; 11.2
(b) ................................................ N.A.
(c)(1) ................................................ 11.4
(c)(2) ................................................ 11.4
(c)(3) ................................................ 11.4
(d) ................................................ N.A.
(e) ................................................ 11.5
(f) ................................................ N.A.
ss. 315(a) .............................................. 7.1(b)
(b) ................................................ 7.5; 11.2
(c) ................................................ 7.1(a)
(d) ................................................ 7.1(c)
(e) ................................................ 6.11
ss. 316(a) (last sentence) .................................... 2.9
(a)(1)(A) ................................................ 6.5
(a)(1)(B) ................................................ 6.4
(a)(2) ................................................ N.A.
(b) ................................................ 6.7
ss. 317(a)(1) .............................................. 6.8
(a)(2) ................................................ 6.9
(b) ................................................ 2.4
ss. 318(a) .............................................. 11.1
- --------------------
N.A. means Not Applicable.
NOTE:This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of this Indenture.
<PAGE>
TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINITIONS AND
INCORPORATION BY REFERENCE
1.1 Definitions.......................................... 1
1.2 Incorporation by Reference of Trust
Indenture Act.................................... 23
1.3 Rules of Construction................................ 23
ARTICLE II
THE SECURITIES
2.1 Form and Dating...................................... 24
2.2 Execution and Authentication......................... 24
2.3 Registrar and Paying Agent........................... 25
2.4 Paying Agent To Hold Money in Trust.................. 25
2.5 Securityholder Lists................................. 26
2.6 Transfer and Exchange................................ 26
2.7 Replacement Securities............................... 27
2.8 Outstanding Securities............................... 27
2.9 Treasury Securities.................................. 28
2.10 Temporary Securities................................. 28
2.11 Cancellation......................................... 28
2.12 Defaulted Interest................................... 28
2.13 CUSIP Number......................................... 29
2.14 Deposit of Moneys.................................... 29
ARTICLE III
REDEMPTION
3.1 Election To Redeem; Notices to Trustee............... 29
3.2 Selection of Securities To Be Redeemed............... 30
3.3 Notice of Redemption................................. 30
3.4 Effect of Notice of Redemption....................... 32
3.5 Deposit of Redemption Price.......................... 32
3.6 Securities Redeemed in Part.......................... 32
ARTICLE IV
COVENANTS
4.1 Payment of Securities................................ 32
4.2 Maintenance of Office or Agency...................... 33
4.3 Corporate or Partnership Existence................... 33
4.4 Payment of Taxes and Other Claims.................... 34
4.5 Maintenance of Properties; Insurance;
Books and Records; Compliance with Law........... 34
4.6 Compliance Certificates.............................. 35
4.7 Reports.............................................. 35
4.8 Limitation on Additional Indebtedness................ 36
4.9 Limitation on Restricted Payments.................... 38
4.10 Limitation on Liens Securing Certain
Indebtedness..................................... 41
4.11 Limitation on Issuance of Certain Guarantees
by, and Debt Securities of, Restricted
Subsidiaries..................................... 41
4.12 Limitation on Dividends and Other Payment
Restrictions Affecting Restricted
Subsidiaries..................................... 41
4.13 Disposition of Proceeds of Asset Sales............... 42
4.14 Limitation on Transactions with Equityholders
and Affiliates................................... 46
4.15 Change of Control.................................... 47
4.16 Limitation on Designations of Unrestricted
Subsidiaries..................................... 49
4.17 Limitation on Activities of the Issuers and
the Restricted Subsidiaries...................... 51
4.18 Limitation on Ownership of Equity Interests
of Restricted Subsidiaries....................... 51
4.19 Amendments to Capital Contribution
Agreement........................................ 52
4.20 Waiver of Stay, Extension or Usury Laws.............. 52
ARTICLE V
SUCCESSOR CORPORATION
5.1 Consolidation, Merger, Sale of Assets, Etc........... 52
5.2 Successor Entity Substituted......................... 54
5.3 Status of Subsidiaries............................... 55
ARTICLE VI
DEFAULT AND REMEDIES
6.1 Events of Default.................................... 55
6.2 Acceleration......................................... 57
6.3 Other Remedies....................................... 58
6.4 Waiver of Past Default............................... 58
6.5 Control by Majority.................................. 58
6.6 Limitation on Suits.................................. 59
6.7 Rights of Holders To Receive Payment................. 59
6.8 Collection Suit by Trustee........................... 60
6.9 Trustee May File Proofs of Claim..................... 60
6.10 Priorities........................................... 61
6.11 Undertaking for Costs................................ 61
ARTICLE VII
TRUSTEE
7.1 Duties of Trustee.................................... 61
7.2 Rights of Trustee.................................... 63
7.3 Individual Rights of Trustee......................... 64
7.4 Trustee's Disclaimer................................. 64
7.5 Notice of Defaults................................... 65
7.6 Reports by Trustee to Holders........................ 65
7.7 Compensation and Indemnity........................... 66
7.8 Replacement of Trustee............................... 66
7.9 Successor Trustee by Merger, Etc..................... 67
7.10 Eligibility; Disqualification........................ 67
7.11 Preferential Collection of Claims Against
Issuers.......................................... 68
7.12 Money Held in Trust.................................. 68
7.13 Preferred Collection of Claims....................... 68
ARTICLE VIII
DISCHARGE OF INDENTURE; DEFEASANCE
8.1 Satisfaction and Discharge........................... 68
8.2 Legal Defeasance and Covenant Defeasance.............. 69
8.3 Application of Trust Money........................... 72
8.4 Repayment to the Issuers or a Subsidiary
Guarantor........................................ 72
8.5 Reinstatement........................................ 73
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
9.1 Without Consent of Holders........................... 74
9.2 With Consent of Holders.............................. 74
9.3 Compliance with Trust Indenture Act.................. 76
9.4 Revocation and Effect of Amendments and
Consents......................................... 76
9.5 Notation on or Exchange of Securities................. 77
9.6 Trustee To Sign Amendments, Etc...................... 77
ARTICLE X
GUARANTEE
10.1 Unconditional Guarantee.............................. 77
10.2 Severability......................................... 78
10.3 Limitation of Liability.............................. 78
10.4 Subsidiary Guarantors May Consolidate, etc.,
on Certain Terms................................. 80
10.5 Contribution......................................... 80
10.6 Waiver of Subrogation................................ 81
10.7 Execution of Guarantee............................... 82
10.8 Waiver of Stay, Extension or Usury Laws.............. 82
ARTICLE XI
MISCELLANEOUS
11.1 Trust Indenture Act Controls......................... 82
11.2 Notices.............................................. 82
11.3 Communications by Holders with Other Holders......... 83
11.4 Certificate and Opinion of Counsel as to
Conditions Precedent............................. 83
11.5 Statements Required in Certificate and Opinion
of Counsel....................................... 84
11.6 Rules by Trustee, Paying Agent, Registrar............ 84
11.7 Legal Holidays....................................... 84
11.8 Governing Law........................................ 85
11.9 No Recourse Against Others........................... 85
11.10 Successors........................................... 85
11.11 Duplicate Originals.................................. 85
11.12 Joint and Several Obligation......................... 85
11.13 Separability......................................... 86
11.14 Table of Contents, Headings, Etc..................... 86
SIGNATURES ..................................................... 93
EXHIBIT A - Form of Security
EXHIBIT B - Form of Subsidiary Guarantee
<PAGE>
INDENTURE dated as of August 15, 1996 by and among SPRINT
SPECTRUM L.P., a Delaware limited partnership (the "Company"), SPRINT SPECTRUM
FINANCE CORPORATION, a Delaware corporation ("FinCo" and, together with the
Company, the "Issuers"), and THE BANK OF NEW YORK, a New York banking
corporation, as Trustee (the "Trustee").
The Issuers have duly authorized the execution and delivery of
this Indenture to provide for the issuance of the Securities to be issued as
provided for in this Indenture. All things necessary to make the Securities the
valid and binding obligations of the Issuers, and to make this Indenture a valid
and binding agreement of each of the Issuers, have been done.
The parties hereto agree as follows for the benefit of each
other and for the equal and ratable benefit of the Holders of the Securities:
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION I.1 Definitions.
"Accreted Value" as of any date (the "Specified Date") means,
with respect to each $1,000 principal amount at maturity of the Securities:
(i) if the Specified Date is one of the following dates
(each a "Semi-Annual Accrual Date"), the amount set forth opposite such
date below:
Semi-Annual Accreted
Accrual Date Value
Issue Date........................................ $546.87
February 15, 1997................................. 579.48
August 15, 1997................................... 615.70
February 15, 1998................................. 654.18
August 15, 1998................................... 695.07
February 15, 1999................................. 735.51
August 15, 1999................................... 784.66
February 15, 2000................................. 833.71
August 15, 2000................................... 885.81
February 15, 2001................................. 941.18
August 15, 2001................................... $1,000.00;
(ii) if the Specified Date occurs between two Semi-Annual
Accrual Dates, the sum of (a) the Accreted Value for the Semi-Annual
Accrual Date immediately preceding the Specified Date and (b) an amount
equal to the product of (x) the Accreted Value for the immediately
following Semi-Annual Accrual Date less the Accreted Value for the
immediately preceding Semi-Annual Accrual Date and (y) a fraction, the
numerator of which is the number of days actually elapsed from the
immediately preceding Semi-Annual Accrual Date to the Specified Date
and the denominator of which is 180; and
(iii) if the Specified Date is after August 15, 2001, $1,000.
"Acquired Indebtedness" means Indebtedness of a Person
existing at the time such Person becomes a Restricted Subsidiary or assumed in
connection with an Asset Acquisition by such Person and not incurred in
connection with, or in anticipation of, such Person becoming a Restricted
Subsidiary or such Asset Acquisition.
"Affiliate" of any specified Person means any other Person
which, directly or indirectly, controls, is controlled by or is under direct or
indirect common control with, such specified Person. For the purposes of this
definition, (i) "control" when used with respect to any Person means the power
to direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing and (ii) each of the Partners shall be deemed an Affiliate of the
Company.
"Affiliate Transaction" has the meaning provided in Section
4.14.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Annualized Pro Forma Consolidated Operating Cash Flow" means
Consolidated Operating Cash Flow for the latest two full fiscal quarters for
which consolidated financial statements of the Company are available multiplied
by two. For purposes of calculating "Consolidated Operating Cash Flow" for any
period for purposes of this definition only, (i) any Subsidiary of the Company
that is a Restricted Subsidiary on the date of the transaction giving rise to
the need to calculate "Annualized Pro Forma Consolidated Operating Cash Flow"
(the "Transaction Date") shall be deemed to have been a Restricted Subsidiary at
all times during such period and (ii) any Subsidiary of the Company that is not
a Restricted Subsidiary on the Transaction Date shall be deemed not to have been
a Restricted Subsidiary at any time during such period. In addition to and
without limitation of the foregoing, for purposes of this definition only,
"Consolidated Operating Cash Flow" shall be calculated after giving effect on a
pro forma basis for the applicable period to, without duplication, any Asset
Sales or Asset Acquisitions (including, without limitation, any Asset
Acquisition giving rise to the need to make such calculation as a result of the
Company or one of the Restricted Subsidiaries (including any Person who becomes
a Restricted Subsidiary as a result of the Asset Acquisition) incurring,
assuming or otherwise being liable for Acquired Indebtedness) occurring during
the period commencing on the first day of such two fiscal quarter period to and
including the Transaction Date (the "Reference Period"), as if such Asset Sale
or Asset Acquisition occurred on the first day of the Reference Period.
"APC" means American PCS, L.P., a Delaware limited partner-
ship.
"Asset Acquisition" means (i) any purchase or other
acquisition (by means of transfer of cash or other property to others or payment
for property or services for the account or use of others, or otherwise) of
Equity Interests of any Person by the Company or any Restricted Subsidiary, in
either case, pursuant to which such Person shall become a Restricted Subsidiary
or shall be merged with or into the Company or any Restricted Subsidiary or (ii)
any acquisition by the Company or any Restricted Subsidiary of the assets of any
Person which constitute substantially all of an operating unit or line of
business of such Person.
"Asset Sale" means any direct or indirect sale, conveyance,
transfer, lease or other disposition to any Person other than the Company or a
Wholly-Owned Restricted Subsidiary, in one transaction or a series of related
transactions, of (i) any Equity Interests of any Restricted Subsidiary, (ii) any
FCC license for the provision of wireless telecommunications services held by
the Company or any Restricted Subsidiary (whether by sale of Equity Interests or
otherwise) or (iii) any other property or asset of the Company or any Restricted
Subsidiary outside of the ordinary course of business. For the purposes of this
definition, the term "Asset Sale" shall not include any disposition of
properties or assets of the Company or one or more of the Restricted
Subsidiaries in a transaction that either (x) involves aggregate consideration
of $5.0 million or less or (y) is governed by and complies with Section 5.1.
"Asset Sale Offer" has the meaning provided in Section 4.13.
"Asset Sale Payment Date" has the meaning provided in Section
4.13.
"Available Operating Cash Flow" means, for any period, the
positive cumulative Consolidated Operating Cash Flow realized during such period
or, if such cumulative Consolidated Operating Cash Flow for such period is
negative, the negative amount by which cumulative Consolidated Operating Cash
Flow is less than zero.
"Average Life to Stated Maturity" means, with respect to any
Indebtedness, as at any date of determination, the quotient obtained by dividing
(i) the sum of the products of (a) the number of years (or any fraction thereof)
from such date to the date or dates of each successive scheduled principal
payment (including, without limitation, any sinking fund requirements) of such
Indebtedness multiplied by (b) the amount of each such principal payment by (ii)
the sum of all such principal payments.
"Bank Credit Facility" means the credit facilities
contemplated by the Commitment Letter dated June 7, 1996 among the Company,
Chase Securities Inc. and Chemical Bank, as the same may be amended, modified,
renewed, refunded, replaced or refinanced from time to time.
"Bankruptcy Law" means Title 11 of the U.S. Code or any other
similar Federal, state or foreign law for the relief of debtors.
"Board" of any Person means the board of directors, management
committee or other governing body of such Person. For purposes of this
definition, while the Company is a partnership, "Board" shall mean, with respect
to the Company, the Partnership Board established under the Holdings Partnership
Agreement and any Person to whom appropriate authority has been delegated by
such Partnership Board.
"Business Day" means any day except a Saturday, a Sunday or
any day on which banking institutions in New York, New York or Kansas City,
Missouri, are required or authorized by law or other governmental action to be
closed.
"Cable Partner" means each of TCI Telephony Services, Inc.,
Comcast Telephony Service and Cox Telephony Partnership.
"Capitalized Lease Obligation" means any obligation to pay
rent or other amounts under a lease of (or other agreement conveying the right
to use) any property (whether real, personal or mixed) that is required to be
classified and accounted for as a capital lease obligation under GAAP and, for
the purpose of this Indenture, the amount of such obligation at any date shall
be the capitalized amount thereof at such date, determined in accordance with
GAAP.
"Cash Equivalents" means (i) any evidence of Indebtedness with
a maturity of 365 days or less issued by or directly, fully and unconditionally
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof); (ii) deposits, certificates of
deposit or acceptances with a maturity of 365 days or less of any institution
that is a member of the Federal Reserve System having combined capital and
surplus and undivided profits of not less than $500.0 million; (iii) commercial
paper with a maturity of 365 days or less issued by a corporation (other than an
Affiliate of the Company) incorporated or organized under the laws of the United
States or any state thereof or the District of Columbia and rated at least "A-1"
by S&P or "P-1" by Moody's; (iv) repurchase agreements and reverse repurchase
agreements relating to marketable direct obligations issued by or directly,
fully and unconditionally guaranteed or insured by the United States of America
or any agency or instrumentality thereof (provided that the full faith and
credit of the United States of America is pledged in support thereof), in each
case, maturing within 365 days from the date of acquisition and (v) any "Cash
Equivalents" as defined in the Bank Credit Facility as in effect on the Issue
Date.
"Change of Control" means the occurrence of any of the
following events: (i) any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act) other than a Permitted Holder or
Permitted Holders or a Person or group controlled by a Permitted Holder or
Permitted Holders is or becomes the "beneficial owner" (as defined in Rules
13d-3 and 13d-5 under the Exchange Act, except that a Person shall be deemed to
have "beneficial ownership" of all securities that such Person has the right to
acquire, whether such right is exercisable immediately or only after the passage
of time, upon the happening of an event or otherwise), directly or indirectly,
of more than 40% of the total Voting Equity Interests of the Company or
Holdings; provided a Permitted Holder or Permitted Holders or a group controlled
by a Permitted Holder or Permitted Holders does not own a greater percentage of
the total Voting Equity Interests of the Company or Holdings, as the case may
be; (ii) the Company or Holdings consolidates with, or merges with or into,
another Person or sells, assigns, conveys, transfers, leases or otherwise
disposes of all or substantially all of its assets to any Person, or any Person
consolidates with, or merges with or into, the Company or Holdings, in any such
event pursuant to a transaction in which the outstanding Voting Equity Interests
of the Company or Holdings are converted into or exchanged for cash, securities
or other property, and immediately after such transaction a "person" or "group"
(as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) other
than a Permitted Holder or Permitted Holders or a Person or group controlled by
a Permitted Holder or Permitted Holders is the "beneficial owner" (as defined in
Rules 13d-3 and 13d-5 under the Exchange Act, except that a Person shall be
deemed to have "beneficial ownership" of all securities that such Person has the
right to acquire, whether such right is exercisable immediately or only after
the passage of time, upon the happening of an event or otherwise), directly or
indirectly, of more than 40% of the total Voting Equity Interests of the
surviving or transferee Person; provided a Permitted Holder or Permitted Holders
or a Person or group controlled by a Permitted Holder or Permitted Holders does
not own a greater percentage of the total Voting Equity Interests of such
Person; and (iii) the approval by the holders of Equity Interests of the Company
or Holdings of any plan or proposal for the liquidation or dissolution of the
Company or Holdings.
"Change of Control Date" has the meaning provided in Section
4.15.
"Change of Control Offer" has the meaning provided in Section
4.15.
"Change of Control Payment Date" has the meaning provided in
Section 4.15.
"Commission" means the Securities and Exchange Commission.
"Common Equity Interests" means (i) with respect to a Person
which is a corporation, any and all shares, interests or other participations
in, and other equivalents (however designated and whether voting or nonvoting)
of, such Person's common stock and includes, without limitation, all series and
classes of such common stock and (ii) with respect to a Person which is not a
corporation, Equity Interests which have characteristics similar in all material
respects to those of common stock of a corporation.
"Company" means the party named as such in this Indenture
until a successor replaces it in accordance with the provisions of this
Indenture and, thereafter, means the successor.
"Consolidated Income Tax Expense" means, with respect to any
period, the provision for Federal, state, local, foreign and other income taxes
of the Company and the Restricted Subsidiaries for such period as determined on
a consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" means, with respect to any
period, without duplication, the sum of (i) the interest expense of the Company
and the Restricted Subsidiaries for such period as determined on a consolidated
basis in accordance with GAAP and shall, in any event, include, without
limitation, (a) any amortization of debt discount, (b) the net cost or net
benefit, as the case may be, under any Currency Agreements and Interest Rate
Protection Obligations (including any amortization of discounts), (c) the
interest portion of any deferred payment obligation, (d) all commissions,
discounts and other fees and charges owed with respect to letters of credit,
bills of exchange, promissory notes and bankers' acceptance financing and (e)
all accrued interest, (ii) all but the principal component of Capitalized Lease
Obligations paid, accrued and/or scheduled to be paid or accrued by the Company
and the Restricted Subsidiaries during such period as determined on a
consolidated basis in accordance with GAAP and (iii) the aggregate amount of
dividends and distributions paid or accrued during such period in respect of
Preferred Equity Interests of the Company and the Restricted Subsidiaries (other
than such dividends or distributions paid or accrued on or with respect to
Preferred Equity Interests owned by the Company or a Wholly-Owned Restricted
Subsidiary) determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, with respect to any period,
the net income (loss) of the Company and the Restricted Subsidiaries for such
period as determined on a consolidated basis in accordance with GAAP, adjusted,
to the extent included in calculating such net income, by excluding, without
duplication, (i) all extraordinary gains or losses, (ii) the portion of net
income (but not losses) of the Company allocable to minority interests in
unconsolidated Persons, except to the extent that cash dividends or
distributions have actually been received by the Company or any Restricted
Subsidiary, (iii) net income (or loss) of any Person combined with the Company
or a Restricted Subsidiary on a "pooling of interests" basis attributable to any
period prior to the date of combination, (iv) gains in respect of any Asset
Sales, (v) the net income of any Unrestricted Subsidiary, except to the extent
that cash dividends or distributions have actually been received by the Company
or a Restricted Subsidiary, (vi) the portion of net income (but not losses) of
the Company allocable to minority interests in Restricted Subsidiaries (other
than a Subsidiary Guarantor) of such person and (vii) the net income of any
Restricted Subsidiary (other than a Subsidiary Guarantor) for such period to the
extent the declaration of dividends or similar distributions by that Restricted
Subsidiary is not at the time permitted, directly or indirectly, by the terms of
its charter or any agreement, instrument, judgment, decree, order, statute, rule
or regulation applicable to that Restricted Subsidiary.
"Consolidated Operating Cash Flow" means, with respect to any
period, the Consolidated Net Income of the Company and the Restricted
Subsidiaries for such period (i) increased by (to the extent included in
computing Consolidated Net Income) the sum of (a) Consolidated Income Tax
Expense for such period; (b) Consolidated Interest Expense for such period; (c)
depreciation of the Company and the Restricted Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP; (d) amortization of
the Company and the Restricted Subsidiaries for such period, including, without
limitation and without duplication, amortization of any Consolidated Interest
Expense and amortization of capitalized debt issuance costs for such period, all
determined on a consolidated basis in accordance with GAAP; and (e) any other
non-cash charges that were deducted in computing Consolidated Net Income
(excluding any non-cash charge which requires an accrual or reserve for cash
charges for any future period) of the Company and the Restricted Subsidiaries
for such period in accordance with GAAP and (ii) decreased by any non-cash gains
that were included in computing Consolidated Net Income.
"consolidation" means, with respect to the Company, the
consolidation of the accounts of the Restricted Subsidiaries with those of the
Company, all in accordance with GAAP; provided that "consolidation" will not
include consolidation of the accounts of any Unrestricted Subsidiary with the
accounts of the Company.
The term "consolidated" has a correlative meaning to the foregoing.
"covenant defeasance" has the meaning provided in Section 8.2.
"Currency Agreement" means any foreign exchange contract,
currency swap agreement or other similar agreement or arrangement designed to
protect against fluctuations in currency values.
"Debt Instrument" has the meaning provided in Section 6.1.
"Debt Securities" means any debt securities (including any
guarantee of such securities) issued by any Issuer and/or any Restricted
Subsidiary in connection with a public offering (whether or not underwritten) or
a private placement (provided such private placement is underwritten for resale
pursuant to Rule 144A, Regulation S or otherwise under the Securities Act or
sold on an agency basis by a broker-dealer or one of its Affiliates to 10 or
more beneficial holders), it being understood that the term "Debt Securities"
shall not include any evidence of Indebtedness under any of the Vendor Credit
Facilities or the Bank Credit Facility or any other commercial bank borrowings
or similar borrowings, recourse transfers of financial assets, capital leases or
other types of borrowings incurred in a manner not customarily viewed as a
"securities offering."
"Default" means any event that is, or after notice or passage
of time or both would be, an Event of Default.
"Default Amount" means, (i) as of any date prior to August 15,
2001, the Accreted Value of all outstanding Securities (plus any applicable
premium thereon) as of such date and (ii) as of any date on or after August 15,
2001, 100% of the principal amount at maturity of all outstanding Securities
(plus any applicable premium thereon), plus accrued and unpaid interest, if any,
thereon.
"Designation" has the meaning provided in Section 4.16.
"Designation Amount" has the meaning provided in Section 4.16.
"Disinterested Director" means, with respect to any
transaction or series of transactions, a member of the Board of the Company or
Holdings, as the case may be, other than any such Board member who has any
material direct or indirect financial interest in or with respect to such
transaction or series of transactions.
"Disqualified Equity Interest" means, with respect to any
Person, any Equity Interest that, by its terms (or by the terms of any security
into which it is convertible or for which it is mandatorily exchangeable), or
upon the happening of any event, matures or is mandatorily redeemable, pursuant
to a sinking fund obligation or otherwise, or is exchangeable for Indebtedness
at the option of the holder thereof, or is redeemable at the option of the
holder thereof, in whole or in part, on or prior to the final maturity date of
the Securities.
"EquipmentCo" means Sprint Spectrum Equipment Company, L.P., a
Delaware limited partnership.
"Equity Interest" in any Person means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) corporate stock or other
equity participations, including partnership interests, whether general or
limited, in such Person.
"Event of Default" has the meaning provided in Section 6.1.
"Excess Proceeds" has the meaning provided in Section 4.13.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Excluded Cash Proceeds" means (i) any net cash proceeds used
to make a concurrent Investment constituting a Restricted Payment pursuant to
clause (iv) of the third paragraph of Section 4.9 and (ii) the first $1.4
billion of net cash proceeds received by the Company after December 31, 1995
from capital contributions in respect of existing Equity Interests (other than
Disqualified Equity Interests) of the Company or from the issue or sale (other
than to a Restricted Subsidiary) of Equity Interests (other than Disqualified
Equity Interests) of the Company; provided that (A) net cash proceeds referred
to in the immediately preceding clause (i), (B) net cash proceeds used to make
an Investment in APC or (C) net cash proceeds used to make an investment
pursuant to clauses (ii) or (iii)(a) of the third paragraph of Section 4.9 shall
not be included as part of the first $1.4 billion referred to in this clause
(ii).
"Fair Market Value" means, with respect to any asset or
property, the price that could be negotiated in an arms'-length free market
transaction, for cash, between a willing seller and a willing buyer, neither of
whom is under pressure or compulsion to complete the transaction. Unless
otherwise specified in this Indenture, Fair Market Value shall be determined by
the Board of the Company acting in good faith.
"FinCo" means the party named as such in this Indenture until
a successor replaces it in accordance with the provisions of this Indenture and,
thereafter, means the successor.
"FCC" means the Federal Communications Commission.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession of the United States of America, which are applicable
on the Issue Date.
"guarantee" means, as applied to any obligation, (i) a
guarantee (other than by endorsement of negotiable instruments for collection in
the ordinary course of business), directly or indirectly, in any manner, of any
part or all of such obligation and (ii) an agreement, direct or indirect,
contingent or otherwise, the effect of which is to assure in any way the payment
or performance (or payment of damages in the event of non-performance) of all or
any part of such obligation (other than an agreement to make a capital
contribution that otherwise is permitted by Section 4.9), including, without
limiting the foregoing, the payment of amounts drawn down under letters of
credit.
"Holder" or "Securityholder" means the Person in whose name a
Security is registered on the Registrar's books.
"Holdings" means Sprint Spectrum Holding Company, L.P., a Del-
aware limited partnership.
"Holdings Partnership Agreement" means the Amended and
Restated Agreement of Limited Partnership of Holdings dated as of January 31,
1996.
"incur" has the meaning provided in Section 4.8.
"Indebtedness" means, with respect to any Person, without
duplication, (i) any liability, contingent or otherwise, of such Person (a) for
borrowed money (whether or not the recourse of the lender is to the whole of the
assets of such Person or only to a portion thereof), whether as a cash advance,
bill, overdraft or money market facility loan, or (b) evidenced by a note,
debenture or similar instrument or letters of credit (including a purchase money
obligation) or by any book-entry mechanism or (c) for the payment of money
relating to a Capitalized Lease Obligation or other obligation relating to the
deferred purchase price of property or (d) in respect of any Interest Rate
Protection Obligation or any Currency Agreement; (ii) any liability of others of
the kind described in the preceding clause (i) which the Person has guaranteed
or which is otherwise its legal liability; (iii) any obligation secured by a
Lien to which the property or assets of such Person are subject, whether or not
the obligations secured thereby shall have been assumed by or shall otherwise be
such Person's legal liability; and (iv) the greater of the maximum repurchase or
redemption price or liquidation preference of any Disqualified Equity Interests
of such Person or, with respect to any Restricted Subsidiary of such Person, of
any Equity Interests (other than Common Equity Interests) of such Restricted
Subsidiary. In no event shall "Indebtedness" include trade payables incurred in
the ordinary course of business. For purposes of Section 4.8 and for purposes of
Section 6.1, in determining the principal amount of any Indebtedness (l) to be
incurred by the Company or a Restricted Subsidiary or which is outstanding at
any date, (x) the principal amount of any Indebtedness which provides that an
amount less than the principal amount thereof shall be due upon any declaration
of acceleration thereof shall be the accreted value thereof at the date of
determination and (y) effect shall be given to the impact of any Currency
Agreements with respect to such Indebtedness and (2) outstanding at any time
under any Currency Agreement of the Company or any Restricted Subsidiary, the
principal amount shall be the net payment obligation under such Currency
Agreement at such time.
"Indenture" means this Indenture as amended or supplemented
from time to time pursuant to the terms hereof.
"Independent Financial Advisor" means an investment banking
firm of national standing in the United States which, in the good faith judgment
of the Board of the Company, is independent with respect to the Company and its
Affiliates and qualified to perform the task for which it is to be engaged.
"Interest Payment Date," when used with respect to any
Security, means the stated maturity of an installment of interest specified in
such Security.
"Interest Rate Protection Obligation" means the obligation of
any Person pursuant to any arrangement with any other Person whereby, directly
or indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such Person
calculated by applying a fixed or a floating rate of interest on the same
notional amount and shall include, without limitation, interest rate swaps,
caps, floors, collars, forward interest rate agreements and similar agreements.
"Investment" means, with respect to any Person, any advance,
loan or other extension of credit (including, without limitation, by means of
any guarantee) or any capital contribution to (by means of transfer of property
to others, payment for property or services for the account or use of others, or
otherwise), or any purchase or other acquisition of any Equity Interests, bonds,
notes, debentures or other securities of, any such Person. In addition, any
foreign exchange contract, currency swap agreement or other similar agreement
made or entered into by any Person shall constitute an Investment by such
Person.
"Issue Date" means the date of original issuance of Securities
under this Indenture.
"Issuers" means the Company and FinCo.
"legal defeasance" has the meaning provided in Section 8.2.
"Legal Holiday" means any day other than a Business Day.
"Lien" means any mortgage, charge, pledge, lien (statutory or
other), security interest, hypothecation or assignment for security.
"Lucent Credit Facility" means the credit facility
contemplated by the commitment letter dated June 21, 1996 between the Company
and Lucent Technologies, Inc., as the same may be amended, modified, renewed,
refunded, replaced or refinanced from time to time.
"Material Restricted Subsidiary" means any Restricted
Subsidiary which, at any date of determination, is (i) a "Significant
Subsidiary" (as that term is defined in Regulation S-X, as in effect on the
Issue Date, issued under the Securities Act), and/or (ii) holds any FCC license
for the transmission of wireless telecommunications services and/or (iii) any of
WirelessCo, RealtyCo or EquipmentCo.
"Maturity Date" means, with respect to any Security, the date
specified in such Security as the fixed date on which principal of such Security
is due and payable.
"Moody's" means Moody's Investors Service, Inc.
"Net Cash Proceeds" means, with respect to any Asset Sale, the
proceeds therefrom in the form of cash or Cash Equivalents, including payments
in respect of deferred payment obligations when received in the form of cash or
Cash Equivalents, net of (i) brokerage commissions and other fees and expenses
(including fees and expenses of legal counsel and investment bankers) related to
such Asset Sale, (ii) provisions for all taxes payable as a result of such Asset
Sale, (iii) amounts required to be paid to any Person (other than the Company or
any Restricted Subsidiary) owning a beneficial interest in or having a Lien on
the assets subject to the Asset Sale and (iv) appropriate amounts to be provided
by the Company or any Restricted Subsidiary, as the case may be, as a reserve
required in accordance with GAAP against any liabilities associated with such
Asset Sale and retained by the Company or any Restricted Subsidiary, as the case
may be, after such Asset Sale, including, without limitation, pension and other
post-employment benefit liabilities and liabilities under any indemnification
obligations associated with such Asset Sale.
"Nortel Credit Facility" means the credit facility
contemplated by the commitment letter dated June 11, 1996 between the Company
and Northern Telecom Inc., as the same may be amended, modified, renewed,
refunded, replaced or refinanced from time to time.
"Obligations" means any principal of, premium, if any, and
interest on, and any other amounts owing in respect of, the Securities payable
pursuant to the terms of the Securities or this Indenture or upon acceleration,
including amounts received upon the exercise of rights of rescission or other
rights of action (including claims for damages) or otherwise, to the extent
relating to the purchase price of the Securities or amounts corresponding to
such principal, premium, if any, interest on, or other amounts owing with
respect to, the Securities.
"Officer" means the Chief Executive Officer, Chairman of the
Partnership Board, the President, any Vice President, the Chief Financial
Officer, the Treasurer, the Secretary, the Chief Technology Officer, the Chief
Business Development Officer, the Chief Public Relations Officer or any Director
or Partnership Board Representative of either of the Issuers or any Subsidiary
Guarantor, as the case may be.
"Officers' Certificate" means a certificate signed by two
Officers or by an Officer and an Assistant Treasurer or Assistant Secretary of
either of the Issuers or any Subsidiary Guarantor, as the case may be.
"Opinion of Counsel" means a written opinion from legal
counsel who is acceptable to the Trustee, which may include an individual
employed as counsel to an Issuer or a Subsidiary Guarantor.
"Other Senior Debt Pro Rata Share" means the amount of the
applicable Excess Proceeds obtained by multiplying the amount of such Excess
Proceeds by a fraction, (i) the numerator of which is the aggregate accreted
value and/or principal amount, as the case may be, of all Indebtedness (other
than (x) the Securities and (y) Subordinated Indebtedness) of an Issuer and any
Subsidiary Guarantor outstanding at the time of the Asset Sale with respect to
which an Issuer or a Subsidiary Guarantor, as the case may be, is required to
use Excess Proceeds to repay or make an offer to purchase or repay and (ii) the
denominator of which is the sum of (a) the aggregate Accreted Value of all
Securities outstanding at the time of the Asset Sale Offer, (b) the aggregate
principal amount of all Senior Notes outstanding at the time of the Asset Sale
Offer and (c) the aggregate principal amount or the aggregate accreted value, as
the case may be, of all other Indebtedness (other than Subordinated
Indebtedness) of an Issuer or a Subsidiary Guarantor outstanding at the time of
the Asset Sale Offer with respect to which an Issuer or a Restricted Subsidiary,
as the case may be, is required to use the Excess Proceeds to offer to repay or
make an offer to purchase.
"Pari Passu Debt Securities" means any Debt Securities (and
any guarantee of any Debt Security) which would not constitute Subordinated
Indebtedness.
"Partners" means, collectively, Sprint Enterprises, L.P., TCI
Telephony Services, Inc., Comcast Telephony Service and Cox Telephony
Partnership, to the extent they are Partners in Holdings and any permitted
transferee of such Partner's interest pursuant to the Holdings Partnership
Agreement.
"Paying Agent" has the meaning provided in Section 2.3.
"Permitted Assets" means property or assets that will be used
in a Permitted Business referred to in clause (i) of the definition of
"Permitted Business" (or Equity Interests of any Person that will become a
Restricted Subsidiary as a result of the applicable Asset Sale to the extent
such Person's operations consist of such a Permitted Business).
"Permitted Business" means (i) the delivery or distribution of
telecommunications, voice, data or video services, (ii) any business or activity
reasonably related thereto, including, without limitation, any business
conducted by the Company or any Restricted Subsidiary on the Issue Date and the
acquisition, holding or exploitation of any license relating to the delivery of
the services described in clause (i) of this definition or (iii) any other
business or activity in which the Company and the Restricted Subsidiaries are
expressly contemplated to be engaged pursuant to the provisions of the Holdings
Partnership Agreement as in effect on the Issue Date.
"Permitted Holder" means (i) each of Sprint Corporation,
Tele-Communications, Inc., Comcast Corporation and Cox Communications, Inc. and
the respective successors (by merger, consolidation, transfer or otherwise) to
all or substantially all of the respective businesses and assets of the
foregoing, (ii) any transferee of the assets resulting from a Permitted
Transaction and (iii) each Person controlled by one or more Persons identified
in clause (i) or (ii) of this definition.
"Permitted Investments" means any of the following: (i)
Investments in any Restricted Subsidiary (including any Person that pursuant to
such Investment becomes a Restricted Subsidiary) and any Person that is merged
or consolidated with or into, or transfers or conveys all or substantially all
of its assets to, the Company or any Restricted Subsidiary at the time such
Investment is made; (ii) Investments in Cash Equivalents; (iii) Investments in
Currency Agreements and Interest Rate Protection Obligations permitted by
Section 4.8; (iv) loans or advances to officers or employees of the Company and
the Restricted Subsidiaries in the ordinary course of business for bona fide
business purposes of the Company and the Restricted Subsidiaries (including
travel and moving expenses) not in excess of $5.0 million in the aggregate at
any one time outstanding; (v) Investments in evidences of Indebtedness,
securities or other property received from another Person by the Company or any
of the Restricted Subsidiaries in connection with any bankruptcy proceeding or
by reason of a composition or readjustment of debt or a reorganization of such
Person or as a result of foreclosure, perfection or enforcement of any Lien in
exchange for evidences of Indebtedness, securities or other property of such
Person held by the Company or any of the Restricted Subsidiaries, or for other
liabilities or obligations of such other Person to the Company or any of the
Restricted Subsidiaries that were created in accordance with the terms of this
Indenture; and (vi) Investments made by the Company and the Restricted
Subsidiaries as a result of consideration received in connection with an Asset
Sale made in compliance with Section 4.13.
"Permitted Transaction" with respect to a Partner means a
transaction or series of related transactions in which (i) such Partner ceases
to be a Subsidiary of its Parent or such Partner Transfers its Interest to a
Person that is not a Controlled Affiliate of such Partner and (ii) the new
Parent of such Partner (or such Partner if it is its own Parent) or the Parent
of the transferee of the Interest after giving effect to such transaction, or
the last transaction in a series of related transactions, owns, directly and
indirectly through its Controlled Affiliates, all or a Substantial Portion of
the cable television system assets (in the case of a Cable Partner) or long
distance telecommunications business assets (in the case of Sprint Corporation)
owned by the Parent of such Partner, directly and indirectly through its
Controlled Affiliates, immediately prior to the commencement of such transaction
or series of transactions. As used herein, "Substantial Portion" means (x) in
the case of a Cable Partner, cable television systems serving 75% or more of the
aggregate number of basic subscribers served by cable television systems in the
United States of America (including its territories and possessions other than
Puerto Rico) owned by the Parent of such Cable Partner, directly and indirectly
through its Controlled Affiliates, and (y) in the case of Sprint Corporation,
long distance telecommunications business assets serving 75% or more of the
aggregate number of customers served by the long distance telecommunications
business in the United States of America (including its territories and
possessions other than Puerto Rico) owned by the Parent of Sprint Corporation,
directly and indirectly through its Controlled Affiliates. All capitalized terms
used in this definition and not otherwise defined in this Indenture shall have
the meanings ascribed to them in the Holdings Partnership Agreement.
"Person" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"principal" of a debt security (including the Securities)
means the principal amount of the security plus, when appropriate, the premium,
if any, on the security. Such amount shall, if applicable, be calculated by
reference to the last sentence of "Indebtedness" and, with respect to the
Securities, shall mean the Accreted Value, plus any premium, for periods prior
to August 15, 2001.
"Public Equity Offering" means an underwritten public offering
of Common Equity Interests made on a primary basis by the Company, Holdings or a
Special Purpose Corporation pursuant to a registration statement filed with, and
declared effective by, the Commission in accordance with the Securities Act;
provided that Holdings or the Special Purpose Corporation, as the case may be,
shall contribute as equity to, or purchase Common Equity Interests in, the
Company with proceeds from the Initial Public Offering of not less than the
greater of (x) $100.0 million or (y) the amount required to effect any
redemption pursuant to Paragraph 8 of the Securities.
"RealtyCo" means Sprint Spectrum Realty Company, L.P., a
Delaware limited partnership.
"Redemption Date" means, with respect to any Security, the
date on which such Security is to be redeemed by the Company pursuant to the
terms of the Securities.
"Refinancing Indebtedness" means (i) Indebtedness of the
Company to the extent the proceeds thereof are used solely to refinance (whether
by amendment, renewal, extension or refunding) Indebtedness of the Company or
any of the Restricted Subsidiaries and (ii) Indebtedness of any Restricted
Subsidiary to the extent the proceeds thereof are used solely to refinance
(whether by amendment, renewal, extension or refunding) Indebtedness of such
Restricted Subsidiary, in each such event, incurred under the first paragraph of
Section 4.8 or clause (a) of the second paragraph of such Section; provided that
(a) the principal amount of Refinancing Indebtedness incurred pursuant to this
definition (or, if such Refinancing Indebtedness provides for an amount less
than the principal amount thereof to be due and payable upon a declaration of
acceleration of the maturity thereof, the accreted value of such Indebtedness)
shall not exceed the principal amount or accreted value, as the case may be, of
the Indebtedness refinanced, plus the amount of any premium required to be paid
in connection with such refinancing pursuant to the terms of such Indebtedness
or the amount of any premium reasonably determined by the Board of the Company
as necessary to accomplish such refinancing by means of a tender offer or
privately negotiated purchase, plus the amount of reasonable expenses in
connection therewith and (b) in the case of Refinancing Indebtedness incurred by
an Issuer or a Subsidiary Guarantor, such Indebtedness has an Average Life to
Stated Maturity greater than or equal to either (A) the Average Life to Stated
Maturity of the Indebtedness refinanced or (B) the remaining Average Life to
Stated Maturity of the Securities and (iii) if the Indebtedness to be refinanced
is Subordinated Indebtedness of an Issuer or a Subsidiary Guarantor, the
Indebtedness to be incurred pursuant to this definition shall also be
Subordinated Indebtedness of the Issuer or the Subsidiary Guarantor, as
applicable, whose Indebtedness is to be refinanced.
"Registrar" has the meaning provided in Section 2.3.
"Replacement Assets" has the meaning provided in Section 4.13.
"Resolution" means, with respect to any Person, a copy of a
resolution certified by the Secretary or Assistant Secretary of such Person to
have been duly adopted by its Board and to be in full force and effect on the
date of such certification, and delivered to the Trustee.
"Restricted Payment" means any of the following: (i) the
declaration or payment of any dividend or distribution on Equity Interests of
the Company or any Restricted Subsidiary or any payment made to the direct or
indirect holders (in their capacities as such), including any Special Purpose
Corporation, of Equity Interests of the Company or any Restricted Subsidiary
(other than dividends or distributions) (a) payable solely in Equity Interests
(other than Disqualified Equity Interests) of the Company or in options,
warrants or other rights to purchase Equity Interests (other than Disqualified
Equity Interests) of the Company, (b) paid to the Company or a Wholly-Owned
Restricted Subsidiary or (c) paid in respect of Equity Interests of a Restricted
Subsidiary to Persons other than the Company or Wholly-Owned Restricted
Subsidiaries (on not more favorable than a pro rata basis with dividends or
distributions then being paid in respect of Equity Interests held by the Company
or a Wholly-Owned Restricted Subsidiary); (ii) the purchase, redemption or other
acquisition or retirement for value of any Equity Interests of the Company or a
Restricted Subsidiary (other than any such Equity Interests owned by the Company
or a Wholly-Owned Restricted Subsidiary); (iii) the making of any principal
payment on, or the purchase, redemption, defeasance or other acquisition or
retirement for value, prior to any scheduled maturity, scheduled repayment or
scheduled sinking fund payment, of any Subordinated Indebtedness of an Issuer or
any Subsidiary Guarantor (other than any such subordinated Indebtedness owned by
the Company or a Restricted Subsidiary); or (iv) the making of any Investment
(other than a Permitted Investment) in any Person (other than an Investment by a
Restricted Subsidiary in the Company or an Investment by the Company or a
Restricted Subsidiary in either (x) a Restricted Subsidiary or (y) a Person that
becomes a Restricted Subsidiary as a result of such Investment).
"Restricted Subsidiary" means any Subsidiary of the Company
that has not been designated by the Board of the Company, by a Resolution
delivered to the Trustee, as an Unrestricted Subsidiary pursuant to and in
compliance with Section 4.16. Any such Designation may be revoked by a
Resolution of the Company delivered to the Trustee, subject to the provisions of
such Section.
"Revocation" has the meaning provided in Section 4.16.
"S&P" means Standard & Poor's Corporation.
"Securities" means the 12 1/2% Senior Discount Notes Due 2006
issued, authenticated and delivered under this Indenture, as amended or
supplemented from time to time pursuant to the terms of this Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Notes" means the 11% Senior Notes due 2006 of the
Issuers.
"Senior Notes Indenture" means the indenture governing the
Senior Notes dated as of August 15, 1996 by and among the Issuers and The Bank
of New York, as Trustee, as amended or supplemented from time to time.
"Special Purpose Corporation" means a corporation formed to
own Common Equity Interests of the Company or Holdings.
"Subordinated Debt Securities" means any Debt Securities (and
any guarantee of any Debt Security) that would constitute Subordinated
Indebtedness.
"Subordinated Indebtedness" of any Person means any
Indebtedness of such Person that is expressly subordinated in right of payment
to any other Indebtedness of such Person.
"Subsidiary" means, with respect to any Person, (i) any
corporation of which the outstanding Equity Interests having at least a majority
of the votes entitled to be cast in the election of directors shall at the time
be owned, directly or indirectly, by such Person, or (ii) any other Person of
which at least a majority in value of Equity Interests or Voting Equity
Interests is at the time, directly or indirectly, owned by such Person.
"Subsidiary Guarantee" has the meaning provided in Section
4.11.
"Subsidiary Guarantor" means a Restricted Subsidiary that
issues a Subsidiary Guarantee pursuant to Section 4.11.
"Surviving Entity" has the meaning provided in Section 5.1.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code
ss.ss. 77aaa-77bbbb) as in effect on the date of this Indenture.
"Total Consolidated Indebtedness" means, at any date of
determination, an amount equal to the aggregate principal amount of all
Indebtedness of the Company and the Restricted Subsidiaries outstanding as of
the date of determination.
"Total Invested Capital" means, at any time of determination,
the sum of, without duplication, (i) the total amount of equity contributed to
the Company as set forth on the March 31, 1996 consolidated balance sheet of the
Company, plus (ii) the aggregate net cash proceeds received by the Company from
capital contributions or the issuance or sale of Equity Interests (other than
Disqualified Equity Interests but including Equity Interests issued upon the
conversion of convertible Indebtedness or from the exercise of options, warrants
or rights to purchase Equity Interests (other than Disqualified Equity
Interests)) subsequent to the Issue Date, other than to a Restricted Subsidiary,
plus (iii) the aggregate net cash proceeds received by the Company or any
Restricted Subsidiary from the sale, disposition or repayment of any Investment
made after the Issue Date and constituting a Restricted Payment in an amount
equal to the lesser of (a) the return of capital with respect to such Investment
and (b) the initial amount of such Investment, in either case, less the cost of
the disposition of such Investment, plus (iv) an amount equal to the
consolidated net Investment on the date of Revocation made by the Company and/or
any of the Restricted Subsidiaries in any Subsidiary that has been designated as
an Unrestricted Subsidiary after the Issue Date upon its redesignation as a
Restricted Subsidiary in accordance with Section 4.16, plus (v) Total
Consolidated Indebtedness, minus (vi) the aggregate amount of all Restricted
Payments (including any Designation Amount, but other than a Restricted Payment
of the type referred to in clause (iii)(b) of the third paragraph of Section
4.9) declared or made from and after the Issue Date.
"Trust Officer" means an officer or assistant officer of the
Trustee assigned to the corporate trust department (or any successor group) of
the Trustee, or any successor to such department or, in the case of a successor
trustee, an officer or assistant officer assigned to the department, division or
group performing the corporate trust work of such successor.
"Trustee" means the party named as such in this Indenture
until a successor replaces it in accordance with the provisions of this
Indenture and thereafter means such successor.
"Unrestricted Subsidiary" means any Subsidiary of the Company
(other than FinCo, WirelessCo, RealtyCo and EquipmentCo) designated after the
Issue Date as such pursuant to and in compliance with Section 4.16. Any such
designation may be revoked by a Resolution of the Company delivered to the
Trustee, subject to the provisions of such Section 4.16.
"U.S. Government Obligations" has the meaning provided in Sec-
tion 8.2(d).
"U.S. Legal Tender" means such coin or currency of the
United States of America as at the time of payment shall be legal tender for the
payment of public and private debts.
"Vendor Credit Facilities" means, collectively, (i) the Lucent
Credit Facility; (ii) the Nortel Credit Facility; and (iii) any other credit
facility entered into with any vendor or supplier (or any financial institution
acting on behalf of such a vendor or supplier); provided that, in the case of
each of clauses (i), (ii) and (iii), the Indebtedness thereunder is incurred
solely for the purpose of financing the cost (including the cost of design,
development, site acquisition, construction, integration, handset manufacture or
acquisition or microwave relocation) of wireless telecommunications networks or
systems or for which the Company or any Restricted Subsidiary has obtained the
applicable licenses or authorizations to utilize the radio frequencies necessary
for the operation of such systems or networks.
"Voting Equity Interests" means, with respect to any Person,
Equity Interests of any class or kind ordinarily having the power to vote for
the election of directors, managers or other voting members of the governing
body of such Person.
"Wholly-Owned Restricted Subsidiary" means any Restricted
Subsidiary of which 100% of the outstanding Equity Interests is owned by the
Company or another Wholly-Owned Restricted Subsidiary. For purposes of this
definition, (i) any directors' qualifying shares or investments by foreign
nationals mandated by applicable law and (ii) Equity Interests of a Person not
to exceed 1% of the total voting power of all outstanding Equity Interests of
such Person and representing a right to receive not greater than 1% of the
profits of such partnership shall be disregarded in determining the ownership of
a Restricted Subsidiary.
"Wholly-Owned Subsidiary" means, with respect to any Person,
any other Person 100% of whose outstanding Equity Interests are owned by such
Person or another Wholly-Owned Restricted Subsidiary of such Person. For
purposes of this definition, (i) any directors' qualifying shares or investments
by foreign nationals mandated by applicable law and (ii) Equity Interests of a
Person not to exceed 1% of the total voting power of all outstanding Equity
Interests of such Person and representing a right to receive not greater than 1%
of the profits of such partnership shall be disregarded in determining the
ownership of a Subsidiary.
"WirelessCo" means WirelessCo, L.P., a Delaware limited part-
nership.
SECTION I.2 Incorporation by Reference
of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the
provision shall be deemed incorporated by reference in and made a part of this
Indenture. The following TIA terms used in this Indenture have the following
meanings:
(a) "indenture securities" means the Securities;
(b) "indenture security holder" means a Holder or
Securityholder;
(c) "indenture to be qualified" means this Indenture;
(d) "indenture trustee" or "institutional trustee" means
the Trustee; and
(e) "obligor" on the indenture securities means the Company,
FinCo, each Subsidiary Guarantor, if any, or any other obligor on the
Securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by Commission
rule and not otherwise defined herein have the meanings so assigned to them
therein.
SECTION I.3 Rules of Construction.
Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) "or" is not exclusive;
(c) words in the singular include the plural, and words
in the plural include the singular;
(d) "herein," "hereof" and other words of similar im-
port refer to this Indenture as a whole and not to any particular Article,
Section or other Subsection; and
(e) unless otherwise specified herein, all accounting terms
used herein shall be interpreted, all accounting determinations
hereunder shall be made, and all financial statements required to be
delivered hereunder shall be prepared in accordance with GAAP.
ARTICLE II
THE SECURITIES
SECTION II.1 Form and Dating.
The Securities and the Trustee's certificates of
authentication with respect thereto shall be substantially in the form set forth
in Exhibit A, which is annexed hereto and hereby incorporated in and expressly
made a part of this Indenture. The Securities may have notations, legends or
endorsements (including notations relating to any Subsidiary Guarantee) required
by law, rule or usage to which the Issuers or any Subsidiary Guarantor are
subject. Each Security shall be dated the date of its authentication. The terms
and provisions contained in the Securities shall constitute, and are expressly
made, a part of this Indenture.
SECTION II.2 Execution and Authentication.
Two Officers (each of whom shall have been duly authorized by
all requisite partnership or corporate action, as the case may be) shall execute
the Securities on behalf of each of the Issuers by manual or facsimile
signature.
If an Officer whose signature is on a Security no longer holds
that office at the time the Trustee authenticates the Security or at any time
thereafter, the Security shall be valid nevertheless.
A Security shall not be valid until an authorized officer of
the Trustee manually signs the certificate of authentication on the Security.
Such signature shall be conclusive evidence that the Security has been
authenticated under this Indenture.
The Trustee shall authenticate Securities for original issue
in an aggregate principal amount at maturity not to exceed $500,000,000 upon
receipt of the Officers' Certificates of each of the Issuers signed by two
Officers of each of the Issuers directing the Trustee to authenticate the
Securities and certifying that all conditions precedent to the issuance of the
Securities contained herein have been complied with. The aggregate principal
amount at maturity of Securities outstanding at any time may not exceed
$500,000,000, except as provided in Section 2.8.
The Trustee may appoint an authenticating agent acceptable to
the Issuers to authenticate Securities. Unless limited by the terms of such
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. Such authenticating agent shall
have the same rights as the Trustee in any dealings hereunder with the Issuers
or with any of the Issuers' Affiliates.
The Securities shall be issuable in fully registered form
only, without coupons, in denominations of $1,000 principal amount at maturity
and any integral multiple thereof.
SECTION II.3 Registrar and Paying Agent.
The Issuers shall maintain an office or agency (which shall be
located in the Borough of Manhattan in The City of New York, State of New York)
where (a) Securities may be presented for registration of transfer or for
exchange (the "Registrar"), (b) Securities may be presented for payment (the
"Paying Agent") and (c) notices and demands to or upon the Issuers and any
Subsidiary Guarantor in respect of the Securities, the Subsidiary Guarantees and
this Indenture may be served. The Registrar shall keep a register of the
Securities and of their transfer and exchange. The Issuers may have one or more
co-registrars and one or more additional paying agents. The term "Paying Agent"
includes any additional paying agent. Neither the Issuers nor any Affiliate
thereof may act as Paying Agent.
The Issuers shall enter into an appropriate agency agreement
with any Agent not a party to this Indenture that shall incorporate the
provisions of the TIA. The agreement shall implement the provisions of this
Indenture that relate to such Agent. The Issuers shall notify the Trustee of the
name and address of any such Agent. If the Issuers fail to maintain a Registrar
or Paying Agent, or fail to give the foregoing notice, the Trustee shall act as
such.
The Company initially appoints the Trustee located at the
address set forth in Section 11.2 as Registrar, Paying Agent and agent for
service of notices and demands in connection with the Securities, any Subsidiary
Guarantee and this Indenture.
SECTION II.4 Paying Agent To Hold Money in Trust.
Each Paying Agent shall hold in trust for the benefit of the
Securityholders or the Trustee all money held by the Paying Agent for the
payment of principal of or interest on the Securities (whether such money has
been paid to it by the Issuers or any other obligor on the Securities), and the
Issuers and the Paying Agent shall notify the Trustee of any default by the
Issuers (or any other obligor on the Securities) in making any such payment.
Money held in trust by the Paying Agent need not be segregated except as
required by law and in no event shall the Paying Agent be liable for any
interest on any money received by it hereunder. The Issuers at any time may
require the Paying Agent to pay all money held by it to the Trustee and account
for any funds disbursed and the Trustee may at any time during the continuance
of any Event of Default specified in Section 6.1(a)(i) or (ii), upon written
request to the Paying Agent, require such Paying Agent to pay forthwith all
money so held by it to the Trustee and to account for any funds disbursed. Upon
making such payment, the Paying Agent shall have no further liability for the
money delivered to the Trustee.
SECTION II.5 Securityholder Lists.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of the Holders of Securities. If the Trustee is not the Registrar, the
Issuers shall furnish to the Trustee at least five Business Days before each
Interest Payment Date, and at such other times as the Trustee may request in
writing, a list in such form and as of such date as the Trustee may reasonably
require of the names and addresses of the Holders of Securities, if any.
SECTION II.6 Transfer and Exchange.
(a) When Securities are presented to the Registrar or a
co-registrar with a request from the Holder of such Securities to register a
transfer, the Registrar shall register the transfer as requested. Every Security
presented or surrendered for registration of transfer or exchange shall be duly
endorsed or be accompanied by a written instrument of transfer in form
satisfactory to the Issuers and the Registrar, duly executed by the Holder
thereof or his attorneys duly authorized in writing.
At the option of the Holder, Securities may be exchanged for
other Securities of any authorized denomination or denominations, of a like
aggregate principal amount at maturity, upon surrender of the Securities to be
exchanged at the office or agency maintained for such purpose pursuant to
Section 2.3.
To permit registrations of transfers and exchanges, the
Issuers shall issue and execute and the Trustee shall authenticate new
Securities evidencing such transfer or exchange at the Registrar's request.
SECTION II.7 Replacement Securities.
If a mutilated Security is surrendered to the Registrar or the
Trustee or if the Holder of a Security claims that the Security has been lost,
destroyed or wrongfully taken, the Issuers shall issue and the Trustee shall
authenticate a replacement Security. If required by the Trustee or the Issuers,
an indemnity bond shall be posted, sufficient in the judgment of each of the
Issuers and the Trustee to protect the Issuers, the Trustee or any Paying Agent
from any loss that any of them may suffer if such Security is replaced. The
Issuers may charge such Holder for the Issuers' reasonable out-of-pocket
expenses in replacing such Security and the Trustee may charge the Issuers for
the Trustee's expenses in replacing such Security. Every replacement Security
shall constitute an additional obligation of each of the Issuers.
SECTION II.8 Outstanding Securities.
Securities outstanding at any time are all Securities that
have been authenticated by the Trustee except for (a) those cancelled by it, (b)
those delivered to it for cancellation, (c) to the extent set forth in Sections
8.1 and 8.2, on or after the date on which the conditions set forth in Section
8.1 or 8.2 have been satisfied, those Securities theretofore authenticated and
delivered by the Trustee hereunder and (d) those described in this Section 2.8
as not outstanding. Subject to Section 2.9, a Security does not cease to be
outstanding because the Issuers or one of their Affiliates holds the Security.
If a Security is replaced pursuant to Section 2.7, it ceases
to be outstanding unless the Trustee receives an Officer's Certificate stating
that the replaced Security is held by a bona fide purchaser in whose hands such
Security is a legal, valid and binding obligation of each of the Issuers.
If the Paying Agent holds, in its capacity as such, on any
Maturity Date or on any optional redemption date, money sufficient to pay all
accrued interest and principal with respect to such Securities payable on that
date and is not prohibited from paying such money to the Holders thereof
pursuant to the terms of this Indenture, then on and after that date such
Securities cease to be outstanding and interest on them ceases to accrue.
SECTION II.9 Treasury Securities.
In determining whether the Holders of the required principal
amount at maturity of Securities have concurred in any declaration of
acceleration or notice of default or direction, waiver or consent or any
amendment, modification or other change to this Indenture, Securities owned by
the Issuers or an Affiliate of an Issuer shall be disregarded as though they
were not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent
or any amendment, modification or other change to this Indenture, only
Securities that the Trustee actually knows are so owned shall be so disregarded.
SECTION II.10 Temporary Securities.
Until definitive Securities are prepared and ready for
delivery, the Issuers may prepare and the Trustee shall authenticate temporary
Securities. Temporary Securities shall be substantially in the form of
definitive Securities but may have variations that the Issuers consider
appropriate for temporary Securities. Without unreasonable delay, the Issuers
shall prepare and the Trustee shall authenticate definitive Securities in
exchange for temporary Securities. Until such exchange, temporary Securities
shall be entitled to the same rights, benefits and privileges as definitive
Securities.
SECTION II.11 Cancellation.
The Issuers at any time may deliver Securities to the Trustee
for cancellation. The Registrar and the Paying Agent shall forward to the
Trustee any Securities surrendered to them for registration of transfer,
exchange or payment or purchase. The Trustee shall cancel all Securities
surrendered for registration of transfer, exchange, payment, replacement or
cancellation or purchase and return such Securities to the Issuers. The Issuers
may not reissue or resell, or issue new Securities to replace, Securities that
the Issuers have redeemed or paid or purchased, or that have been delivered to
the Trustee for cancellation.
SECTION II.12 Defaulted Interest.
If the Issuers default on a payment of interest on the
Securities, they shall pay the defaulted interest, plus (to the extent permitted
by law) any interest payable on the defaulted interest, in accordance with the
terms hereof, to the Persons who are Holders of Securities on a subsequent
special record date, which date shall be at least five Business Days prior to
the payment date. The Issuers shall fix such special record date and payment
date in a manner satisfactory to the Trustee. At least 15 days before such
special record date, the Issuers shall mail to each Holder of Securities a
notice that states the special record date, the payment date and the amount of
defaulted interest, and interest payable on such defaulted interest, if any, to
be paid.
SECTION II.13 CUSIP Number.
The Issuers in issuing the Securities may use a "CUSIP"
number, and if so, such CUSIP number shall be included in notices of redemption
or exchange as a convenience to Holders; provided that any such notice may state
that no representation is made as to the correctness or accuracy of the CUSIP
number printed in the notice or on the Securities and that reliance may be
placed only on the other identification numbers printed on the Securities. The
Issuers will promptly notify the Trustee of any change in the CUSIP number.
SECTION II.14 Deposit of Moneys.
On each Interest Payment Date and Maturity Date and on any
Business Day immediately following any acceleration of the Securities pursuant
to Section 6.2, the Issuers shall have deposited with the Paying Agent in
immediately available funds money sufficient to make cash payments, if any, due
on such Interest Payment Date, Maturity Date or Business Day, as the case may
be, in a timely manner that permits the Trustee to remit payment to the Holders
on such Interest Payment Date, Maturity Date or Business Day, as the case may
be.
ARTICLE III
REDEMPTION
SECTION III.1 Election To Redeem; Notices to Trustee.
If the Issuers elect to redeem Securities pursuant to
Paragraph 7 or 8 of the Securities, they shall notify the Trustee and the Paying
Agent in writing of the Redemption Date and the principal amount at maturity of
Securities to be redeemed.
The Issuers shall give each notice provided for in this
Section 3.1 at least 30 days before the Redemption Date (unless a shorter notice
shall be agreed to by the Trustee in writing), together with an Officers'
Certificate of each of the Issuers stating that such redemption will comply with
the conditions contained herein and in the Securities.
SECTION III.2 Selection of Securities To Be Redeemed.
(a) If the mandatory redemption of Securities pursuant to
Paragraph 6 of the Securities would result in an outstanding Security in a
denomination (i) of less than $1,000 principal amount at maturity or (ii) other
than an integral multiple of $1,000 principal amount at maturity, such Security
will be redeemed (x) in whole, in the case of clause (i), or (y) by an
additional amount so that such Security will be in a denomination of an integral
multiple of $1,000 principal amount at maturity, in the case of clause (ii).
(b) If less than all of the Securities are to be redeemed
pursuant to Paragraph 7 or 8 of the Securities, the Trustee shall select the
Securities to be redeemed in compliance with the requirements of the principal
national securities exchange, if any, on which the Securities are listed or, if
the Securities are not then listed on a national securities exchange, on a pro
rata basis, by lot or by such other method as the Trustee deems fair and
appropriate; provided that any redemption pursuant to Paragraph 8 of the
Securities shall be made on a pro rata basis or on as nearly a pro rata basis as
is practicable (subject to the procedures of The Depository Trust Company) based
on the aggregate principal amount at maturity of Securities held by each Holder.
The Trustee shall make such selection from the Securities outstanding and not
previously called for redemption. The Trustee shall promptly notify the Issuers
in writing of such Securities selected for redemption and, in the case of
Securities selected for partial redemption, the principal amount at maturity to
be redeemed. The Trustee may select for redemption pursuant to Paragraph 7 or 8
of the Securities portions of the principal amount at maturity of Securities
that have denominations equal to or larger than $1,000 principal amount at
maturity. Securities and portions of them the Trustee so selects shall be in
amounts of $1,000 principal amount at maturity or integral multiples thereof.
(c) Provisions of this Indenture that apply to Securities
called for redemption also apply to portions of Securities called for
redemption.
SECTION III.3 Notice of Redemption.
At least 30 days but not more than 60 days before a Redemption
Date, the Issuers shall mail or cause the mailing of a notice of redemption by
first-class mail to each Holder of Securities to be redeemed at such Holder's
registered address. A copy of such notice shall be mailed to the Trustee on the
same day the notice is mailed to Holders of Securities.
The notice shall identify the Securities to be redeemed and
shall state:
(a) the Redemption Date;
(b) the paragraph of the Securities pursuant to which the
Securities are being redeemed;
(c) the redemption price and the amount of accrued in-
terest, if any, to be paid;
(d) the name and address of the Paying Agent;
(e) that Securities called for redemption must be
surrendered to the Paying Agent to collect the redemption price and accrued
interest, if any;
(f) that, unless the Issuers default in making the redemption
payment, Accreted Value and interest on Securities called for
redemption ceases to accrete or accrue, as the case may be, on and
after the Redemption Date and the only remaining right of the Holders
of such Securities is to receive payment of the redemption price upon
surrender to the Paying Agent of the Securities redeemed;
(g) if any Security is to be redeemed in part, the portion of
the principal amount at maturity of such Security to be redeemed and
that, on or after the Redemption Date, upon surrender of such Security,
a new Security or Securities in aggregate principal amount at maturity
equal to the unredeemed portion thereof will be issued without charge
to the Securityholder;
(h) if less than all of the Securities are to be redeemed, the
identification of the particular Securities (or portion thereof) to be
redeemed, as well as the aggregate principal amount at maturity of
Securities to be redeemed and the aggregate principal amount at
maturity of Securities to be outstanding after such partial redemption;
and
(i) the CUSIP number, if any, pursuant to Section 2.13.
At the Issuers' request, the Trustee shall give the notice of
redemption in the Issuers' name and at the Issuers' expense.
SECTION III.4 Effect of Notice of Redemption.
Once notice of redemption is mailed, Securities called for
redemption become due and payable on the Redemption Date and at the redemption
price. Upon surrender to the Paying Agent, such Securities shall be paid at the
redemption price plus accrued interest, if any, to the Redemption Date, but
interest installments whose maturity is on or prior to such Redemption Date will
be payable on the relevant Interest Payment Dates to the Holders that would
otherwise have been entitled thereto pursuant to this Indenture and the
Securities.
SECTION III.5 Deposit of Redemption Price.
At least one Business Day prior to the Redemption Date, the
Issuers shall deposit with the Paying Agent U.S. Legal Tender sufficient to pay
the redemption price of and accrued interest, if any, on all Securities or
portions thereof to be redeemed on that date.
If any Security surrendered for redemption in the manner
provided in the Securities shall not be so paid on the Redemption Date due to
the failure of the Issuers to deposit with the Paying Agent U.S. Legal Tender,
the principal, premium, if any, and accrued and unpaid interest, if any, thereon
shall, until paid or duly provided for, bear interest as provided in Section 4.1
with respect to any payment default.
SECTION III.6 Securities Redeemed in Part.
Upon the surrender to the Paying Agent of a Security that is
redeemed in part, the Issuers shall execute and the Trustee shall authenticate
for the Holder a new Security equal in principal amount at maturity to the
principal amount at maturity of the unredeemed portion of the Security
surrendered.
ARTICLE IV
COVENANTS
SECTION IV.1 Payment of Securities.
The Issuers shall pay the principal of, premium, if any, and
interest on the Securities on the dates and in the manner provided in the
Securities and this Indenture.
An installment of principal, premium or interest shall be
considered paid on the date due if the Trustee or the Paying Agent holds on such
date U.S. Legal Tender designated for and sufficient to pay such installment.
The Issuers shall pay cash interest on overdue principal and
(to the extent permitted by law) on overdue installments of interest at the rate
borne by the Securities. Interest will be computed on the basis of a 360-day
year comprised of twelve 30-day months.
<PAGE>
SECTION IV.2 Maintenance of Office or Agency.
The Issuers shall maintain the office or agency required under
Section 2.3. The Issuers will give prompt written notice to the Trustee of the
location, and any change in the location, of each such office or agency. If at
any time the Issuers shall fail to maintain any such required office or agency
or shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
address of the Trustee set forth in Section 11.2.
The Issuers may also from time to time designate one or more
other offices or agencies where the Securities may be presented or surrendered
for any or all such purposes and may from time to time rescind such
designations; provided that no such designation or rescission shall in any
manner relieve the Issuers of their obligation to maintain an office or agency
in the Borough of Manhattan, The City of New York, for such purposes. The
Issuers will give prompt written notice to the Trustee of any such designation
or rescission and of any change in the location of any such other office or
agency.
The Issuers hereby initially designate the corporate trust
office of the Trustee set forth in Section 11.2 as an agency of the Issuers with
respect to the Securities in accordance with Section 2.3.
SECTION IV.3 Corporate or Partnership Existence.
Subject to Article V, the Issuers shall do or cause to be
done, at their own cost and expense, all things necessary to, and will cause
each Restricted Subsidiary to, preserve and keep in full force and effect the
corporate or partnership existence and rights (charter and statutory), licenses
and/or franchises of each of the Issuers and each Restricted Subsidiary;
provided that none of the Issuers or any Restricted Subsidiaries shall be
required to preserve any such rights, licenses or franchises if such rights,
licenses or franchises will be replaced or if the Board of the Company shall
reasonably determine that the preservation thereof is no longer desirable in the
conduct of the business of the Issuers or such Restricted Subsidiary, as the
case may be, and the loss thereof is not adverse in any material respect to the
Holders; provided, further, that any Restricted Subsidiary may be wound up and
liquidated into an Issuer or any other Restricted Subsidiary.
SECTION IV.4 Payment of Taxes and Other Claims.
The Issuers shall pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (a) all taxes, assessments
and governmental charges levied or imposed upon their or their Subsidiaries'
income, profits or property and (b) all lawful claims for labor, materials and
supplies that, if unpaid, might by law become a Lien upon the property of an
Issuer or a Restricted Subsidiary; provided that the Issuers shall not be
required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim whose amount, applicability or validity is being
contested in good faith by appropriate negotiations or proceedings and for which
disputed amounts any reserves required in accordance with GAAP have been made.
SECTION IV.5 Maintenance of Properties;
Insurance; Books and Records; Compliance
with Law.
(a) Each of the Issuers shall, and shall cause each of the
Restricted Subsidiaries to, at all times cause all properties used or useful in
the conduct of its business to be maintained and kept in good condition, repair
and working order (reasonable wear and tear excepted) and supplied with all
necessary equipment, and shall cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereto.
(b) Each of the Issuers shall, and shall cause each of the
Restricted Subsidiaries to, maintain insurance (which may include
self-insurance) in such amounts and covering such risks as are usually and
customarily carried with respect to similar facilities according to their
respective locations.
(c) Each of the Issuers shall, and shall cause each of the
Subsidiaries to, keep proper books of record and account, in which full and
correct entries shall be made of all of its financial transactions and the
assets and business, in accordance with GAAP consistently applied.
(d) Each of the Issuers shall and shall cause each of the
Subsidiaries to comply with all statutes, laws, ordinances, or government rules
and regulations to which it is subject, non-compliance with which would
materially adversely affect the business, earnings, properties, assets or
financial condition of the Issuers and the Restricted Subsidiaries, taken as a
whole.
SECTION IV.6 Compliance Certificates.
(a) Each of the Issuers shall deliver to the Trustee, within
45 days after the end of each of the first three quarters of the Issuers' fiscal
year, and within 90 days after the end of such fiscal year, an Officers'
Certificate stating (i) that a review of the activities of the respective Issuer
during the preceding fiscal quarter or year, as the case may be, has been made
under the supervision of the signing Officers with a view to determining whether
the respective Issuer has kept, observed, performed and fulfilled its
obligations under this Indenture and (ii) that, to the best knowledge of each
Officer signing such certificate, the respective Issuer has kept, observed,
performed and fulfilled each and every covenant and condition contained in this
Indenture and is not in default in the performance or observance of any of the
terms, provisions, conditions and covenants hereof (or, if a Default or Event of
Default shall have occurred, describing all such Defaults or Events of Default
of which such Officers may have knowledge, their status and what action the
defaulting Issuer is taking or proposes to take with respect thereto).
(b) The annual financial statements delivered pursuant to
Section 4.7 shall be accompanied by a written statement of the Company's
independent public accountants that in making the examination necessary for
certification of such annual financial statements nothing as to which such
accountants have professional competence has come to their attention that would
lead them to believe that either of the Issuers has violated any provisions of
this Indenture as to which such accountants have professional competence, or, if
any such violation has occurred, specifying the nature and period of existence
thereof, it being understood that such accountants shall not be liable directly
or indirectly to any Person for any failure to obtain knowledge of any such
violation.
(c) Each of the Issuers shall, so long as any of the
Securities are outstanding, deliver to the Trustee, promptly after any Officer
of either of the Issuers becomes aware of any Default or Event of Default, an
Officers' Certificate specifying such Default or Event of Default and what
action the applicable Issuer is taking or proposes to take with respect thereto.
SECTION IV.7 Reports.
So long as any of the Securities are outstanding, the Company
will file with the Commission the annual reports, quarterly reports and other
documents that the Company would have been required to file with the Commission
pursuant to Sections 13(a) and 15(d) of the Exchange Act whether or not the
Company is then obligated to file reports pursuant to such Sections, and the
Company will promptly provide to all registered Holders of the Securities and
file, within 30 days of filing with the Commission, with the Trustee copies of
such reports and documents.
Delivery of such reports, information and documents to the
Trustee is for informational purposes only and the Trustee's receipt of such
shall not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Issuers'
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
SECTION IV.8 Limitation on Additional
Indebtedness.
The Company will not, and will not permit any Restricted
Subsidiary to, create, incur, assume, issue, guarantee or in any other manner
become directly or indirectly liable, contingently or otherwise, for or with
respect to (in any such case, to "incur") any Indebtedness (including any
Acquired Indebtedness); provided that the Issuers and the Restricted
Subsidiaries may incur Indebtedness (including Acquired Indebtedness) if after
giving pro forma effect to such incurrence (including the application or use of
the net proceeds therefrom to repay Indebtedness or make any Restricted Payment)
either (a) the ratio of (x) Total Consolidated Indebtedness to (y) Annualized
Pro Forma Consolidated Operating Cash Flow would be less than (A) 7.0 to 1.0, if
the Indebtedness is to be incurred prior to July 1, 2002, or (B) 6.0 to 1.0, if
the Indebtedness is to be incurred on or after July 1, 2002, or (b) in the case
of any incurrence of Indebtedness prior to July 1, 2002 only, Total Consolidated
Indebtedness would be equal to or less than 70% of Total Invested Capital.
Notwithstanding the foregoing, the Issuers and, to the extent
specified, the Restricted Subsidiaries will be permitted to incur each and all
of the following (each of which shall be given independent effect):
(a) Indebtedness under the Securities, any Subsidiary
Guarantee and this Indenture;
(b) Indebtedness of the Issuers and the Restricted Sub-
sidiaries outstanding from time to time pursuant to any of the Vendor Credit
Facilities;
(c) Indebtedness of the Issuers and the Restricted
Subsidiaries outstanding from time to time pursuant to the Bank Credit
Facility in an aggregate principal amount at any one time outstanding
not to exceed $2.0 billion;
(d) Indebtedness of an Issuer or a Restricted Subsidiary owed
to and held by an Issuer or another Restricted Subsidiary so long as
any such Indebtedness owing by an Issuer is unsecured and subordinated
in right of payment to the Securities, except that (x) any direct or
indirect transfer of such Indebtedness by an Issuer or a Restricted
Subsidiary (other than to an Issuer or a Restricted Subsidiary), as the
case may be, or (y) any direct or indirect sale, transfer or other
disposition by an Issuer or a Restricted Subsidiary of Equity Interests
of a Restricted Subsidiary that is owed Indebtedness of an Issuer or a
Restricted Subsidiary such that it ceases to be a Restricted Subsidiary
shall, in each such event, be an incurrence of Indebtedness by the
Issuer or such Restricted Subsidiary, as the case may be, subject to
the other provisions of this Section 4.8;
(e) Interest Rate Protection Obligations of an Issuer or a
Restricted Subsidiary relating to Indebtedness of an Issuer or a
Restricted Subsidiary otherwise permitted under this Indenture that are
entered into for the purpose of protecting against fluctuations in
interest rates in respect of such Indebtedness and not for speculative
purposes;
(f) Indebtedness of an Issuer or a Restricted Subsidiary under
Currency Agreements; provided that (x) such Currency Agreements relate
to Indebtedness otherwise permitted under this Indenture or the
purchase price of goods purchased or sold by an Issuer or a Restricted
Subsidiary in the ordinary course of its business and (y) such Currency
Agreements do not increase the Indebtedness or other obligations of an
Issuer or a Restricted Subsidiary outstanding other than as a result of
fluctuations in foreign currency exchange rates or by reason of fees,
indemnities and compensation payable thereunder;
(g) Indebtedness of an Issuer or a Restricted Subsidiary
represented by letters of credit for the account of an Issuer or a
Restricted Subsidiary in order to provide security for workers'
compensation claims, payment obligations in connection with
self-insurance or similar requirements in the ordinary course of
business;
(h) other Indebtedness of the Issuers and the Re-
stricted Subsidiaries in an aggregate principal amount not to exceed $100
million at any one time outstanding; and
(i) Refinancing Indebtedness.
Indebtedness of a Person existing at the time such Person
becomes a Restricted Subsidiary or which is secured by a Lien on an asset
acquired by the Company or a Restricted Subsidiary (whether or not such
Indebtedness is assumed by the acquiring Person) shall be deemed incurred at the
time the Person becomes a Restricted Subsidiary or at the time of the asset
acquisition, as the case may be.
SECTION IV.9 Limitation on Restricted Payments.
The Company will not, and will not permit any of the
Restricted Subsidiaries to, make, directly or indirectly, any Restricted Payment
on or prior to December 31, 1999; and, thereafter, will not, and will not permit
any of the Restricted Subsidiaries to, make, directly or indirectly, any
Restricted Payments unless:
(i) no Default shall have occurred and be continuing at
the time of or after giving effect to such Restricted Payment;
(ii) immediately after giving effect to such Restricted
Payment, the Company would be able to incur $1.00 of additional
Indebtedness under clause (a) of the proviso to the first paragraph of
Section 4.8; and
(iii) immediately after giving effect to such Restricted
Payment, the aggregate amount of all Restricted Payments declared or
made on or after the Issue Date (including any Designation Amount)
would not exceed an amount equal to the sum of, without duplication,
(1) the amount of (x) the Available Operating Cash Flow of the Company
after December 31, 1999 through the end of the latest full fiscal
quarter for which consolidated financial statements of the Company are
available preceding the date of such Restricted Payment (treated as a
single accounting period) less (y) 150% of the cumulative Consolidated
Interest Expense of the Company after December 31, 1999 through the end
of the latest full fiscal quarter for which consolidated financial
statements of the Company are available preceding the date of such
Restricted Payment (treated as a single accounting period), plus (2)
the aggregate net cash proceeds (other than Excluded Cash Proceeds)
received by the Company as a capital contribution in respect of
existing Equity Interests (other than Disqualified Equity Interests) of
the Company made after the Issue Date or from the issue or sale (other
than to a Restricted Subsidiary) by the Company of its Equity Interests
(other than Disqualified Equity Interests) made after the Issue Date,
plus (3) the aggregate net cash proceeds received by the Company or any
Restricted Subsidiary from the sale, disposition or repayment (other
than to the Company or a Restricted Subsidiary) of any Investment
(other than an Investment made pursuant to clause (vi) of the following
paragraph) made after the Issue Date and constituting a Restricted
Payment in an amount equal to the lesser of (x) the return of capital
with respect to such Investment and (y) the initial amount of such
Investment, in either case, less the cost of disposition of such
Investment, plus (4) an amount equal to the consolidated net Investment
on the date of Revocation made by the Company and/or any of the
Restricted Subsidiaries in any Subsidiary that has been designated as
an Unrestricted Subsidiary after the Issue Date upon its redesignation
as a Restricted Subsidiary in accordance with Section 4.16. For
purposes of the preceding clause (2), the value of the aggregate net
cash proceeds received by the Company upon the issuance of Equity
Interests either upon the conversion of convertible Indebtedness or in
exchange for outstanding Indebtedness or upon the exercise of options,
warrants or rights will be the net cash proceeds received upon the
issuance of such Indebtedness, options, warrants or rights plus the
incremental amount received by the Company upon the conversion,
exchange or exercise thereof.
For purposes of determining the amount expended for Restricted
Payments, cash distributed shall be valued at the face amount thereof and
property other than cash shall be valued at its Fair Market Value.
The provisions of this Section 4.9 shall not prohibit (i) the
payment of any dividend or distribution within 60 days after the date of
declaration thereof, if at such date of declaration such payment would comply
with the provisions of this Indenture; (ii) so long as no Default shall have
occurred and be continuing, the purchase, redemption, retirement or other
acquisition of any Equity Interests of the Company out of the net cash proceeds
of the substantially concurrent capital contribution in respect of existing
Equity Interests (other than Disqualified Equity Interests) of the Company or
from the issue or sale (other than to a Restricted Subsidiary) of Equity
Interests (other than Disqualified Equity Interests) of the Company; provided
that any such net cash proceeds are excluded from clause (iii)(2) of the second
preceding paragraph; (iii) so long as no Default shall have occurred and be
continuing, the purchase, redemption, retirement, defeasance or other
acquisition of Subordinated Indebtedness of an Issuer made by exchange for or
conversion into, or out of the net cash proceeds of, a concurrent issue and sale
(other than to a Restricted Subsidiary) of (a) Equity Interests (other than
Disqualified Equity Interests) of the Company (provided that any such net cash
proceeds are excluded from clause (iii)(2) of the second preceding paragraph) or
(b) other Subordinated Indebtedness of an Issuer that has an Average Life to
Stated Maturity equal to or greater than the Average Life to Stated Maturity of
the Subordinated Indebtedness being purchased, redeemed, retired, defeased or
otherwise acquired; (iv) so long as no Default shall have occurred and be
continuing, the making of a direct or indirect Investment constituting a
Restricted Payment out of the proceeds of a concurrent capital contribution in
respect of existing Equity Interests (other than Disqualified Equity Interests)
of the Company or from the issue or sale (other than to a Restricted Subsidiary)
of Equity Interests (other than Disqualified Equity Interests) of the Company;
provided that any such net cash proceeds are excluded from clause (iii)(2) of
the second preceding paragraph; (v) so long as no Default shall have occurred or
be continuing and provided the Company is then a partnership for federal income
tax purposes, distributions in respect of, and repurchases of, Equity Interests
of the Company owned by the Partners, to the extent necessary to pay current tax
liabilities payable in respect of income of the Company in an amount not to
exceed in any calendar year the product of (a) the ordinary income from trade or
business activities and giving effect to other items of income, loss and
deduction reported by the Company for the most recently ended tax year for
federal income tax purposes multiplied by (b) a percentage equal to the sum of
(x) the highest applicable federal corporate income tax rate for such tax year
(expressed as a percentage) plus (y) 5% multiplied by the excess of 100% over
the highest applicable federal corporate income tax rate for such tax year
(expressed as a percentage); provided that nothing in this clause (v) shall be
redeemed to permit any such distribution or repurchase to pay any tax
liabilities of the Company's partners resulting from the conversion of the
Company from partnership to corporate form; (vi) so long as no Default shall
have occurred and be continuing, any direct or indirect Investment constituting
a Restricted Payment by the Company or any Restricted Subsidiary in any Person
(including any Unrestricted Subsidiary) whose operations consist principally of,
or has been formed principally to operate, a Permitted Business in an amount not
to exceed $100 million in the aggregate at any time outstanding; or (vii) any
transfer of any Investment in APC held by the Company or any Restricted
Subsidiary to Holdings or any Wholly-Owned Subsidiary of Holdings; provided APC
has not been made a Restricted Subsidiary under Section 4.16.
Restricted Payments made pursuant to clause (i) of the
immediately preceding paragraph shall be included in making the determination of
available amounts under clause (iii) of the third preceding paragraph and
Restricted Payments made pursuant to clauses (ii), (iii), (iv), (v) and (vii) of
the immediately preceding paragraph shall not be included in making the
determination of available amounts under clause (iii) of the third preceding
paragraph.
SECTION IV.10 Limitation on Liens Securing
Certain Indebtedness.
The Company will not, and will not permit any Restricted
Subsidiary to, create, incur, assume or suffer to exist any Liens upon any
property or assets of the Company or any Restricted Subsidiary securing either
(i) Subordinated Debt Securities unless the Securities and the Subsidiary
Guarantees, as applicable, are secured by a Lien on such property or assets that
is senior in priority to the Liens securing such Subordinated Debt Securities or
(ii) Pari Passu Debt Securities unless the Securities and the Subsidiary
Guarantees, as applicable, are equally and ratably secured with the Liens
securing such Pari Passu Debt Securities.
SECTION IV.11 Limitation on Issuance of Certain
Guarantees by, and Debt Securities
of, Restricted Subsidiaries.
The Company will not permit (i) any Restricted Subsidiary to,
directly or indirectly, guarantee any Debt Securities of any of the Issuers or
(ii) any Restricted Subsidiary to issue any Debt Securities, unless, in either
such case, such Restricted Subsidiary simultaneously executes and delivers a
guarantee (a "Subsidiary Guarantee") of the Securities in accordance with
Article X. Any such Subsidiary Guarantee shall not be subordinate in right of
payment to any Indebtedness of the Restricted Subsidiary providing the
Subsidiary Guarantee.
SECTION IV.12 Limitation on Dividends and Other
Payment Restrictions Affecting
Restricted Subsidiaries.
The Company will not, and will not permit any Restricted
Subsidiary to, directly or indirectly, create or otherwise enter into or cause
to become effective any consensual encumbrance or restriction of any kind on the
ability of any Restricted Subsidiary to (i) pay dividends, in cash or otherwise,
or make any distributions on its Equity Interests or any other interest or
participation in, or measured by, its profits owned by the Company or any
Restricted Subsidiary, (ii) pay any Indebtedness owed to the Company or a
Restricted Subsidiary, (iii) make any Investment in the Company or any
Restricted Subsidiary or (iv) transfer any of its property or assets to the
Company or any Restricted Subsidiary, except for (a) any such customary
encumbrance or restriction contained in a security document creating a Lien
permitted under this Indenture to the extent relating to the property or asset
subject to such Lien (including, without limitation, customary restrictions
relating to assets securing any indebtedness under any of the Vendor Credit
Facilities or the Bank Credit Facility under the applicable security documents),
(b) any such encumbrance or restriction with respect to a Restricted Subsidiary
that is not a Restricted Subsidiary on the Issue Date, which encumbrance or
restriction is in existence at the time such Person becomes a Restricted
Subsidiary but not created in contemplation thereof and which encumbrance or
restriction pertains only to that Restricted Subsidiary and (c) any such
encumbrance or restriction imposed pursuant to an agreement that has been
entered into for the sale or disposition of all or substantially all of the
Equity Interests or assets of such Restricted Subsidiary.
SECTION IV.13 Disposition of Proceeds of
Asset Sales.
The Company will not, and will not permit any Restricted
Subsidiary to, make any Asset Sale unless (i) the Company or such Restricted
Subsidiary, as the case may be, receives consideration at the time of such Asset
Sale at least equal to the Fair Market Value of the assets sold or otherwise
disposed of and (ii) at least 80% of such consideration consists of cash or Cash
Equivalents; provided that the amount of any liabilities of the Company or such
Restricted Subsidiary that are assumed (and from which the Company or such
Restricted Subsidiary is unconditionally released) in connection with such Asset
Sale by the transferee or purchaser of such assets or on behalf of such
transferee or purchaser by a third party shall be deemed to be cash for purposes
of this clause (ii); provided, further, that up to $25.0 million of
consideration in the aggregate that is not in the form of cash or Cash
Equivalents may be received in excess of the amount permitted by the foregoing
provisions during the term of the Securities. The Company or the applicable
Restricted Subsidiary, as the case may be, may (i) apply such Net Cash Proceeds
within 365 days of receipt thereof to repay an amount of Indebtedness (other
than Subordinated Indebtedness) of an Issuer or any Subsidiary Guarantor of the
Company or any Subsidiary Guarantor in an amount not exceeding the Other Senior
Debt Pro Rata Share of Excess Proceeds and elect to permanently reduce the
amount of the commitments thereunder by the amount of the Indebtedness so
repaid, (ii) apply such Net Cash Proceeds within 365 days of the receipt thereof
to repay Indebtedness (other than Subordinated Indebtedness) of any Restricted
Subsidiary (other than a Subsidiary Guarantor) and elect to permanently reduce
the amount of the commitments thereunder by the amount of the Indebtedness so
repaid or (iii) apply such Net Cash Proceeds within 365 days of receipt thereof
to an investment in properties and assets that will be used in a Permitted
Business (or in Equity Interests of any Person that will become a Restricted
Subsidiary as a result of such investment to the extent such Person's operations
consist of Permitted Businesses) of the Company or any Restricted Subsidiary
("Replacement Assets"). Net Cash Proceeds from any Asset Sale that are neither
used as set forth in clause (ii) of the preceding sentence nor invested in
Replacement Assets within such 365-day period shall constitute "Excess
Proceeds." Any Excess Proceeds not used as set forth in clause (i) of the second
preceding sentence within such 365-day period shall constitute "Offer Excess
Proceeds" subject to disposition as set forth below.
When the aggregate amount of Offer Excess Proceeds equals or
exceeds $20.0 million, the Issuers shall make an offer to purchase Securities
(an "Asset Sale Offer"), on a Business Day not more than 60 days after the day
the amount of Offer Excess Proceeds equals or exceeds $20.0 million (an "Asset
Sale Payment Date") from all holders of Securities, at a price in cash equal to
(a) 100% of the Accreted Value on the applicable Asset Sale Payment Date, if
such Asset Sale Payment Date is on or before August 15, 2001, and (b) 100% of
the principal amount at maturity of the Securities, plus accrued and unpaid
interest, if any, thereon to the applicable Asset Sale Payment Date, if such
Asset Sale Payment Date is after August 15, 2001. Each Asset Sale Offer shall
remain open for a period of 20 Business Days or such longer period as may be
required by law. To the extent that the aggregate purchase price for the
Securities tendered pursuant to an Asset Sale Offer is less than the Offer
Excess Proceeds available for such offer, the Company and the Restricted
Subsidiaries may use such deficiency for general partnership or corporate
purposes, as the case may be, including to repay other Indebtedness. It is
agreed that, notwithstanding anything herein to the contrary, if holders of
other Debt Securities (including the Senior Notes, but other than Subordinated
Indebtedness) of the Issuers or any Subsidiary Guarantor are entitled to have a
similar offer to purchase their Debt Securities made to them, such other offer
shall be conducted and consummated simultaneously with the Asset Sale Offer for
the Securities. If the aggregate Accreted Value and/or principal amount of the
Securities and other Debt Securities (including the Senior Notes, but other than
Subordinated Indebtedness) validly tendered pursuant to an Asset Sale Offer or
contractually required offer to purchase under this Indenture, the Senior Note
Indenture or any instrument or agreement governing Debt Securities (other than
Subordinated Indebtedness) exceeds the Offer Excess Proceeds, the Securities to
be purchased will be selected on a pro rata basis among the holders of
Securities, Senior Notes and such Debt Securities (based upon the Accreted Value
of the Securities, the principal amount of the Senior Notes and/or the principal
amount or accreted value, as the case may be, of such Debt Securities tendered
by each holder thereof). Upon completion of such Asset Sale Offer, the amount of
Excess Proceeds shall be reset to zero.
Notwithstanding the two immediately preceding paragraphs, the
Company and the Restricted Subsidiaries shall be permitted to consummate an
Asset Sale without complying with such paragraphs to the extent (i) at least 80%
of the consideration for such Asset Sale consists of cash, Cash Equivalents
and/or Permitted Assets and (ii) such consideration at the time of such Asset
Sale is at least equal to the Fair Market Value of the assets sold or otherwise
disposed of; provided that (x) any Net Cash Proceeds received by the Company or
any of the Restricted Subsidiaries in connection with any such Asset Sale shall
be subject to the provisions of the two immediately preceding paragraphs and (y)
if any of the assets disposed of are assets otherwise required to be held by
WirelessCo, RealtyCo or EquipmentCo under Section 4.18, the Permitted Assets
received shall be held by, or promptly transferred to, WirelessCo, RealtyCo or
EquipmentCo.
Not less than 30 nor more than 60 days before the Asset Sale
Payment Date, the Issuers shall send, by first class mail, a notice to every
Holder of Securities, with a copy to the Trustee and Paying Agent. The notice,
which shall govern the terms of the Asset Sale Offer, shall include such
disclosures as are required by law and shall state:
(1) that the Asset Sale Offer is being made pursuant to
this Section 4.13;
(2) the purchase price to be paid for Securities purchased
pursuant to the Asset Sale Offer (including the amount of accrued
interest, if any) and the Asset Sale Payment Date;
(3) that any Security not tendered will continue to
accrete Accreted Value and accrue interest, as the case may be;
(4) that, unless the Company defaults in making payment
therefor, any Security accepted for payment pursuant to the Asset Sale
Offer shall cease to accrete Accreted Value and accrue interest, as the
case may be, after the Asset Sale Payment Date;
(5) that Holders electing to have a Security purchased
pursuant to the Asset Sale Offer will be required to surrender the
Security, with the form entitled "Option of Holder to Elect Purchase"
on the reverse of the Security completed, to the Paying Agent at the
address specified in the notice prior to the close of business on the
Asset Sale Payment Date;
(6) that Holders will be entitled to withdraw their election
if the Paying Agent receives, not later than the second Business Day
prior to the Asset Sale Payment Date, a facsimile transmission or
letter setting forth the name of the Holder, the principal amount at
maturity of the Security the Holder delivered for purchase and a
statement that such Holder is withdrawing his election to have such
Security purchased; and
(7) that Holders whose Securities are purchased only in part
will be issued new Securities in a principal amount at maturity equal
to the unpurchased portion of the Securities surrendered.
On or before the Asset Sale Payment Date, the Company shall
(i) accept for payment Securities or portions thereof tendered pursuant to the
Asset Sale Offer in accordance with this Section 4.13, (ii) deposit with the
Paying Agent U.S. Legal Tender sufficient to pay the purchase price, plus
accrued interest, if any, of all Securities to be purchased in accordance with
this Section 4.13 and (iii) deliver to the Trustee Securities so accepted
together with an Officers' Certificate stating the Securities or portions
thereof being purchased by the Company. The Paying Agent shall promptly mail to
the Holders of Securities so accepted payment in an amount equal to the purchase
price, plus accrued interest, if any, thereon. For purposes of this Section
4.13, the Trustee shall act as the Paying Agent.
If the Company is required to make an Asset Sale Offer, the
Company will comply with all applicable tender offer laws and regulations,
including, to the extent applicable, Section 14(e) and Rule 14e-1 under the
Exchange Act, and any other applicable Federal or state securities laws and
regulations and any applicable requirements of any securities exchange on which
the Securities are listed.
SECTION IV.14 Limitation on Transactions with
Equityholders and Affiliates.
The Company will not, and will not permit, cause, or suffer
any Restricted Subsidiary to, conduct any business or enter into, renew or
extend any transaction or series of related transactions (including, without
limitation, the purchase, sale, lease or exchange of property or assets, or the
rendering of any service) with or for the benefit of any of their respective
Affiliates or any beneficial holder of 5% or more of any class of Equity
Interests of the Company (each an "Affiliate Transaction"), except on terms that
are no less favorable to the Company or such Restricted Subsidiary than those
that could reasonably be obtained in a comparable arm's-length transaction with
a Person that is not such a holder or Affiliate. Each Affiliate Transaction
involving aggregate payments or other Fair Market Value in excess of $15.0
million shall be approved by (i) if the Company is a Wholly-Owned Subsidiary of
Holdings, either (a) if the current provisions of Section 8.6 ("Interested Party
Transactions") of the Holdings Partnership Agreement are in effect, members of
the Board of Holdings exercising votes representing at least a majority (or such
other percentage vote as required by the Holdings Partnership Agreement) of
votes entitled to be exercised by members of such Board selected by the Partners
not having any financial interest in any such Affiliate Transaction, or (b) if
the current provisions of Section 8.6 ("Interested Party Transactions") of the
Holdings Partnership Agreement are not in effect, a majority of the
Disinterested Directors of Holdings, in each case, as evidenced by a Resolution
of the Board of Holdings and (ii) if the Company is not a Wholly-Owned
Subsidiary of Holdings, a majority of the Disinterested Directors of the Company
as evidenced by a Resolution of the Company. In the event the Company obtains a
written opinion from an Independent Financial Advisor stating that the terms of
an Affiliate Transaction are fair to the Company or a Restricted Subsidiary, as
the case may be, from a financial point of view, it shall conclusively meet the
requirements of the first sentence of this paragraph and there shall be no need
to comply with the second sentence of this paragraph.
Notwithstanding the foregoing, the restrictions set forth in
this Section 4.14 shall not apply to (i) transactions between or among the
Company and/or any of the Restricted Subsidiaries, (ii) any dividend or
distribution permitted by Section 4.9, (iii) directors' fees, indemnification
and similar arrangements, officers' indemnification, employee stock option or
employee benefit plans and employee salaries and bonuses paid or created in the
ordinary course of business, (iv) any Affiliate Transaction pursuant to any
agreement in effect on the Issue Date, as the same shall be amended from time to
time; provided that any material amendment shall be required to comply with the
provisions of the preceding paragraph of this Section 4.14, (v) transactions
involving the marketing of products and services of the Company or any
Restricted Subsidiary jointly with products and services of an Affiliate of the
Company or a beneficial holder of 5% or more of any class of Equity Interests of
the Company (such holder or Affiliate bring a "Related Party"); provided all
payments made by the Company or any Restricted Subsidiary to the Related Party
are made to reimburse the Related Party for its share of any expenses incurred
by the Related Party on behalf of the Company or any Restricted Subsidiary, (vi)
transactions involving the leasing or sharing or other use by the Company or any
Restricted Subsidiary of communications network facilities (including, without
limitation, cable or fiber lines, equipment or transmission capacity) of a
Related Party on terms that are no less favorable (when taken as a whole) to the
Company or such Restricted Subsidiary, as applicable, than those available from
such Related Party to unaffiliated third parties, (vii) transactions involving
the provision of telecommunication services by a Related Party in the ordinary
course of its business to the Company or any Restricted Subsidiary, or by the
Company or any Restricted Subsidiary to a Related Party, on terms that are no
less favorable (when taken as a whole) to the Company or such Restricted
Subsidiary, as applicable, than those available from such Related Party to
unaffiliated third parties, and (viii) any sales agency agreements pursuant to
which a Partner or any of its Affiliates has the right to market any or all of
the products or services of the Company or any of the Restricted Subsidiaries on
a "most favored nation" basis (without regard to volume), as contemplated by the
Holdings Partnership Agreement as in effect on the Issue Date.
SECTION IV.15 Change of Control.
(a) Upon the occurrence of a Change of Control (the date of
such occurrence being the "Change of Control Date"), the Issuers shall notify
the holders of the Securities, in the manner prescribed by this Indenture, of
such occurrence and shall make an offer to purchase (a "Change of Control
Offer"), on a Business Day (the "Change of Control Payment Date") not later than
60 days following the Change of Control Date, all Securities then outstanding at
a purchase price equal to (i) 101% of the Accreted Value on the Change of
Control Payment Date of the Securities, if the Change of Control Payment Date is
on or before August 15, 2001, and (ii) 101% of the principal amount at maturity
of the Securities, plus accrued and unpaid interest, if any, thereon to the
Change of Control Payment Date, if such date is after August 15, 2001. The
Change of Control Offer shall remain open for at least 20 Business Days or such
longer period as may be required by law and until the close of business on the
Change of Control Payment Date. The Issuers' obligations under this Section 4.15
may be satisfied if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements
applicable to a Change of Control Offer made by the Issuers and purchases all
Securities validly tendered and not withdrawn under such Change of Control
Offer.
(b) Not less than 30 days nor more than 60 days before the
Change of Control Payment Date, the Issuers shall send, by first class mail, a
notice to each Holder of Securities, with a copy to the Trustee and the Paying
Agent. The notice, which shall govern the terms of the Change of Control Offer,
shall include such disclosures as are required by law and shall state:
(i) that a Change of Control Offer is being made pursuant to
this Section 4.15 and that all Securities tendered will be accepted for
payment;
(ii) the purchase price (including the amount of accrued
interest, if any) for each Security and the Change of Control Payment
Date;
(iii) that any Security not tendered for payment will continue
to accrete Accreted Value and accrue interest, as the case may be, in
accordance with the terms thereof;
(iv) that, unless the Issuers default on making the payment,
any Security or portion thereof accepted for payment pursuant to the
Change of Control Offer shall cease to accrete Accreted Value and
accrue interest, as the case may be, after the Change of Control
Payment Date;
(v) that Holders electing to have Securities or any portion
thereof purchased pursuant to a Change of Control Offer will be
required to surrender their Securities to the Paying Agent at the
address specified in the notice prior to 5:00 p.m., New York City time,
on the Business Day preceding the Change of Control Payment Date with
the "Option of Holder to Elect Purchase" on the reverse thereof
completed and must complete any form of letter of transmittal proposed
by the Issuers and acceptable to the Trustee and the Paying Agent;
(vi) that Holders of Securities will be entitled to withdraw
their election if the Paying Agent receives, not later than 5:00 p.m.,
New York City time, on the Business Day preceding the Change of Control
Payment Date, a tested telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount at maturity of
Securities the Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Securities purchased;
and
(vii) that Holders whose Securities are purchased only in part
will be issued Securities equal in principal amount at maturity to the
unpurchased portion of the Securities surrendered.
On the Change of Control Payment Date, the Issuers shall (i)
accept for payment Securities or portions thereof tendered pursuant to the
Change of Control Offer, (ii) deposit with the Paying Agent U.S. Legal Tender
sufficient to pay the purchase price of all Securities or portions thereof so
tendered and accepted and (iii) deliver to the Trustee the Securities so
accepted together with an Officers' Certificate of each of the Issuers setting
forth the Securities or portions thereof tendered to and accepted for payment by
the Issuers. The Paying Agent shall promptly (but in any case no later than 10
calendar days after the Change of Control Payment Date) mail or deliver to the
Holders of Securities so accepted payment in an amount equal to the purchase
price, and the Trustee shall promptly authenticate and mail or deliver to such
Holders a new Security equal in principal amount at maturity to any unpurchased
portion of the Security surrendered. Any Securities not so accepted shall be
promptly mailed or delivered by the Issuers to the Holder thereof.
For purposes of this Section 4.15, the Trustee shall act as
Paying Agent.
In connection with the purchase of Securities pursuant to a
Change of Control Offer, the Issuers shall comply with all applicable tender
offer laws and regulations, including, to the extent applicable, Section 14(e)
and Rule 14(e)-1 under the Exchange Act, and any other applicable Federal or
state securities laws and regulations and any applicable requirements of any
securities exchange on which the Securities are listed.
SECTION IV.16 Limitation on Designations of
Unrestricted Subsidiaries.
The Company may designate any Subsidiary of the Company (other
than FinCo, WirelessCo, RealtyCo and EquipmentCo) as an "Unrestricted
Subsidiary" under this Indenture (a "Designation") only if:
(i) no Default shall have occurred and be continuing at
the time of or after giving effect to such Designation; and
(ii) the Company would be permitted under this Indenture to
make an Investment at the time of Designation (assuming the
effectiveness of such Designation) in an amount (the "Designation
Amount") equal to the Fair Market Value of the aggregate amount of its
Investments in such Subsidiary on such date; and
(iii) except in the case of a Subsidiary in which an
Investment is being made pursuant to and as permitted by the third
paragraph of Section 4.9, the Company would be permitted to incur $1.00
of additional Indebtedness pursuant to clause (a) of the proviso to the
first paragraph of Section 4.8 at the time of Designation (assuming the
effectiveness of such Designation).
In the event of any such Designation, the Company shall be
deemed to have made an Investment constituting a Restricted Payment pursuant to
Section 4.9 for all purposes of this Indenture in the Designation Amount. The
Company shall not, and shall not permit any Restricted Subsidiary to, at any
time (x) provide direct or indirect credit support for or a guarantee of any
Indebtedness of any Unrestricted Subsidiary (including of any undertaking,
agreement or instrument evidencing such Indebtedness), (y) be directly or
indirectly liable for any Indebtedness of any Unrestricted Subsidiary or (z) be
directly or indirectly liable for any Indebtedness which provides that the
Holder thereof may (upon notice, lapse of time or both) declare a default
thereon or cause the payment thereof to be accelerated or payable prior to its
final scheduled maturity upon the occurrence of a default with respect to any
Indebtedness of any Unrestricted Subsidiary (including any right to take
enforcement action against such Unrestricted Subsidiary), except, in the case of
clause (x) or (y), to the extent permitted under Section 4.9.
Notwithstanding anything herein to the contrary, APC shall
not, at any time, be considered a Restricted Subsidiary absent a Revocation in
compliance with the following paragraph.
The Company may revoke any Designation of a Subsidiary as an
Unrestricted Subsidiary (a "Revocation"), whereupon such Subsidiary shall then
constitute a Restricted Subsidiary, if:
(a) no Default shall have occurred and be continu-
ing at the time of and after giving effect to such Revocation; and
(b) all Liens and Indebtedness of such Unrestricted Subsidiary
outstanding immediately following such Revocation would, if incurred at
such time, have been permitted to be incurred for all purposes of this
Indenture.
All Designations and Revocations must be evidenced by
Resolutions of the Company delivered to the Trustee certifying compliance with
the foregoing provisions.
SECTION IV.17 Limitation on Activities of
the Issuers and the Restricted
Subsidiaries.
(i) The Company will not, and will not permit any Restricted
Subsidiary to, engage in any business other than a Permitted Business and (ii)
FinCo will not own any operating assets or other properties or conduct any
business other than to serve as an Issuer and obligor on the Securities and
other Indebtedness permitted under this Indenture.
SECTION IV.18 Limitation on Ownership of Equity
Interests of Restricted Subsidiaries.
Notwithstanding any other provision of this Indenture to the
contrary, (i) each of WirelessCo, RealtyCo, EquipmentCo and FinCo shall at all
times remain a direct Wholly-Owned Restricted Subsidiary of the Company (except
that FinCo may be merged with and into the Company or a Wholly-Owned Restricted
Subsidiary if the Company or such Wholly-Owned Restricted Subsidiary is then a
corporation) and (ii) none of WirelessCo, RealtyCo or EquipmentCo will, directly
or indirectly, sell, convey, transfer, lease or otherwise dispose of any assets
or property used or useful in the operation of the business of the Company and
the Restricted Subsidiaries in the geographic areas for which the Company or a
Restricted Subsidiary owns or holds an FCC license for the transmission of
wireless telecommunications services on the Issue Date other than, in the case
of this clause (ii), to a Person not an Affiliate of the Company or any of the
Restricted Subsidiaries or to a Wholly-Owned Subsidiary if all of the
outstanding Equity Interests of such Wholly-Owned Subsidiary are concurrently
sold to a Person that is not an Affiliate of the Company or any of the
Restricted Subsidiaries, in each case in compliance with Section 4.13.
Notwithstanding the foregoing, WirelessCo, RealtyCo, EquipmentCo and FinCo may
issue Disqualified Equity Interests that do not entitle the Holders thereof to
participate in the earnings, profits or cash flow of such Restricted Subsidiary
pursuant to and in compliance with Section 4.8.
SECTION IV.19 Amendments to Capital
Contribution Agreement
The Company will not amend, modify or waive, or refrain from
enforcing, any provision of the Capital Contribution Agreement dated as of July
15, 1996 among Sprint Corporation, Tele-Communications, Inc., Comcast
Corporation, Cox Communications, Inc. and the Company in any manner adverse to
the Company or the holders of the Securities in any material respect.
SECTION IV.20 Waiver of Stay, Extension
or Usury Laws.
Each of the Issuers covenants, and each Subsidiary Guarantor
shall be deemed to covenant, (to the extent permitted by law) that it will not
at any time insist upon, plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law or any usury law or other law
that would prohibit or forgive the Issuers or such Subsidiary Guarantor, as the
case may be, from paying all or any portion of the principal of or interest on
the Securities as contemplated herein, wherever enacted, now or at any time
hereafter in force, or that may affect the covenants or the performance of this
Indenture; and (to the extent permitted by law) each of the Issuers hereby
expressly waives and each Subsidiary Guarantor shall be deemed to expressly
waive, all benefit or advantage of any such law, and covenants, and each
Subsidiary Guarantor shall be deemed to covenant, that it will not hinder, delay
or impede the execution of any power herein granted to the Trustee, but will
suffer and permit the execution of every such power as though no such law had
been enacted.
ARTICLE V
SUCCESSOR CORPORATION
SECTION V.1 Consolidation, Merger, Sale
of Assets, Etc.
The Company will not, in any transaction or series of
transactions, merge or consolidate with or into, or sell, assign, convey,
transfer, lease or otherwise dispose of all or substantially all of its
properties and assets as an entirety to, any Person or Persons, and the Company
will not permit any of the Restricted Subsidiaries to enter into any such
transaction or series of transactions if such transaction or series of
transactions, in the aggregate, would result in a sale, assignment, conveyance,
transfer, lease or other disposition of all or substantially all of the
properties and assets of the Company and the Restricted Subsidiaries, taken as a
whole, to any other Person or Persons, unless at the time of and after giving
effect thereto:
(i) either (a) if the transaction or series of transactions
is a merger or consolidation, the Company shall be the surviving Person
of such merger or consolidation, or (b) the Person formed by any such
consolidation or into which the Company or such Restricted Subsidiary
is merged or to which the properties and assets of the Company and/or
any Restricted Subsidiary, as the case may be, are transferred (any
such surviving Person or transferee Person being a "Surviving Entity")
shall be a partnership or corporation organized and existing under the
laws of the United States of America, any state thereof or the District
of Columbia and shall expressly assume by a supplemental indenture
executed and delivered to the Trustee, in form reasonably satisfactory
to the Trustee, all the obligations of the Company under the Securities
and this Indenture, and, in each case, this Indenture shall remain in
full force and effect;
(ii) immediately before and immediately after giving effect
to such transaction or series of transactions on a pro forma basis
(including, without limitation, any Indebtedness incurred or
anticipated to be incurred in connection with or in respect of such
transaction or series of transactions), no Default shall have occurred
and be continuing;
(iii) immediately after giving effect to such transaction or
series of transactions on a pro forma basis (including, without
limitation, any Indebtedness incurred or anticipated to be incurred in
connection with or in respect of such transaction or series of
transactions), the Company or the Surviving Entity, as the case may be,
could incur $1.00 of additional Indebtedness pursuant to the proviso to
the first paragraph of clause (a) of Section 4.8; provided that in the
event of a conversion of the Company from partnership to corporate form
in a transaction the primary purpose of which is to effect such
conversion and in which no additional Indebtedness is incurred or
anticipated to be incurred by the Company, the Surviving Entity or any
Restricted Subsidiary, the Surviving Entity shall not be required to be
able to incur such $1.00 of additional Indebtedness; and
(iv) the Company or its surviving entity, as the case may be,
shall deliver, or cause to be delivered, to the Trustee, in form and
substance reasonably satisfactory to the Trustee, an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, transfer, lease, assignment or other disposition
and the supplemental indenture in respect thereof comply with the
requirements of this Indenture.
Each Subsidiary Guarantor (other than any Subsidiary Guarantor
whose Subsidiary Guarantee is to be released in accordance with the terms of the
Subsidiary Guarantee and this Indenture in connection with any transaction
complying with the provisions of Section 4.17) will not, and the Company will
not cause or permit any Subsidiary Guarantor to, consolidate with or merge with
or into any Person other than the Company or another Subsidiary Guarantor
unless: (a) the entity formed by or surviving any such consolidation or merger
(if other than the Subsidiary Guarantor) is a corporation or partnership
organized and existing under the laws of the United States or any state thereof
or the District of Columbia; (b) such entity assumes by supplemental indenture
all of the obligations of the Subsidiary Guarantor under its Subsidiary
Guarantee; (c) immediately after giving effect to such transaction, no Default
or Event of Default shall have occurred and be continuing; and (d) immediately
after giving effect to such transaction and the use of any net proceeds
therefrom on a pro forma basis, the Company could satisfy the provisions of
clause (iii) of the first paragraph of this Section. Any merger or consolidation
of a Subsidiary Guarantor with and into the Company (with the Company being the
Surviving Entity) or another Subsidiary Guarantor need only comply with clause
(ii) of the first paragraph of this Section.
SECTION V.2 Successor Entity Substituted.
Upon any consolidation, combination, merger or any transfer of
all or substantially all of the assets of a Person subject to, and in accordance
with Section 5.1, the Surviving Entity formed by such consolidation or
combination or into which the Company is merged or to which such transfer is
made shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under this Indenture with the same effect as if such
Surviving Entity had been named as the Company herein; provided that, solely for
purposes of computing Available Operating Cash Flow for purposes of clause (iii)
of the first paragraph of Section 4.9, the Available Operating Cash Flow of any
Persons other than the Company and the Restricted Subsidiaries shall only be
included for periods subsequent to the effective time of such consolidation,
combination, merger or transfer of assets.
SECTION V.3 Status of Subsidiaries.
For all purposes of this Indenture and the Securities
(including the provisions of this Article V and Sections 4.8, 4.9 and 4.10),
Subsidiaries of any Surviving Entity will, upon such transaction or series of
transactions, become Restricted Subsidiaries or Unrestricted Subsidiaries as
provided pursuant to Section 4.16 and all Indebtedness, and all Liens on
property or assets, of the Company and the Restricted Subsidiaries immediately
prior to such transaction or series of transactions will be deemed to have been
incurred to upon such transaction or series of transactions; provided that in
the event of a conversion of the Company from partnership to corporate form in a
transaction the purpose of which is to effect such conversion and in which no
additional Indebtedness is incurred or anticipated to be incurred by the
Company, the Surviving Entity or any Restricted Subsidiary, no Indebtedness of
the Company and the Restricted Subsidiaries shall be deemed to have been
incurred upon such transaction or series of transactions.
ARTICLE VI
DEFAULT AND REMEDIES
SECTION VI.1 Events of Default.
(a) An "Event of Default" occurs if:
(i) there is a default in the payment of the principal of,
or premium, if any, on the Securities when due, at maturity, upon
redemption or otherwise (including pursuant to a Change of Control
Offer or an Asset Sale Offer); or
(ii) there is a default in the payment of interest on the
Securities when it becomes due and payable and continuance of such
default for a period of 30 days; or
(iii) there is a default in the performance, or breach, of
any covenant described in Section 5.1; or
(iv) there is a default in the performance of or compliance
with, or breach of, any term, covenant, condition or provision of the
Securities or this Indenture (other than those specified in clause (i)
or (ii) above) and such default continues for a period of 30 days after
written notice to the Company thereof by the Trustee or holders of at
least 25% of the aggregate principal amount at maturity of the
Securities then outstanding; or
(v) either (a) one or more default or defaults in the
payment of any principal under one or more agreements, instruments,
mortgages, bonds, debentures or other evidences of Indebtedness (each,
a "Debt Instrument") under which the Company or one or more Restricted
Subsidiaries or the Company and one or more Restricted Subsidiaries
then have outstanding Indebtedness in excess of $50.0 million,
individually or in the aggregate, or (b) any other default or defaults
under one or more Debt Instruments under which the Company or one or
more Restricted Subsidiaries or the Company and one or more Restricted
Subsidiaries then have outstanding Indebtedness in excess of $50.0
million, individually or in the aggregate, and, in the case of this
clause (b), either (x) such Indebtedness is already due and payable in
full by its terms or (y) such default or defaults have resulted in the
acceleration of the maturity of such Indebtedness; or
(vi) one or more judgments, orders or decrees of any court or
regulatory or administrative agency of competent jurisdiction for the
payment of money in excess of $50.0 million, either individually or in
the aggregate, shall be entered against the Company or any Restricted
Subsidiary or any of their respective properties and shall not be
discharged or fully bonded and there shall have been a period of 60
days after the date on which any period for appeal has expired and
during which a stay of enforcement of such judgment, order or decree
shall not be in effect; or
(vii) any holder of at least $50.0 million in aggregate
principal amount of Indebtedness of the Company or any of the
Restricted Subsidiaries, or its trustee, agent or representative, shall
commence (or have commenced on its behalf) judicial proceedings to
foreclose upon assets of the Company or any of the Restricted
Subsidiaries having an aggregate Fair Market Value, individually or in
the aggregate, in excess of $50.0 million or shall have exercised any
right under applicable law or applicable security documents to take
ownership of any such assets in lieu of foreclosure; or
(viii) any Subsidiary Guarantee ceases to be in full force and
effect or is declared null and void or a Subsidiary Guarantor denies
that it has any further liability under its Subsidiary Guarantee or
gives notice to such effect; or
(ix) an Issuer, any Subsidiary Guarantor or any Material
Restricted Subsidiary (a) admits in writing its inability to pay its
debts generally as they become due, (b) commences a voluntary case or
proceeding under any Bankruptcy Law with respect to itself, (c)
consents to the entry of a judgment, decree or order for relief against
it in an involuntary case or proceeding under any Bankruptcy Law, (d)
consents to the appointment of a Custodian (as defined below) of it or
for substantially all of its property, (e) consents to or acquiesces in
the institution of a bankruptcy or an insolvency proceeding against it,
(f) makes a general assignment for the benefit of its creditors or (g)
takes any partnership or corporate action, as the case may be, to
authorize or effect any of the foregoing;
(x) a court of competent jurisdiction enters a judgment,
decree or order for relief in respect of an Issuer, any Subsidiary
Guarantor or any Material Restricted Subsidiary in an involuntary case
or proceeding under any Bankruptcy Law, which shall (a) approve as
properly filed a petition seeking reorganization, arrangement,
adjustment or composition in respect of an Issuer, any Subsidiary
Guarantor or any Material Restricted Subsidiary, (b) appoint a
Custodian of the Company or any of its Subsidiaries or for
substantially all of any of their property or (c) order the winding-up
or liquidation of its affairs; and such judgment, decree or order shall
remain unstayed and in effect for a period of 60 consecutive days.
(b) For purposes of this Article VI: the term "Custodian"
means any receiver, interim receiver, receiver and manager, trustee, assignee,
liquidator, sequestrator or similar official charged with maintaining possession
or control over property for one or more creditors, whether under any Bankruptcy
Law or otherwise.
SECTION VI.2 Acceleration.
If an Event of Default (other than an Event of Default
specified in Section 6.1(a)(ix) or (x) with respect to an Issuer) occurs and is
continuing, the Holders of at least 25% in principal amount at maturity of the
outstanding Securities may, by written notice to the Issuers and the Trustee,
and the Trustee upon the request of the Holders of not less than 25% in
principal amount at maturity of the outstanding Securities shall by written
notice to the Issuers, declare the Default Amount to be due and payable
immediately. Upon any such declaration such amounts shall become due and payable
immediately. If an Event of Default specified in Section 6.1(a)(ix) or (x)
occurs and is continuing with respect to an Issuer, then the Default Amount
shall ipso facto become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Holder. The Holders
of a majority in aggregate principal amount at maturity of outstanding
Securities may, by notice to the Trustee, rescind such declaration of
acceleration if all existing Events of Default have been cured or waived, other
than the non-payment of the Default Amount and any accrued interest on the
Securities that has become due solely as a result of such acceleration and if
the rescission of acceleration would not conflict with any judgment or decree.
No such rescission shall affect any subsequent default or impair any right
consequent thereto.
SECTION VI.3 Other Remedies.
If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy by proceeding at law or in equity to collect the
payment of principal of or interest on the Securities, or to enforce the
performance of any provision of the Securities, this Indenture or any Subsidiary
Guarantee.
All rights of action and claims under this Indenture, or the
Securities or any Subsidiary Guarantee may be enforced by the Trustee even if
the Trustee does not possess any of the Securities or does not produce any of
them in the proceeding. A delay or omission by the Trustee or any Securityholder
in exercising any right or remedy accruing upon an Event of Default shall not
impair the right or remedy or constitute a waiver of or acquiescence in the
Event of Default. No remedy is exclusive of any other remedy. All available
remedies are cumulative to the extent permitted by law.
SECTION VI.4 Waiver of Past Default.
Subject to Sections 6.7 and 9.2, the Holders of, in the
aggregate, a majority in aggregate principal amount at maturity of the
outstanding Securities by notice to the Trustee may waive an existing Default or
Event of Default and its consequences, except a Default specified in Section
6.1(a)(i) or (ii) or in respect of any provision hereof that cannot be modified
or amended without the consent of the Holder so affected pursuant to Section
9.2. When a Default or Event of Default is so waived, it shall be deemed cured
and shall cease to exist.
SECTION VI.5 Control by Majority.
The Holders of at least a majority in principal amount at
maturity of the outstanding Securities may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on it; provided that the Trustee may refuse to
follow any direction that (i) conflicts with law or this Indenture, (ii) the
Trustee determines may be unduly prejudicial to the rights of another
Securityholder, or (iii) may involve the Trustee in personal liability unless
the Trustee has indemnification satisfactory to it in its sole discretion
against any loss or expense caused by its following such direction; and
provided, further, that the Trustee may take any other action deemed proper by
the Trustee that is not inconsistent with such direction.
SECTION VI.6 Limitation on Suits.
A Securityholder may not pursue any remedy with respect to
this Indenture, the Securities or any Subsidiary Guarantee unless:
(a) the Holder gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% in principal amount
at maturity of the outstanding Securities make a written request to
the Trustee to pursue a remedy;
(c) such Holder or Holders offer and, if requested, provide to
the Trustee security or indemnity reasonably satisfactory to the
Trustee against any loss, liability or expense;
(d) the Trustee does not comply with the request
within 30 days after receipt of the request and the offer and, if re-
quested, provision of indemnity; and
(e) during such 30-day period the Holders of a majority in
principal amount at maturity of the outstanding Securities do not give
the Trustee a direction inconsistent with the request.
The foregoing limitations shall not apply to a suit instituted
by a Holder for the enforcement of the payment of the Default Amount, principal
of or accrued interest on the Securities on or after the respective due dates
set forth or provided for in the Securities.
A Securityholder may not use this Indenture to obtain a
preference or priority over any other Securityholder.
SECTION VI.7 Rights of Holders To Receive Payment.
Notwithstanding any other provision of this Indenture, the
right of any Holder to receive payment of the Default Amount, principal of and
interest on a Security, on or after the respective due dates expressed or
provided for in the Security, or to bring suit for the enforcement of any such
payment on or after such respective dates, is absolute and unconditional and
shall not be impaired or affected without the consent of such Holder.
SECTION VI.8 Collection Suit by Trustee.
If an Event of Default specified in Section 6.1(a)(i) or (ii)
occurs and is continuing, the Trustee may recover judgment in its own name and
as trustee of an express trust against the Issuers or any other obligor on the
Securities for the whole amount of principal and accrued interest remaining
unpaid, together with interest overdue on principal and, to the extent that
payment of such interest is lawful, interest on overdue installments of
interest, in each case at the interest rate borne by the Securities and such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
SECTION VI.9 Trustee May File Proofs of Claim.
The Trustee shall be entitled and empowered to file such
proofs of claim and other papers or documents as may be necessary or advisable
in order to have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel) and the Securityholders allowed in any judicial
proceedings relative to the Issuers or any Subsidiary Guarantor (or any other
obligor upon the Securities), their creditors or their property and shall be
entitled and empowered to collect and receive any monies or other property
payable or deliverable on any such claims and to distribute the same, and any
Custodian in any such judicial proceedings is hereby authorized by each
Securityholder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the
Securityholders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agent and
counsel, and any other amounts due the Trustee under Section 7.7. Nothing herein
contained shall be deemed to authorize the Trustee to authorize or consent to or
accept or adopt on behalf of any Securityholder any plan of reorganization,
arrangement, adjustment or composition affecting the Securities or the rights of
any Holder thereof, or to authorize the Trustee to vote in respect of the claim
of any Securityholder in any such proceeding.
SECTION VI.10 Priorities.
If the Trustee collects any money pursuant to this Article VI,
it shall pay out such money in the following order:
First: to the Trustee for amounts due under Section 7.7;
Second: to Holders for interest accrued on the Securities,
ratably, without preference or priority of any kind, according to
the amounts due and payable on the Securities for interest;
Third: to Holders for Accreted Value or principal amounts,
as the case may be, owing under the Securities, ratably, without
preference or priority of any kind, according to the amounts due
and payable on the Securities for principal; and
Fourth: to the Issuers or any Subsidiary Guarantor, as their
respective interests may appear.
The Trustee, upon prior written notice to the Issuers, may fix
a record date and payment date for any payment to Securityholders pursuant to
this Section 6.10.
SECTION VI.11 Undertaking for Costs.
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as Trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by a
Holder pursuant to Section 6.7 or a suit by Holders of more than 10% in
aggregate principal amount at maturity of the outstanding Securities.
ARTICLE VII
TRUSTEE
SECTION VII.1 Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture and use the same degree of care and skill in its exercise as a prudent
person would exercise or use under the circumstances in the conduct of such
person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) The Trustee undertakes to perform such duties as are
specifically set forth in this Indenture and no implied covenants or
obligations shall be read into this Indenture against the Trustee.
(ii) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph
(b) of this Section 7.1;
(ii) the Trustee shall not be liable for any error of
judgment made in good faith by a Trust Officer, unless it is proved
that the Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith and reasonably believed
by it to be authorized or within the discretion or rights or powers
conferred upon it by this Indenture.
(d) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or in the exercise of any of its
rights or powers if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(e) Every provision of this Indenture that in any way relates
to the Trustee is subject to paragraphs (a), (b), (c) and (d) of this Section
7.1.
(f) The Trustee may refuse to perform any duty or exercise any
right or power unless it is provided adequate funds to enable it to do so and it
receives indemnity satisfactory to it in its sole discretion against any loss,
liability, fee or expense.
SECTION VII.2 Rights of Trustee.
Subject to TIA ss.ss. 315(a)-(d) and except as provided in
Section 7.1:
(a) The Trustee may rely upon any document believed by it to
be genuine and to have been signed or presented by the proper Person.
The Trustee shall not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other
paper or document, but the Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it may
see fit, and, if the Trustee shall determine to make such further
inquiry or investigation, it shall be entitled, upon reasonable notice,
to examine the books, records and premises of the Issuers, personally
or by agent or attorney at the sole cost of the Company and shall incur
no liability or additional liability of any kind by reason of such
inquiry or investigation.
(b) Before the Trustee acts or refrains from acting with
respect to any matter contemplated by this Indenture, it may require an
Officers' Certificate from each of the Issuers or an Opinion of Counsel
from each of the Issuers, that shall conform to the provisions of
Section 11.5. The Trustee shall not be liable for any action it takes
or omits to take in good faith in reliance on such certificate or
opinion.
(c) The Trustee may act through its attorneys and agents and
shall not be responsible for the misconduct or negligence of any agent
(other than the negligence or willful misconduct of an agent who is an
employee of the Trustee) appointed with due care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith that it reasonably believes to be
authorized or within its rights or powers; provided, however, that the
foregoing shall apply only if the Trustee's conduct does not constitute
negligence or bad faith.
(e) The Trustee may consult with counsel of its selection and
the advice or opinion of such counsel as to matters of law shall be
full and complete authorization and protection from liability in
respect of any action taken, omitted or suffered by it hereunder in
good faith and in accordance with the advice or opinion of such
counsel.
(f) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request
or direction of any Holder pursuant to this Indenture, unless such
Holder shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction.
SECTION VII.3 Individual Rights of Trustee.
The Trustee in its individual capacity or any other capacity
may become the owner or pledgee of Securities and may otherwise deal with the
Issuers or their Affiliates with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights. However, the Trustee is
subject to Sections 7.10 and 7.11.
SECTION VII.4 Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture, the Securities
or any Subsidiary Guarantee, it shall not be accountable for the Company's use
of the proceeds from the issuance of the Securities and it shall not be
responsible for any statement of the Issuers in this Indenture or any document
issued in connection with the sale of Securities or any statement in the
Securities other than the Trustee's certificate of authentication.
SECTION VII.5 Notice of Defaults.
If a Default or an Event of Default with respect to the
Securities occurs and is continuing and is known to the Trustee, the Trustee
shall give notice of the Default or Event of Default within 30 days after the
Trustee acquires knowledge of the occurrence thereof to all Holders as their
names and addresses appear on the Register, unless such Default shall have been
cured or waived before the mailing of such notice. Except in the case of a
Default or an Event of Default in payment of principal of or interest on any
Security, the Trustee may withhold the notice to the Securityholders if a
committee of its Trust Officers in good faith determines that withholding the
notice is in the interest of Securityholders.
SECTION VII.6 Reports by Trustee to Holders.
To the extent required by TIA ss. 313(a), within 60 days after
May 15 of each year commencing with 1997 and for as long as there are Securities
outstanding hereunder, the Trustee shall mail to each Securityholder the
Trustee's brief report dated as of such date that complies with TIA ss. 313(a).
The Trustee also shall comply with TIA ss. 313(b) and TIA ss. 313(c) and (d). A
copy of such report at the time of its mailing to Securityholders shall be filed
with the Commission, if required, and each stock exchange, if any, on which the
Securities are listed.
SECTION VII.7 Compensation and Indemnity.
The Issuers shall pay to the Trustee, the Paying Agent and the
Registrar from time to time such compensation as shall be agreed to in writing
from time to time by the Trustee and the Issuers for their respective services
rendered hereunder. The Trustee's, the Paying Agent's and the Registrar's
compensation shall not be limited by any law on compensation of a trustee of an
express trust. The Issuers shall reimburse the Trustee, the Paying Agent and the
Registrar upon request for all reasonable out-of-pocket disbursements, expenses
and advances (including reasonable fees and expenses of counsel) incurred or
made by each of them in addition to the compensation for their respective
services. Such expenses shall include the reasonable compensation, out-of-pocket
disbursements and expenses of the Trustee's, the Paying Agent's and the
Registrar's agents and counsel.
The Issuers shall indemnify each of the Trustee, any
predecessor Trustee, the Paying Agent and the Registrar for, and hold each of
them harmless against, any claim, demand, expense (including but not limited to
their respective reasonable attorneys' fees and expenses), loss or liability,
including taxes (other than taxes based upon, measured by or determined by the
income of the Trustee) incurred by each of them arising out of or in connection
with the administration of this Indenture and their respective duties hereunder
or thereunder. Each of the Trustee, the Paying Agent and the Registrar shall
notify the Issuers promptly of any claim asserted against it for which it may
seek indemnity. However, failure by the Trustee, the Paying Agent or the
Registrar to so notify the Issuers shall not relieve the Issuers of their
obligations hereunder. The Issuers need not reimburse any expense or indemnify
against any loss or liability incurred by the Trustee, the Paying Agent or the
Registrar through the Trustee's, the Paying Agent's or the Registrar's, as the
case may be, own willful misconduct, negligence or bad faith.
To secure the Issuers' payment obligations in this Section 7.7
and in Section 6.9 (insofar as the Trustee is concerned), each of the Trustee,
the Paying Agent and the Registrar shall have a lien prior to the Securities on
all money or property held or collected by it, in its capacity as Trustee,
Paying Agent or Registrar, as the case may be, except money or property held in
trust to pay principal of or interest on particular Securities. Such lien shall
survive the satisfaction and discharge of this Indenture or any other
termination under the Bankruptcy Law.
Subject to any other rights available to the Trustee, the
Registrar and the Paying Agent under any Bankruptcy Law, when any of the
Trustee, the Paying Agent and the Registrar incurs expenses or renders services
after an Event of Default specified in Section 6.1(a)(ix) or (x) with respect to
an Issuer occurs, the parties hereto and the Securityholders, by acceptance of
the Securities, hereby agree that the expenses and the compensation for the
services are intended to constitute expenses of administration under any
Bankruptcy Law.
The provisions of this Section 7.7 shall survive the
termination of this Indenture.
SECTION VII.8 Replacement of Trustee.
The Trustee may resign at any time by so notifying the Issuers
in writing, such resignation to be effective upon the appointment of a successor
Trustee. The Holders of a majority in principal amount at maturity of the
outstanding Securities may remove the Trustee by so notifying the Trustee in
writing and may appoint a successor Trustee with the Issuers' consent, which
consent shall not be unreasonably withheld. The Issuers may remove the Trustee
if:
(a) the Trustee fails to comply with Section 7.10;
(b) the Trustee is adjudged a bankrupt or an insolvent;
(c) a receiver or other public officer takes charge of
the Trustee or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of the Trustee for any reason (the Trustee in such event being
referred to herein as the retiring Trustee), the Issuers shall promptly appoint
a successor Trustee. Within one year after the successor Trustee takes office,
the Holders of a majority in principal amount of the Securities may appoint a
successor Trustee to replace the successor Trustee appointed by the Issuers.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuers. Immediately after that,
the retiring Trustee shall transfer all property held by it as Trustee to the
successor Trustee (subject to the lien provided in Section 7.7), the resignation
or removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. A successor Trustee shall mail notice of its succession to each
Securityholder.
If a successor Trustee does not take office within 30 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Issuers or the Holders of at least 25% in principal amount at maturity of the
outstanding Securities may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any
Securityholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this
Section 7.8, the Issuers' obligations under Section 7.7 shall continue for the
benefit of the retiring Trustee.
SECTION VII.9 Successor Trustee by Merger, Etc.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation or national banking association, the resulting, surviving or
transferee corporation or national banking association without any further act
shall be the successor Trustee provided such corporation shall be otherwise
qualified and eligible under this Article VII.
SECTION VII.10 Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss. 310(a)(1) and (2). The Trustee shall have a combined
capital and surplus of at least $50,000,000 as set forth in its most recent
published annual report of condition. The Trustee shall comply with TIA ss.
310(b) subject to its rights to apply for a stay of its duty to resign under the
penultimate paragraph of TIA ss. 310(b). The provisions of TIA ss. 310 shall
refer to the Issuers and any Subsidiary Guarantor as obligors in respect of the
Securities.
SECTION VII.11 Preferential Collection of
Claims Against Issuers.
The Trustee shall comply with TIA ss. 311(a), excluding any
creditor relationship listed in TIA ss. 311(b). A Trustee who has resigned or
been removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
The provisions of TIA ss. 311 shall refer to the Issuers and any Subsidiary
Guarantor, if applicable, as obligors in respect of the Securities.
SECTION VII.12 Money Held in Trust.
Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required by law. The Trustee
shall be under no liability for interest on any money received by it hereunder
except as otherwise agreed in writing with the Issuers.
SECTION VII.13 Preferred Collection of Claims.
If and when the Trustee shall be or become a creditor of the
Issuers (or any other obligor upon the Securities), the Trustee shall be subject
to the provisions of the TIA regarding the collection of claims against the
Issuers (or any such other obligor).
ARTICLE VIII
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION VIII.1 Satisfaction and Discharge.
This Indenture will be discharged and will cease to be of
further effect (except as to surviving rights of registration of transfer or
exchange of the Securities, as expressly provided for in this Indenture) as to
all outstanding Securities when:
(1) either (a) all the Securities, theretofore authenticated
and delivered (except lost, stolen or destroyed Securities that have
been replaced or paid and Securities for whose payment money has
theretofore been deposited in trust or segregated and held in trust by
the Issuers and thereafter repaid to the Issuers or discharged from
such trust) have been delivered to the Trustee for cancellation or (b)
all Securities not theretofore delivered to the Trustee for
cancellation have become due and payable and the Issuers have
irrevocably deposited or caused to be deposited with the Trustee U.S.
Legal Tender in an amount sufficient to pay and discharge the entire
Indebtedness on the Securities not theretofore delivered to the Trustee
for cancellation, for principal of, premium, if any, and interest on
the Securities to the date of deposit together with irrevocable
instructions from the Issuers directing the Trustee to apply such funds
to the payment thereof at maturity or redemption, as the case may be;
(2) the Issuers have paid all other sums payable under
this Indenture by them; and
(3) each of the Issuers has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel stating that all
conditions precedent under this Indenture relating to the satisfaction
and discharge of this Indenture have been complied with.
SECTION VIII.2 Legal Defeasance and Covenant
Defeasance.
(a) The Issuers may, at their option by Resolution, at any
time, with respect to the Securities, elect to have either paragraph (b) or
paragraph (c) below be applied to the outstanding Securities upon compliance
with the conditions set forth in paragraph (d).
(b) Upon the Issuers' exercise under paragraph (a) of the
option applicable to this paragraph (b), the Issuers and any Subsidiary
Guarantor, if any, shall be deemed to have been released and discharged from its
obligations with respect to the outstanding Securities on the date the
conditions set forth below are satisfied (hereinafter, "legal defeasance"). For
this purpose, such legal defeasance means that the Issuers shall be deemed to
have paid and discharged the entire indebtedness represented by the outstanding
Securities, which shall thereafter be deemed to be "outstanding" only for the
purposes of paragraph (e) below and the other Sections of and matters under this
Indenture referred to in (i) and (ii) below, and to have satisfied all its other
obligations under such Securities and this Indenture insofar as such Securities
are concerned (and the Trustee, at the expense of the Issuers, shall execute
proper instruments acknowledging the same), except for the following that shall
survive until otherwise terminated or discharged hereunder: (i) the rights of
Holders of outstanding Securities to receive solely from the trust fund
described in paragraph (d) below and as more fully set forth in such paragraph,
payments in respect of the principal of, premium, if any, and interest on such
Securities when such payments are due, (ii) the Issuers' obligations with
respect to such Securities under Sections 2.2, 2.3, 2.6, 2.7, 2.8, 4.1, 4.2 and
4.19, and, with respect to the Trustee, under Sections 7.7 and 7.8, (iii) the
rights, powers, trusts, duties and immunities of the Trustee hereunder and (iv)
this Section 8.2 and Sections 8.3, 8.4 and 8.5. Subject to compliance with this
Section 8.2, the Issuers may exercise their option under this paragraph (b)
notwithstanding the prior exercise of their option under paragraph (c) below
with respect to the Securities.
(c) Upon the Issuers' exercise under paragraph (a) of the
option applicable to this paragraph (c), the Issuers shall be released and
discharged from their obligations under any covenant contained in Article V and
in Sections 4.4 through 4.18 (except for obligations mandated by the TIA) with
respect to the outstanding Securities on and after the date the conditions set
forth below are satisfied (hereinafter, "covenant defeasance"), and the
Securities and each Subsidiary Guarantee, if any, shall thereafter be deemed to
be not "outstanding" for the purpose of any direction, waiver, consent or
declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder. For this purpose, such covenant defeasance
means that, with respect to the outstanding Securities, the Issuers and any
Subsidiary Guarantor, if any, may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event of Default under Sections
6.1(a)(iii) or 6.1(a)(iv), but, except as specified above, the remainder of this
Indenture and such Securities shall be unaffected thereby.
(d) The following shall be the conditions to appli-
cation of either paragraph (b) or paragraph (c) above to the outstanding
Securities:
(i) the Issuers must irrevocably deposit with the Trustee,
in trust, for the benefit of the holders of the Securities, cash in
United States Dollars, direct non-callable obligations of, or
non-callable obligations guaranteed by, the United States of America
for the payment of which obligation or guarantee the full faith and
credit of the United States is pledged ("US Government Obligations"),
or a combination thereof, in such amounts as will be sufficient to pay
the principal of, premium, if any, and interest on the outstanding
Securities to redemption or maturity (except lost, stolen or destroyed
Securities that have been replaced or paid);
(ii) each of the Issuers shall have delivered to the Trustee
an Opinion of Counsel to the effect that the holders of the outstanding
Securities will not recognize income, gain or loss for Federal income
tax purposes as a result of such legal defeasance or covenant legal
defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been
the case if such legal defeasance or covenant legal defeasance had not
occurred (in the case of legal defeasance, such opinion must refer to
and be based upon a ruling of the Internal Revenue Service or a change
in applicable Federal income tax laws);
(iii) no Default under this Indenture shall have
occurred and be continuing on the date of such deposit;
(iv) such legal defeasance or covenant defeasance shall not
cause the Trustee to have a conflicting interest with respect to any
securities of the Issuers;
(v) such legal defeasance or covenant defeasance shall not
result in a breach or violation of, or constitute a default under, any
agreement or instrument to which the Issuers or any of their
Subsidiaries is a party or by which it is bound;
(vi) each of the Issuers shall have delivered to the Trustee
an Opinion of Counsel to the effect that after the 91st day following
their deposit, the trust funds will not be subject to the effect of any
applicable bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally or to the rights of any creditor
of the Issuers or any Subsidiary Guarantor other than those continuing
rights of the applicable holders of Securities; and
(vii) each of the Issuers shall have delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel, each stating that
all conditions precedent under this Indenture to either legal
defeasance or covenant defeasance, as the case may be, have been
complied with.
(e) All United States Dollars and U.S. Government Obligations
(including the proceeds thereof) deposited with the Trustee (or other qualifying
trustee, collectively for purposes of this paragraph (e), the "Trustee")
pursuant to paragraph (d) above in respect of the outstanding Securities shall
be held in trust and applied by the Trustee, in accordance with the provisions
of such Securities and this Indenture, to the payment, either directly or
through any Paying Agent as the Trustee may determine, to the Holders of such
Securities of all sums due and to become due thereon in respect of principal,
premium and interest, but such money need not be segregated from other funds
except to the extent required by law.
The Issuers shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to paragraph (d) above or the principal, premium,
if any, and interest received in respect thereof other than any such tax, fee or
other charge that by law is for the account of the Holders of the outstanding
Securities.
Anything in this Section 8.2 to the contrary notwithstanding,
the Trustee shall deliver or pay to the Issuers from time to time upon the
request, in writing, by the Issuers any money or U.S. Government Obligations
held by it as provided in paragraph (d) above that, in the opinion of a
nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, are in excess of the
amount thereof that would then be required to be deposited to effect an
equivalent legal defeasance or covenant defeasance.
SECTION VIII.3 Application of Trust Money.
The Trustee shall hold in trust money or U.S. Government
Obligations deposited with it pursuant to Sections 8.1 and 8.2, and shall apply
the deposited money and the money from U.S. Government Obligations in accordance
with this Indenture to the payment of principal of, premium, if any, and
interest on the Securities.
SECTION VIII.4 Repayment to the Issuers or a
Subsidiary Guarantor.
Subject to Sections 7.7, 8.1 and 8.2, the Trustee and the
Paying Agent shall promptly pay to the Issuers, or if deposited with the Trustee
by any Subsidiary Guarantor, to such Subsidiary Guarantor upon receipt by the
Trustee and the Paying Agent of Officers' Certificates stating the amount to
which each of the Issuers or such Subsidiary Guarantor, as the case may be, is
entitled, any excess money, determined in accordance with Section 8.2(e), held
by it at any time. The Trustee and the Paying Agent shall pay to the Issuers or
such Subsidiary Guarantor, as the case may be, upon receipt by the Trustee or
the Paying Agent, as the case may be, of Officers' Certificates stating the
amount to which the Issuers or such Subsidiary Guarantor, as the case may be, is
entitled, any money held by it for the payment of principal, premium, if any, or
interest that remains unclaimed for two years after payment to the Holders is
required; provided, however, that the Trustee and the Paying Agent before being
required to make any payment may, but need not, at the expense of the Issuers,
mail by first-class mail to each Holder of Securities entitled to such money at
such Holder's address as set forth on the Register notice that such money
remains unclaimed and that after a date specified therein, which shall be at
least one year from the date of such publication or mailing, any unclaimed
balance of such money then remaining will be repaid to the Issuers or such
Subsidiary Guarantor, as the case may be. After payment to the Issuers or such
Subsidiary Guarantor, as the case may be, Securityholders entitled to money must
look solely to the Issuers and such Subsidiary Guarantor for payment as general
creditors unless an applicable abandoned property law designates another Person,
and all liability of the Trustee or Paying Agent with respect to such money
shall thereupon cease.
SECTION VIII.5 Reinstatement.
With respect to the circumstances referred to in Section 8.1
and 8.2, if the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with this Indenture by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, then
and only then the Issuers' and any Subsidiary Guarantor's (if any) obligations
under this Indenture and the Securities shall be revived and reinstated as
though no deposit had been made pursuant to this Indenture until such time as
the Trustee or Paying Agent is permitted to apply all such money or U.S.
Government Obligations in accordance with this Indenture; provided, that if the
Issuers or any such Subsidiary Guarantor has made any payment of principal of,
premium, if any, or interest on any Securities because of the reinstatement of
its obligations, the Issuers or any such Subsidiary Guarantor, as the case may
be, shall be subrogated to the rights of the Holders of such Securities to
receive such payment from the money or U.S. Government Obligations held by the
Trustee or Paying Agent.
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION IX.1 Without Consent of Holders.
The Issuers and any Subsidiary Guarantors, when authorized by
Resolutions of their respective Boards, and the Trustee may amend, waive or
supplement this Indenture and the Securities without notice to or consent of any
Securityholder:
(a) to cure any ambiguity, defect or inconsistency,
provided that such amendment or supplement does not adversely
affect the rights of any Holder;
(b) to comply with any requirements of the Commission un-
der the TIA;
(c) to evidence the succession in accordance with Article V
hereof of another Person and the assumption by any such successor of
the covenants of any of the Issuers or any Subsidiary Guarantor herein
and in the Securities;
(d) to evidence and provide for the acceptance of
appointment hereunder by a successor Trustee with respect to the
Securities;
(e) to make any change that does not adversely affect the
rights of any Holder; or
(f) to add a Subsidiary Guarantor pursuant to Section
4.11.
SECTION IX.2 With Consent of Holders.
Subject to Section 6.7 and the provisions of this Section 9.2,
the Issuers and any Subsidiary Guarantors, when authorized by Resolutions of
their respective Boards, and the Trustee may amend or supplement this Indenture
or the Securities in any respect with the written consent of the Holders of not
less than a majority in aggregate principal amount at maturity of the Securities
then outstanding. Subject to Section 6.7 and the provisions of this Section 9.2,
the Holders of, in the aggregate, at least a majority in aggregate principal
amount at maturity of the outstanding Securities affected may waive compliance
by the Issuers or any Subsidiary Guarantor with any provision of this Indenture,
the Securities or any Subsidiary Guarantee, as the case may be, without notice
to any other Securityholder.
Notwithstanding the foregoing, without the consent of each
Securityholder affected, an amendment, supplement or waiver, including a waiver
pursuant to Section 6.4, may not:
(a) reduce the principal amount of or Accreted Value
of, extend the fixed maturity of, or alter the redemption provisions
of, the Securities;
(b) change the currency in which any Securities or any
premium or the accrued interest thereon is payable;
(c) reduce the percentage in principal amount of outstanding
Securities which must consent to an amendment, supplement or waiver or
consent to take any action under this Indenture, the Securities or any
Subsidiary Guarantees;
(d) impair the right to institute suit for the en-
forcement of any payment on or with respect to the Securities or any
Subsidiary Guarantee;
(e) waive a default in payment with respect to the Secur-
ities;
(f) reduce the rate or extend the time for payment of in-
terest on the Securities or amend the rate of accretion on the Secu-
rities or amend the definition of Accreted Value;
(g) alter the obligation to purchase the Securities in
accordance with this Indenture following the occurrence of an Asset
Sale or a Change of Control or waive any default in the performance
thereof;
(h) adversely affect the ranking of the Securities or any
Subsidiary Guarantees;
(i) release any Subsidiary Guarantee other than in accor-
dance with this Indenture; or
(j) modify this Section 9.2 or Section 6.4.
It shall not be necessary for the consent of the Holders under
this Section 9.2 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment or waiver under this Section 9.2 becomes
effective, the Issuers shall mail to the Holders affected thereby a notice
briefly describing the amendment or waiver. Any failure of the Issuers to mail
such notice, or any defect therein, shall not, however, in any way impair or
affect the validity of any such amendment or waiver.
Promptly after the execution by the Issuers and any Subsidiary
Guarantors and the Trustee of any supplemental indenture pursuant to the
provisions of this Section 9.2, the Trustee shall give notice thereof, at the
expense of the Issuers, to the Holders of then outstanding Securities, by
mailing a notice thereof by first-class mail to such Holders at their addresses
as they shall appear on the books of the Registrar, and such notice shall set
forth in general terms the substance of such supplemental indenture. Any failure
of the Trustee to give such notice, or any defect therein, shall not, however,
in any way impair or affect the validity of any such supplemental indenture.
SECTION IX.3 Compliance with Trust Indenture Act.
Every amendment to or supplement of this Indenture or the
Securities or any Subsidiary Guarantee shall comply with the TIA as then in
effect.
SECTION IX.4 Revocation and Effect of Amendments
and Consents.
Until an amendment or waiver becomes effective, a consent to
it by a Holder is a continuing consent by the Holder and every subsequent Holder
of that Security or portion of that Security that evidences the same debt as the
consenting Holder's Security, even if notation of the consent is not made on any
Security. Any such Holder or subsequent Holder, however, may revoke the consent
as to his Security or portion of a Security. Such revocation shall be effective
only if the Trustee receives the notice of revocation before the date the
amendment, supplement or waiver becomes effective. Notwithstanding the above,
nothing in this paragraph shall impair the right of any Securityholder under ss.
316(b) of the TIA.
The Issuers may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders of Securities entitled to
consent to any amendment, supplement or waiver. If a record date is fixed, then
notwithstanding the second and third sentences of the immediately preceding
paragraph, those Persons who were Holders of Securities at such record date (or
their duly designated proxies), and only those Persons, shall be entitled to
consent to such amendment, supplement or waiver or to revoke any consent
previously given, whether or not such Persons continue to be Holders of
Securities after such record date. Such consent shall be effective only for
actions taken within 90 days after such record date.
After an amendment, supplement or waiver becomes effective, it
shall bind every Securityholder (and every subsequent Securityholder), unless it
makes a change described in any of clauses (a) through (j) of Section 9.2; if it
makes such a change, the amendment, supplement or waiver shall bind every Holder
consenting thereto and every subsequent Holder of a Security or portion of a
Security that evidences the same debt as the consenting Holder's Security.
SECTION IX.5 Notation on or Exchange of Securities.
If an amendment, supplement or waiver changes the terms of a
Security, the Trustee shall (in accordance with the specific direction of the
Issuers) request the Holder of the Security to deliver it to the Trustee. The
Trustee shall (in accordance with the specific direction of the Issuers) place
an appropriate notation on the Security about the changed terms and return it to
the Holder. Alternatively, if the Issuers or the Trustee so determines, the
Issuers in exchange for the Security shall issue and the Trustee shall
authenticate a new Security that reflects the changed terms. Failure to make the
appropriate notation or issue a new Security shall not affect the validity and
effect of such amendment, supplement or waiver.
SECTION IX.6 Trustee To Sign Amendments, Etc.
The Trustee shall sign any amendment, supplement or waiver
authorized pursuant to this Article IX if the amendment, supplement or waiver
does not adversely affect the rights, duties or immunities of the Trustee. If it
does, the Trustee may, but need not, sign it.
ARTICLE X
GUARANTEE
SECTION X.1 Unconditional Guarantee.
Each Subsidiary Guarantor, if any, hereby unconditionally
guarantees in accordance with the provisions of Section 4.11, to each Holder of
a Security authenticated and delivered by the Trustee and to the Trustee and its
successors and assigns, the Securities that: (i) the principal of, premium, if
any, and interest on the Securities will be promptly paid in full when due,
subject to any applicable grace period, whether at maturity, by acceleration or
otherwise and interest on the overdue principal, if any, and interest on any
interest, to the extent lawful, of the Securities to the Holders or the Trustee
will be promptly paid in full or performed, all in accordance with the terms
hereof and thereof; and (ii) in case of any extension of time of payment or
renewal of any Securities, the same will be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, subject to
any applicable grace period, whether at stated maturity, by acceleration or
otherwise, subject, however, in the case of clauses (i) and (ii) above, to the
limitations set forth in Section 10.03. Each Subsidiary Guarantor, if any,
hereby agrees that its obligations hereunder shall be unconditional,
irrespective of the validity, regularity or enforceability of the Securities or
this Indenture, the absence of any action to enforce the same, any waiver or
consent by any Holder of the Securities with respect to any provisions hereof or
thereof, the recovery of any judgment against the Issuers, and action to enforce
the same or any other circumstance that might otherwise constitute a legal or
equitable discharge or defense of a guarantor. Each Subsidiary Guarantor, if
any, hereby waives diligence, presentment, demand of payment, filing of claims
with a court in the event of insolvency or bankruptcy of the Issuers, any right
to require a proceeding first against the Issuers, protest, notice and all
demands whatsoever and covenants that its Subsidiary Guarantee will not be
discharged except by complete performance of the obligations contained in the
Securities, this Indenture and in its Subsidiary Guarantee. If any
Securityholder or the Trustee is required by any court or otherwise to return to
the Issuers, any Subsidiary Guarantor or any custodian, trustee, liquidator or
other similar official acting in relation to the Issuers or any such Subsidiary
Guarantor, any amount paid by the Issuers or any such Subsidiary Guarantor to
the Trustee or such Securityholder, each Subsidiary Guarantee to the extent
theretofore discharged, shall be reinstated in full force and effect. Each
Subsidiary Guarantor further agrees that, as between it and all other Subsidiary
Guarantors, on the one hand, and the Holders and the Trustee, on the other hand,
(x) the maturity of the obligations guaranteed hereby may be accelerated as
provided in Article VI for the purposes of a Subsidiary Guarantee
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby, and (y) in the
event of any acceleration of such obligations as provided in Article VI, such
obligations (whether or not due and payable) shall forthwith become due and
payable by the Subsidiary Guarantors for the purpose of the Subsidiary
Guarantees.
SECTION X.2 Severability.
In case any provision of this Article X shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
SECTION X.3 Limitation of Liability.
Each Subsidiary Guarantor, and by its acceptance hereof each
Holder, hereby confirms that it is the intention of all such parties that the
guarantee by each Subsidiary Guarantor pursuant to its Subsidiary Guarantee not
constitute a fraudulent transfer or conveyance for purposes of any Bankruptcy
Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act
or any similar Federal or state law. To effectuate the foregoing intention, the
Holders and each Subsidiary Guarantor hereby irrevocably agree that the
obligations of each Subsidiary Guarantor under its Subsidiary Guarantee shall be
limited to the maximum amount as will, after giving effect to all other
contingent and fixed liabilities of such Subsidiary Guarantor and after giving
effect to any collections from or payments made by or on behalf of any of the
other Subsidiary Guarantors in respect of the obligations of such other
Subsidiary Guarantors under the other Subsidiary Guarantees or pursuant to
Section 10.05, result in the obligations of such Subsidiary Guarantor under its
Subsidiary Guarantee not constituting such fraudulent transfer or conveyance.
SECTION X.4 Subsidiary Guarantors May
Consolidate, etc., on Certain Terms.
(a) Nothing contained in this Indenture or in the Securities
shall prevent any consolidation or merger of a Subsidiary Guarantor with or into
an Issuer or another Subsidiary Guarantor or shall prevent any sale of assets or
conveyance of the property of a Subsidiary Guarantor as an entirety or
substantially as an entirety, to an Issuer or another Subsidiary Guarantor. Upon
any such consolidation, merger, sale or conveyance, the Subsidiary Guarantee
given by such Subsidiary Guarantor shall no longer have any force or effect.
(b) Upon the sale or disposition as an entirety (whether by
merger, stock purchase, asset sale or otherwise) of a Subsidiary Guarantor (or
all or substantially all its assets) to a Person that is not a Subsidiary of the
Company and which sale or disposition is otherwise in compliance with Section
4.17 and the other terms of this Indenture, such Subsidiary Guarantor shall be
deemed released from all obligations under this Article X without any further
action required on the part of the Trustee or any Holder.
The Trustee shall deliver an appropriate instrument evidencing
such release upon receipt of a request by the Issuers accompanied by Officers'
Certificates and Opinions of Counsel certifying as to the compliance with this
Section 10.04. Any Subsidiary Guarantor not so released remains liable for the
full amount of principal of and interest on the Securities as provided in this
Article X.
SECTION X.5 Contribution.
In order to provide for just and equitable contribution among
the Subsidiary Guarantors, the Subsidiary Guarantors agree, inter se, that in
the event any payment or distribution is made by any Subsidiary Guarantor (a
"Funding Guarantor") under any of the Subsidiary Guarantees, such Funding
Guarantor shall be entitled to a contribution from all other Subsidiary
Guarantors in a pro rata amount based on the Adjusted Net Assets (as defined
below) of each of the Subsidiary Guarantors (including the Funding Guarantor)
for all payments, damages and expenses incurred by that Funding Guarantor in
discharging the Issuers' obligations with respect to the Securities or any
obligations of any of the other Subsidiary Guarantors with respect to any of the
Subsidiary Guarantees. "Adjusted Net Assets" of any Person at any date shall
mean the lesser of the amount by which (x) the fair value of the property of
such Person exceeds the total amount of liabilities, including, without
limitation, contingent liabilities (after giving effect to all other fixed and
contingent liabilities incurred or assumed on such date), but excluding
liabilities under a Subsidiary Guarantee of such Person at such date and (y) the
present fair salable value of the assets of such Person at such date exceeds the
amount that will be required to pay the probable liability of such Person on its
debts (after giving effect to all other fixed and contingent liabilities
incurred or assumed on such date), excluding debt in respect of the Subsidiary
Guarantee of such Person, as they become absolute and matured.
SECTION X.6 Waiver of Subrogation.
Until all Obligations under each of the Subsidiary Guarantees,
the Securities and this Indenture are paid in full, each of the Subsidiary
Guarantors hereby irrevocably waives any claims or other rights that it may now
or hereafter acquire against the Issuers that arise from the existence, payment,
performance or enforcement of its obligations under its Subsidiary Guarantee and
this Indenture, including, without limitation, any right of subrogation,
reimbursement, exoneration, indemnification and any right to participate in any
claim or remedy of any Holder of Securities against the Issuers, whether or not
such claim, remedy or right arises in equity, or under contract, statute or
common law, including, without limitation, the right to take or receive from the
Issuers, directly or indirectly, in cash or other property or by set-off or in
any other manner, payment or security on account of such claim or other rights.
If any amount shall be paid to any of the Guarantors in violation of the
preceding sentence and the Securities shall not have been paid in full, such
amount shall have been deemed to have been paid to such Person for the benefit
of, and held in trust for the benefit of, the Holders of the Securities, and
shall, forthwith be paid to the Trustee for the benefit of such Holders to be
credited and applied upon the Securities, whether matured or unmatured, in
accordance with the terms of this Indenture. Each of the Subsidiary Guarantors
acknowledges that it will receive direct and indirect benefits from the
financing arrangements contemplated by this Indenture and that the waiver set
forth in this Section 10.06 is knowingly made in contemplation of such benefits.
SECTION X.7 Execution of Guarantee.
To evidence their guarantee to the Securityholders set forth
in this Article X, each Subsidiary Guarantor hereby agrees to execute a
Subsidiary Guarantee in substantially the form of Exhibit B to this Indenture,
which shall be endorsed on each Security ordered to be authenticated and
delivered by the Trustee. Each Subsidiary Guarantor hereby agrees that its
Subsidiary Guarantee set forth in this Article X shall remain in full force and
effect notwithstanding any failure to endorse on each Security a notation of a
Subsidiary Guarantee. A Subsidiary Guarantee shall be signed on behalf of a
Subsidiary Guarantor by two Officers, or an Officer and an Assistant Secretary,
or one Officer shall sign and one Officer or an Assistant Secretary (each of
whom shall, in each case, have been duly authorized by all requisite corporate
or partnership actions) shall attest to the Subsidiary Guarantee prior to the
authentication of the Security on which it is endorsed, and the delivery of such
Security by the Trustee, after the authentication thereof hereunder, shall
constitute due delivery of the Subsidiary Guarantee on behalf of such Subsidiary
Guarantor. Such signatures upon a Subsidiary Guarantee may be by manual or
facsimile signature of such officers and may be imprinted or otherwise
reproduced on the Subsidiary Guarantee and in case any such officer who shall
have signed a Subsidiary Guarantee shall cease to be such officer before the
Security on which the Subsidiary Guarantee is endorsed shall have been
authenticated and delivered by the Trustee or disposed of by the Issuers, such
Security nevertheless may be authenticated and delivered or disposed of as
though the Person who signed the Subsidiary Guarantee had not ceased to be such
officer of the Subsidiary Guarantor.
SECTION X.8 Waiver of Stay, Extension or Usury
Laws.
Each Subsidiary Guarantor, if any, covenants (to the extent
that it may lawfully do so) that it will not at any time insist upon, plead, or
in any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law or any usury law or other law that would prohibit or forgive such
Subsidiary Guarantor from performing a Subsidiary Guarantee as contemplated
herein, wherever enacted, now or at any time hereafter in force, or which may
affect the covenants or the performance of this Indenture; and (to the extent
that it may lawfully do so) each Subsidiary Guarantor, if any, hereby expressly
waives all benefit or advantage of any such law, and covenants that it will not
hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.
ARTICLE XI
MISCELLANEOUS
SECTION XI.1 Trust Indenture Act Controls.
If and to the extent that any provision of this Indenture
limits, qualifies or conflicts with the duties imposed by, or with another
provision (an "incorporated provision") included in this Indenture by operation
of, Sections 310 to 318, inclusive, of the TIA, such imposed duties or
incorporated provision shall control.
<PAGE>
SECTION XI.2 Notices.
Any notice or communication shall be deemed given if in
writing and delivered in Person or mailed by first-class mail, addressed as
follows, and received by the addressee:
(a) if to the Issuers or any Subsidiary Guarantor:
Sprint Spectrum L.P.
4900 Main Street
12th Floor
Kansas City, Missouri 64112
Attention: Joseph M. Gensheimer, Esq.
(b) if to the Trustee:
The Bank of New York
101 Barclay Street
Floor 21 West
New York, New York 10286
Attention: Corporate Trust Trustee
Administration
The Issuers or the Trustee by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Holder of a Security,
including any notice delivered in connection with TIA ss. 310(b), TIA ss.
313(c), TIA ss. 314(a) and TIA ss. 315(b), shall be mailed to him, first-class
postage prepaid, at his address as it appears on the registration books of the
Registrar and shall be deemed given to him if so mailed within the time
prescribed.
Failure to mail a notice or communication to a Securityholder
or any defect in it shall not affect its sufficiency with respect to other
Securityholders. Except for a notice to the Trustee, which is deemed given only
when received, if a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION XI.3 Communications by Holders with Other
Holders.
Securityholders may communicate pursuant to TIA ss. 312(b)
with other Securityholders with respect to their rights under this Indenture or
the Securities. The Issuers, the Trustee, the Registrar and any other Person
shall have the protection of TIA ss. 312(c).
SECTION XI.4 Certificate and Opinion of Counsel
as to Conditions Precedent.
Upon any request or application by the Issuers or any
Subsidiary Guarantor to the Trustee to take any action under this Indenture, the
Issuers or any Subsidiary Guarantor, as the case may be, shall furnish to the
Trustee (a) Officers' Certificates in form and substance satisfactory to the
Trustee stating that, in the opinion of the signers, all conditions precedent,
if any, provided for in this Indenture relating to the proposed action have been
complied with, (b) Opinions of Counsel in form and substance satisfactory to the
Trustee stating that, in the opinion of such counsel, all such conditions have
been complied with and (c) where applicable, a certificate or opinion by an
accountant that complies with TIA ss. 314(c).
<PAGE>
SECTION XI.5 Statements Required in Certificate
and Opinion of Counsel.
Each certificate and Opinion of Counsel with respect to
compliance with a condition or covenant provided for in this Indenture shall
include:
(a) a statement that the Person making such certifi-
cate or Opinion of Counsel has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements contained in
such certificate or Opinion of Counsel are based;
(c) a statement that, in the opinion of such Person, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(d) a statement as to whether or not, in the opinion of
such Person, such condition or covenant has been complied with.
SECTION XI.6 Rules by Trustee, Paying Agent,
Registrar.
The Trustee may make reasonable rules in accordance with the
Trustee's customary practices for action by or at a meeting of Securityholders.
The Paying Agent or Registrar may make reasonable rules for its functions.
SECTION XI.7 Legal Holidays.
If a payment date is a Legal Holiday at a place of payment,
payment may be made at that place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period.
SECTION XI.8 Governing Law.
The internal laws of the State of New York shall govern this
Indenture, the Securities and any Subsidiary Guarantees without regard to
principles of conflict of laws.
SECTION XI.9 No Recourse Against Others.
A trustee, director, officer, employee, stockholder, partner,
organizer or incorporator, as such, of the Issuers or a Subsidiary Guarantor
(including Sprint Spectrum Holding Company, L.P. and the Partners (and the
Affiliates of the Partners)) shall not have any liability for any obligations of
the Issuers or a Subsidiary Guarantor under the Securities, this Indenture or
any Subsidiary Guarantee or for any claim based on, in respect of or by reason
of such obligations or their creation. Each Securityholder by accepting a
Security waives and releases all such liability.
SECTION XI.10 Successors.
All agreements of the Issuers and any Subsidiary Guarantor in
this Indenture, the Securities and any Subsidiary Guarantees shall bind their
respective successors. All agreements of the Trustee in this Indenture shall
bind its successor.
SECTION XI.11 Duplicate Originals.
The parties may sign any number of copies of this Indenture.
Each signed copy shall be an original, but all of them together represent the
same agreement.
SECTION XI.12 Joint and Several Obligations.
Each of the Issuers shall have joint and several liability in
respect of all obligations hereunder. Each Issuer hereby acknowledges that this
Agreement is the independent and several obligation of each of the Issuers and
may be enforced against either Issuer separately, whether or not enforcement of
any right or remedy hereunder has been sought against any other party hereto.
Each Issuer hereby expressly waives, with respect to any of the amounts owing
hereunder by any other Issuer in respect of the obligations (collectively, the
"Other Obligations"), diligence, presentment, demand of payment, protest and all
notices whatsoever, and any requirement that any other party exhaust any right,
power or remedy or proceed against such other Issuer under this Indenture or
against any other Person under any other guarantee of, or security for, any of
such Other Obligations.
SECTION XI.13 Separability.
In case any provision in this Indenture, the Securities or in
any Subsidiary Guarantee shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby, and a Holder shall have no claim
therefor against any party hereto.
SECTION XI.14 Table of Contents, Headings, Etc.
The table of contents, cross-reference sheet and headings of
the Articles and Sections of this Indenture have been inserted for convenience
of reference only, and are not to be considered a part hereof, and shall in no
way modify or restrict any of the terms or provisions hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed as of the date first written above.
SPRINT SPECTRUM L.P., as
Co-Issuer
By: Sprint Spectrum Holding
Company, L.P., its
General Partner
By: /s/ Robert M. Neumeister, Jr.
Name: Robert M. Neumeister, Jr.
Title: Chief Financial Officer
SPRINT SPECTRUM FINANCE
CORPORATION, as Co-Issuer
By: /s/ Robert M. Neumeister, Jr.
Name: Robert M. Neumeister, Jr.
Title: Chief Financial Officer
THE BANK OF NEW YORK,
as Trustee
By: /s/ Paul J. Schmalzel
Name: Paul J. Schmalzel
Title: Assistant Treasurer
<PAGE>
Exhibit A
SPRINT SPECTRUM L.P.
SPRINT SPECTRUM FINANCE CORPORATION
This Security is issued with original issue discount for purposes of Section
1271 et seq. of the Internal Revenue Code. For each $1,000 of principal amount
of this Security, the issue price is $546.87 and the amount of original issue
discount is $453.13. The issue date of the this Security is August 23, 1996 and
the yield to maturity is 12-1/2%.
Cusip No.: 85207FAB4
No. $
12 1/2% SENIOR DISCOUNT NOTE DUE 2006
Each of SPRINT SPECTRUM L.P. and SPRINT SPECTRUM FINANCE CORPORATION
promises to pay to Cede & Co. or registered assigns upon surrender hereof the
principal sum of Dollars on August 15, 2006.
Interest Payment Dates: February 15, August 15 and at stated maturity.
By: Sprint Spectrum L.P.
By: Sprint Spectrum Holding
Company, L.P., its
General Partner
By:
Name:
Title:
By:
Name:
Title:
<PAGE>
By: Sprint Spectrum Finance
Corporation
By:
Name:
Title:
By:
Name:
Title:
Dated:
<PAGE>
Certificate of Authentication
This is one of the Senior Discount Notes due 2006 referred to in the
within-mentioned Indenture.
THE BANK OF NEW YORK, as Trustee
By:
Authorized Signatory
<PAGE>
(REVERSE OF SECURITY)
SPRINT SPECTRUM L.P.
SPRINT SPECTRUM FINANCE CORPORATION
12 1/2% SENIOR DISCOUNT NOTE DUE 2006
<PAGE>
1. Interest. SPRINT SPECTRUM L.P., a Delaware limited partnership (the
"Company"), and SPRINT SPECTRUM FINANCE CORPORATION, a Delaware corporation
("FinCo" and, together with the Company, the "Issuers"), promise to pay to
the registered holder of this Security, until the principal hereof is paid
or duly provided for, interest on the principal amount set forth on the
face of this Security at a rate of 12 1/2% per annum. Interest on the
Securities will accrue from and including the most recent date to which
interest has been paid or duly provided for or, if no interest has been
paid or duly provided for, from and including August 15, 2001 through but
excluding the date on which interest is paid or duly provided for. Interest
shall be payable in arrears on each February 15 and August 15 and at stated
maturity, commencing February 15, 2002. Interest will be computed on the
basis of a 360-day year of twelve 30-day months.
The principal of this Security shall not bear or accrue interest until
August 15, 2001, except in the case of a default in payment of principal
and/or premium, if any, upon acceleration, redemption or purchase and, in
such case, the overdue principal and any overdue premium shall bear
interest at the rate of 12 1/2% per annum (compounded semiannually on each
February 15 and August 15) (to the extent that the payment of such interest
shall be legally enforceable), from the dates such amounts are due until
they are paid or duly provided for. To the extent, but only to the extent,
interest on amounts in default constituting original issue discount prior
to August 15, 2001 is not permitted by law, original issue discount shall
continue to accrete until paid or duly provided for. On or after August 15,
2001, interest on overdue principal and premium, if any, and, to the extent
permitted by law, on overdue installments of interest will accrue, until
the principal and premium, if any, is paid or duly provided for, at the
rate of 12 1/2% per annum. Interest on any overdue principal or premium
shall be payable on demand.
2. Method of Payment. The Issuers will pay interest on the Securities
(except defaulted interest) to the registered Holder of this Security.
Holders must surrender Securities to a Paying Agent to collect principal
payments. The Issuers will pay principal, premium, if any, and interest in
money of the United States that at the time of payment is legal tender for
the payment of public and private debts ("U.S. Legal Tender"). However, the
Issuers may pay principal, premium, if any, and interest by wire transfer
of Federal funds or interest by check payable in U.S. Legal Tender.
3. Paying Agent. Initially, The Bank of New York (the "Trustee") will
act as a Paying Agent. The Issuers may change any Paying Agent without
notice. Neither the Issuers nor any of their Affiliates may act as Paying
Agent.
4. Indenture. The Issuers issued the Securities under an Indenture
dated as of August 15, 1996 (the "Indenture") among the Issuers and the
Trustee. This Security is one of an issue of Securities of the Issuers
issued, or to be issued, under the Indenture. Capitalized terms herein are
used as defined in the Indenture unless otherwise defined herein. The terms
of the Securities include those stated in the Indenture and those made part
of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.
Code ss.ss. 77aaa-77bbbb), as amended from time to time. The Securities are
subject to all such terms, and Holders are referred to the Indenture and
such Act for a statement of them. The Securities are senior obligations of
the Issuers limited in aggregate principal amount at maturity to
$500,000,000.
5. Subsidiary Guarantees. This Security may after the date hereof be
entitled to certain Subsidiary Guarantees made for the benefit of the
Holders pursuant to Section 4.11 of the Indenture.
6. Mandatory Accreted Interest Redemption. On August 15, 2001, the
Issuers are required to redeem an amount equal to $384.772 per $1,000
principal amount at maturity of each Security outstanding on a pro rata
basis at a redemption price of 100% of the principal amount at maturity of
the Securities so redeemed. If the redemption of a Security pursuant to
this Paragraph 6 would result in an outstanding Security in a denomination
(i) of less than $1,000 principal amount at maturity or (ii) other than an
integral multiple of $1,000 principal amount at maturity, such Security
will be redeemed (a) in whole, in the case of clause (i), or (b) by an
additional amount so that such Security will be in a denomination of an
integral multiple of $1,000 principal amount at maturity, in the case of
clause (ii).
7. Optional Redemption. The Issuers, at their option, may redeem all
or any of the Securities, in whole or in part, at any time on or after
August 15, 2001, at the redemption prices (expressed as percentages of
principal amount at maturity) set forth below, plus accrued and unpaid
interest, if any, to the redemption date, if redeemed during the 12-month
period beginning on August 15 of the years indicated below:
Year Redemption Price
2001............................................... 110.00%
2002............................................... 106.50%
2003............................................... 103.25%
2004 and thereafter................................ 100.00%
8. Redemption Upon Public Equity Offering. Prior to August 15, 1999,
the Issuers may redeem up to 35% of the originally issued principal amount
at maturity of the Securities at a redemption price equal to 112.5% of the
Accreted Value at the redemption date of the Securities so redeemed with
the net proceeds of one or more Public Equity Offerings of Common Equity
Interests of (i) the Company, (ii) Holdings or (iii) a Special Purpose
Corporation, in any case, resulting in gross proceeds to (or contributed to
the Company in respect of Common Equity Interests) of at least $100 million
in the aggregate; provided that at least 65% of the originally issued
principal amount at maturity of the Securities would remain outstanding
immediately after giving effect to such redemption.
9. Notice of Redemption. Notice of redemption will be mailed at least
30 days but not more than 60 days before the redemption date to each Holder
of Securities to be redeemed. On and after the Redemption Date, unless the
Issuers default in making the redemption payment, Accreted Value ceases to
accrete and interest ceases to accrue on Securities or portions thereof
called for redemption.
10. Offers To Purchase. The Indenture provides that upon the
occurrence of a Change of Control or an Asset Sale and subject to further
limitations contained therein, the Issuers shall make an offer to purchase
outstanding Securities in accordance with the procedures set forth in the
Indenture.
11. Denominations. The Securities are in registered form without
coupons and only in denominations of $1,000 of principal amount at maturity
and integral multiples thereof.
12. Persons Deemed Owners. The registered Holder of this Security may
be treated as the owner of this Security for all purposes.
13. Unclaimed Money. If money for the payment of principal or interest
remains unclaimed for one year, the Trustee or Paying Agent will pay the
money back to the Issuers or a Subsidiary Guarantor, as the case may be, at
its request. After that, Holders entitled to the money must look to the
Issuers or a Subsidiary Guarantor for payment as general creditors unless
an "abandoned property" law designates another Person.
14. Amendment, Supplement, Waiver, Etc. The Issuers, any Subsidiary
Guarantors and the Trustee (if a party thereto) may, without the consent of
the Holders of any outstanding Securities, amend, waive or supplement the
Indenture, the Securities or any Subsidiary Guarantee for certain specified
purposes, including, among other things, curing ambiguities, defects or
inconsistencies, maintaining the qualification of the Indenture under the
Trust Indenture Act of 1939, as amended, and making any change that does
not adversely affect the rights of any Holder. Other amendments and
modifications of the Indenture, the Securities or any Subsidiary Guarantee
may be made by the Issuers, any Subsidiary Guarantor and the Trustee with
the consent of the Holders of not less than a majority of the aggregate
principal amount at maturity of the outstanding Securities, subject to
certain exceptions requiring the consent of the Holders of the particular
Securities to be affected.
15. Successor Corporation. When a successor corporation or
partnership, as the case may be, assumes all the obligations of its
predecessor under the Securities or a Subsidiary Guarantee, as the case may
be, and the Indenture and the transaction complies with the terms of
Article V of the Indenture, the predecessor corporation or partnership, as
the case may be, will, except as provided in Article V, be released from
those obligations.
16. Restrictive Covenants. The Indenture contains certain covenants
that, among other things, limit the ability of the Company and the
Restricted Subsidiaries to make restricted payments, to incur indebtedness,
to create liens, to sell assets, to permit restrictions on dividends and
other payments by Restricted Subsidiaries to the Company, to consolidate,
merge or sell all or substantially all of its assets, to engage in
transactions with affiliates or to engage in certain businesses. The
limitations are subject to a number of important qualifications and
exceptions. The Company must annually report to the Trustee on compliance
with such limitations.
17. Defaults and Remedies. Events of Default are set forth in the
Indenture. Subject to certain limitations in the Indenture, if an Event of
Default (other than an Event of Default specified in Section 6.1(a)(ix) or
(x) of the Indenture with respect to an Issuer) occurs and is continuing,
then the Holders of not less than 25% in aggregate principal amount at
maturity of the outstanding Securities may, and the Trustee upon the
request of the Holders of not less than 25% in aggregate principal amount
at maturity of the outstanding Securities shall, declare the Default Amount
of and any accrued interest on all of the Securities to be due and payable
immediately. If an Event of Default specified in Section 6.1(a)(ix) or (x)
of the Indenture occurs with respect to an Issuer, the Default Amount shall
ipso facto become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Holder. Holders
may not enforce the Indenture, the Securities or any Subsidiary Guarantee
except as provided in the Indenture. The Trustee may require indemnity
satisfactory to it before it enforces the Indenture, the Securities or any
Subsidiary Guarantee. Subject to certain limitations, Holders of a majority
in principal amount at maturity of the then outstanding Securities may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders notice of any continuing default (except a default in
payment of the Default Amount, principal or interest) if it determines that
withholding notice is in their interests.
18. Trustee Dealings with Issuers. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Issuers or their Affiliates, and may otherwise deal with
the Issuers or their Affiliates, as if it were not Trustee.
19. No Recourse Against Others. A director, officer, employee,
partner, stockholder or incorporator, as such, of the Issuers or any
Subsidiary Guarantor (including Holdings and the Partners (and the
Affiliates of the Partners)) shall not have any liability for any
obligations of the Issuers or any such Subsidiary Guarantor under the
Indenture, the Securities or any Subsidiary Guarantee or for any claim
based on, in respect of, or by reason of, such obligations or their
creation. Each Holder by accepting a Security waives and releases all such
liability. The waiver and release are part of the consideration for the
issue of the Securities and any Subsidiary Guarantee.
20. Discharge. The Issuers' and any Subsidiary Guarantor's obligations
pursuant to the Indenture will be discharged, except for obligations
pursuant to certain sections thereof, subject to the terms of the
Indenture, upon the payment of all the Securities or upon the irrevocable
deposit with the Trustee of U.S. Legal Tender or U.S. Government
Obligations sufficient to pay when due principal of and interest on the
Securities to maturity or redemption, as the case may be.
21. Authentication. This Security shall not be valid until the Trustee
signs the certificate of authentication on the other side of this Security.
The internal laws of the State of New York shall govern this Security
without regard to principles of conflict of laws.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to:
SPRINT SPECTRUM, L.P.
4900 Main Street
12th Floor
Kansas City, Missouri 64112
Attention: Joseph M. Gensheimer, Esq.
<PAGE>
ASSIGNMENT FORM
If you the Holder want to assign this Security, fill in the form below and have
your signature guaranteed:
I or we assign and transfer this Security to
(Insert assignee's social security or tax ID number) __________
(Print or type assignee's name, address and zip code)
and irrevocably appoint agent to transfer this Security on the books of the
Issuers. The agent may substitute another to act for him.
Date:______________ Your Signature:
(Sign exactly as your name appears on the
other side of this Security)
Signature Guarantee:
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Security purchased by the Issuers pursuant to
Section 4.13 or 4.15 of the Indenture, check the Box: [ ]
If you wish to have a portion of this Security purchased by the Issuers
pursuant to Section 4.13 or 4.15 of the Indenture, state the amount:
$------------
Date: ________________ Your Signature: ____________________
Signature Guarantee: _______________________
<PAGE>
EXHIBIT B
SUBSIDIARY GUARANTEE
The undersigned hereby unconditionally guarantees on a senior
unsecured basis to the Holder of this Security the payments of principal of,
premium, if any, and interest on this Security in the amounts and at the time
when due and interest on the overdue principal, premium, if any, and interest,
if any, of this Security, if lawful, and the payment or performance of all other
obligations of the Issuers under the Indenture or the Securities, to the Holder
of this Security and the Trustee, all in accordance with and subject to the
terms and limitations of this Security, Article X of the Indenture and this
Subsidiary Guarantee. This Subsidiary Guarantee will become effective in
accordance with Article X of the Indenture and its terms shall be evidenced
therein. The validity and enforceability of any Subsidiary Guarantee shall not
be affected by the fact that it is not affixed to any particular Security.
The obligations of the undersigned to the Holders of
Securities and to the Trustee pursuant to this Subsidiary Guarantee and the
Indenture are expressly set forth in Article X of the Indenture and reference is
hereby made to the Indenture for the precise terms of this Subsidiary Guarantee
and all of the other provisions of the Indenture to which this Subsidiary
Guarantee relates.
The internal laws of the State of New York shall govern this
Subsidiary Guarantee without regard to principles of conflict of laws.
[ ]
By:
Name:
Title:
By:
Name:
Title:
Exhibit 10.1
AMENDMENT NO. 2
TO THE
LUCENT TECHNOLOGIES/SPRINT SPECTRUM
PROCUREMENT AND SERVICES CONTRACT
Dated as of July 15, 1996
The omitted portions indicated by brackets have been separately filed with
the Securities and Exchange Commission pursuant to a request for
confidential treatment under Rule 24b-2 of the Securities Exchange Act of
1934, as amended.
<PAGE>
AMENDMENT NO. 2 dated as of July 15, 1996, to the Procurement and Services
Contract dated as of January 31, 1996, between Sprint Spectrum Holding Company,
L.P., a Delaware limited partnership formerly known as MajorCo L.P., a Delaware
limited partnership, as subsequently assigned (pursuant to that certain
Assignment, Assumption and Amendment No. 1 dated June 21, 1996) to Sprint
Spectrum Equipment Company, L.P., a Delaware limited partnership (and as the
successor in interest of Sprint Spectrum, L.P., the "Owner") and Lucent
Technologies Inc., a Delaware corporation, the full successor to the Network
Systems Group of AT&T Corp., a New York corporation (the "Vendor", and together
with the Owner, the "Parties").
RECITALS:
WHEREAS, the Parties are parties to a certain Procurement and Services
Contract dated as of January 31, 1996 (the "Contract") wherein the Owner agreed
to have the Vendor engineer and construct PCS Systems in the System Areas and
the Vendor, itself or through its Subcontractors, agreed to provide Products and
Services to the Owner in connection with the engineering and construction of PCS
Systems in the System Areas pursuant to and in accordance with the terms of the
Contract.
WHEREAS, the Parties desire to amend the Contract to provide, amongst other
things, for the provision, installation, operation and maintenance by the Vendor
to and for the Owner of a stand-alone Service Control Point/Home Location
Register (SCP/HLR), Service Management System (SMS) and Service Creation
Environment (SCE) (as such terms are defined below).
WHEREAS, the Parties further desire to amend the Contract to provide,
amongst other things, for the provision, installation, operation and maintenance
by the Vendor to and for the Owner of certain Application Software Products,
including AS Software, AS Equipment and AS Services (as such terms are defined
below).
NOW THEREFORE, in consideration of the mutual covenants and conditions set
forth herein, the Owner and the Vendor hereby agree as follows:
1. Definitions. Unless otherwise defined herein, all capitalized terms used
in this Amendment will have the meaning given to such terms in the Contract. For
the purposes of the Contract and this Amendment (i) the term "Equipment" as
defined in the Contract will be deemed (to the extent it is not already clear)
to include the SCP/HLRs and any and all equipment associated with or integral to
the SCP/HLRs, the AM/HLRs as well as the AS Equipment to be delivered and
installed by the Vendor pursuant to the SCP/HLR Specifications, the AM/HLR
Specifications and the AS Statement of Work, as applicable, including, but not
limited to, SMS and SCE, as the case may be, and (ii) the term "Software" as
defined in the Contract will be deemed (to the extent it is not already clear)
to include all software with or integral to the SCP/HLRs, the AM/HLR Products
and the AS Software delivered and installed by the Vendor pursuant to the
SCP/HLR Specifications, the AM/HLR Specifications or the AS Statement of Work,
as the case may be.
2. Agreements.
(a) Pursuant to and in accordance with the terms of the Contract as amended
hereby, the Vendor agrees to provide the Owner with; (i) one mated pair of
stand-alone SCP/HLRs with SMS (two SCPs), (ii) one SCE with eight RTUs, (iii)
one AM/HLR (to the extent not already being provided), (iv) compiled servers and
(v) one copy of "Execution Environment" in accordance with the Specifications in
the Owners Test-bed Laboratory no later than the Completion Dates as set forth
in the HLR Statement of Work. In addition, the Vendor agrees to provide the
Owner three (3) other mated pairs of SCP/HLRs for the Nationwide Network in
accordance with the SCP/HLR Specifications at the HLR Designated Switch Sites no
later than the HLR Completion Dates. As an interim solution only, the Vendor
will provide, at its sole cost and expense, AM/HLRs in accordance with the
AM/HLR Specifications at the AM/HLR Designated Switch Sites.
(b) Pursuant to the terms of the Contract as amended hereby, the Vendor
will supply to the Owner AS Products and AS Services for the Owner's Nationwide
Network pursuant to and in accordance with the AS Statement of Work (as defined
below).
(c) The Vendor will use its best efforts to work with Northern Telecom
Inc., a Delaware corporation ("Nortel") and a party to that certain Procurement
and Services Contract dated as of January 31, 1996, between the Owner and Nortel
(the "Nortel Contract") in order to ensure that the AM/HLRs and SCP/HLRs work
with the Equipment and Software (as defined in the Nortel Contract) provided by
Nortel so that in a timely manner the AM/HLRs and SCP/HLRs Products and Services
provide service to the entire Nationwide Network (including, but not limited to,
the Nortel constructed portion of the Nationwide Network) in accordance with the
AM/HLR Specifications and the SCP/HLR Specifications, as applicable. Nothing
stated herein above to the contrary, the Vendor will not be liable for the
failure of any of the AM/HLRs and/or the SCP/HLRs to properly operate with the
Nortel System (as such term is defined in the Nortel Agreement) where such
failure was directly caused by Nortel's failure to provide timely and accurate
specifications or to make its Equipment accessible and to operate with the
AM/HLRs and/or SCP/HLRs in accordance with and pursuant to the Lucent/Nortel
License Agreement.
(d) The Vendor will use its best efforts to work with Nortel in order to
ensure that the AS Products work with the Equipment and Software (as defined in
the Nortel Contract) provided by Nortel so that in a timely manner the AS
Products and Services provide service to the entire Nationwide Network
(including, but not limited to, the Nortel constructed portion of the Nationwide
Network) in accordance with the AS Statement of Work, as applicable. Nothing
stated herein above to the contrary, the Vendor will not be liable for the
failure of any of the AS Products to properly operate with the Nortel System (as
such term is defined in the Nortel Agreement) where such failure was directly
caused by Nortel's failure to provide timely and accurate specifications or to
make its Equipment accessible and to operate with the AS Products in accordance
with and pursuant to the Lucent/Nortel License Agreement-OAM&P.
(e) Commencing on the date hereof, the Vendor will regularly update
(including the provision of at least monthly written updates) the Owner as to
the Vendor's progress in developing and being able to timely deliver the AM/HLRs
and the SCP/HLRs for both the Test-bed Laboratory and the Nationwide Network.
(f) Notwithstanding anything to the contrary in the Contract, Substantial
Completion of any PCS System within the Initial System, and the testing required
therefor, will expressly require and be conditioned upon the successful
integration and inter-operation (in accordance with the AM/HLR Specifications),
of the other Products within any such PCS System with the then existing AM/HLRs
within the Nationwide Network.
(g) Notwithstanding anything to the contrary, the provisions of subsections
2.3, 2.4, 2.5, 2.6, 2.7, 2.8, 2.9(b), 2.10, 2.25, 2.38, 2.40, 2.41, 6.4, 6.5,
6.7, 6.8, and 7.1 and Section 4 are not applicable to AS Products and AS
Services.
(h) The Parties will mutually agree to and incorporate in the Contract an
Appendix K to Amendment No. 2 as to Application Software Products Acceptance
Procedures and Criteria which will work to provide verification for the
requirements set forth in Appendix G by no later than July 24, 1996.
3. Amendment to Subsection 1.1. Subsection 1.1 of the Contract is hereby
amended as follows:
(a) by adding the following definitions:
"Access Manager HLR (AM/HLR)" means Equipment and Software that
provides the call processing logic which comprises the stand-alone HLR
service. The stand-alone service being that service which contains the
PCS subscriber's or group of PCS subscribers' profile data used to
provide call completion and enhanced services as further described in
Appendix A attached to Amendment No. 2.
"Access Manager Specifications (AM/HLR Specifications)" means the
Access Manager Specifications set forth in Appendix A attached to
Amendment No. 2.
"Adaptations" means any derivative work based on service package
application licensed Software including (i) any work incorporating any
of service package application licensed Software directly, (ii) any
work incorporating any computer program from service package
application licensed Software rewritten in a different computer
language or converted to operate on a different type of CPU, (iii) any
work utilizing a method or concept from service package application
licensed Software that the Owner is obligated to keep in confidence
hereunder or (iv) any work otherwise covered by any of the Vendor's
intellectual property rights in service package application licensed
Software.
"Amendment No. 2" means this Amendment No. 2 to the Contract.
"AS Acceptance Date" means the date or dates on which the AS Products
successfully complete the AS Functional Acceptance Tests or the AS
Final Acceptance Tests, as the case may be.
"AS Acceptance Test(s)" means the collective reference to the AS
Functional Acceptance Tests and the AS Final Acceptance Tests.
"AS Acceptance Test Period" means the applicable period of time in
days that the Vendor has to test and the Owner has to accept certain
AS Products as specified in the AS Statement of Work.
"AS Completion Dates" means the dates and milestones as set forth in
Appendix G that are required to be met by the Vendor for the
successful and timely completion of the AS Statement of Work in
accordance with the AS Statement of Work.
"AS Equipment" means certain third party manufactured or other
Equipment provided to the Owner by the Vendor as necessary for the
operation and integration of the AS Software and the AS Services
pursuant to and in accordance with the AS Statement of Work.
"AS Functional Acceptance" means the Owner's initial acceptance of AS
Products and Services, and, to the extent applicable, the installation
thereof, pursuant to and in accordance with the AS Functional
Acceptance Tests set forth in Appendix K to Amendment No. 2.
"AS Final Acceptance" means the Owner's final acceptance of the
relevant AS Products and installation thereof, pursuant to and in
accordance with the AS Final Acceptance Tests set forth in Appendix K
to Amendment No. 2; provided that in no event can AS Final Acceptance
occur with respect to AS Software and/or AS Services prior to thirty
(30) days after the completion of AS Functional Acceptance Testing.
"AS Functional Acceptance Test" and "AS Functional Acceptance Testing"
means the initial functional tests performed pursuant to and in
accordance with Appendix K to Amendment No. 2.
"AS Final Acceptance Tests" and "AS Final Acceptance Testing" means
the AS Product final acceptance testing as set forth in Appendix K to
Amendment No. 2.
"AS Maintenance and Instruction Manuals" has the meaning ascribed
thereto in subsection 2.22.
"AS/OAM&P Statement of Work" or "AS Statement of Work" means the scope
of work to be performed by the Vendor in accordance with the AS
Statement of Work as set forth in Appendix G to Amendment No. 2.
"AS Operating Manuals" has the meaning ascribed thereto in subsection
2.20.1.
"AS Price" means the aggregate price set forth in Appendix I to
Amendment No. 2 for all of the AS Products and AS Services to be
provided under the Contract and described in the AS Statement of Work.
"AS Products" means the collective reference to AS Software and AS
Equipment.
"AS Product Warranty Period" has the meaning ascribed thereto in
subsection 17.1.1. "AS Services" means those OAM&P Services
(including, but not limited to, Optional AS Services) provided by the
Vendor as part of the provision, installation and continuing operation
and maintenance of the AS Products pursuant to and in accordance with
the AS Statement of Work.
"Application Software ("AS")" or "AS Software," means the software
used for operations and maintenance support as part of the Vendor
provided AS Products and Services described in Appendix G to Amendment
No. 2.
"AS/T&M" means AS Services time and material pricing as set forth in
Appendix I to Amendment No. 2 describing the quantity of hours and
involved and material expenses related to a specific AS Statement of
Work requirement which is done in accordance with and pursuant to the
AS Statement of Work; provided that AS/T&M charges will only be
charged (to the extent applicable) by the Vendor for AS Services
(other than Optional AS Services requested by the Owner in accordance
with Appendix G to Amendment No. 2) requested by the Owner for
performance by the Vendor of applicable AS Services after three (3)
years from the date of Amendment No. 2 to the Contract.
"Computer Program" means any Source-Code or object-code instruction or
group of such instructions for controlling the operation of a CPU.
"Contract Cover Damages" has the meaning ascribed thereto in
subsection 15.4.
"CPU" means a central processing unit.
"Designated Processor" has the meaning of the AS Product for which the
"RTU" License specified in subsection 11.1 is granted.
"Field Acceptance" means the Owner's initial acceptance of SCP/HLR
Products and the installation thereof, pursuant to and in accordance
with the Field Acceptance Tests set forth in Appendix E to Amendment
No. 2.
"Field Acceptance Tests" and "Field Acceptance Testing" means the
SCP/HLR field acceptance testing as set forth in Appendix E to
Amendment No. 2.
"Firmware" means a combination of (i) Equipment and (ii) Software
represented by a pattern of bits contained in such Equipment.
"HLR Completion Dates" means the dates and milestones as set forth in
Appendix E to Amendment No. 2 that are required to be met by the
Vendor for the successful and timely completion of the HLR Statement
of Work.
"HLR Designated Switch Sites" means the Switch Sites within the
Nationwide Network in which the Owner requires the installation of
AM/HLRs within the Denver, Kansas City and Philadelphia System Areas
and the installation of SCP/HLRs within the San Francisco, New York,
Dallas, Denver, Kansas City and Philadelphia System Areas.
"HLR Final Acceptance" means the Owner's final acceptance of SCP/HLR
Products and the installation thereof, pursuant to and in accordance
with the HLR Final Acceptance Tests set forth in Appendix E to
Amendment No. 2; provided that in no event can HLR Final Acceptance
occur with respect to any SCP/HLR Product prior to thirty (30) days
after the completion of Field Acceptance Testing for such SCP/HLR
Product(s).
"HLR Final Acceptance Tests" and "HLR Final Acceptance Testing" means
the SCP/HLR final acceptance testing as set forth in Appendix E to
Amendment No. 2.
"HLR Statement of Work" means the statement of work applicable to the
AM/HLRs and the SCP/HLRs as set forth in Appendix E to Amendment No.
2.
"Lucent/Nortel License Agreement" means the Interface License
Agreement between the Vendor and Nortel dated as of June 14, 1996
attached as Appendix D1 to Amendment No. 2.
"Lucent/Nortel License Agreement-OAM&P" means the OAM&P Interface
License Agreement between the Vendor and Nortel dated as of July __,
1996 attached as Appendix D2 to Amendment No. 2.
"Nortel" has the meaning ascribed thereto in Paragraph 2(c) of
Amendment No. 2.
"Nortel Contract" has the meaning ascribed thereto in Paragraph 2(c)
of Amendment No. 2.
"OAM&P" means Operations Administration Maintenance & Provisioning as
described in Appendix G to Amendment No. 2.
"Optional AS Services" means those AS services classified as optional,
as set forth in Appendix G to Amendment No. 2, which are only provided
to the Owner upon the request of the Owner.
"SCE" means the Service Creation Environment Equipment and Software as
further described in Appendix B to Amendment No. 2.
"SCP/HLR" means the Equipment and Software that provides the call
processing logic which comprises the stand-alone HLR service which
contains the PCS subscriber's or group of PCS subscriber's profile
data used to provide call completion and enhanced services and further
described in Appendix B to Amendment No. 2.
"SCP/HLR Hardware" means SCP/HLR equipment and platform software as
set forth in Appendix B to Amendment No. 2.
"SCP/HLR Price" means the aggregate price for all of the SCP/HLRs as
set forth on Appendix F to Amendment No. 2.
"SCP/HLR Products" means the collective reference to SCP/HLR Hardware,
and SCP/HLR Software, SMSs, SCEs and RTUs.
"SCP/HLR Specifications" means the SCP/HLR specifications as set forth
in Appendix B to Amendment No. 2 and including, but not limited to,
the SCE and the SMS.
"SCP/HLR Software" means the SCP/HLR Software as more fully described
in Appendix B to Amendment No. 2.
"SMS" means the Service Management System Equipment and Software as
further described in Appendix B to Amendment No. 2.
(b) by deleting the definition of "PCS Products" as such definition is set
forth in the Contract and replacing it in its entirety with the following
definition:
"'PCS Products' means the Vendor's PCS Equipment and Software, as
offered from time to time in the Customer Price Guide; provided that
for the purposes of this Contract, PCS Products will always (subject
to subsection 10.1) include at least (i) the SCP/HLRs, (ii) the
SCP/HLR Products, (iii) the AM/HLRs (to the extent not already PCS
Products), (iv) SMS, (v) SCE, (vi) the AS Products and (vii) those
other Items listed on the Vendor's Customer Price Guide as of the
Effective Date. As the context requires and notwithstanding the above,
the term PCS Products includes all Vendor manufactured Products
provided to the Owner in connection with its obligations pursuant to
the terms of this Contract, but excludes Items furnished solely as
part of Facilities Preparation Services not otherwise integral to the
operation or maintenance of the PCS Items set forth on the Customer
Price Guide, including Non-Essential Equipment." and
(c) by deleting the definition of "Specifications" as such definition is
set forth in the Contract and replacing it in its entirety with the following
definition:
"'Specifications' means the collective reference to the
specifications and performance standards of the design, Facilities
Preparation Services, Engineering, Products, Installation and Services
contemplated by this Contract and includes any Expansions, amendments,
modifications and/or other revisions thereto made in accordance with
the terms of this Contract and as more fully set forth in Exhibits C,
D, E and F and the AM/HLR Specifications, the SCP/HLR Specifications,
the HLR Statement of Work, the AS Statement of Work or as otherwise
determined hereunder pursuant to the terms of this Contract; provided
that, except as otherwise provided in or determined pursuant to this
Contract or as otherwise mutually agreed between the Parties, the
applicable Specifications for an Item will be the Vendor's or other
manufacturer's standard technical specifications for such Item, as
applicable, unless the Owner will have specifically not agreed with
such Vendor or other manufacturer specification; and provided further,
that with respect to Facilities Preparation Services, design,
engineering, Products, Installation and Services for which
specifications and performance standards are not provided and listed
in such Exhibits (such Exhibits including, but not limited to, the
AM/HLR Specifications, SCP/HLR Specifications, the HLR Statement of
Work and the AS Statement of Work), "Specifications" references to
performance, functionality and fitness for the intended purpose in
which such design, Facilities, Preparation Services, Engineering,
Products, Installation and Services are employed."
4. Amendment to Subsection 2.2. Subsection 2.2 is hereby amended to add the
following subsection 2.2.1 after subsection 2.2:
"2.2.1 AS Products and AS Services Additional Coverage. Where the
Owner wishes to purchase AS Products or AS Services for use and/or
application in a country outside the United States but within North
America including any territory of the United States not otherwise
covered by the definition of the "United States" as set forth herein,
the Owner and the Vendor will, in good faith, negotiate a separate
agreement for such purchase upon substantially all of the same terms
as those set forth in this Contract, with only such modifications as
may reasonably be appropriate to reflect the international nature of
such transaction and to assure protection of the Vendor's intellectual
property applicable to such AS Products and AS Services."
5. Amendment to Subsection 2.5. Subsection 2.5 is hereby amended to add the
following subsection 2.5(c) after subsection 2.5(b):
"(c) The Vendor will supply (and Exhibit I will be deemed to include),
at no cost to the Owner, (i) one mated pair SCP/HLRs with one SMS,
(ii) one SCE with eight RTU's, (iii) one AM/HLR, (iv) one source code
compiler and (v) one copy of "Execution Environment" all in accordance
with and pursuant to the Specifications for the Test-bed /Laboratory
no later than the dates specified in the HLR Statement of Work. All
provisions of subsections 2.5(a) and 2.5(b) above will apply similarly
to the Products listed in clauses (i) through (v) provided by the
Vendor pursuant to this subsection 2.5(c). Nothing in this subsection
2.5(c) will be deemed to release or accelerate the Project Milestones
and/or delivery requirements set forth in subsections 2.5(a) and
2.5(b) above."
6. Amendment to Subsection 2.20. Subsection 2.20 is hereby is amended to
add the following subsection 2.20.1 after subsection 2.20:
"2.20.1 AS Products and Services Operating Manuals. The Vendor will
provide the Owner operating and instruction manuals for the AS
Products and AS Services (the "AS Operating Manuals") in accordance
with this subsection as soon as they are reasonably available but in
no event later than the dates and times as set forth in Appendix G to
Amendment No. 2. The Vendor will provide the Owner with the quantity
of AS Operating Manuals as set forth in the AS Statement of Work. The
AS Operating Manuals will be prepared in accordance with the AS
Statement of Work and in sufficient detail to accurately describe the
operations and instructions for the AS Products and all of its
component parts and will recommend procedures for operation and
maintenance."
7. Amendment to Subsection 2.22. Subsection 2.22 is hereby amended to add
the following paragraph after the last unnumbered paragraph in subsection 2.22:
"In addition to, and without limiting the requirements set forth in
clauses (a) through (d) of this subsection 2.22, the AS Operating
Manuals for the AS Products and Services will be submitted to the
Owner in hard-copy volume format if so requested by the Owner. In
addition to any of the Owner's other rights and remedies, the Owner
will have the right to reject such AS Operating Manuals if in its
reasonable judgment any of them do not meet the standards set forth in
this Contract."
8. Amendment to Subsection 2.23. Subsection 2.23 is hereby amended as
follows:
(a) by deleting the text of subsection 2.23 immediately preceding clause
(a) and substituting in lieu thereof the following:
"2.23 Training. As more fully described below, starting at least one
hundred and eighty (180) days prior to the Substantial Completion of
the Initial PCS System, the Vendor must provide to the Owner a
practical and participatory and, where feasible, on-site training
program with respect to the System, which program will include
technical education (collectively, the "Training"). The Vendor will
provide, upon the Owner's prior written request and at the time or
times mutually agreed in good faith by the Owner during the Initial
Term of this Contract, (i) not less than a minimum of twelve thousand
fifty (12,050) man days of Training and Training materials for the
Owner's personnel, at no cost to the Owner plus (ii) an additional one
thousand (1,000) man days of Training at no cost to the Owner for the
SCP/HLRs and/or AM/HLRs; provided that the Vendor will be required to
commence provision of SCP/HLR training no later than October 1, 1996.
The Owner will be responsible for the travel and living expenses of
personnel receiving Training. Such Training must be kept current to
encompass the latest Software and Equipment, or any other Software
Revision level and/or Equipment Revision Level directed by the Owner
pursuant to the terms of this Contract. Subject to the foregoing,
Training course size, content and material will be designed and agreed
to by mutual consent between the Parties. The Vendor will conduct
classes for the subjects described below:" and
(b) by inserting the following clauses (vii) and (viii) after clause (vi)
of subsection 2.23 (b) and renumbering the following clauses accordingly:
"(vii) Stand-alone SCP/HLR operations;
(viii) OAM&P and AS Products operations;"
9. Amendment to Subsection 6.1. Subsection 6.1 is hereby amended to add the
following sentence to the end of subsection 6.1 as such subsection is identified
in the Contract:
"Notwithstanding the foregoing, the aforesaid credits may not be
applied to the purchase of any SCP/HLRs and/or any AS Products or
Services."
10. Amendment to Subsection 6.3.to Subsection 6.3
(a) Subsection 6.3 is hereby amended by deleting the first sentence of such
subsection and replacing in lieu thereof the following:
"Except with respect to Facilities Preparation Services, RF
Engineering, SCP/HLR Products and AS Products and Services as set
forth below, an invoice may be submitted to the Owner only after
shipment of a Product or performance of a Service." and
(b) Clause (c) of subsection 6.3 is hereby amended by adding immediately
prior to the semicolon at the end of such clause (c) the following:
"; provided that the Owner will not be obligated to make any such
Final Acceptance payment to the Vendor for the Initial PCS System
only, until and unless the SCP/HLRs to be delivered and installed in
accordance with the SCP/HLR Specifications are so delivered and
installed and operating in accordance with such SCP/HLR
Specifications."
(c) Subsection 6.3 is hereby amended by inserting the following subsections
6.3.2 and 6.3.3:
"6.3.2 SCP/HLR Payments. Notwithstanding anything contained in this
Section 6 to the contrary, any invoice for SCP/HLR Products delivered
and/or installed by the Vendor will be payable as follows: (a) (i)
[_______________] of the amount of any invoice for SCP/HLR Hardware
will be payable within [_______________] following the installation by
the Vendor of such SCP/HLR Hardware at the appropriate HLR Designated
Switch Sites, (ii) [_______________] of the amount of any invoice for
SCP/HLR Hardware will be payable within [______________] following the
Owner's Field Acceptance of such installed SCP/HLR Hardware in
accordance with the SCP/HLR Specifications and (iii) the remaining
[_______________] of the amount of any invoice for SCP/HLR Hardware
will be payable within [_______________] of the Owner's Final
Acceptance of such installed SCP/HLR Hardware in accordance with the
SCP/HLR Specifications; and (b) (i) [_______________] of the amount of
any invoice for SCP/HLR Software will be payable within
[_______________] of the Owner's Field Acceptance in accordance with
the SCP/HLR Specifications and (ii) the remaining [__________________]
of the amount of any invoice for SCP/HLR Software will be payable
within [_______________] of the Owner's HLR Final Acceptance in
accordance with the SCP/HLR Specifications.
6.3.3. AS Products Payments. (a) Notwithstanding anything contained in
this Section 6 to the contrary, any invoice for AS Software delivered
and/or installed by the Vendor will be payable by the Owner as
follows: (i) [___________________] of the total price for any AS
Software order for such AS Software will be payable within
[______________] of the order placement for such AS Software by the
Owner, (ii) [_________________] of the amount of any invoice for
ordered AS Software will be payable within [______________] of the
time of delivery by the Vendor of such AS Software, (iii)
[________________] of the amount of any invoice for ordered AS
Software will be payable within [______________] of AS Functional
Acceptance of such AS Software, and (iv) the remaining
[________________] of the amount of any invoice for ordered AS
Software will be payable within [_______________] of AS Final
Acceptance of such AS Software.
(b) The Vendor may invoice the Owner for [_______________] of the
passed-through cost (without mark-ups, add-ons or charges of any kind
(except as explicitly provided in Appendix I)) of any third party
manufactured AS Equipment supplied by the Vendor for the AS Software
for the AS Software System in accordance with the AS Statement of Work
and the Owner will be required to pay any such invoice for third-party
AS Equipment within [_______________] of the Owner's receipt and
reasonable acceptance thereof. The Vendor may invoice the Owner for AS
Services (if applicable) pursuant to the first sentence of subsection
6.3.1 of the Contract. AS Software Annual Maintenance Services will be
provided by the Vendor pursuant to the Annual Application Software
Maintenance Services Fees as set forth on Appendix I to Amendment No.
2 and such fees will be invoiced to the Owner with the Annual Software
Release Maintenance Fees in accordance with the terms of the
Contract."
11. Amendment to Section 9. Section 9 is hereby amended by inserting the
following subsection 9.7 after subsection 9.6:
"9.7 AS Acceptance Testing and Acceptance. (a) After installation of
AS Software, or any part thereof as set forth in Appendix K to
Amendment No. 2, the Owner will carry out Functional Acceptance Tests
in accordance with the provisions of Appendix K to Amendment No. 2,
testing the compliance of the AS Software with the AS Statement of
Work. The Owner will start the AS Functional Acceptance Tests no later
than seven (7) days after installation of such AS Software and
complete the AS Functional Acceptance Tests no later than fourteen
(14) days after installation of such AS Software.
(b) After the AS Software has successfully passed the Functional
Acceptance Tests, the Owner will commence the AS Final Acceptance Test
in accordance with the provisions of Appendix K to Amendment No. 2.
The duration of the AS Final Acceptance Test shall be thirty (30) days
after successful completion of the AS Functional Acceptance Test.
(c) If the Owner fails to complete either the AS Functional Acceptance
Tests or the Final Acceptance Test within the time periods set forth
in subsections 9.7(a) and 9.7(b), the AS Software shall be deemed to
have met the Acceptance Test criteria on the last day of the time
period allotted for the applicable AS Acceptance Test.
(d) The costs and expenses of the AS Acceptance Tests will be borne by
the Owner. Upon request of the Owner, the Vendor will provide
reasonable support to the Owner during the AS Functional Acceptance
Tests and the AS Final Acceptance Tests.
(e) If the AS Acceptance Tests show that any of the AS Software
complies with the AS Statement of Work, such AS Software will be
accepted by the Owner by confirming the results in a written report.
(f) If any AS Acceptance Test is not satisfied, the Owner will (i) in
writing, notify the Vendor of such failure, and (ii) the Vendor will
promptly correct whatever Defects or Deficiencies caused such AS
Acceptance Test not to be satisfied. After such correction, the Vendor
must (i) repeat at its sole cost and expense the failed AS Acceptance
Tests and as many other AS Acceptance Tests as are necessary to ensure
in the reasonable opinion of the Owner that such correction made by
the Vendor would not have affected the outcome of such other AS
Acceptance Tests, and (ii) in writing, notify the Owner as to what
correction was made and what AS Acceptance Tests were repeated.
Nothing stated herein to the contrary will in any way limit the
Owner's right to liquidated damages pursuant to subsection 15.8 or
other remedies under this Contract in the event the Vendor fails to
deliver AS Products in accordance with the requirements of Appendix G
to Amendment No. 2 on the dates originally scheduled for such
deliveries.
(g) Minor Defects and shortcomings not affecting the operational use
of any part of the AS Software shall not give rise to withholding the
acceptance provided that the Vendor undertakes to remedy such Defects
and shortcomings as soon as reasonably possible, pursuant to the
procedures described in Appendix K to Amendment No. 2."
12. Amendment to Section 12. Section 12 is hereby amended by inserting the
following subsections 12.5 and 12.6 after subsection 12.4.:
"12.5 Right to Modify SCP/HLR Software. The Vendor grants to the Owner
a personal, non-transferable, non-exclusive and royalty-free license
to modify the following component layers of the SCP/HLR Software
provided under this Amendment No. 2 to run on the SCP/HLR Hardware,
solely for use by the Owner in its business of providing
telecommunications services (the names for the component layers set
forth below being used in conformity with the conventions displayed on
the graphic element of Appendix B to Amendment No. 2):
(i) Service Customization Layer
(ii) Application Oriented Layer
(iii) Capability Creation Layer
(iv) Platform Enhancement Layer
Such right to modify includes the right for the Owner, its
employees, and agents to modify and copy the Source Code of the
above named component layers (including, but not limited to,
access to the "SCP Action Execution Library" (including IS41 Rev.
B and IS41 Rev. C)) of the SCP/HLR Software provided solely for
the purposes of maintaining and enhancing or supplementing the
object code versions of such provided Software. The Owner agrees
to use the modifications to Licensed Software made in the
exercise of the license granted in this subsection 12.5 in
accordance with its licensed rights in the SCP/HLR Software
hereunder, except as otherwise provided in this subsection 12.5.
The license to modify set forth in this subsection 12.5 will be
royalty-free and without fee with respect to code implementing
features or capabilities provided within the above-enumerated
layers of releases or versions of the Software which are provided
by the Vendor in accordance with or pursuant to the Annual
Maintenance Fee.
Intellectual property rights in modifications to the SCP/HLR
Software by the Owner, its employers or agents for hire in the
exercise of a right of modification granted in this subsection
12.5 will vest in the Owner, subject to the Vendor's intellectual
property rights in the Vendor's proprietary "SLL" programming
language and compiler and in the Vendor's unmodified SCP/HLR
Licensed Software. The unmodified Computer Programs provided by
the Vendor, including, but not limited to, the SCP/HLR Software,
will remain the intellectual property of the Vendor; and nothing
in this subsection 12.5 will be deemed to confer upon the Owner
ownership in any aspect of the unmodified SCP/HLR Software. Nor
will anything herein be deemed to confer upon the Owner any right
to license or sublicense use of the unmodified SCP/HLR Software,
or any part thereof, to third persons. The Vendor will be
entitled to license any right to use and to sublicense
modifications made by or for the Owner on terms mutually agreed
between the Owner and the Vendor, unless the Owner unilaterally
designates, in writing, a specific modification or modifications
to be restricted from such licensing for a specific period of
time.
The Vendor agrees to provide the Owner Software tools,
documentation, services and training requested by the Owner which
is reasonably necessary to the exercise of the Owner's rights of
modification granted in this subsection 12.5, upon mutually
agreed prices, terms and conditions. The Vendor will endeavor in
subsequent Software Upgrades, Software Enhancements, Combined
Releases and other versions of its SCP/HLR Software to
accommodate the Owner's need to preserve compatibility between
the Owner's modifications and such Vendor-provided programs.
Nothing contained in this subsection 12.5 to the contrary
authorizes the Owner to engage any entity or person as an agent
for hire to modify the Vendor's SCP/HLR Software which entity or
person (i) is substantially and directly engaged in competition
with the Vendor in manufacturing or developing PCS systems; or
(ii) does not agree in writing to recognize and respect the
Vendor's intellectual property rights in such Licensed Software
(including, but not limited to, the Vendor's rights stated
herein) and to maintain the secrecy of information proprietary to
the Vendor regarding the structure and contents of the Vendor's
computer programs upon terms comparable to the Owner's
undertakings to maintain the confidentiality of the Vendor's
Proprietary Information."
12.6 Right to Modify AS Software. The Owner may add to, delete
from, or modify AS Software modules or menus, if available from
the Vendor. Such changes or modifications, however extensive
shall not affect the Vendor's title to the AS Software."
13. Amendment to Section 15. Section 15 of the Contract is hereby amended
by inserting the following subsections 15.4, 15.5, 15.6, 15.7 and 15.8 after
subsection 15.3:
"15.4 SCP/HLR Delay. (a) Failure of the Vendor to properly
deliver, install and test any of the SCP/HLR Products at the then
existing HLR Designated Switch Sites in accordance with the
SCP/HLR Specifications and the milestones set forth therein
applicable to SCP/HLR Products by the HLR Completion Dates will
result in the Vendor being liable to pay to the Owner contract
cover damages (the "Contract Cover Damages") equal to any and all
reasonable and actual increased costs or expenses including, but
not limited to, increased costs or expenses associated with
network modifications, extra equipment, software or training or
re-engineering incurred by the Owner due to the Vendor's failure
to deliver, install and test the SCP/HLR Products by the HLR
Completion Dates in accordance with SCP/HLR Specifications and
the HLR Statement of Work.
15.5 AM/HLR Interim Solution. In order to meet the Owner's
projected service date the Vendor will provide to the Owner, at
the Vendor's own sole cost and expense, and at the Owner's then
existing HLR Designated Switch Sites, AM/HLRs pursuant to and in
accordance with the AM/HLR Specifications and the HLR Statement
of Work as an interim solution so that the Nationwide Network may
operate in accordance with the Specifications; provided that the
Vendor will continue to use its best efforts, at its sole cost
and expense (but with all reasonable cooperation from the Owner),
to replace such interim AM/HLR solution with a comprehensive
SCP/HLR system in accordance with the SCP/HLR Specifications and
the HLR Statement of Work.
15.6 AM/HLR Redeployment. After acceptance of the SCP/HLRs, the
Owner will, at the Owner's sole discretion, have the Vendor
redeploy the AM/HLRs as Access Managers to other sites within the
System at the Vendor's sole cost and expense for any and all
costs associated with such redeployment, including removal,
transportation, and delivery but not installation or the cost of
such Access Manager; provided that if the Access Manager is not
moved to another location but redeployed in the same location in
a separate function or for a separate MSC, the Owner will only be
liable for the cost of the Access Manager and the Vendor will be
responsible for all other costs. All payments, if any, for
redeployed AM/HLRs will be made by the Owner pursuant to
subsection 6.3(a)-(d); provided that in the event that any such
redeployment is to a PCS System which has already achieved
Substantial Completion then the payment terms of subsection 6.3.1
will apply.
15.7 SCP/HLR Delay Termination. If after thirty (30) days after
the HLR Completion Dates the Vendor is still unable to
satisfactorily complete the Final Acceptance Tests applicable to
the SCP/HLRs and/or any of the SCP/HLR Products to be delivered
in accordance with the terms of this Contract (including, but not
limited to, the SCP/HLR Specifications) the Owner will have the
right (in addition to any rights under subsection 15.4 above),
but not the obligation, to terminate the Contract only with
respect to the SCP/HLR Products and will have the right to seek
from the Vendor reimbursement for any of its reasonable and
actual increased costs associated with acquiring reasonable
replacement SCP/HLR Products from a third-party supplier. The
remedies set forth in subsections 15.4, 15.5 and 15.7 will be the
Owner's sole and exclusive remedies in the event the Owner
chooses to terminate the delivery of SCP/HLR Products pursuant to
the terms of this subsection 15.7.
15.8 AS Software Delay. With respect to the AS Products and
Services, in the event the Vendor fails to deliver any such AS
Statement of Work compliant AS Products and/or AS Services within
seven (7) days (except as provided below, the "AS Delay Grace
Period") of the applicable dates for delivery set forth in
Appendix G to Amendment No. 2, the Vendor will (to the extent the
Owner will not have cancelled the applicable order therefor
pursuant to the terms of the Contract) credit to the Owner (in
the form of purchase credits for any Vendor Products including,
but not limited to, AS Products) as liquidated damages for such
late performance for each of the first [_______________] beyond
such AS Delay Grace Period, an amount equal to [________________]
per day (for such [________________] period) of the total price
of such undelivered or unsatisfactory AS Products or AS Services;
provided that upon the timely AS Functional Acceptance (on the
dates originally scheduled for such AS Functional Acceptance) of
any such AS Products and/or AS Services, any delay penalties
accrued therefor shall be forgiven; and provided further for AS
Software "release 0.1" (as defined in Appendix G) the AS Delay
Grace Period will be [____________] from the delivery dates set
forth in Appendix G for the delivery of such AS Software release
0.1."
14. Amendment to Subsection 17.1. Subsection 17.1 is hereby amended to add
the following subsection 17.1.1 after subsection 17.1:
"17.1.1 AS Products Warranty. Notwithstanding anything stated
herein to the contrary, for the AS Products provided hereunder,
the Vendor warrants that, from the date of AS Final Acceptance of
the installation and Engineering thereof, the AS Products will
materially conform with and perform the functions set forth in
the AS Statement of Work, to the extent applicable, and will be
free from Defects and Deficiencies for a warranty period (each as
applicable, an "AS Product Warranty Period") of (i) in the case
of AS Software, ninety (90) days and (ii) in the case of AS
Equipment, one (1) year. In the case of AS Software, the AS
Product Warranty Period applicable to any such AS Software will
be automatically extended for a new ninety (90) day period
commencing on the date of the completion of any applicable
Software Upgrade and/or Software Enhancement upon, and
simultaneous with, any Software Upgrade and/or Software
Enhancement issued pursuant to the terms of Section 12. To the
extent the Owner orders additional AS Products not otherwise
covered pursuant to Appendix G to Amendment No. 2 from the Vendor
in accordance with the terms of this Contract, any such AS
Products so ordered by the Owner and delivered and installed by
the Vendor or its Subcontractors will be warranted to the same
extent as set forth above, from the earlier of (i) the date the
Owner puts such additional AS Products into In Revenue Service,
(ii) the date of the Owner's acceptance of such additional AS
Products and (iii) thirty (30) days after the Vendor completes
the installation of such additional AS Products."
15. Amendment to Subsection 17.7. Subsection 17.7 is hereby amended by
deleting the "or" at the end of clause or subsection 17.7.5, and placing an "or"
at the very end of clause or subsection 17.7.6 and by inserting the following
new clause or subsection 17.7.7:
"17.7.7 Owner modifications to SCP/HLR Software (including the
Platform Software in SCP/HLR Hardware) done pursuant to
subsection 12.5 and/or Owner modifications to AS Software done
pursuant to subsection 12.6."
16. Amendment to Subsection 20.2. Subsection 20.2 is hereby amended by
adding in the second line thereof after "15.3," and before "17.4," "15.4, 15.5,
15.6, 15.7, 15.8".
17. Amendment to Subsection 22.2. Subsection 22.2 is hereby amended by
adding subsection 22.3 after subsection 22.2:
"22.3 AS Products Risk of Loss. Risk of loss as to AS Products
will pass to the Owner upon the delivery to the Owner's
designated location."
18. Cross References. All references in the Contract to Section and
subsection numbers of the Contract will be amended accordingly to reflect the
changes made by this Amendment.
19. NO OTHER AMENDMENTS. EXCEPT AS EXPRESSLY AMENDED, MODIFIED AND
SUPPLEMENTED HEREBY, THE PROVISIONS OF THE CONTRACT ARE AND WILL REMAIN IN FULL
FORCE AND EFFECT AND NOTHING IN THIS AMENDMENT NO. 2 WILL BE CONSTRUED AS A
WAIVER OF ANY OF THE RIGHTS OR OBLIGATIONS OF THE PARTIES UNDER THE CONTRACT.
20. Governing Law. This Amendment No. 2 will be construed in accordance
with and governed by the laws of the State of Missouri without regards to the
laws and principles thereof which would direct the application of the laws of
another jurisdiction.
21. Descriptive Headings. Descriptive headings are for convenience only and
will not control or affect the meaning or construction of any provisions of this
Amendment No. 2.
22. Counterparts. This Amendment No. 2 may be executed in any number of
identical counterparts, each of which will constitute an original but all of
which when taken together will constitute but one contract.
* * * * *
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be signed by their duly authorized representatives on the date
first above written.
SPRINT SPECTRUM EQUIPMENT COMPANY, L.P.,
as the Owner
By: /s/ Arthur A. Kurtze
Name: Arthur A. Kurtze
Title: Chief Operating Officer
LUCENT TECHNOLOGIES INC.,
as the Vendor
By: /s/ James P. Goodman
Name: James P. Goodman
Title: Sales Vice President
<PAGE>
APPENDIX A
AM/HLR Description and Specifications
<PAGE>
APPENDIX B
SCP/HLR Description and Specifications
<PAGE>
APPENDIX C
[Intentionally Omitted]
<PAGE>
APPENDIX D1
Lucent/Nortel License Agreement-HLR
<PAGE>
APPENDIX D2
Lucent/Nortel License Agreement-OAM&P
<PAGE>
APPENDIX E
HLR Statement of Work
<PAGE>
APPENDIX F
SCP/HLR Prices
<PAGE>
APPENDIX G
AS/OAM&P Statement of Work
<PAGE>
APPENDIX H
[Intentionally Omitted]
<PAGE>
APPENDIX I
AS/OAM&P Prices
<PAGE>
APPENDIX J
[Intentionally Omitted]
<PAGE>
APPENDIX K
Application Software Products Acceptance Procedures and Criteria
APPLICATIONS SOFTWARE ACCEPTANCE:
To be delivered pursuant to mutual agreement of the Parties pursuant to the
terms of Amendment No. 2.
<PAGE>
APPENDIX L
Application Software Products Maintenance and Support Services
6.1 GENERAL
The provisions of this Appendix L apply to the furnishing of maintenance AS
Services by the Vendor for AS Software furnished by the Vendor. This Appendix L
in no way limits, modifies or otherwise amends the Vendor's obligations as to
maintenance Services for other Products pursuant to the terms of the Contract.
6.2 DEFINITIONS
For the purposes of this Appendix L, the following terms shall have the
meanings indicated below:
(a) "AS Severity Level" means the priority status of an AS Software
condition that is indicative of the severity of the reported condition as set
forth in the table below.
(b) "Corrective Maintenance" means maintenance performed or required to be
performed by the Vendor upon written or oral request of the Owner to correct a
Defect in the AS Software.
(c) "Maintenance Updates", to be provided from time to time by the Vendor
but in any event, at least monthly, consist of at least the following:
(i) revised object code as appropriate for AS Software in the
same machine-readable storage media form as the original AS
Software; and
(ii) new or modified AS Software documentation or information
regarding such documentation.
(d) "Problem Resolution Management" means the procedures and actions
performed or required to be performed by the Vendor upon written or oral request
of the Owner to act in an ombudsman-type capacity and investigate and manage the
resolution of a reported condition so that the Owner has a single interface that
is engaged in pursuing a problem through to its resolution. This includes
Corrective Maintenance in the case of a reported Defect in AS Software covered
by the Contract.
(e) "Response Time" means the maximum period of time, in hours, within
which the Vendor will acknowledge the Owner's written or oral notification of a
Defect, make an initial assignment of the appropriate AS Severity Level and
initiate corrective action and escalation procedures.
6.3 SERVICE DESCRIPTION
Maintenance AS Services for AS Software include, but are not limited to,
fixed-term Service and AS/T&M Service. Unless otherwise agreed by Vendor in
writing, maintenance AS Service is only available for the then present generic
and the then immediately preceding generic.
(a) Fixed-term maintenance AS Service consists of procedures, as determined
by the Vendor for particular AS Software and for fixed periods, to keep the AS
Software operating consistent with the AS Statement of Work. Such AS Services
include diagnostic Service using on-site or remote techniques, as appropriate,
to analyze a problem and prescribe remedial action, and mandatory escalation
procedures to provide successively higher levels of expertise. Such AS Services
do not include support for administrative, operational, or keyboard command
questions. Fixed-term maintenance AS Services will be rendered primarily during
the Service hours reasonably requested by the Owners.
(b) Each order for fixed-term maintenance AS Services shall be for a
minimum of one (1) year and shall commence on the date set forth in the Owner's
order therefor. The Vendor shall give written notice of the impending
termination of an order at least sixty (60) days prior to the date for such
renewal, at which time the Owner may consider renewal, in its sole and absolute
discretion.
(c) AS/T&M Service includes, on a call-by-call basis and on the basis of
the Vendor's AS Services personnel availability, technical assistance using
on-site or remote techniques, as appropriate, to analyze a problem, prescribe
remedial action and, if ordered, make necessary repairs to AS Products.
6.4 ELIGIBILITY FOR MAINTENANCE SERVICE
AS Software installed by the Vendor is eligible for maintenance Service
without initial evaluation by the Vendor provided the Service commences not
later than the end of the Warranty Period.
In all other situations, the AS Software shall not be eligible for
maintenance Service until the Vendor, at its option, has made an initial
evaluation to determine whether modifications are required to make the AS
Software eligible. If, in the Vendor's reasonable judgment, modifications are
required for this purpose, the Vendor will provide an estimate to the Owner of
the costs of making such modifications. The Owner will be invoiced at Vendor's
then standard reasonable rate for such evaluation and any such modifications
furnished by the Vendor and accepted by the Owner.
6.5 PERIODS OF AS MAINTENANCE SERVICE
AS Maintenance Service will be provided twenty-four (24) hours a day, three
hundred sixty-five (365) days a year, unless otherwise agreed by the Parties in
writing.
6.6 AS MAINTENANCE SERVICE EXCLUSIONS
Unless expressly agreed by Vendor, maintenance Services to be provided
under this Appendix L will not include:
(a) Work external to the AS Software, whether or not on the AS Software's
Designated Processor;
(b) Making AS Specification changes or performing Services connected with
relocation of the AS Software;
(c) Such Service which is impractical for Vendor to render because of
changes not authorized by Vendor in the Designated Processor, hardware
configuration or Vendor's AS Software; and
(d) Modification or replacement of AS Software, repair of damage, or
increase in Service time caused by:
(i) Failure to provide a reasonably suitable operational
environment with all facilities prescribed by the applicable
manual including, but not limited to, the failure to provide, or
the failure of, reasonable electrical power, air conditioning, or
humidity control;
(ii) The use of the AS Software in a manner not in accordance
with the AS Statement of Work (except as otherwise authorized by
the Vendor);
(iii) Accident; disaster, which shall include, but not be limited
to, fire, flood, water, wind, and lightning (but only to the
extent such AS Software should not have withstood such conditions
pursuant to and in accordance with the AS Statement of Work);
transportation not provided by or arranged by Vendor; neglect, or
misuse by anyone other than Vendor, its employees, agents, or
subcontractors;
(iv) Modifications, maintenance, or repairs performed by other
than Vendor, its employees, agents, or subcontractors;
(v) The conversion from one Vendor AS Software release to
another, or the failure of Owner to reasonably apply previously
applicable modifications and corrections furnished by the Vendor
(excluding any items in Appendix G); and
(vi) The use of the AS Software in combination with other
Software not furnished by Vendor, except where such combinations
are specified in Vendor's Specifications for the AS Software or
are approved by Vendor in writing; provided that any Nortel
Software (as defined in the Nortel Agreement) shall be deemed to
be authorized by the Vendor for any such combinations to the
extent such Nortel Software needs to interoperate or otherwise
integrate with the AS Software in order for the entire Nationwide
Network to operate with the AS Software.
At the request and acceptance of the Owner, the Vendor will perform any of
the following Services at the Vendor's reasonable rates and terms in effect at
the time of such request.
6.7 MAINTENANCE OF RELOCATED AS SOFTWARE
AS Software Serviced under the Contract which is moved to another
Designated Processor within the Territory shall continue to be covered under
this Agreement provided that the Vendor has received fifteen (15) days prior
written notice of such relocation and, if requested by Vendor, the Parties have
renegotiated the objective response time selected by the Owner in the order. The
Vendor reserves the right to supervise the unloading of the AS Software from the
original processor and to inspect and reinstall the AS Software at the new
installation location; provided that in such event, the Vendor must exercise any
such rights, promptly and in a workmanlike manner. If the Owner elects to
utilize the Vendor's services hereunder, the Owner shall be charged for all such
work performed by Vendor at the Vendor's then reasonable rates.
6.8 SCOPE OF AS SOFTWARE MAINTENANCE AS SERVICES
(a) All Designated Processors covered for maintenance AS Services shall be
listed in the order along with their physical location and serial numbers. The
Owner may add or delete any Designated Processor upon the Owner's written notice
to the Vendor. Unless otherwise agreed by the Vendor in writing, maintenance AS
Services will be provided to support only the then present generic and
immediately preceding generic of each AS Software System for which such Services
are offered.
(b) The Vendor shall provide a telephone contact point at which the Owner
can notify the Vendor of the need for AS Software maintenance AS Services
twenty-four (24) hours per day, seven (7) days per week. In accordance with
provisions of the order a trained, knowledgeable, technically qualified Vendor
representative will promptly respond to the Owner. Such response will serve to
acknowledge receipt of notification and to obtain from the Owner a verbal
description of the nature of the need for maintenance AS Services. Such
representative shall analyze the problem, using data provided by the Owner, and
provide the Owner with timely program corrections to either fix the problem or
provide a procedure for working around the problem. If a work-around is provided
by the Vendor, the Vendor shall, on a best efforts basis, subsequently (but
promptly) provide a permanent solution to such problem.
(c) The Vendor shall, within a reasonable period of time after making any
correction to the AS Software as described herein, provide any necessary
revisions to the Vendor documentation related to the AS Software ("AS Related
Documentation").
(d) If it is determined that the AS Software is operating in accordance
with the AS Statement of Work and the reported problem arose from the Owner's
unauthorized use of the AS Software, the Vendor shall be entitled to Vendor's
reasonable standard charges for any reasonable effort spent, including
reasonable personnel travel and reasonable subsistence, if any, to diagnose,
analyze, and resolve such problem.
6.9 DESCRIPTION OF AS SOFTWARE CORRECTIVE MAINTENANCE SERVICES
A. DIAGNOSTIC SUPPORT
The Vendor will provide diagnostic support of Defects reported by the Owner
including isolation of the Defect to one of the following areas: (1) Program
Problems:
(a) AS Software
(b) AS Related Documentation
(2) Other Problems:
(a) Owner Operational Problems
(b) Data Base Problems
(c) Hardware and Firmware Problems
(d) Other Interfacing AS Systems Problems
B. CORRECTIVE ACTION
The Vendor will provide the following types of corrective action as
follow-up to the diagnostic support.
(1) AS SOFTWARE DEFECTS
(a) AS Software - In response to maintenance requests, the Vendor will
provide required Corrective Maintenance, in accordance with the AS Severity
Levels and Corrective Actions specified below for the AS Software in two ways:
(i) AS Emergency Fixes - Vendor will provide fixes such as
patches or changes to operational methods when it has been
determined that the Defect is in the AS Severity Level 1 or
2 classification;
(ii) AS Maintenance Update - A maintenance update to the
standard AS Software release will be issued on a periodic
basis to provide a fix to a group of conditions.
(iii) AS Related Documentation - If the condition is
isolated to the AS Related Documentation for the AS
Software, the corrected documentation will be given to the
Owner as part of the AS Maintenance Update or AS Emergency
Fix procedures.
(2) OTHER PROBLEMS
The Vendor will perform Problem Resolution Management for all components of
the total system, including AS Software, hardware and Firmware as follows:
(a) Owner Operational Problems - If the condition is determined to be the
result of unauthorized use or misuse of the AS System by the Owner, it will be
referred back to the Owner by the Vendor. At the Owner's request the Vendor will
prepare a proposal for billable effort to correct such nonstandard use.
(b) Data Base Problems - If the condition is determined to be the result of
corruption of the AS Software data base, and such corruption is not the direct
result of the AS Software, the condition will be referred back to Owner. At
Owner's request and at Vendor's option, Vendor may prepare a proposal for
billable effort to correct Owner's data base.
(c) Hardware/Firmware Problems - When a condition has been isolated to
hardware or Firmware associated with the AS Software, it will be referred back
to the Owner by Problem Resolution Management personnel for disposition under
whatever maintenance arrangement the Owner may have.
(d) Other Interfacing Systems Problems - If the condition is determined to
be caused by mechanized systems other than the AS Software, including but not
limited to those systems, excluding any and all systems and/or products, which
interface with the AS Software, it will be referred to Owner for action
authorized and/or contemplated in Appendix G.
(3) USER DOCUMENTATION
Documentation will be provided for AS Maintenance Updates which will enable
the Owner to train its personnel in the operation of the AS Software as modified
by such releases.
(4) NOTIFICATIONS OF CORRECTIONS
The Vendor will issue bulletins periodically, but not less than quarterly,
that describe known Defects in the AS Software or known interface hardware or
Firmware Defects and the availability of corrections for them. Bulletins will be
provided to the Owner during the period in which Owner is receiving maintenance
AS Services under the Contract for the applicable AS Software. The Owner will be
responsible for distribution of such bulletins within its own company; provided
that the Vendor will use reasonable efforts to forward any such bulletins to the
appropriate personnel at the Owner then known to the Vendor.
(5) CORRECTIVE MAINTENANCE RESPONSIBILITY
The Owner agrees to install the corrections or replacements provided
pursuant to the terms of this Contract as promptly as possible. Owner's failure
to install emergency fixes or patches or releases will cause the AS Software to
be considered nonstandard until all such fixes are installed.
(6) [Intentionally Omitted]
(7) PROBLEM DIAGNOSIS MATERIALS
The Owner will use its reasonable efforts to cooperate with the Vendor, in
the Vendor's performance of its obligations under and/or pursuant to the terms
of this Appendix L.
(8) SEVERITY CONDITIONS AND PRIORITIZATION
The Vendor shall perform AS Problem Resolution Management in accordance
with the AS System severity condition after it has been assigned an AS Severity
Level by the Owner. The priority for problem condition resolution will be based
on the AS Severity Level of outstanding reported conditions. AS Severity Level 1
conditions will receive top priority support. In the event that notification of
a condition with a AS Severity Level 1 supplants and redirects efforts expended
on a AS Severity Level 2 condition, the Vendor will notify the Owner reporting
such AS Severity Level 2 condition that there will be a delay in correcting the
AS Severity Level 2 condition and will reschedule efforts to correct that
condition.
(9) ESCALATION PROCEDURES
The Vendor will observe the following escalation procedures:
(a) AS Severity Level 1 - In the event of a AS Severity Level 1 condition
that is still unresolved four (4) hours after the condition is reported, the
Vendor will notify the Vendor's supervisory management of the unresolved
condition. If the AS Severity Level 1 condition is still unresolved eight (8)
hours after the condition is reported, the next higher level of the Vendor
supervisory management will be notified of the unresolved condition.
(b) AS Severity Level 2 - In the event of a AS Severity Level 2 condition
that is still unresolved twelve (12) hours after the condition is reported, the
Vendor will notify the Vendor's supervisory management of the unresolved
condition. If the AS Severity Level 2 condition is still unresolved twenty-four
(24) hours after the condition is reported, the next higher level of Vendor
supervisory management will be notified of the unresolved condition.
(10) HOT-LINE SERVICE
The Vendor will provide an "800 Hot-Line" telephone Service for direct
telephone support to the Owner in an emergency situation. This Service will be
available twenty-four (24) hours a day, seven (7) days a week for AS Severity
Levels 1 and 2 conditions only. Prior to placing the call to the Hot-Line, the
following steps shall have been completed by the Owner with assistance of Vendor
when necessary:
(a) Identification of the condition and its isolation to a particular
component of the AS System believed to be the Vendor's responsibility.
(b) Collection of sufficient supporting documentation from the system for
inclusion in the trouble report.
(c) Determination that there are no outstanding program fixes which correct
the condition.
Once the solution is found, the Vendor will supply it for testing and use
on the failed system.
(11) NORMAL TROUBLE-REPORTING PROCEDURES
Owner requirements and routines for reporting AS Severity Levels 2, 3 and 4
conditions are as follows:
(a) The Owner shall prepare a trouble report, including supporting
documentation and forward it to the Vendor.
(b) The Owner may also telephone the Vendor's Operation Support Center
(OSC) for answers to general operational questions about the AS Software and/or
assistance in correcting Severity Level 3 and 4 conditions. The return call will
either provide the requested information, request additional information, or
report on the status of corrective action on the trouble report.
(c) The calling Owner's personnel shall provide the following information:
Caller's name, location, and company Call-back
telephone number System name, location Generic issue
Processor location, type and serial number Nature of
question or situation.
(12) RESPONSE TIME
The Vendor will provide a one (1) hour Response Time during the twenty-four
hour seven day a week coverage period (the "Standard Coverage Period"). The
response will involve the establishment of a mutually agreed-upon AS Severity
Level for the condition. Appropriate Corrective Maintenance and escalation
procedures will begin during the Standard Coverage Period. However, at the
Owner's request, the Vendor will immediately initiate Corrective Maintenance
activities during other periods for a AS Severity Level 1 condition.
AS SEVERITY LEVELS AND CORRECTIVE ACTIONS
=========== ------------------------------ =====================================
AS
SEVERITY CONDITION ACTION
=========== ------------------------------ =====================================
LEVEL 1 This condition exists when The Vendor will develop an emergency
the AS System is completely bypass or a fix to enable the
inoperative, and it is not licensed AS Software to function
usable by the Owner. The until the condition is resolved or
inoperative portion of the make necessary changes to such AS
licensed Software completely Software to restore it to
restricts the Owner's operating condition.
operation.
=========== ------------------------------ =====================================
LEVEL 2 This condition exists when The Vendor will initiate problem
the AS System is partially correction procedures and will
inoperative, but it is still continue them until the condition is
usable by Owner. The resolved or corrected. The Vendor
inoperative portion of the will notify the Owner of any
licensed AS Software severely resolution or corrections, which
restricts the Owner's will be in the form of procedure or
operations but has a less program changes. If a bypass proce-
critical effect than a AS dure is utilized, the condition will
Severity Level 1 condition. be reclassified to AS Severity
Level 3.
=========== ------------------------------ =====================================
LEVEL 3 This condition exists when The Vendor will initiate problem
the AS System is usable by resolution and correction procedures
the Owner but with limited with the objective of resolving or
functions. The condition is correcting the condition and
not critical to Owner scheduling any correction, replace-
operations and does not ment, or change for inclusion in
severely restrict such future scheduled release of the
operations licensed AS Software and/or its
related documentation.
============ ----------------------------- =====================================
LEVEL 4 This condition exists when The Vendor will initiate problem
the AS System is usable by resolution and correction procedures
the Owner and a means of with the objective of resolving or
circumventing the condition correcting the condition and may
has been found. The condi- schedule any correction, replacement
tion does not materially or change for inclusion in a future
affect Owner operations release of the licensed AS Software.
or service.
============ ============================= =====================================
<PAGE>
TABLE OF CONTENTS
Page
1. Definitions......................................................... 1
2. Agreements.......................................................... 2
3. Amendment to Subsection 1.1......................................... 3
4. Amendment to Subsection 2.2......................................... 8
5. Amendment to Subsection 2.5......................................... 9
6. Amendment to Subsection 2.20........................................ 9
7. Amendment to Subsection 2.22........................................ 9
8. Amendment to Subsection 2.23....................................... 10
9. Amendment to Subsection 6.1........................................ 11
10. Amendment to Subsection 6.3........................................ 11
11. Amendment to Section 9............................................. 12
12. Amendment to Section 12............................................ 14
13. Amendment to Section 15............................................ 16
14. Amendment to Subsection 17.1....................................... 17
15. Amendment to Subsection 17.7....................................... 18
16. Amendment to Subsection 20.2....................................... 18
17. Amendment to Subsection 22.2....................................... 18
18. Cross References................................................... 19
19. NO OTHER AMENDMENTS................................................ 19
20. Governing Law...................................................... 19
21. Descriptive Headings............................................... 19
22. Counterparts....................................................... 19
<PAGE>
APPENDICES
Appendix A.................................AM/HLR Description and Specifications
Appendix B................................SCP/HLR Description and Specifications
Appendix C...............................................[Intentionally Omitted]
Appendix D1..................................Lucent/Nortel License Agreement-HLR
Appendix D2................................Lucent/Nortel License Agreement-OAM&P
Appendix E.................................................HLR Statement of Work
Appendix F........................................................SCP/HLR Prices
Appendix G............................................AS/OAM&P Statement of Work
Appendix H...............................................[Intentionally Omitted]
Appendix I.......................................................AS/OAM&P Prices
Appendix J...............................................[Intentionally Omitted]
Appendix K......Application Software Products Acceptance Procedures and Criteria
Appendix L........Application Software Products Maintenance and Support Services
EXHIBIT 10.2
FIRST AMENDMENT TO AMENDED AND RESTATED
SPRINT TRADEMARK LICENSE AGREEMENT
This First Amendment to Amended and Restated Sprint Trademark License
Agreement (the "First Amendment"), made as of the 26th day of September, 1996,
by and between Sprint Communications Company, L.P. ("Licensor"), and Sprint
Spectrum Holding Company, L.P. (formerly known as MajorCo, L.P.) ("Licensee"),
amends the AMENDED AND RESTATED SPRINT TRADEMARK LICENSE AGREEMENT dated January
31, 1996 (the "Sprint Trademark License Agreement"), as outlined below.
1. The definition of "Licensed Mark" is amended to include the
trademarks SPRINT PCS and SPRINT PERSONAL COMMUNICATIONS SERVICE.
2. Additionally, Licensor grants Licensee a limited license to use the
tradename SPRINT SPECTRUM as its corporate name. The Parties agree that the
SPRINT SPECTRUM name will not be used for marketing or promotional purposes.
3. The Parties agree that the representations and warranties contained
in Paragraph 6.1(b) of the Sprint Trademark License Agreement do not apply to
the tradename SPRINT SPECTRUM.
4. The provisions of the Sprint Trademark License Agreement as amended
by this First Amendment sets forth the entire agreement and understanding
between the Parties as to the subject matter hereof and supersedes all prior
agreements, oral or written, and other communication between the Parties,
relating to the subject matter hereof.
5. Except as expressly amended by this First Amendment, all terms and
provision of the SPRINT TRADEMARK LICENSE AGREEMENT shall remain in full force
and effect.
LICENSOR
SPRINT COMMUNICATIONS COMPANY L.P.
By: /s/ Don A. Jensen
Name: Don A. Jensen
Title: Vice President - Law
LICENSEE
SPRINT SPECTRUM HOLDING COMPANY, L.P.
By: /s/Joseph M. Gensheimer
Name: Joseph M. Gensheimer
Title: General Counsel
EXHIBIT 10.3
ASSIGNMENT AND ACCEPTANCE AGREEMENT
THIS ASSIGNMENT AND ACCEPTANCE AGREEMENT ("Agreement") made as of the
30th day of September, 1996, by and between Sprint Spectrum Holding Company,
L.P., a limited partnership organized under the laws of the state of Delaware
("Assignor"), and Sprint Spectrum L.P., a limited partnership organized under
the laws of the state of Delaware ("Assignee");
WITNESSETH:
WHEREAS, prior to the execution and delivery of this Agreement Sprint
Communications Company, L.P. ("Sprint") granted certain rights to Assignor to
use the trademarks "Sprint" with the related "Diamond" logo, "Sprint PCS" and
"Sprint Personal Communications Services", pursuant to the Amended and Restated
Sprint Trademark Agreement, dated January 31, 1996, as amended by the First
Amendment dated September 26, 1996, copies of which are attached hereto and made
a part hereof (as amended, the "Assigned Agreement");
WHEREAS, Assignor desires to assign to Assignee all of the rights and
obligation granted to or incurred by Assignor under the Assigned Agreement; and
WHEREAS, Assignee wishes to accept the assignment by Assignor of all of
the rights granted to Assignor under the Assigned Agreement and to assume all of
the obligations of Assignor thereunder;
NOW THEREFORE, Assignor and Assignee, in consideration of the mutual
agreement contained herein and for other good and valuable consideration, the
receipt and adequacy of which hereby are acknowledged by the parties hereto, do
hereby agree as follows:
1. Assignor hereby assigns, transfers and conveys to Assignee all of
the Assignor's interest in and rights under the Assigned Agreement.
2. Assignee agrees to accept and does hereby accept the assignment to
Assignee of the Assigned Agreement, and Assignee hereby further agrees to be
bound by all of the terms and conditions of the Assigned Agreement and to
assume, perform and discharge all of the obligations and liabilities of Assignor
in connection with the Assigned Agreement, of whatever kind and description, and
to perform them in accordance with their terms.
3. Assignor hereby represent and warrants to Assignee that:
(a) Assignor has the right to assign all of the rights granted to it
under the Assigned Agreement in accordance with the terms and conditions hereof.
Assignor is in compliance with and has not breached any of the terms and
conditions of the Assigned Agreement, and the Assigned Agreement is and will
remain in full force and effect notwithstanding the assignment hereby to
Assignee.
(b) Assignor is a partnership duly formed, validly existing and in good
standing under the laws of the State of Delaware. Assignor has the partnership
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder and the execution, delivery and performance of this
Agreement have been duly authorized by all necessary partnership action. This
Agreement constitutes the legal, valid and binding obligation of Assignor
enforceable against Assignor in accordance with its terms, subject as to
enforceability to limits imposed by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and the availability of equitable
remedies.
(c) The execution, delivery and performance of this Agreement will not
(i) conflict with, violate or result in a breach of any of the terms, conditions
or provisions or any law, regulation, order, writ, injunction, decree,
determination or award of any court, any governmental department, board, agency
or instrumentality, domestic or foreign, or any arbitrator, applicable to
Assignor, (ii) conflict with, violate, result in a breach of or constitute a
default under any of the terms conditions or provision of Assignor's partnership
agreement or of any material agreement or instrument to which Assignor is or may
(including the Assigned Agreement) or by which Assignor is or may be bound or to
which any of its material properties or assets is subject (other that any such
conflict, violation, breach or default that has been validly and unconditionally
waived), (iii) conflict with, violate, result in a breach of or constitute a
default under (whether with notice or lapse of time or both), accelerate or
permit the acceleration of the performance required by, give to others any
material interest or rights or require any consent, authorization or approval
under any indenture, mortgage, lease agreement or instrument to which Assignor
is a party or by which Assignor is or may be bound, or (iv) result in the
creation of imposition or any lien upon any of the material properties or assets
of Assignor, which in any such case could reasonably be expected to have a
material adverse effect on Assignor's or to materially impair Assignor's ability
to perform its obligations under this Agreement.
(d) Any registration, declaration or filing with, or consent, approval,
license, permit or other authorization or order by, any governmental or
regulatory authority, domestic or foreign, that is required to be obtained by
Assignor in connection with the valid execution, delivery and performance by
Assignor under this Agreement has been or will be completed, made or obtained.
(e) The representation and warranties provided for under this paragraph
3 will survive the execution and delivery of this Agreement.
4. Assignee acknowledges Assignor has previously (i) requested pursuant
to Article 15 of the Assigned Agreement that Sprint grant licenses to Cox
Communications PCS, L.P. and American PCS, L.P. for operation of their
respective operations and (ii) agreed to permit such parties to have the rights
with respect to their operations (similar to Section 15.3 of the Assigned
Agreement) to request that Sprint grant additional licenses within the territory
covered by their license, Assignee agrees to be bound by such request and
agreements of Assignor.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the date and year first
above written.
SPRINT SPECTRUM HOLDING COMPANY, L.P.
By: /s/ Joseph M. Gensheimer
Name: Joseph M. Gensheimer
Title: General Counsel
SPRINT SPECTRUM L.P.
By: /s/ Joseph M. Gensheimer
Name: Joseph M. Gensheimer
Title: General Counsel
* * *
<PAGE>
CONSENT TO ASSIGNMENT
Pursuant to Section 15.1 of the Assigned Agreement, the undersigned
hereby consents and agrees to the assignment of the Assigned Agreement made
pursuant to the Agreement (pursuant to which Assignee has become the Licensee
(as defined in the Assigned Agreement) under the Assigned Agreement for all
purposes), and agrees that Assignor is hereby released from any further
liability or obligation under the Assigned Agreement. The undersigned has caused
this consent to be executed by its duly authorized representative as of this
30th day of September, 1996.
SPRINT COMMUNICATIONS COMPANY, L.P.
By: /s/ Don A. Jensen
Name: Don A. Jensen
Title: Vice President, Law
EXHIBIT 10.4
AMENDED AND RESTATED
ASSIGNMENT AND ASSUMPTION AGREEMENT
This Amended and Restated Assignment and Assumption Agreement
("Agreement") is entered into as of July 1, 1996 ("Effective Date") by and
between Sprint Spectrum Holding Company, L.P., a Delaware limited partnership
("Holding"), Sprint Spectrum L.P., a Delaware limited partnership ("Spectrum"),
and Sprint Spectrum Realty Company, L.P., a Delaware limited partnership
("RealtyCo").
RECITALS:
A. Holding, Spectrum and RealtyCo previously entered into an Assignment
and Assumption ("Original Assignment"), dated as of July 1, 1996, wherein, among
other things, (i) Holding assigned to Spectrum all of Holding's interest in
certain leasehold interests held by Holding as of the close of business on June
30, 1996 ("Holding Leases"); (ii) Holding assigned to Spectrum all employee
benefit plans and employment agreements and arrangements entered into by Holding
(the "Employee Plans and Agreements"); and (iii) Spectrum assigned to RealtyCo
all of Spectrum's interest in the Holding Leases and the Employee Plans and
Agreements.
B. Holding, Spectrum and RealtyCo desire to amend the Original
Assignment as provided herein and to restate the Original Assignment in its en-
tirety.
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which the parties
acknowledge, the parties agree as follows:
1. Holding Assignment of Realty Interest. Holding hereby transfers,
conveys and assigns to Spectrum all of Holding's right, title and interest in,
to and under, and delegates its duties and obligations under, all real property
licensed or leased by Holding or in which Holding acquired an easement interest,
used or to be used for cell sites, switch sites, office space for
administrative, technical or customer support, and other uses related to the
administration and operation of the business of Holding, whether now existing or
entered into after the date hereof ("Holding Realty Interests"). Such assignment
will be deemed to be effective (a) immediately for each Holding Realty Interest
existing on the Effective Date, and (b) immediately after the creation of the
Holding Realty Interest for all such interests created after the Effective Date.
Spectrum hereby accepts this assignment and agrees to assume and perform all of
Holdings' duties and obligations under the instruments creating the Holding
Realty Interests.
2. Holding Assignment of Employee Plans and Agreements. Holding hereby
transfers, conveys and assigns to Spectrum all of Holding's right, title and
interest in, to and under, and delegates its duties and obligations under, the
Employee Plans and Agreements. Spectrum hereby accepts this assignment and
agrees to assume all of Holding's duties and obligations under the Employee
Plans and Agreements.
3. Spectrum Assignment of Realty Interest. Spectrum hereby transfers,
conveys and assigns to RealtyCo all of Spectrum's right, title and interest in,
to and under, and delegates its duties and obligations under, all real property
licensed or leased by Spectrum or in which Spectrum acquires an easement
interest, used or to be used for cell sites, switch sites, office space for
administrative, technical or customer support, retail space and other uses
related to the administration and operation of the business of Spectrum, whether
now or existing or entered into after the date hereof, including, without
limitation, the Holding Realty Interests ("Spectrum Realty Interests"). Such
assignment will be deemed to be effective (a) immediately for each Spectrum
Realty Interest existing on the Effective Date, and (b) immediately after the
creation of the Spectrum Realty Interest for all such interests created after
the Effective Date. RealtyCo hereby accepts the assignment and agrees to assume
and perform all of Spectrum's duties and obligations under the instruments
creating the Spectrum Realty Interests.
4. General Provisions. This Agreement will be effective as of the
commencement of business on July 1, 1996. The parties hereby agree that the
Original Agreement is hereby replaced with this Agreement. This Agreement is
governed by, and construed and interpreted in accordance with, the laws of the
State of Missouri without reference to applicable choice of law provisions. The
headings used in this Agreement are for convenience only and must not in any way
affect the meaning or interpretation of this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
SPRINT SPECTRUM HOLDING
COMPANY, L.P.
By: /s/ Robert M. Neumeister, Jr.
Name: Robert Neumeister
Title: Chief Financial Officer
SPRINT SPECTRUM L.P.
By: /s/ Robert M. Neumeister, Jr.
Name: Robert Neumeister
Title: Chief Financial Officer
SPRINT SPECTRUM REALTY
COMPANY, L.P.
By: /s/ Robert M. Neumeister, Jr.
Name: Robert Neumeister
Title: Chief Financial Officer
EXHIBIT 10.6
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made
and entered into as of August 23, 1996, by and among Sprint Spectrum L.P., a
Delaware limited partnership ("Sprint Spectrum"), Sprint Spectrum Finance
Corporation, a Delaware corporation ("FinCo" and, together with Sprint Spectrum,
the "Issuers"), and Sprint Corporation, a Kansas corporation ("Sprint").
This will confirm that, in connection with the purchase by
Sprint, on the date hereof, of an aggregate $182,859,000 principal amount at
maturity of 12 1/2% Senior Discount Notes (the "Notes") of the Issuers, and as
an inducement to Sprint to consummate the purchase of the Notes, the Issuers
have agreed to provide the registration rights set forth in this Agreement to
Sprint.
The parties hereby agree as follows:
1. The Securities
(a) Definitions. The terms "Registrable Securities" and
"Restricted Securities" shall mean the Notes.
(b) Restricted Securities. For the purposes of this Agreement,
Notes will cease to be Restricted Securities when (i) a registration statement
covering such Restricted Securities has been declared effective and they have
been disposed of pursuant to such effective registration statement, or (ii) they
are distributed to the public pursuant to Rule 144 (or any similar provision
then in force) under the Securities Act, or (iii) they have been otherwise
transferred and the Issuers, in accordance with applicable law and regulations,
have delivered new certificates or other evidences of ownership for them not
subject to any stop transfer order or other restriction on transfer.
(c) Registrable Securities. As to any particular Notes,
such Notes will cease to be Registrable Securities when they cease to be Re-
stricted Securities.
(d) Securities Act. The term "Securities Act" shall mean the
Securities Act of 1933, as amended, or any similar federal statute, and the
rules and regulations of the Securities and Exchange Commission ("Commission")
thereunder, all as the same shall be in effect at the time.
2. Holdback Agreements
(a) Restrictions on Public Sale by Sprint. To the extent not
inconsistent with applicable law and regulations, with respect to each
registration statement filed by the Issuers under the Securities Act, in
connection with an underwritten public offering of any debt security similar to
the Notes, Sprint, as a holder of Registrable Securities (whether or not Sprint
requests to participate or participates in such registration statement) agrees
not to effect any public sale or public distribution of the Notes during the 15
days prior to, and during the 90-day period beginning on, the effective date of
such registration statement (except as part of such registration), if requested
in writing (with reasonable prior notice) by the managing underwriter or
underwriters of the underwritten public offering.
(b) Restrictions on Public Sale by the Issuers and Others. The
Issuers agree (i) not to effect any public sale or distribution of any
securities similar to those being registered, during the 15 days prior to, and
the 90-day period beginning on, the effective date of any registration statement
in which Sprint is participating in connection with an underwritten public
offering if requested in writing (with reasonable prior notice) by the managing
underwriter or underwriters of the underwritten public offering and (ii) that
any agreement entered into after the date of this Agreement pursuant to which
the Issuers issue or agree to issue any privately placed securities which have
registration rights shall contain provisions under which holders of such
securities agree not to effect any public sale or distribution of any securities
similar to those being registered, during the periods set forth above if the
Issuers receive the notice referred to in clause (i) above.
3. Demand Registration
(a) Right to Demand. Subject to Section 3(b), Sprint may at
any time make a written request to the Issuers for registration under the
Securities Act of all or part of its Registrable Securities (a "Demand
Registration"). Upon receipt of such request, the Issuers will effect such
registration in accordance with the procedures in Section 4, including in such
registration all Registrable Securities with respect to which the Issuers have
received written requests for inclusion therein. All requests made pursuant to
this Section 3(a) will specify the aggregate amount of the Registrable
Securities to be registered and will also specify the intended methods of
disposition thereof. Notwithstanding anything to the contrary contained herein,
no sales of, or offers to sell, Registrable Securities may be made within 180
days after August 20, 1996.
(b) Number of Demand Registrations. Sprint shall be entitled,
in the aggregate, to three Demand Registrations, the Registration Expenses of
which shall be borne by the Issuers. The Issuers shall not be deemed to have
effected a Demand Registration unless and until such Demand Registration is
declared effective.
(c) Priority on Demand Registrations. If the managing
underwriter or underwriters of a Demand Registration for an underwritten public
offering advise the Issuers in writing that in their opinion the number of
securities proposed to be sold in such Demand Registration exceeds the number
which can be sold in such offering, the Issuers will include in such
registration only the number of securities that, in the opinion of such managing
underwriter or underwriters, can be sold; provided, that no Registrable
Securities shall be excluded from such registration until all notes which are
not Registrable Securities have been excluded. The Issuers agree that any
agreement entered into on or after the date of this Agreement pursuant to which
either or both Issuers grant any person other than Sprint "piggyback"
registration rights that may be exercised in connection with a Demand
Registration hereunder shall expressly provide that the securities of such other
person will be entirely excluded from such registration before any Registrable
Securities are so excluded. Any exclusion of securities pursuant to this Section
3(c) in connection with the last Demand Registration available hereunder shall
entitle Sprint to one additional Demand Registration.
(d) Selection of Underwriters. If any Demand Registration is
an underwritten offering, Sprint will select a managing underwriter or
underwriters to administer the offering, which managing underwriter or
underwriters shall be reasonably satisfactory to the Issuers.
(e) Notwithstanding anything in the foregoing to the contrary,
the Issuers shall not be obligated to effect a Demand Registration at any time
when the Issuers, in the good faith judgment of their Partnership Board or their
Board of Directors, as the case may be, reasonably believe that the filing
thereof at the time requested, or the offering of securities pursuant thereto,
would be seriously detrimental to the Issuers. The effectuation of Demand
Registrations hereunder cannot be suspended, pursuant to the provisions of the
preceding sentence, more than once, and in any case shall not be suspended for
more than 60 days after the date of the applicable Board's determination
referenced in the preceding sentence.
4. Registration Procedures
The Issuers will, in connection with any registration pursuant
to Section 3, as expeditiously as possible:
(a) prepare and file with the Commission a registration
statement on any appropriate form under the Securities Act (a "Registration
Statement"), which form shall be available for the sale of Registrable
Securities in accordance with the intended method or methods of distribution
thereof, and use their best efforts to cause such Registration Statement to
become effective; provided that at least five business days before filing with
the Commission a Registration Statement or prospectus or any amendments or
supplements thereto, including documents incorporated by reference after the
initial filing of any Registration Statement, the Issuers will furnish to Sprint
draft copies of such Registration Statement, and, upon the request of Sprint,
shall continue to provide drafts of such Registration Statement until filed and
thereafter such number of copies of such Registration Statement, each amendment
and supplement thereto, the prospectus included in such Registration Statement
(including each preliminary prospectus) and such other documents as Sprint may
reasonably request in order to facilitate the disposition of the Registrable
Securities owned by Sprint and to change the Registration Statement as it
relates to Sprint as requested by Sprint on a timely basis, and to reasonably
consider other changes to the Registration Statement (but not including any
document incorporated therein by reference) reasonably requested by Sprint on a
timely basis, in light of the requirements of the Securities Act and any other
applicable laws and regulations; and provided, further, that as to documents
incorporated by reference, the Issuers shall provide documents incorporated by
reference promptly upon the filing of such documents;
(b) prepare and file with the Commission such amendments and
post-effective amendments to a Registration Statement and timely make any such
filings to be incorporated by reference therein as may be necessary to keep such
Registration Statement effective for 120 days (or until all Registrable
Securities registered thereunder have been sold, whichever is earlier); and
cause the related prospectus to be supplemented by any required prospectus
supplement, and as so supplemented to be filed to the extent required pursuant
to Rule 424 under the Securities Act, during such 120 day period; and otherwise
comply with the provisions of the Securities Act with respect to the disposition
of all securities covered by such Registration Statement during the applicable
period in accordance with the intended methods of disposition by the sellers
thereof set forth in such Registration Statement or supplement to such
prospectus;
(c) notify Sprint and the managing underwriter or
underwriters, if any, promptly, and confirm such advice in writing, (1) when a
prospectus or any prospectus supplement or post-effective amendment has been
filed, and, with respect to a Registration Statement or any post-effective
amendment, when the same has become effective, (2) of any request by the
Commission for amendments or supplements to a Registration Statement or related
prospectus or for additional information, (3) of the issuance by the Commission
of any stop order suspending the effectiveness of a Registration Statement or
the initiation of any proceedings for that purpose, (4) if at any time the
representations and warranties of the Issuers contemplated by paragraph (j)
below cease to be true and correct, (5) of the receipt by the Issuers of any
notification with respect to the suspension of the qualification of any of the
Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, and (6) of the happening of any
event which makes any statement made in any Registration Statement, the
prospectus or any document incorporated therein by reference untrue or which
requires the making of any changes in any Registration Statement or prospectus
so that they will not contain any untrue statement of material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading;
(d) make every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of a registration statement at the
earliest possible moment and to prevent the entry of such an order;
(e) use their best efforts to register or qualify such
Registrable Securities under such other securities or blue sky laws of such
jurisdictions as Sprint reasonably requests in writing and do any and all other
acts and things which may be necessary or advisable to enable Sprint to
consummate the disposition in such jurisdictions of the Registrable Securities
owned by Sprint; provided that the Issuers will not be required to (i) qualify
generally to do business in any jurisdiction where they would not otherwise be
required to qualify but for this paragraph (e), (ii) subject themselves to
taxation in any such jurisdiction or (iii) take any action which would subject
them to general service of process in any such jurisdiction;
(f) make available for inspection by a representative of
Sprint, any underwriter participating in any disposition pursuant to such
Registration Statement, and any attorney or accountant retained by any such
underwriter or Sprint (collectively, the "Inspectors"), all financial and other
records, pertinent corporate documents and properties of the Issuers
(collectively, the "Records") as shall be reasonably necessary to enable them to
exercise their due diligence responsibility, and cause the officers, directors,
employees and agents of the Issuers to supply all information reasonably
requested by any such Inspector in connection with such Registration Statement.
Records which the Issuers determine, in good faith, to be confidential and which
they notify the Inspectors are confidential shall not be disclosed by the
Inspectors unless (i) the release of such Records is ordered pursuant to a
subpoena or other order from a court of competent jurisdiction or (ii) the
disclosure of such Records is required by any applicable law or regulation or
any governmental regulatory body with jurisdiction over any holder of
Registrable Securities or any Inspectors. Sprint agrees that it will, upon
learning the disclosure of such Records is sought in a court of competent
jurisdiction, give notice to the Issuers and allow the Issuers, at their
expense, to undertake appropriate action to prevent disclosure of the Records
deemed confidential;
(g) cooperate with Sprint and the managing underwriter or
underwriters, if any, to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold and not bearing any
restrictive legends and enable such Registrable Securities to be in such
denominations and registered in such names as Sprint or any managing
underwriters may request at least two business days prior to any sale of
Registrable Securities;
(h) comply with all applicable rules and regulations of the
Commission and promptly make generally available to their security holders each
of their earning statements covering a period of at least twelve months, (1) in
an underwritten offering, commencing after a Registration Statement is declared
effective by the Commission, or (2) in a non-underwritten offering, beginning
with the first month of the Issuers' first fiscal quarter commencing after the
effective date of a Registration Statement, which earning statement in each case
shall satisfy the provisions of Section 11(a) of the Securities Act;
(i) provide a CUSIP number for all Registrable Securities, not
later than the effective date of the Registration Statement relating to the
first public offering of Registrable Securities of the Issuers pursuant hereto;
(j) enter into such customary agreements (including an
underwriting agreement in customary form) and take all such other actions
reasonably requested by Sprint or the managing underwriter or underwriters in
order to expedite or facilitate the disposition of such Registrable Securities
and in such connection, whether or not an underwriting agreement is entered into
and whether or not the registration is an underwritten registration (1) make
such representations and warranties, if any, to Sprint and any underwriters with
respect to the Registration Statement, prospectus and documents incorporated by
reference, if any, in form, substance and scope as are customarily made by
issuers to underwriters in underwritten offerings and confirm the same if and
when requested, (2) obtain opinions of counsel to the Issuers and updates
thereof addressed to Sprint and the underwriters, if any, with respect to the
Registration Statement, prospectus and documents incorporated by reference, if
any, covering the matters customarily covered in opinions requested in
underwritten offerings and such other matters as may be reasonably requested by
Sprint and the underwriters, (3) obtain a "cold comfort" letter and updates
thereof from the Issuers' independent certified public accountants addressed to
Sprint and to the underwriters, if any, which letters shall be in customary form
and cover matters of the type customarily covered in "cold comfort" letters by
accountants in connection with underwritten offerings, and (4) deliver such
documents and certificates as may be reasonably requested by Sprint and the
managing underwriter or underwriters, if any, to evidence compliance with any
customary conditions contained in the underwriting agreement or other agreement
entered into by the Issuers. The above shall be done at each closing under such
underwriting or similar agreement or as and to the extent required thereunder;
(k) use its reasonable efforts to provide customary
assistance to the underwriters in their selling efforts and presentations to
prospective investors; and
(l) use its best efforts to list the Registrable Securities on
any securities exchange on which the Notes are then listed, if the listing of
such securities is then permitted under the rules of such exchange.
The Issuers may require Sprint to furnish to the Issuers such
information regarding the distribution of such securities as the Issuers may
from time to time reasonably request in writing.
Sprint agrees that, upon receipt of any notice from the
Issuers of the happening of any event of the kind described in Section 4(c)(2),
4(c)(3), 4(c)(5) or 4(c)(6) hereof, Sprint will forthwith discontinue
disposition of Registrable Securities pursuant to the Registration Statement
covering such Registrable Securities (if pursuant to an event described in
Section 4(c)(5), only in the affected jurisdictions) (A) until Sprint's receipt
of the copies of the supplemented or amended prospectus contemplated by Section
4(c)(1) hereof, or until it is advised in writing (the "Advice") by the Issuers
that the use of the applicable prospectus may be resumed, and (B) until it has
received copies of any additional or supplemental filings which are incorporated
by reference in such prospectus. If so directed by the Issuers, Sprint will
deliver to the Issuers (at the expense of the Issuers) all copies, other than
permanent file copies then in Sprint's possession, of the prospectus covering
such Registrable Securities current at the time of receipt of such notice.
5. Registration Expenses
All expenses incident to the performance of or compliance with
this Agreement by the Issuers, including, without limitation, all registration
and filing fees of the Commission, the National Association of Securities
Dealers Inc. and other agencies, fees and expenses of compliance with securities
or blue sky laws (including reasonable fees and disbursements of counsel in
connection with blue sky qualifications of the Registrable Securities), rating
agency fees, printing expenses, expenses incurred by the Issuers in connection
with presentations to prospective investors, messenger and delivery expenses,
internal expenses (including, without limitation, all salaries and expenses of
its officers and employees performing legal or accounting duties), the fees and
expenses incurred in connection with the listing, if any, of the securities to
be registered on any securities exchange and fees and disbursements of counsel
for the Issuers and the Issuers' independent certified public accountants
(including the expenses of any special audit or "cold comfort" letters required
by or incident to such performance), securities acts liability insurance (if the
Issuers elect to obtain such insurance), the fees and expenses of any special
experts retained by the Issuers in connection with such registration, and the
fees and expenses of any other person retained by the Issuers (but not including
any underwriting discounts or commissions attributable to the sale of
Registrable Securities or other out-of-pocket expenses of Sprint (or the agents
who act on its behalf) unless reimbursement is specifically approved by the
Issuers), will be borne by the Issuers. All such expenses are herein called
"Registration Expenses". Notwithstanding the foregoing, the Issuers shall not be
required to pay for any Registration Expenses of any Demand Registration if such
registration request is subsequently withdrawn at the request of Sprint, unless
Sprint agrees to forfeit its right to initiate one Demand Registration; provided
that if at the time of such withdrawal, Sprint has learned of a material adverse
change in the condition, business or prospects of the Issuers from that known to
Sprint at the time of its request, then Sprint shall not be required to pay any
of such expenses and shall not forfeit its right to initiate one Demand
Registration.
6. Indemnification; Contribution
(a) Indemnification by the Issuers. The Issuers agree to
indemnify and hold harmless, to the full extent permitted by law, Sprint, its
officers and directors and each person who controls Sprint (within the meaning
of the Securities Act), and any agent thereof against all losses, claims,
damages, liabilities and expenses (including reasonable attorney's fees and
expenses of investigation) incurred by such party pursuant to any actual or
threatened suit, action, proceeding or investigation arising out of or based
upon any untrue or alleged untrue statement of a material fact contained in any
Registration Statement, prospectus or preliminary prospectus or any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein (in the case of a prospectus, in the
light of the circumstances under which they were made) not misleading, except
insofar as the same arise out of or are based upon any such untrue statement or
omission based upon information with respect to Sprint furnished in writing to
the Issuers by Sprint expressly for use therein. The Issuers shall also agree in
any underwriting agreement executed in connection with the sale of Registrable
Securities to indemnify and hold harmless the underwriters and their officers,
directors and control persons to the same extent as provided above with regard
to actual or alleged statements in or omissions from a Registration Statement,
except with respect to suits, actions, proceedings or investigations arising out
of statements furnished in writing to the Issuers by such underwriters or Sprint
expressly for use therein.
(b) Indemnification by Sprint. In connection with any
Registration Statement in which Sprint is participating, Sprint will be required
to furnish to the Issuers in writing such information with respect to Sprint as
the Issuers reasonably request for use in connection with any such Registration
Statement or prospectus, and Sprint agrees to indemnify, to the full extent
permitted by law, the Issuers, the respective directors, partnership board
representatives and officers of the Issuers and each person who controls the
Issuers (within the meaning of the Securities Act) and any agent thereof,
against all losses, claims, damages, liabilities and expenses (including
reasonable attorney's fees and expenses of investigation) incurred by such party
pursuant to any actual or threatened suit, action, proceeding or investigation
arising out of or based upon any untrue or alleged untrue statement of a
material fact contained in any Registration statement, prospectus or preliminary
prospectus or any omission or alleged omission to state therein a material fact
necessary to make the statements therein (in the case of a prospectus, in the
light of the circumstances under which they are made) not misleading, to the
extent, but only to the extent, that such untrue statement or omission is based
upon information relating to Sprint furnished in writing to the Issuers by
Sprint expressly for use therein.
(c) Conduct of Indemnification Proceedings. Promptly after
receipt by an indemnified party under this Section 6 of written notice of the
commencement of any action, proceeding, suit or investigation or threat thereof
made in writing for which such indemnified party may claim indemnification or
contribution pursuant to this Agreement, such indemnified party shall notify in
writing the indemnifying party of such commencement or threat; but the omission
so to notify the indemnifying party shall not relieve it from any liability
which it may have to any indemnified party (x) hereunder, unless the
indemnifying party is actually prejudiced thereby, or (y) otherwise than under
this Section 6. In case any such action, suit or proceeding shall be brought
against any indemnified party, and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and the indemnifying party shall assume the defense thereof, with
counsel reasonably satisfactory to the indemnified party and the payment of all
expenses. The indemnified party shall have the right to employ separate counsel
in any such action, suit or proceeding and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party has agreed to pay such
fees and expenses or (ii) the indemnifying party shall have failed to assume the
defense of such action, suit or proceeding or to employ counsel reasonably
satisfactory to the indemnified party therein or to pay all expenses or (iii)
the named parties to any such action or proceeding (including any impleaded
parties) include both the indemnified party and the indemnifying party and the
indemnified party shall have been advised by counsel that there may be one or
more legal defenses available to the indemnified party which are different from
or additional to those available to the indemnifying party and which may result
in a conflict between the indemnifying party and such indemnified party (in
which case, if the indemnified party notifies the indemnifying party in writing
that the indemnified party elects to employ separate counsel at the expense of
the indemnifying party, the indemnifying party shall not have the right to
assume the defense of such action or proceeding on behalf of the indemnified
party, it being understood, however, that the indemnifying party shall not, in
connection with any one such action, suit or proceeding or separate but
substantially similar or related actions, suits or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one separate firm of attorneys at
any time for the indemnified party, which firm shall be designated in writing by
the indemnified party).
(d) Contribution. If the indemnification provided for in this
Section 6 from the indemnifying party is unavailable to an indemnified party
hereunder in respect of any losses, claims, damages, liabilities or expenses
referred to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect the relative fault of
the indemnifying party and indemnified party as well as any other relevant
equitable considerations. The relative fault of such indemnifying party and the
indemnified party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such indemnifying party or
indemnified party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the losses, claims, damages, liabilities
and expenses referred to above shall be deemed to include, subject to the
limitation set forth in Section 6(e), any legal or other fees or expenses
reasonably incurred by such party in connection with any investigation or
proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 6(d) were determined by pro
rata allocation or by any other method of allocation which does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
(e) Limitation. Anything to the contrary contained in this
Section 6 or in Section 7 hereof notwithstanding, Sprint shall not be liable for
indemnification and contribution payments aggregating an amount in excess of the
maximum amount received by Sprint in connection with any sale of Registrable
Securities as contemplated herein.
7. Participation in Underwritten Registrations
Sprint may not participate in any underwritten registration
hereunder unless Sprint (a) agrees to sell Sprint's securities on the basis
provided in any customary underwriting arrangements and to comply with Rules
10b-6 and 10b-7 under the Exchange Act, and (b) completes and executes all
questionnaires, appropriate and limited powers of attorney, escrow agreements,
indemnities, underwriting agreements and other documents reasonably required
under the terms of such underwriting arrangements, provided that all such
documents shall be consistent with the provisions of Section 6 hereof.
8. Rule 144 and Rule 144A
The Issuers covenant that they will timely file the reports
required to be filed by them under the Securities Act and the Securities
Exchange Act of 1934, as amended, and the rules and regulations adopted by the
Commission thereunder. So long as the Issuers are not required to file such
reports following a public offering, they will, upon the request of Sprint, make
publicly available other information to the extent, and so long as, necessary to
permit sales of the Registrable Securities pursuant to Rule 144 or Rule 144A
under the Securities Act, and they will take such further action as Sprint may
reasonably request, all to the extent required from time to time to enable
Sprint to sell Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by Rule 144 and Rule 144A
under the Securities Act, as such Rules may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission, in each case to
the extent such rules may otherwise be available to Sprint. Upon the reasonable
request of Sprint, the Issuers will deliver to Sprint a written statement as to
whether they have complied with such requirements.
9. Additional Provisions
(a) No Inconsistent Agreements. The Issuers will not
hereafter enter into any agreement with respect to their securities which is in-
consistent with the rights granted to Sprint in this
Agreement.
(b) Amendments and Waivers. Except as otherwise provided
herein, the provisions of this Agreement may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Issuers have obtained the written consent of
Sprint.
(c) Notices. All communications under this Agreement
shall be sufficiently given if delivered by hand or by overnight courier or
mailed by registered or certified mail, postage prepaid, addressed,
(1) if to Sprint Spectrum, to:
Sprint Spectrum L.P.
4900 Main Street - Twelfth Floor
Kansas City, Missouri 64112
Attention: Joseph M. Gensheimer, Esq.
(2) if to FinCo, to:
Sprint Spectrum Finance Corporation
4900 Main Street - Twelfth Floor
Kansas City, Missouri 64112
Attention: Joseph M. Gensheimer, Esq.
(3) if to Sprint, to:
Sprint Corporation
2330 Shawnee Mission Parkway
Westwood, Kansas 66205
Attention: General Counsel
(d) Successors and Assigns; Holders as Beneficiaries. This
Agreement shall inure to the benefit of and be binding upon the parties and
their respective successors and assigns, and the agreements of the Issuers
herein shall inure to the benefit of Sprint and its respective successors and
assigns, including, without limitation, and without the need for an express
assignment, subsequent holders of Registrable Securities.
(e) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the mean-
ing hereof.
(g) Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York.
(h) Severability; Specific Enforcement. In the event that any
one or more of the provisions contained herein, or the application thereof in
any circumstances, is held invalid, illegal, or unenforceable for any reason,
the validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in any way
impaired thereby, it being intended that all of the rights and privileges of the
Issuers and Sprint shall be enforceable to the fullest extent permitted by law.
Each of Sprint and the Issuers acknowledges that the other party would not have
an adequate remedy at law for money damages in the event that any of the
covenants or agreements of the other party in this Agreement were not performed
in accordance with its terms and therefore agrees that the other party shall be
entitled to specific enforcement of such covenants or agreements and to
injunctive and other equitable relief in addition to any other remedy to which
it may be entitled, at law or in equity.
(i) Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein and therein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein and therein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
SPRINT SPECTRUM L.P.
By: Sprint Spectrum Holding
Company, L.P.,
its General Partner
By: /s/ Robert E. Sleet, Jr.
Name: Robert E. Sleet, Jr.
Title: Treasurer
SPRINT SPECTRUM FINANCE CORPORATION
By: /s/ Robert E. Sleet, Jr.
Name: Robert E. Sleet, Jr.
Title: Assistant Treasurer
SPRINT CORPORATION
By: /s/ Arthur B. Krause
Name: Arthur B. Krause
Title: Executive Vice President and
Chief Financial Officer
EXHIBIT 10.7
AMENDED AND RESTATED
CAPITAL CONTRIBUTION AGREEMENT
AMENDED AND RESTATED CAPITAL CONTRIBUTION AGREEMENT, dated as
of October 2, 1996, among SPRINT CORPORATION, a Kansas corporation ("Sprint"),
TELE-COMMUNICATIONS, INC., a Delaware corporation ("TCI"), COMCAST CORPORATION,
a Pennsylvania corporation ("Comcast"), COX COMMUNICATIONS, INC., a Delaware
corporation ("Cox", and collectively with Sprint, TCI and Comcast, the
"Parents"), and SPRINT SPECTRUM L.P., a Delaware limited partnership (the
"Borrower").
W I T N E S S E T H:
WHEREAS, the Parents and the Borrower have entered into a
Capital Contribution Agreement, dated as of July 15, 1996 (as heretofore
amended, the "Existing Agreement");
WHEREAS, the Parents and the Borrower desire to amend and restate the
Existing Agreement;
WHEREAS, the Parents, through subsidiaries, indirectly are the
sole limited and general partners of Holding (as defined below);
WHEREAS, Holding is the sole general partner of the Borrower;
WHEREAS, the Borrower intends to obtain loans and other extensions of
credit from various sources;
WHEREAS, the Parents will derive substantial direct and
indirect benefit from the making of loans and other extensions of credit to the
Borrower; and
WHEREAS, to induce others to make loans and other extensions
of credit to the Borrower, the Parents and the Borrower are executing and
delivering this Capital Contribution Agreement;
NOW, THEREFORE, the parties hereto hereby agree that the
Existing Agreement be amended and restated in its entirety as follows:
1. Defined Terms. (a) As used in this Capital Contribution Agreement, the
following terms shall have the following meanings:
"Aggregate Short-Term Debt Service Requirements": as of any date, the
aggregate amount that becomes due (whether as a scheduled payment, upon
acceleration or otherwise) during the period beginning on (and including) such
date and ending on (and excluding) the date three months later, in respect of
principal, interest, fees and other amounts under indebtedness of Borrower and
the Restricted Subsidiaries.
"APC": American PCS, L.P., a Delaware limited partnership.
"Business Day": a day other than a Saturday, Sunday or other day on which
commercial banks in New York City or Kansas City, Missouri are authorized or
required by law to close.
"Capital Contribution Agreement": this Amended and Restated Capital
Contribution Agreement, as amended, supplemented or otherwise modified from time
to time in accordance with its terms.
"Cash Equivalents": (a) securities with maturities of one year or less from
the date of acquisition issued or fully guaranteed or insured by the United
States Government or any agency thereof, (b) certificates of deposit and
eurodollar time deposits with maturities of one year or less from the date of
acquisition and overnight bank deposits of any commercial bank having capital
and surplus in excess of $500,000,000, (c) repurchase obligations of any
commercial bank satisfying the requirements of clause (b) of this definition,
having a term of not more than 30 days with respect to securities issued or
fully guaranteed or insured by the United States Government, (d) commercial
paper of a domestic issuer rated at least A-1 by S&P or P-1 by Moody's, (e)
securities with maturities of one year or less from the date of acquisition
issued or fully guaranteed by any state, commonwealth or territory of the United
States, by any political subdivision or taxing authority of any such state,
commonwealth or territory or by any foreign government, the securities of which
state, commonwealth, territory, political subdivision, taxing authority or
foreign government (as the case may be) are rated at least A by S&P or A by
Moody's, (f) securities with maturities of one year or less from the date of
acquisition backed by standby letters of credit issued by any commercial bank
satisfying the requirements of clause (b) of this definition or (g) shares of
open end money market mutual or similar funds which invest exclusively in assets
satisfying the requirements of clauses (a) through (f) of this definition.
"Cash Expenditures": all cash expenditures of the Borrower and the
Restricted Subsidiaries on a consolidated basis, including, without limitation
and without duplication, the capital expenditures, working capital requirements
and Aggregate Short-Term Debt Service Requirements.
"Contractual Obligations": as to any Person, any provision of any security
issued by such Person or of any agreement, indenture, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Contribution Amount": (a) with respect to any Contribution Certificate,
the amount, if any, specified in such Contribution Certificate as the amount by
which the expected Cash Expenditures of the Borrower and its Restricted
Subsidiaries during the period of three months following the date of such
Contribution Certificate exceeds the cash, Cash Equivalents and borrowing
availability of the Borrower under any credit facility (so long as no default or
event of default shall have occurred and be continuing under such facility and
the Borrower shall be capable of satisfying all conditions to borrowing under
such facility) on the date of such Contribution Certificate plus their expected
cash receipts from sources other than borrowings during such period, (b) with
respect to any Triggering Event resulting from default in the payment of any
amount due under any Secured Instrument, the amount due and unpaid and (c) with
respect to any Triggering Event resulting from the acceleration of any Secured
Obligations, the entire aggregate amount of the Parents' contingent obligations
under Section 2 immediately prior to the occurrence of such Triggering Event.
"Contribution Certificate": a certificate of the Chief Executive Officer,
President, Chief Financial Officer or Treasurer of the Borrower or, under the
circumstances set forth in Section 14(b), a certificate of the Corporate
Trustee, substantially in the form of Exhibit A to this Capital Contribution
Agreement, delivered to each Parent (with a copy to the Corporate Trustee)
pursuant to Section 3, which specifies in reasonable detail (a) the cash, Cash
Equivalents and borrowing availability of the Borrower under any credit facility
(so long as no default or event of default shall have occurred and be continuing
under such facility and the Borrower shall be capable of satisfying all
conditions to borrowing under such facility) on the date of such certificate
plus their expected cash receipts from sources other than borrowings during the
period of three months following the date of such certificate and (b) the
expected Cash Expenditures of the Borrower and its Restricted Subsidiaries for
such period.
"Corporate Trustee": as defined in the Trust Agreement.
"EquipmentCo": Sprint Spectrum Equipment Company, L.P., a Delaware limited
partnership.
"Excluded Equity Proceeds": cash equity contributions made to the Borrower
that are the proceeds of Specified Affiliate Debt or that are used by the
Borrower, directly or indirectly, to fund (a) the acquisition of any entity
which does not become a Restricted Subsidiary upon such acquisition, provided
that if at any time subsequent to the date of such acquisition such entity shall
become a Restricted Subsidiary the cash equity contributions used to fund such
acquisition shall no longer constitute Excluded Equity Proceeds, (b) equity
contributions, loans or advances to or other investments in any entity which is
not a Restricted Subsidiary, provided that if at any time subsequent to the date
of such contribution, loan, advance or other investment such entity shall become
a Restricted Subsidiary, the cash equity contributions used to fund such equity
contributions, loans, advances or other investments shall no longer constitute
Excluded Equity Proceeds, (c) the acquisition of any assets by any Restricted
Subsidiary that subsequent to the date of such acquisition shall no longer
constitute a Restricted Subsidiary (unless such assets are transferred to the
Borrower or a Restricted Subsidiary) or (d) the optional prepayment of any
indebtedness of the Borrower or any Restricted Subsidiary (other than any
optional prepayment of any committed revolving credit facility to the extent
that the commitments to lend are not reduced in connection therewith).
"Governmental Authority": any nation or government, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"High Yield Debt": the 11% Senior Notes due 2006 in the stated principal
amount of $250,000,000 and 12 1/2% Senior Discount Notes due 2006 in the stated
principal amount of $500,000,000 of the Borrower and Sprint Spectrum Finance
Corporation (together, the "Issuers").
"Holding": Sprint Spectrum Holding Company, L.P., a Delaware limited
partnership, the general partner of the Borrower.
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest of any kind or nature whatsoever.
"Moody's: Moody's Investors Service, Inc.
"Partnership Agreement": the Amended and Restated Agreement of Limited
Partnership of Holding, dated as of January 31, 1996, among the Partnership
Subsidiaries, as amended, supplemented or otherwise modified from time to time.
"Partnership Subsidiary": with respect to Sprint, Sprint Enterprises, L.P.;
with respect to TCI, TCI Telephony Services, Inc.; with respect to Comcast,
Comcast Telephony Services; and with respect to Cox, Cox Telephony Partnership.
"Percentage Interest": with respect to Sprint, 40%; with respect to TCI,
30%; with respect to Comcast, 15%; and with respect to Cox, 15%.
"Person": an individual, partnership, corporation, business trust, joint
stock company, trust, unincorporated association, joint venture, Governmental
Authority or other entity of whatever nature.
"Public Debt Rating": with respect to any Person, the actual or implied
rating of such Person's senior long-term unsecured debt by a Rating Agency.
"Rating Agency": each of S&P and Moody's.
"RealtyCo": Sprint Spectrum Realty Company, L.P., a Delaware limited
partnership.
"Restricted Subsidiary": any Subsidiary of the Borrower that is not an
Unrestricted Subsidiary.
"Requirement of Law": as to any Person, the partnership agreement, the
certificate of incorporation and by-laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"S&P": Standard and Poor's Rating Services.
"Secured Instruments": as defined in the Trust Agreement.
"Secured Obligations": as defined in the Trust Agreement.
"Subsidiary": as to any Person, a corporation, partnership or other entity
of which shares of stock or other ownership interests having ordinary voting
power (other than stock or such other ownership interest having such power only
by reason of the happening of a contingency) to elect a majority of the board of
directors or other managers of such corporation, partnership or other entity are
at the time owned, or the management of which is otherwise controlled, directly
or indirectly through one or more intermediaries, or both, by such Person.
"Triggering Event": (a) any delivery to the Parents (with a copy to the
Corporate Trustee) pursuant to Section 3 of a Contribution Certificate showing a
Contribution Amount for the three month period covered by such Contribution
Certificate, (b) the occurrence of an event of default under any Secured
Instrument arising from the failure to pay when due any amount payable under
such Secured Instrument or (c) the acceleration of maturity of any of the
Secured Obligations upon the occurrence of any event of default under any
Secured Instrument.
"Trust Agreement": the Trust Agreement, dated as of October 2, 1996, among
the Borrower, First Union National Bank, as corporate trustee, and Kenneth D.
Benton, as individual trustee, as amended, supplemented or otherwise modified
from time to time.
"Unrestricted Subsidiary": APC and any other Subsidiary of the Borrower
(other than WirelessCo, EquipmentCo and RealtyCo) that the Borrower designates
as an Unrestricted Subsidiary in accordance with the applicable provisions of
the Secured Instruments, provided, however, that the Borrower may cause any
Unrestricted Subsidiary to become a Restricted Subsidiary to the extent
permitted by the applicable provisions of the Secured Instruments.
"WirelessCo": WirelessCo, L.P., a Delaware limited partnership.
(b) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Capital Contribution Agreement shall refer to
this Capital Contribution Agreement as a whole and not to any particular
provision of this Capital Contribution Agreement, and Section and paragraph
references are to this Capital Contribution Agreement unless otherwise
specified.
(c) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
(d) Capitalized terms used but not otherwise defined herein
shall have the meanings given to them in the Trust Agreement.
2. Capital Contribution. (a) Upon the occurrence of a
Triggering Event, each Parent shall contribute, or shall cause to be
contributed, to the Borrower such Parent's Percentage Interest of the
Contribution Amount applicable to such Triggering Event within 5 Business Days
of the occurrence of such Triggering Event; provided, however, that no Parent
shall be required to contribute in the aggregate more than that amount which is
equal to (i) its Percentage Interest of the sum of (A) $1,000,000,000, (B) the
Agreed Value of the License Contribution and (C) the Agreed Value of the Omaha
License (calculated as of the earlier of the date on which the Omaha License is
contributed or the date that the Contribution Certificate to which the
Triggering Event relates is delivered) less (ii) the sum of (A) the amount of
any cash equity contributions not otherwise required to be made pursuant to this
paragraph that are made by such Parent or any of its Subsidiaries (through one
or more intermediate partnerships or corporations) to the Borrower subsequent to
December 31, 1995 (other than Excluded Equity Proceeds), (B) such Parent's
Percentage Interest of the amount of the aggregate cash proceeds of equity
capital (other than Excluded Equity Proceeds) obtained by the Borrower from
sources other than the Parents or any of their respective Subsidiaries
subsequent to December 31, 1995 and (C) in the case of Cox, the Agreed Value of
the License Contribution and the Agreed Value of the Omaha License (calculated
as of the earlier of the date on which the Omaha License is contributed or the
date that the Contribution Certificate to which the Triggering Event relates is
delivered). As used in this Section 2, the terms "Agreed Value," "License
Contribution" and "Omaha License" have the meanings given to them in the
Partnership Agreement as in effect on the date hereof.
(b) Each contribution made, or caused to be made, by each
Parent pursuant to paragraph (a) of this Section 2 and Section 5 shall be deemed
a contribution made by such Parent's Partnership Subsidiary to Holding pursuant
to Section 2 of the Partnership Agreement and a contribution by Holding to the
Borrower.
3. Delivery of Contribution Certificates. The Borrower shall
deliver Contribution Certificates hereunder (a) as frequently as is necessary to
prevent the occurrence of any cash shortfall while this Capital Contribution
Agreement is in effect, and in any event the Borrower shall deliver Contribution
Certificates not less frequently than once each fiscal quarter while this
Capital Contribution Agreement is in effect and (b) promptly following the
occurrence of any event of default under any Secured Instrument.
4. Payments. The contributions made hereunder by the Parents
will be paid to the Borrower without set-off or counterclaim in U.S.
dollars and in immediately available funds to such account as the Borrower
shall from time to time notify the Parents in writing subject to the provisions
of Section 14(b).
5. Parent(s) Failure to Make Contribution(s). If any Parent
fails to make any contribution required to be made by it under the terms of this
Capital Contribution Agreement, any one or all of the other Parents may, but
shall not be obligated to, make such contribution in addition to its own
contribution in accordance with (a) the same procedures that would be applicable
if the capital call had been made under the Partnership Agreement or (b) such
other procedures as the Parents may agree upon.
6. Valid Obligations. The obligations of each Parent under
this Capital Contribution Agreement are absolute and unconditional, shall not be
affected by the performance or failure to perform by any other Parent of such
Parent's obligations hereunder, under the Partnership Agreement or any other
agreement or by the financial condition, affairs, status, nature or actions of
the Borrower, are enforceable against the Parents without regard to the
legality, validity or enforceability of any obligations of the Borrower,
including the Secured Obligations, and without regard to any modification of
such obligations that may be effected, with or without the consent of the
Parents and shall not be affected by: (a) the failure of the Trustees or any
Secured Party to assert any claim or demand or to enforce any right or remedy
against the Borrower or any other person under this Capital Contribution
Agreement, any Secured Instrument or Security Document; (b) any extension or
renewal of any of the Secured Obligations; (c) any rescission, waiver, amendment
or modification of any of the terms or provisions of this Capital Contribution
Agreement, any Secured Instrument or Security Document; (d) the release of any
security held by the Trustees or any Secured Party for the performance of any of
the Secured Obligations; (e) any default, failure or delay, willful or
otherwise, in the performance of the Secured Obligations; (f) the voluntary or
involuntary liquidation, dissolution, sale of assets, marshalling of assets and
liabilities, receivership, conservatorship, custodianship, insolvency,
bankruptcy, assignment for the benefit of creditors, reorganization,
arrangement, readjustment of or similar proceeding affecting any Person,
including without limitation, the Borrower, any Parent, Holding or any
Restricted Subsidiary; (g) any change in corporate or partnership relationship
or degree or manner of ownership among the Borrower, any Parent or Holding or
any termination of such relationship or ownership; (h) any voluntary reduction
by the Borrower of any commitments under any credit facilities; or (i) any other
act or omission or delay to do any other act that might in any manner or to any
extent vary the risk of such Parent or that would otherwise operate as a
discharge of such Parent as a matter of law.
<PAGE>
7. Representations and Warranties. Each Parent hereby
represents and warrants that:
(a) it is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its organization and has
the corporate power and authority and the legal right to own and operate its
property, to lease the property it operates and to conduct the business in which
it is currently engaged;
(b) it has the corporate power and authority and the legal
right to execute and deliver, and to perform its obligations under, this Capital
Contribution Agreement, and has taken all necessary corporate action to
authorize its execution, delivery and performance of this Capital Contribution
Agreement;
(c) this Capital Contribution Agreement has been duly executed
and delivered by such Parent and constitutes a legal, valid and binding
obligation of such Parent, enforceable in accordance with its terms, subject to
the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing;
(d) the execution, delivery and performance of this Capital
Contribution Agreement will not violate in any material respect any provision of
any Requirement of Law or Contractual Obligation of such Parent and will not
result in or require the creation or imposition of any Lien on any of the
properties or revenues of such Parent pursuant to any such Requirement of Law or
Contractual Obligation of such Parent;
(e) no consent or authorization of, filing with, or other act
by or in respect of, any arbitrator or Governmental Authority is required in
connection with the execution, delivery, performance, validity or enforceability
of this Capital Contribution Agreement, other than any of the foregoing that
have been obtained and are in full force and effect;
(f) it is not an "investment company," within the meaning of
the Investment Company Act of 1940, as amended, or a "holding company," or a
"subsidiary" or "affiliate" of a "holding company," within the meaning of the
Public Utility Holding Company of 1935; and
(g) the aggregate amounts of cash equity contributions (other
than Excluded Equity Proceeds) made or caused to be made by such Parent as of
(i) December 31, 1995 and (ii) the date of this Capital Contribution Agreement
are as set forth on Schedule I attached hereto.
8. Notices. (a) All notices, requests and demands hereunder to
or upon the Borrower or any Parent, and all notices to the Trustees, to be
effective shall be in writing (or by fax or similar electronic transfer
confirmed in writing) and shall be deemed to have been duly given or made (i)
when delivered by hand or (ii) if given by mail, five days after being deposited
in the mails by certified mail, return receipt requested, or (iii) if by fax or
similar electronic transfer, when sent and receipt has been confirmed, addressed
to such Parent or the Borrower at its address or transmission number for notices
set forth under its signature below or addressed to the Trustees at their
respective addresses as set forth in the Trust Agreement.
(b) The Parents and the Borrower may change their respective
addresses and transmission numbers for notices by notice in the manner provided
in this Section.
9. Severability. Any provision of this Capital Contribution
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
10. Expenses of Enforcement. Each Parent agrees to pay or
reimburse the Borrower and the Corporate Trustee for all out-of-pocket
costs and expenses (including reasonable fees and disbursements of counsel)
incurred in enforcing such Parent's obligations hereunder.
11. Integration. This Capital Contribution Agreement
represents the agreement of the Parents with respect to the subject matter
hereof, and there are no promises or representations by the Borrower or the
Parents relative to the subject matter hereof not reflected herein (including by
reference to the Partnership Agreement). This Capital Contribution Agreement is
in addition to the Partnership Agreement, but, except as provided in Section
2(b), does not supersede or otherwise modify any provisions of the Partnership
Agreement, provided, however, that, as between the Corporate Trustee and the
Secured Parties, on the one hand, and each Parent and the Borrower, on the
other, the Capital Contribution Agreement shall supersede any inconsistent
provision of the Partnership Agreement and any other existing or future
agreement among the Parents and the Borrower or to which the Borrower and any
Parent is a party.
12. Amendments in Writing. None of the terms or provisions of
this Capital Contribution Agreement may be waived, amended, supplemented or
otherwise modified except by a written instrument executed by each of the
parties hereto and consented to by the Required Secured Parties.
13. Section Headings. The Section headings used in this Cap-
ital Contribution Agreement are for convenience of reference only and are not to
affect the construction hereof or be taken into consideration in the interpreta-
tion hereof.
14. Successors and Assigns. (a) This Capital Contribution
Agreement shall be binding upon and inure to the benefit of each of the parties
hereto and their successors and assigns; provided that no Parent may assign any
of its obligations hereunder without the prior written consent of the Required
Secured Parties or unless such Parent ceases to own directly or indirectly any
interest in Holding, in which event such Parent may assign its obligations
hereunder to the parent/parents of the entity/entities which has/have acquired
such Parent's direct or indirect interest in Holding, and such Parent shall be
automatically released from its obligations hereunder as a result of such
assignment if, after giving effect to such assignment and assumption by such
assignee of such assignor Parent's obligations hereunder, such assignee has a
Public Debt Rating by either Rating Agency at least equivalent to the lower of
(i) the Public Debt Rating of such assignor Parent by such Rating Agency on the
date of this Capital Contribution Agreement and (ii) the Public Debt Rating of
such assignor Parent by such Rating Agency immediately prior to such assignment.
(b) The Parents hereby acknowledge and agree that this Capital
Contribution Agreement is intended to, and shall, be for the benefit of the
Secured Parties and that the Borrower has therefore granted the Corporate
Trustee the right to enforce on behalf of the Secured Parties this Capital
Contribution Agreement, and the Parents hereby consent thereto and to the
assignment by the Borrower to the Trustee contained in the Security Documents of
the Borrower's rights under this Capital Contribution Agreement. The Parents and
the Borrower further agree that (i) in the event the Borrower fails to deliver a
Contribution Certificate deliverable hereunder or (ii) a Notice of Enforcement
shall be in effect, the Corporate Trustee may deliver any Contribution
Certificate deliverable hereunder (executed by the Corporate Trustee, and not by
an officer of the Borrower) and that in any such event described in this clause
(ii) all amounts payable hereunder by each Parent shall be paid directly to the
Corporate Trustee for the benefit of the Secured Parties for deposit in the
Collateral Account. The parties hereto agree that notwithstanding anything
herein to the contrary, if a Notice of Enforcement is in effect, the Borrower
shall have no right to deliver a Contribution Certificate and any certificate
delivered by the Borrower purporting to be a Contribution Certificate shall be
null and void and of no force or effect.
15. Submission to Jurisdiction; Waivers. Each Parent hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Capital Contribution Agreement, or for recognition
and enforcement of any judgment in respect thereof, to the non-exclusive general
jurisdiction of the Courts of the State of New York, the courts of the United
States of America for the Southern District of New York, and appellate courts
from any thereof;
(b) consents that any such action or proceeding may be brought
in such courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or certified
mail (or any substantially similar form of mail), postage prepaid, to such
Parent at its address set forth under its signature below or at such other
address of which the Borrower shall have been notified pursuant hereto; and
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall limit
the right to sue in any other jurisdiction.
16. Parent Acknowledgments. Each Parent confirms that:
(a) such Parent is aware of, and has acknowledged, the risks
involved in the transaction contemplated in the Borrower's construction and
operation of a wireless telecommunications system, including those associated
with the condition (financial or otherwise), creditworthiness, affairs, status
and nature of the Borrower and any other Parent;
(b) such Parent has independently determined to incur its
obligations hereunder, and such Parent understands that each Secured Party is
relying upon this Capital Contribution Agreement and that each Secured Party
would not enter into the applicable Secured Instruments except in reliance upon
the agreement of such Parent to honor its obligations under this Capital
Contribution Agreement in accordance with its terms;
(c) such Parent has not relied upon any information provided
by any Secured Party with respect to the Borrower or any other Parent and no
Secured Party has made any representation or warranty to such Parent with
respect to matters referred to in Section 16(a); and
(d) such Parent has not relied and will not rely on any
Secured Party (i) to check or inquire on behalf of such Parent into the
adequacy, accuracy or completeness of any information or document provided by
the Borrower or any other Parent under or in connection with any of the Secured
Instruments or Security Documents or the transactions contemplated therein
(whether or not such information or document has been or is hereafter
distributed to such Parent by any Secured Party) or (ii) to assess or review on
behalf of such Parent the condition (financial or otherwise), creditworthiness,
affairs, status and nature of the Borrower or any other Parent.
17. Governing Law. This Capital Contribution Agreement shall
be governed by, and construed and interpreted in accordance with, the law of
the State of New York.
IN WITNESS WHEREOF, each of the undersigned has caused this
Capital Contribution Agreement to be duly executed and delivered by its duly
authorized officer as of the day and year first above written.
SPRINT CORPORATION
By: /s/ M. Jeannine Strandjord
Title: Sr. VP/Treasurer
Address for Notices:
Sprint Enterprises, L.P.
2330 Shawnee Mission Parkway
Westwood, Kansas 66205
Attention: Chief Financial Officer
Fax: (913) 624-8426
with a copy to:
Sprint Enterprises, L.P.
2330 Shawnee Mission Parkway
Westwood, Kansas 66205
Attention: Corporate Secretary
Fax: (913) 624-2256
TELE-COMMUNICATIONS, INC.
By: /s/ Brendon Clouston
Title: Executive Vice President
Address for Notices:
Tele-Communications, Inc.
5619 DTC Parkway
Englewood, Colorado 80111-3000
Attention: Brendon Clouston, Executive Vice
President
Fax: 303-488-3200
with a copy to:
Baker & Botts, L.L.P.
599 Lexington Avenue
Suite 2900
New York, New York 10022-6030
Attention: Elizabeth M. Markowski
Fax: 212-705-5125
COMCAST CORPORATION
By: /s/Arthur Block
Title: Vice President
Address for Notices:
Comcast Corporation
1500 Market Street
Philadelphia, Pennsylvania 19102-2148
Attention: General Counsel
Fax: 215-981-7794
COX COMMUNICATIONS, INC.
By: /s/ Dallas Clement
Title: Assistant Treasurer
Address for Notices:
Cox Communications, Inc.
1400 Lake Hearn Drive
Atlanta, Georgia 30319-1464
Attention: James O. Robbins, President
Fax: 404-843-5804
with a copy to:
Dow, Lohnes & Albertson
1200 New Hampshire Avenue, N.W.
Suite 800
Washington, D.C. 20036-6802
Attention: David D. Wild
Fax: 202-776-2222
SPRINT SPECTRUM L.P.
By: /s/ Robert E. Sleet, Jr.
Title: Treasurer
Address for Notices:
Sprint Spectrum L.P.
4717 Grand Avenue, 5th Floor
Kansas City, Missouri 64112
Attention: Treasurer
Fax: 816-559-1490
with a copy to:
Sprint Spectrum L.P.
4900 Main Street, 12th Floor
Kansas City, Missouri 64112
Attention: General Counsel
Fax: 816-559-2591
<PAGE>
SCHEDULE I
CONTRIBUTIONS
Contributions made as of
December 31, 1995 October 2, 1996*
----------------- ---------------
Sprint Corporation $ 867,759,473 $1,057,381,393
Tele-Communications, Inc. $ 650,819,605 $ 793,036,045
Comcast Corporation $ 325,409,802 $ 396,518,023
Cox Communications, Inc. $ 325,409,802 $ 396,518,023
-------------- --------------
Total $2,169,398,682 $2,643,453,484
- --------------
* Each parent represents and warrants that the cash equity contributions (other
than Excluded Equity Proceeds) made or caused to be made by such Parent are at
least as much as set forth above.
<PAGE>
EXHIBIT A
FORM OF
CONTRIBUTION CERTIFICATE
[Date]
To: Sprint Corporation
Tele-Communications, Inc.
Comcast Corporation
Cox Communications, Inc.
Reference is hereby made to the Amended and Restated Capital
Contribution Agreement, dated as of October 2, 1996 (as amended, supplemented or
otherwise modified from time to time, the "CCA"), and Sprint Corporation,
Telecommunications, Inc., Comcast Corporation, Cox Communications, Inc. and
Sprint Spectrum L.P. Unless otherwise defined herein, terms which are defined in
the CCA and used herein shall have the same meanings given to them in the CCA.
This is a Contribution Certificate referred to in Section 3 of
the CCA.
As of the date hereof, the cash, Cash Equivalents and
borrowing availability under any credit facility (so long as no default or event
of default shall have occurred and be continuing and the Borrower shall be
capable of satisfying all conditions to borrowing under such facility) of the
Borrower are as follows:
[Specify in reasonable detail]
The expected cash receipts from sources other than such
available borrowings by the Borrower and its Restricted Subsidiaries during the
period of three months following the date hereof are as follows:
[Specify in reasonable detail]
The expected Cash Expenditures of the Borrower and its
Restricted Subsidiaries during the period of three months following the date
hereof are as follows:
[Specify in reasonable detail]
The Contribution Amount with respect to this Contribution
Certificate is $___________.
IN WITNESS WHEREOF, the undersigned has executed this
Contribution Certificate.
SPRINT SPECTRUM L.P.
By:________________________
Title:
*. Each Parent represents and warrants that the cash equity contributions (other
than Excluded Equity Proceeds) made or caused to be made by such Parent are at
least as much as set forth above.
Exhibit 10.9
The omitted portions indicated by brackets have been separately filed with
the Securities and Exchange Commission pursuant to a request for confidential
treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
PURCHASE AND SUPPLY AGREEMENT
This Purchase and Supply Agreement (the "Agreement") is entered into and is
effective as of September 17, 1996 (the "Effective Date") by and between Samsung
Electronics Co., Ltd., a company organized under the laws of the Republic of
Korea, with offices at 1501 LBJ Freeway, Suite 410, Dallas, Texas 75234, (the
"Vendor") and Sprint Spectrum L.P., a Delaware limited partnership, with offices
at 4717 Grand Avenue, Kansas City, Missouri 64112 (the "Owner").
RECITALS:
WHEREAS, the Vendor has certain rights to use certain proprietary Code
Division Multiple Access ("CDMA") technology;
WHEREAS, the Federal Communications Commission ("FCC") has defined six
spectral bands near 1.9 Ghz for use in Personal Communications Services ("PCS")
for auction to bidders;
WHEREAS, the FCC granted to the Owner or certain of its Affiliates PCS
licenses to build and operate PCS systems in specified geographic areas in the
United States;
WHEREAS, the Owner desires to purchase certain CDMA subscriber equipment
from the Vendor and the Vendor desires to sell such equipment to the Owner in
accordance with the terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth in this Agreement, the Owner and the Vendor hereby agree as follows:
Section 1. Headings and Definitions
All headings used in this Agreement are inserted for convenience only and
are not intended to affect the meaning or interpretation of this Agreement or
any section or clause of this Agreement. References to "third party" or "third
parties" will not mean either Party. The meanings given to terms defined in this
Agreement are equally applicable to both the singular and the plural forms of
such terms. Terms used and/or defined in the Exhibits, appendices or Schedules
attached hereto that are not otherwise defined in this Agreement, will have the
meanings set forth in those Exhibits, appendices or Schedules for the purposes
of those Exhibits, appendices or Schedules only. For the purposes of this
Agreement, the following definitions apply:
"AAA" means the American Arbitration Association.
"Accessories" mean those accessories for the Subscriber Units and made
generally available to Customers and will include, without limitation, a car
kit, cigarette lighter adapter, desk charger, travel charger, leather case, hand
strap and extra batteries (all in accordance with and pursuant to the
Specifications) and such other items as are specified in the Specifications or
agreed upon by the Parties from time to time. Individually, an "Accessory".
"Additional Affiliate" has the meaning ascribed thereto in subsection 12.2.
"Additional Affiliate Agreement" has the meaning ascribed thereto in
subsection 12.3.
"Additional Affiliate Arrangement" means a formal arrangement between the
Owner and a Person to be designated an Additional Affiliate under the terms of
this Agreement, which arrangement will include, but not be limited to,
agreements on marketing, backhaul, common billing, resale agreements and/or
revenue sharing.
"Affected Products" has the meaning ascribed thereto in subsection 3.6(b).
"Affiliates" means the collective reference to the Initial Affiliates and
the Additional Affiliates.
"Agents" means the Owner's agents with resale capability in the Territory.
"Agreement" means this written contract together with all appendices,
exhibits and schedules attached hereto, as this Agreement may be amended,
supplemented or otherwise modified from time to time in accordance with the
provisions of subsection 11.13 of this Agreement.
"Annual Minimum Commitment" has the meaning ascribed thereto in subsection
3.2(b).
"Annual Supply Period" has the meaning ascribed thereto in subsection
3.2(b).
"Applicable Laws" means, as to any Person, the certificate of incorporation
and by-laws or other organizational or governing documents of such Person, all
laws (including, but not limited to, any Environmental Laws), treaties,
ordinances, judgments, orders and stipulations of any court or governmental
agency or authority and statutes, rules, regulations, orders and interpretations
thereof of any federal, state, provincial, county, municipal, regional,
environmental or other Governmental Entity, instrumentality, agency, authority,
court or other body (i) applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject or (ii)
having jurisdiction over all or any part of the Products or otherwise in
connection with the Vendor's obligations under this Agreement.
"Assignment Date" has the meaning ascribed thereto in subsection 11.1.
"Assignment Notice" has the meaning ascribed thereto in subsection 11.1.
"Business Day" means any day of the year other than a Saturday or Sunday or
a United States national public holiday.
"Catastrophic Defect" has the meaning ascribed thereto in subsection 3.10.
"Catastrophic Defect Cure Period" has the meaning ascribed thereto in
subsection 3.10(a).
"Change Order" has the meaning ascribed thereto in subsection 3.23.
"Commencement" has the meaning ascribed thereto in subsection 4.2(d).
"Commencement Date" has the meaning ascribed thereto in subsection 3.2(a).
"Consumer Warranty" has the meaning ascribed thereto in subsection 3.8.
"Contract Vendors" means the counterparties to Procurement and Services
Contracts.
"Customer" means any CDMA customer of the Vendor offering Products for sale
within the Territory (including any CDMA customer outside of the Territory who
intends to use or resell Products within the Territory) or any CDMA customer of
any of the Vendor's affiliates or subsidiaries offering Products for sale within
the Territory.
"Custom Material" has the meaning ascribed thereto in subsection 7.9.
"Defects and Deficiencies," "Defects or Deficiencies" or "Defective" means
when used with respect to any Products, such items that are not (i) new (unless
otherwise as specifically set forth in this Agreement) and of good quality and
free from improper or inferior workmanship and defects or (ii) otherwise in
conformance with the Specifications.
"Delay Grace Period" has the meaning ascribed thereto in subsection 4.2.
"Delay Period" has the meaning ascribed thereto in subsection 4.2(d).
"Delayed Products" has the meaning ascribed thereto in subsection 4.2(d).
"Delivery Order" means a written order by the Owner to have Products
delivered to the FOB Point pursuant to and in accordance with the terms of this
Agreement, each of which will be deemed to incorporate all terms, conditions and
provisions of this Agreement unless the Parties expressly agree otherwise.
"Disputed Amount" has the meaning ascribed thereto in subsection 10.5.
"End Date" has the meaning ascribed thereto in Section 2.
"Environmental Laws" means any and all federal, state, local or municipal
laws, rules, orders, regulations, statutes, ordinances, codes, requirements of
any Governmental Entity, or requirements of law (including, without limitation,
common law) relating in any manner to contamination, pollution, or protection of
human health or the environment.
"Excess Delivery Order" has the meaning ascribed thereto in subsection 5.2.
"Exchange Act" has the meaning ascribed thereto in subsection 11.18.
"FCC Rules and Regulations" has the meaning ascribed thereto in subsection
3.20.
"Financing Interim Period" has the meaning ascribed thereto in subsection
10.10.
"First Annual Minimum Commitment" has the meaning ascribed thereto in
subsection 3.2(b).
"First System" has the meaning ascribed thereto in subsection 4.2(d).
"FOB Point" means the headquarters of Samsung America in Dallas, Texas or
as otherwise mutually agreed between the Parties from time to time.
"Forecast" has the meaning ascribed thereto in subsection 5.1.
"Forecast Period" has the meaning ascribed thereto in subsection 5.1.
<PAGE>
"Governmental Entity" means any nation or government, any state, province
or other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government within the Territory.
"Independent Auditor" means any of the Persons set forth on Schedule 1 or
any Person otherwise mutually agreeable to the Parties other than the then
acting Independent Public Accountant.
"Independent Public Accountant" has the meaning ascribed thereto in
subsection 3.3(b).
"Infrastructure Equipment" means any radio subsystem or any combination of
radio subsystems that handle the Owner's PCS radio traffic in a cell or cells
within any given Owner PCS System and all other telecommunications equipment
which is necessary to the functioning of any such radio subsystem(s) (i) with
any other radio subsystem or (ii) otherwise within the Nationwide Network or any
part thereof.
"Initial Affiliates" means the collective reference to each of the Persons
set forth on Schedule 2.
"Initial Affiliate Agreement" has the meaning ascribed thereto in
subsection 12.1.
"Initial Fulfillment Units" has the meaning ascribed thereto in subsection
4.2(a).
"Initial Term" has the meaning ascribed thereto in Section 2.
"Intellectual Property Rights" has the meaning ascribed thereto in
subsection 7.1.
"Late Amount" has the meaning ascribed thereto in subsection 3.4(a).
"Late Postponement" has the meaning ascribed thereto in subsection 5.2(c).
"Mark" has the meaning ascribed thereto in subsection 3.15.
"Material Accessories" means, with respect to each Subscriber Unit, the
desk charger (and the plug therefor) and the slimline batteries.
"MFC Certificate" has the meaning ascribed thereto in subsection 3.3(b).
"Nationwide Network" means all of the PCS Systems built or to be owned
and/or operated by the Owner or its Affiliates in North America.
"New Products" has the meaning ascribed thereto in subsection 3.11.
"Non-Conforming Products" has the meaning ascribed thereto in subsection
3.22(b).
"North America" means the United States, Canada (including the Province of
Quebec) and Mexico.
"Operating Subsidiary" means an entity (i) at least fifty-one percent (51%)
owned or controlled by an other entity, (ii) operating in the telecommunications
industry and (iii) having assets of at least ten million dollars ($10,000,000).
"Originally Scheduled Supply Period" has the meaning ascribed thereto in
subsection 3.2(c).
"Owner Defined Feature" means (a) the features listed on Schedule 5 and (b)
any feature, enhancement, modification or upgrade to or to be added to any
Product which is (i) not currently listed on or described in Exhibit A, (ii)
which is, after the Effective Date, specifically requested in writing by the
Owner to the Vendor to be added to any Product pursuant to and in accordance
with the terms of this Agreement, (iii) which is not otherwise made generally
available to the Vendor's Customers and (iv) which is developed by the Vendor
for the Owner based solely upon the initiation of the Owner.
"Owner Event of Default" has the meaning ascribed thereto in subsection
10.8.
"Owner's Succeeding Entity" has the meaning ascribed thereto in subsection
11.19.
"Parties" means, collectively, the Owner and the Vendor, and "Party" will
individually mean the Owner or the Vendor.
"Partners" means the collective reference to "Sprint Corporation, a
Delaware corporation ("Sprint"), Sprint Enterprises, L.P., a Delaware limited
partnership, Tele-Communications Inc., a Delaware corporation, TCI Network
Services, a Delaware general partnership ("TCI"), Comcast Corporation, a
Delaware corporation, Comcast Telephony Services, a Delaware general partnership
("Comcast"), Cox Communications, a Delaware corporation, and Cox Telephony
Partnership, a Delaware general partnership ("Cox").
"Patent License" has the meaning ascribed thereto in subsection 7.11.
"PCS" has the meaning ascribed thereto in the second Recital.
"PCS System" means all products and other equipment, tools and software,
all system element sites and any property located there necessary or desirable
to provide PCS in a given specified System Area.
"Person" means an individual, partnership, limited partnership,
corporation, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Entity or other entity of whatever
nature.
"Previously Existing Products" has the meaning ascribed thereto in
subsection 3.12.
"Procurement and Services Contract" means a procurement and services
contract entered into, or to be entered into, between the Owner and the
counterparty or counterparties thereto in connection with the engineering and
construction of PCS Systems or any part thereof, as the same may be amended,
supplemented or otherwise modified from time to time.
"Product Enhancements" means modifications or improvements made to the
Products which improve performance of such Products.
"Products" means all of the Subscriber Units and the Accessories provided
by the Vendor pursuant to and in accordance with this Agreement.
"Proprietary Information" has the meaning ascribed thereto in subsection
8.2.
"Proprietary Marks" has the meaning ascribed thereto in subsection 3.17(b).
"Purchaser" means a Person who purchases Products from the Owner or an
Agent as an initial end user of the Product or Products (provided that an Agent
that uses the Product will in no event be a Purchaser).
"RFP" has the meaning ascribed thereto in subsection 7.9.
"Samsung America" has the meaning ascribed thereto in subsection 11.1.
"Second Annual Minimum Commitment" has the meaning ascribed thereto in
subsection 3.2(b).
"Shipped-to Location" has the meaning ascribed thereto in subsection 5.2.
"Shortfall" has the meaning ascribed thereto in subsection 3.2(c).
"Similar Products" has the meaning ascribed thereto in subsection 3.3(d).
"Software" has the meaning ascribed thereto in subsection 7.5(a).
"Software Enhancements" means modifications or improvements made to the
Software relating to PCS Products which improve performance of the Software or
which provide additional functions to the Software.
"Specifications" means the specifications and performance standards of the
Products contemplated by this Agreement and includes any amendments,
modifications and/or other revisions thereto made in accordance with the terms
of this Agreement and as more fully set forth in the Exhibits.
"Subscriber Unit" means the Vendor's SCH-1000 subscriber handset, and
subsequent portable phone models added pursuant to this Agreement, all in
accordance with and pursuant to the Specifications.
"System Area" means a major trading area to which the Owner or any Owner
Affiliate has an FCC License to operate PCS services.
"System Managers" means each of the managers designated by the Owner and
the Vendor, respectively, for the purposes of subsection 11.8.
"Task Force Team" means the joint development Owner/Vendor task force
established pursuant to subsection 3.18.
"Term" has the meaning ascribed thereto in Section 2.
"Territory" means the United States of America, including Washington D.C.
and all territories and possessions of the United States of America.
"Third Annual Minimum Commitment" has the meaning ascribed thereto in
subsection 3.2(b).
"Total Minimum Commitment" has the meaning ascribed thereto in subsection
3.2(b).
"Training" has the meaning ascribed thereto in subsection 6.1.
"United States" means the fifty states of the United States, the District
of Columbia and all United States territories and possessions.
"UPC" means the Universal Product Code.
"Vendor Event of Default" has the meaning ascribed thereto in subsection
10.2.
"Vendor Indemnities" has the meaning ascribed thereto in subsection 9.3(a).
"Vendor Liabilities" has the meaning ascribed thereto in subsection 9.3(a).
"Vendor's affiliate","affiliate of the Vendor" or "Vendor's affiliates" or
the like means any Person which directly or indirectly controls, or is
controlled by, or is under common control with the Vendor. The term "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person.
"Vendor Patents" has the meaning ascribed thereto in subsection 7.11.
"Vendor's Succeeding Entity" has the meaning ascribed thereto in subsection
11.18.
"Warranty Period" means as to each Subscriber Unit, the respective period
expiring (i) with respect to the Owner, twelve (12) months after the respective
date of delivery of such Product to the FOB Point and (ii) with respect to any
Purchaser, twelve (12) months after the date of service activation of such
Product for such Purchaser; provided, however, that, with respect to Accessories
purchased by any Purchaser, three (3) months after the date of such purchase,
whether they were purchased separately or together with Subscriber Units.
Section 2. Term
This Agreement will commence on the date first set forth above and will
continue for a period of three years (the "Initial Term") following the initial
purchase of production Subscriber Units by the Owner (the "End Date"). The
Initial Term of this Agreement may be extended beyond the End Date for
successive periods by mutual agreement of the Parties hereto (all such periods
plus the Initial Term, the "Term"). The terms, conditions and provisions of this
Agreement will apply to all Delivery Orders issued by the Owner for any Products
during the Term, unless otherwise agreed by the Parties.
Section 3. Product Purchases
3.1 Right to Purchase, Resell and Use (a) During the Term, the Owner will
purchase Subscriber Units and Accessories on a non-exclusive basis from the
Vendor pursuant to and in accordance with the terms and conditions of this
Agreement. The Vendor understands and agrees that the Owner will purchase
Products from the Vendor pursuant to this Agreement for the purpose of reselling
such Products to the Owner's Agents and/or Purchasers in accordance with the
applicable terms of this Agreement. The Vendor further understands,
acknowledges, and agrees that the Products sold hereunder will be used in
accordance with their intended purpose on and within the Owner's Nationwide
Network.
(b) The Vendor hereby grants to the Owner a nonexclusive right to resell
the Products within the Territory by means of (i) the Owner's own direct sales
utilizing its outbound sales force and/or through retail outlets owned or
operated by the Owner, and (ii) resales to Agents (who shall in turn, have the
right to resell such Products to Purchasers within the Territory), all upon the
terms and conditions set forth herein. The Vendor represents that it has
unencumbered title to and right to sell any and all of the Products sold or to
be sold hereunder. Subject to Applicable Law, the Owner agrees that, with
respect to all its sales to Agents, it will use its reasonable commercial
efforts to require its Agents to which it sells Products to resell such Products
only to bona fide end users, Purchasers or other Agents and only within the
Territory. For the purposes hereof a "bona fide end user" means any Person who
is purchasing Products without the intent to resell such Products.
3.2 Availability of Subscriber Units and Accessories; Minimum Commitment
(a) Subscriber Units and the Accessories therefor may be ordered by the Owner
for delivery at any time during the Term on or after April 1, 1997 or as
otherwise mutually agreed between the Parties (the "Commencement Date") in
accordance with the lead times and forecasts set forth in Sections 4 and 5
below.
(b) Pursuant to and in accordance with the terms of this Agreement, during
the Initial Term of this Agreement the Owner will purchase from the Vendor not
less than [___________________] Subscriber Units (the "Total Minimum
Commitment"). During the twelve (12) months from the Commencement Date (such
first twelve (12) month period and each succeeding twelve (12) month period
during the Term, an "Annual Supply Period") the Owner will only be required to
purchase from the Vendor [__________________] Subscriber Units (the "First
Annual Minimum Commitment"). During the second Annual Supply Period the Owner
will only be required to purchase from the Vendor [_______________] Subscriber
Units (the "Second Annual Minimum Commitment"). During the third Annual Supply
Period the Owner will only be required to purchase from the Vendor
[________________] Subscriber Units (the "Third Annual Minimum Commitment"; each
of the First Annual Minimum Commitment, Second Annual Minimum Commitment, and
Third Annual Minimum Commitment, an "Annual Minimum Commitment").
Notwithstanding anything stated in this subsection 3.2(b) to the contrary, in
any given Annual Supply Period the Owner will only have to purchase seventy
percent (70%) of the respective amounts set forth in the second, third and
fourth sentences of this subsection 3.2(b), provided that at any time prior to
the termination of the Initial Term (unless earlier terminated in accordance
with Section 10) the Owner will have fulfilled its Total Minimum Commitment
pursuant to and in accordance with the terms of this Agreement. Pursuant to and
in accordance with the immediately preceding sentence, any amounts (up to thirty
percent (30%)) not purchased by the Owner in any given Annual Supply Period will
increase the Annual Minimum Commitment in the next succeeding Annual Supply
Period (without any penalty or Shortfall payment by the Owner to the Vendor);
provided that for the third Annual Supply Period any such amounts (up to thirty
percent (30%)) will be carried over and into and must be purchased by the Owner
in accordance with the terms of this Agreement during the remaining period
within the Initial Term. Prior to the end of the first Annual Supply Period and
the second Annual Supply Period, the Owner will give the Vendor prior written
notice of any election by the Owner to exercise the Owner's rights under the
preceding sentence to purchase less than one hundred percent (100%) of the
amount of the First Annual Minimum Commitment and the Second Annual Minimum
Commitment, as applicable, in the respective first Annual Supply Period and
second Annual Supply Period, as the case may be.
(c) In the event that the Owner elects, in its sole discretion, not to
place Delivery Orders for delivery of Subscriber Units in accordance with the
terms of this Agreement in the amounts set forth in subsection 3.2(b) above (the
difference between any Annual Minimum Commitment and the amount actually ordered
for delivery during each of the Annual Supply Periods set forth in subsection
3.2(b) by the Owner, a "Shortfall"), then the amount of the relevant Annual
Minimum Commitment for such Annual Supply Period will be reduced (by an amount
equal to the amount of the Shortfall for such Annual Supply Period) and the
Owner will pay to the Vendor the following amounts per Subscriber Unit which are
in any such Shortfall, as full compensation to the Vendor for such a reduction
in the applicable Annual Minimum Commitments:
Charge per Subscriber
Amount of Shortfall Unit in the Shortfall
Shortfall greater than or equal $[_____] per Subscriber Unit in Shortfall
to 50% of the applicable Annual
Minimum Commitment
Shortfall greater than or equal $[_____] per Subscriber Unit in Shortfall
to 30% and less than 50% of the
applicable Annual Minimum Commitment
Shortfall greater than or equal $[_____] per Subscriber Unit in Shortfall
to 10% and less than 30% of the
applicable Annual Minimum Commitment
Shortfall less than 10% of the $[_____] per Subscriber Unit in Shortfall
applicable Annual Minimum Commitment
To the extent there is a Shortfall in any Annual Supply Period, the Vendor
may invoice the Owner for any amounts owed by the Owner to the Vendor pursuant
to this subsection 3.2(c) no earlier than 5:00 p.m. on the last Business Day of
such period and no later than ninety (90) days from the last Business Day of
such period, and the Owner will have sixty (60) days to pay any such invoice to
the extent the amount of any such invoice is not in good faith dispute between
the Parties pursuant to subsection 11.8. To the extent the Owner is required to
pay the Vendor amounts as set forth in this subsection 3.2(c) for any Shortfall
during any Annual Supply Period, any such amounts once paid by the Owner will be
full compensation to the Vendor for such reduction in the Annual Minimum
Commitments and the Owner will have no further liability or obligation of any
kind to the Vendor for any such reductions in the Annual Minimum Commitments and
any such payment will be the Vendor's sole remedy (at law or in equity) for any
such reductions in the Annual Minimum Commitments. Nothing set forth in
subsections 3.2(b) or 3.2(c) will be construed or interpreted as relieving the
Owner of purchasing those amounts of Products projected by the Owner in the
first three (3) months of a Forecast which are subject to a firm Delivery Order
in accordance with subsection 5.1.
3.3 Most Favored Customer Status; Exclusivity. (a) With respect to all
Products (including any New Products ordered by the Owner pursuant to the terms
of this Agreement), the Owner will be deemed the most important and favored
Customer of the Vendor and will always throughout the Term receive
[_____________________________________] better than any other Customers who are
within the Territory or otherwise intend to use or resell such Products and/or
Similar Products within the Territory. Notwithstanding the above, the Vendor
will not be obligated to provide such priority to the Owner if providing such
priority would cause the Vendor to breach any of its then-existing contracts
and/or any Applicable Law; and further, the priorities [_____________________]
set forth in this subsection 3.3 will not apply to internal transfers or
distributions of Products and/or Similar Products by the Vendor to any of its
affiliates or subsidiaries; provided that any subsequent sales by any such
Vendor's affiliate or subsidiary to any Customer will be subject to the
priorities [___________________] set forth in this subsection 3.3. At any time
during the Term, the Owner (subject to the immediately preceding sentence) will
receive Products and/or Similar Products (including any New Products ordered by
the Owner pursuant to the terms of this Agreement) [___________________] no less
favorable to the Owner than those given to any other Customer (other than
Affiliates pursuant to the terms of this Agreement).
(b) On an annual basis throughout the Term of this Agreement commencing on
the Effective Date, the Vendor will be required to review its pricing of all
Similar Products provided to all Customers in the preceding calendar year and
certify to the Owner in a certificate executed by a duly authorized officer of
the Vendor (the "MFC Certificate") that the Owner has in fact received the
prices and availability of and on Products in accordance with the terms of
clause (a) of this subsection 3.3. The annual MFC Certificate delivered to the
Owner in accordance with this subsection 3.3(b) will be subject to verification,
at the election of the Owner, by any public accounting firm reasonably
acceptable to the Owner and listed on Schedule 1 (the "Independent Public
Accountant") and at the sole cost and expense of the Party whose position is not
supported by the report of the Independent Public Accountant or, if contested,
the report of the Independent Auditor. The Independent Public Accountant will in
no event disclose to the Owner or any other third party the details of any
contract or amendment between the Vendor and any Customer other than details as
necessary to summarize terms including, but not limited to, pricing relevant to
determinations under subsections 3.3(a) and (b) and further, it is expressly
understood by the Parties that any such Independent Public Accountant, will only
have access to such limited information from the Vendor as is specifically
necessary to verify the Vendor's assertions (as disputed by the Owner) set forth
in the MFC Certificate so subject to verification pursuant to the terms of this
subsection 3.3(b).
(c) To the extent that it is determined pursuant to subsection 3.3(b) that
the Vendor has not in fact complied with the terms of subsection 3.3(a), the
Owner will have thirty (30) Business Days from receipt of the MFC Certificate
(as verified by the Independent Public Accountant, if the MFC Certificate(s) was
so subject to verification) to provide the Vendor with a written claim for
Product pricing rebates (as measured from the date any such lower prices are
charged in violation of this subsection 3.3) on future purchases under this
Agreement based upon the Independent Public Accountant's calculation of the
price differentials between the Vendor's prices for Products and/or Similar
Products (including any New Products) under this Agreement and any lower prices
charged by the Vendor to any other Customer in violation of clause (a) of this
subsection 3.3. To the extent that the Vendor disagrees with any such claim for
such pricing rebates made by the Owner pursuant to this subsection 3.3(c), the
Vendor will have the right within ten (10) Business Days of receiving the
Owner's written rebate claim to submit such claim (including, but not limited
to, the Independent Public Accountant's report on which it as based) and the
Vendor's written response thereto to an Independent Auditor (other than the
Independent Public Accountant) who will have the authority to determine whether,
based only on the information provided by the Owner and the Vendor, the Vendor
has complied with the terms of this subsection 3.3(c). If the Independent
Auditor finds that the Owner's pricing rebate claim is incorrect but that the
Vendor has still violated clause (a) of this subsection 3.3, then the
Independent Auditor will have the right to adjust any such claim as appropriate
under such circumstances. The Independent Auditor's determination must be made
and delivered to both the Vendor and the Owner within ten (10) Business Days of
receiving the request from the Vendor. Such determination once made by the
Independent Auditor will be final and binding on the Parties and will not be
subject to further modification. The costs and expenses of the Independent
Auditor will be borne by the Party whose position is not supported by the
Independent Auditor or otherwise equitably under the circumstances.
[(d) ___________________________.]
3.4 Payment Terms and Taxes. (a) Pursuant to and in accordance with the
terms of this Agreement, the Vendor will invoice the Owner for Products
purchased upon delivery of such Products to the FOB Point, and the Owner will
pay all such invoices within [______________] after the invoice date unless, the
Owner disputes (in accordance with subsection 11.8) in good faith either the
Vendor's entitlement to, or the amount of, any such invoiced amount. All amounts
stated herein and/or otherwise required to be paid under or pursuant to this
Agreement are stated in, and will be paid in, U.S. Dollars.
(b) The amounts to be paid by the Owner under this Agreement do not include
any United States' state or local sales and use taxes, however designated, which
may be levied or assessed in the United States on the Products to be sold
hereunder. With respect to only such United States sales or use taxes, the Owner
will either furnish the Vendor with an appropriate exemption certificate
applicable thereto or pay to the Vendor, upon presentation of invoices therefor,
such amounts thereof as the Vendor may by law be required to collect or pay;
provided that the Vendor will use its reasonable efforts to minimize the amount
of any such taxes. The Owner has no obligation to the Vendor with respect to any
other taxes, including, but not limited to, those relating to franchise, net or
gross income or revenue, license, occupation, other real or personal property,
and fees relating to importation or exportation of the Products to the FOB
Point. Furthermore, the Vendor will be responsible for and will pay any and all
taxes, fees, tariffs and/or charges levied by any governmental entity in or of
the Republic of Korea with respect to or arising from this Agreement and/or any
actions related hereto.
3.5 Delivery. (a) All deliveries of Products will be made to the FOB Point.
The Owner will specify the desired method of shipping. Unless otherwise agreed
in writing, the Owner will pay for all shipping, freight, insurance and other
similar charges incurred in connection with such deliveries. In the absence of
written shipping instructions from the Owner, the Vendor will select the carrier
and insurance company at the Owner's expense, taking into account and using its
best commercial efforts to minimize the charges levied by the carriers and
insurance companies under consideration, and will ship Products utilizing ground
transportation; provided that, in the absence of prior shipping instructions,
the Vendor will use reasonable efforts to contact the Owner to request such
shipping instructions prior to making any such selections.
(b) The Owner will inspect and either accept or reject all Products in
whole or in part within ten (10) Business Days after the date of receipt at the
delivery location applicable to such Products pursuant to the terms of this
Agreement. If the Owner fails to reject any Product delivered by the end of such
period, the Owner shall be deemed to have accepted such Product; provided that
any such acceptance will in no event limit, modify, waive or otherwise restrict
the Owner's rights under the terms, including without limitation the warranty
provisions, of this Agreement.
(c) The Owner may request that the Vendor provide more extensive logistical
and distribution capabilities to the Owner, which capabilities the Vendor will
use its best commercial efforts to provide. If the Vendor agrees to provide such
services, there may be, depending on the level and scope of such services,
additional charges to the Owner on a per Product basis. Any such charges will be
mutually agreed upon by the Parties during negotiations between the Parties on
the provision of any such additional logistical and distribution services beyond
those outlined in this subsection 3.5; provided that, in determining any such
charges, the Owner will be deemed the Vendor's most important and favored
Customer and will receive such services at prices, on payment terms and subject
to all other contract terms on terms no less favorable to the Owner than those
offered or available to any other Customer subject to and in accordance with the
terms of subsection 3.3.
3.6 Pricing (a) The Owner will purchase Products from the Vendor in
accordance with the Product pricing set forth on Appendix 1. The price for
Products will be the price in effect on the date of the applicable Delivery
Order. Initial pricing for new Products not otherwise covered by Appendix 1 or
the terms of this Agreement will be established by mutual good faith agreement
between the Parties, such agreement to be reached no less than ninety (90) days
prior to the commercial availability of any such new Products to any Customer.
All such pricing for such new Products will be determined in accordance with and
pursuant to the terms of this Agreement, including, but not limited to, the most
favored customer provisions set forth in subsection 3.3.
(b) In the event that the Vendor reduces the price (other than the
automatic annual price reductions set forth in Appendix 1 or any price reduction
due to a violation of subsection 3.3) of any Product, the Vendor will credit the
Owner's accounts payable with an amount equal to the difference between the
reduced price and the price in effect immediately prior to such reduction
multiplied by the number of units of such Product which were shipped to the
Owner during the thirty (30) days immediately prior to such price reduction and
which remain in the Owner's inventory at such time (the "Affected Products").
The Vendor will promptly notify the Owner of any such price reduction. If the
Vendor fails to provide the Owner with such a credit within such thirty (30) day
period after notification by the Owner of such quantities remaining in the
Owner's inventory, the Owner will be entitled to offset the amount of such
credit (calculated in accordance with the immediately preceding sentence) first
against the amounts owed for any of the Affected Products, and second against
any other amounts due to the Vendor by the Owner pursuant to this Agreement. The
Vendor will have the right, but not the obligation, to have an Independent
Auditor audit the Owner's calculation of the quantity of Products that remain in
the Owner's inventory immediately prior to such price reduction, provided that
the Party whose position is not supported by the Independent Auditor will be
responsible for the costs and expenses of the Independent Auditor designated
pursuant to this subsection 3.6(b).
3.7 Warranty to the Owner (a) The Vendor warrants to the Owner that each
Product will be, during the applicable Warranty Period, free from Defects or
Deficiencies in material or workmanship.
(b) In the event of any breach of the warranty set forth in subsection
3.7(a) during the applicable Warranty Period, the Vendor will, in accordance
with the terms of this subsection 3.7, promptly repair or replace (in accordance
with subsection 3.9) the defective or nonconforming Product or otherwise cure
any Defects and Deficiencies so that the defective or nonconforming Product or
any replacement therefor will perform in accordance with the Specifications. If
the Vendor fails to promptly repair, replace and/or cure such defect or
nonconformance, the Vendor will promptly refund any monies paid by the Owner for
such Defective Product (such refund to be made no later than the notice to the
Owner that it will not repair and replace). The remedies set forth in this
subsection 3.7(b) will be the sole and exclusive warranty remedies in the event
of a breach by the Vendor of its obligation under this subsection 3.7.
(c) No warranty will extend to any Product that has been subjected to
misuse, neglect or improper storage or installation by any Person other than the
Vendor, its agents, employees, subsidiaries and/or affiliates or that has been
used with accessories other than Accessories provided by the Vendor (or
authorized by the Vendor for use with the subject Product) or any Product that
has been opened, repaired, modified or altered by anyone other than the Vendor
or a Vendor authorized repair facility or any Product whose original Product
specific identification marks or serial numbers have been intentionally removed
or altered so as to be unreadable.
(d) The Owner hereby acknowledges and agrees that it has not relied on any
representations or warranties other than those expressly set forth in this
Agreement. During the applicable Warranty Period (in no event less than the
Term), Vendor will provide, at Vendor's sole expense, to the Owner telephonic
technical support, including a hotline staffed from 7:00 a.m to 10:00 p.m.
Eastern time on each day of the year; provided that during any other time period
the Vendor will starting upon the Commencement Date and, during the Term provide
the Owner access (by beeper or otherwise) to Vendor personnel competent to
address significant problems relating to the Products.
3.8 Consumer Warranty (a) In addition to the warranty provided in
subsection 3.7, the Vendor will provide a warranty ("Consumer Warranty") to
Purchasers, on the terms and conditions set forth on Appendix 2; provided that
subject to the proof of purchase requirements set forth in Appendix 2, such
Consumer Warranty will in no event be for a term less than the applicable
Warranty Period and will be for the benefit of, and will be directly enforceable
by any such Purchaser. The Parties agree that the Consumer Warranty is made
solely by the Vendor and that the Owner makes no warranties with respect to the
Products pursuant to this Agreement. In the event any such Purchaser
inadvertently or otherwise forwards Products subject to the Consumer Warranty to
the Owner, the Owner will have the right to forward such Products to the Vendor
and the Vendor will perform its obligations under the Consumer Warranty as if
such Purchaser forwarded such Products directly to the Vendor.
(b) Notwithstanding anything to the contrary in Appendix 2, during the
Consumer Warranty period the Vendor agrees to allow a Purchaser to return a
Product to the Owner or to the locations described in Schedule 4 for a
replacement thereof by the Vendor in the event that such Product suffers from a
Defect or Deficiency within thirty (30) days after the purchase of such Product.
Upon the Owner's receipt of a Defective Product from a Purchaser the Owner will
have the right to deliver any such Defective Product to the Vendor and the
Vendor will within ten (10) days of its receipt of such Defective Product from
the Owner replace such Defective Product by sending a replacement Product
directly to the Owner or its designated agents, or as otherwise mutually agreed
by the Parties.
3.9 Repair and Replacement Services (a) If the Owner claims a breach of
warranty under subsection 3.7, it must notify the Vendor of the claimed breach
within a reasonable time (in any event during the applicable Warranty Period)
after its determination that a breach has in fact occurred. The Owner will allow
the Vendor to inspect the Products, at the Owner's location designated for such
purpose, or, upon the Vendor's issuance of a return authorization number and at
the Vendor's sole expense, the Owner will return via ground transportation such
Products to any of the Vendor's designated repair facilities located in the
United States and listed on Schedule 4.
(b) Upon request by the Owner for a return authorization, pursuant to
subsection 3.7 or 3.8, whether for replacement or for repair of a Product, the
Vendor agrees that, within thirty (30) days of such Owner request, it will
either issue such return authorization number or provide the Owner in writing
with reasons for refusing to issue such return authorization number. In the
event that the Vendor fails to provide the return authorization number, or
provide written reasons for refusing to do so, the Owner will be permitted to
offset the value of any amount paid for the Product against any other amounts
owed by the Owner to the Vendor pursuant to this Agreement; provided that in the
event of any such offset the Vendor may request the return of the subject
Product and, in the event of such request, the Owner will return such Product.
(c) The Vendor will repair Products as soon as practicable after receipt of
the Defective Product giving rise to the warranty claim and will maintain a
maximum ten (10) day turn-around time to either repair or replace Products.
Turn-around time is the time between receipt by the Vendor of the Defective
Product and shipment for return by the Vendor of the repaired or replacement
Product. When repairing or replacing any Defective Product, the Vendor will
maintain the quality of the Product and will not substitute any component
thereof with a component of lesser quality or with a component that has a lesser
performance standard or capability. Subject to the immediately preceding
sentence, the Vendor will be entitled to repair or replace defective Products
using refurbished components and refurbished Products. In the event the Vendor
is requested by the Owner or any Purchaser or Agent to repair a Product which is
no longer covered by a warranty pursuant to the terms of this Agreement, the
Vendor will promptly repair any such Product in accordance with and subject to
the terms of this subjection 3.9 and at the repair service prices/fees set forth
on Appendix 3 hereto.
3.10 Catastrophic Defects (a) Throughout the applicable Warranty Period in
the event that (i) during the first twelve (12) months of the Term in excess of
[_______________] of any lot, batch or other separately distinguishable
manufacturing run of Products shipped to the Owner are found to be Defective
(other than defects directly attributable to a specific Owner requested and
Vendor accepted Product modification pursuant to subsection 3.23) within any
consecutive six (6) month period, or (ii) at any time after the first twelve
(12) months of the Term in excess of [_______________] of any lot, batch or
other separately distinguishable manufacturing run of Products shipped to the
Owner are found to be Defective within any consecutive six (6) month period (any
such defect described in clauses (i) or (ii) above hereinafter referred to as a
"Catastrophic Defect") the Owner will notify the Vendor thereof. Upon receipt of
such notification, the Vendor will have ninety (90) days in which to determine
the cause of and to remedy such Defect (the "Catastrophic Defect Cure Period").
Upon such remediation, the Vendor will promptly repair or replace any and all
Products that were subject to the same or similar condition(s) causing such
Catastrophic Defect (in the Owner's inventory and any such Products sold by the
Owner to Purchasers) with repaired or otherwise replaced Products at the
Vendor's sole expense (including, without limitation, all freight and duty
payments applicable thereto). In order to accurately determine that any
Catastrophic Defect has in fact been cured by the Vendor in accordance with the
terms of this subsection 3.10 the Owner will not exercise any of its remedies
under this subsection 3.10 against the Vendor until and unless the Defect
percentages for any such lot, batch or other separately distinguishable
manufacturing run of Products subject to such a Catastrophic Defect, as measured
during a sixty (60) day period starting on the date the Vendor commences any
such remediation, has failed to fall below the applicable threshold percentages
set forth in clauses (i) or (ii) above.
(b) In the event that such Catastrophic Defect is not remedied within the
Catastrophic Defect Cure Period in accordance with this subsection 3.10, the
Owner will have the right, but not the obligation, to terminate this Agreement
and to resell to the Vendor for cash payment any and all Products which are then
in the Owner's inventory and which are subject to such Catastrophic Defect or
which are subject to the same or similar condition(s) causing such Catastrophic
Defect at the price paid to the Vendor by the Owner, without charge (including,
without limitation, any restock charge) or penalty; provided that if the Vendor
is diligently pursuing a cure, prior to any such termination the Owner will
allow the Vendor an additional thirty (30) days to remedy such Catastrophic
Defect (provided further that any such resale will be implemented at the end of
the initial ninety (90) day cure period for such Catastrophic Defect).
Regardless of whether the Owner exercises the rights set forth in the
immediately preceding sentence, in the event that such Catastrophic Defect is
not remedied, the Vendor agrees to reimburse the Owner for any and all
reasonable direct out of pocket expenses and costs in excess of any expenses and
costs the Owner would have otherwise incurred hereunder in reasonably replacing
(using replacement Products with the most comparable features and functionality
available at such time) the Owner's or any Purchasers' Products as a result of
such Catastrophic Defect and to repurchase from the Owner any Vendor Products
repurchased or otherwise recalled by the Owner due to the Vendor's failure to
remedy any such Catastrophic Defect.
(c) In the event the Vendor has failed to perform any of its warranty
obligations under the terms of this Agreement and if the Vendor purchases or
subcontracts for the manufacture of any part of any Product to be provided
hereunder from a third party, the warranties given to the Vendor by such third
party will inure, to the extent applicable or permitted by Applicable Law, to
the benefit of the Owner, and the Owner will have the right, to the extent
permitted by Applicable Law, in its sole discretion, to enforce such warranties
directly against such third party. The remedies set forth in subsections 3.10(b)
and (c) will be the sole and exclusive remedies in the event of a breach by the
Vendor of its obligation under subsection 3.10(a) above.
(d) Notwithstanding that the applicable Warranty Period in respect thereof
may have expired, the Vendor will provide repair and maintenance (but not
replacement) services as set forth in subsection 3.9 with respect to any Product
purchased under this Agreement for a period of five (5) years following the
purchase of such Product at its standard commercial prices which will be
reasonable, unless (i) such Product has been subjected by a Person other than
the Vendor (or any of its subcontractors or suppliers) to misuse, neglect or
improper storage or installation or (ii) is in such deteriorated or damaged
condition that it cannot reasonably be repaired. In the event that a Product is
not repairable, the Vendor will return such Product to the Person who returned
such Product (at such Person's cost), with a statement certifying the reasons
why such Product cannot be repaired.d) Notwithstanding that the applicable
Warranty Period in respect thereof may have expired, the Vendor will provide
repair and maintenance (but not replacement) services as set forth in subsection
3.9 with respect to any Product purchased under this Agreement for a period of
five (5) years following the purchase of such Product at its standard commercial
prices which will be reasonable, unless (i) such Product has been subjected by a
Person other than the Vendor (or any of its subcontractors or suppliers) to
misuse, neglect or improper storage or installation or (ii) is in such
deteriorated or damaged condition that it cannot reasonably be repaired. In the
event that a Product is not repairable, the Vendor will return such Product to
the Person who returned such Product (at such Person's cost), with a statement
certifying the reasons why such Product cannot be repaired.
3.11 New Generation of Products. The Vendor may, from time to time during
the Term of this Agreement, modify, update or enhance existing or produce new
generations, or updated, modified or enhanced versions, of Products sold
hereunder ("New Products"). In the event that the Vendor makes such New Products
generally available to any of its other Customers, the Vendor will offer to sell
such New Products to the Owner on terms and conditions pursuant to and in
accordance with subsections 3.3 (a), (b) and (c); provided that at such time the
Parties will mutually agree (within the parameters set forth in subsection 3.3)
as to the fundamental terms (such as price, quantity and delivery dates) with
respect to the supply of such New Products. Notwithstanding anything stated
herein to the contrary, no Product subject to a modification which in no way
affects the form, fit or functionality of the Product will be deemed a New
Product and any such Product will remain a Previously Existing Product.
3.12 Right to Cease Supply of Obsolete Products. If the Vendor begins
selling and making generally available New Products or products to replace or as
a substitute for previously existing Products ("Previously Existing Products"),
the Vendor may, with the Owner's prior written consent, such consent not to be
unreasonably withheld, cease supplying the Previously Existing Products to the
Owner under this Agreement by delivering six (6) months' prior written notice to
the Owner regarding such cessation; provided that the Vendor will offer to
supply to the Owner such replacement or substitute Products on terms and
conditions pursuant to and in accordance with subsection 3.3; and provided
further that the New Products or replacement or substitute Products maintain
performance and functionality equivalent to that previously provided by the
Previously Existing Products (unless any such lower performance and/or
functionality has been consented to by the Owner, such consent not to be
unreasonably withheld). Notwithstanding anything stated herein to the contrary,
the Vendor will not be required to provide the Owner notice under this
subsection 3.12 or otherwise of any modification to a Product or a component
thereof which in no way affects the form, fit and/or functionality of such
Product. The Vendor will under no circumstances be entitled to cease supplying
such Previously Existing Products which are covered under a then unfilled
Delivery Order from the Owner. The Vendor will have no right to cease supplying
the Owner under this subsection 3.12 with any such Previously Existing Products
so long as the Vendor continues to supply and make available such Previously
Existing Products to any other Customer.
3.13 [Intentionally Omitted]
3.14 Excess Inventory. In the event that at the end of any Annual Supply
Period throughout the Term, the Owner shall have excess amounts of Products
unsold and in its inventory (any such inventory, "Excess Inventory") then the
Vendor will use its best efforts to promptly (in any event within sixty (60)
days of written notice from the Owner of any such Excess Inventory)
[___________________________]. The Owner will pay for any and all costs incurred
by the Vendor associated with any Product modification or transportation
required for the Vendor to assist the Owner pursuant to the terms of this
subsection 3.14; provided that the Vendor will not commence any such Product
modification or transportation without the prior mutual agreement of the
Parties.
3.15 Technology Mark. The exterior of each Subscriber Unit and its
packaging will bear the technology mark, as specified in Appendix 4, or such
other substantially equivalent technology mark as mutually agreed upon by the
Parties (a "Mark"). The Mark will be positioned in accordance with Appendix 4.
At the Owner's option, and at the Vendor's sole expense, and with appropriate
lead times agreed to by the Parties, each Subscriber Unit may be otherwise
labeled and/or logoed on the front of the Subscriber Unit below the key pad in
accordance with the Specifications.
3.16 Materials and Equipment Whenever materials are specified or described
in this Agreement (including the Specifications) by using the name of a
proprietary item or the name of a particular supplier, the naming of the item is
intended to establish the type, function and quality required, and substitute
materials may nonetheless be used, provided that such materials are equivalent
or equal to those named. If the Vendor wishes to furnish or use a substitute
item, the Vendor must first certify that the proposed substitute will perform at
least as well as the intended functions and achieve the results called for by
this Agreement (including but not limited to the Specifications), will be
substantially similar or of equal substance to that specified and be suited for
the same use as that specified. The Owner may require the Vendor to furnish, at
the Vendor's expense, additional data about the proposed substitute as required
to evaluate the substitution. The Owner will be allowed a reasonable time within
which to evaluate each proposed substitute. Notwithstanding the foregoing, prior
to the shipment of Products pursuant to the terms of this Agreement, the Vendor
may at any time without notice to or consent of the Owner make changes in a
Vendor Product furnished pursuant to this Agreement, or modify the drawings and
published specifications relating thereto, or substitute Products of similar or
later design to fulfill its obligations under this Agreement or otherwise fill
an order, provided that any such changes, modifications or substitutions will in
no way have an adverse affect or otherwise adversely impact upon the form, fit,
or function of an ordered Product pursuant to and in accordance with the
applicable Specifications. With respect to changes, modifications and
substitutions which do in fact adversely affect the form, fit, or function of an
ordered Product pursuant to and in accordance with the Specifications, the
Vendor must notify the Owner in writing at least ninety (90) days prior to the
effective dates of any such changes, modifications or substitutions. In the
event that any such change, modification or substitution is not desired by the
Owner (in its sole and absolute discretion), the Owner will notify the Vendor
within ten (10) days from the date of notice and the Vendor will not furnish any
such changed Products to the Owner on any orders in process at the time the
Owner is so notified; provided further, nothing contained herein will otherwise
modify Vendor's obligations under the terms of this Agreement.
3.17 Logos. (a) The Products will bear only those labels and logos as
agreed to by the Owner pursuant to the terms of this Agreement (other than the
Mark pursuant to subsection 3.15). The Products will bear the "Sprint" label or
logo and/or such other labels or logos as the Owner shall require or the Parties
shall otherwise agree to from time to time, in such size and position on the
Products as the Owner, or the Parties, as the case may be, shall specify from
time to time pursuant to and in accordance with subsection 3.15. The Owner and
the Vendor will work together to devise and agree upon a co-branding strategy
which provides for the co-branding of the Subscriber Units with both "Sprint"
and "Samsung" trademarks and/or logos.
(b) Throughout the Term of this Agreement, the Owner may use only those
trademarks, insignias, logos or other proprietary marks listed on Schedule 6 or
as otherwise consented to in writing by the Vendor ("Proprietary Marks") in
connection with the Owner's sales, advertisements and marketing of the Products;
provided that the Owner's use thereof shall be in accordance with the Vendor's
reasonable directions and policies. The Owner agrees that it has no rights with
respect to the Proprietary Marks, except as expressly provided in this
subsection 3.17(b), and will not use the Proprietary Marks as part of the
business name of the Owner.
(c) The Vendor will use its reasonable efforts to cooperate with the Owner
in the development of Product packaging that is fully integrated with the
Owner's branding strategy and which supports the Owner's marketing communication
and segmentation strategy as reasonably communicated to the Vendor by the Owner
from time to time. Such cooperation will focus on the contents of Product
packaging, the configuration, physical dimensions and materials of such
packaging, communications, colors, graphics and descriptive language used in
connection with such Products and such other items as the Parties shall agree
upon from time to time.
If the Vendor is itself unable to meet the Owner's packaging needs as set
forth in subsection 3.17(c) or as otherwise reasonably communicated by the Owner
to the Vendor from time to time, the Vendor agrees to supply the Products in
specified configurations and bulk packaging to the Owner's designated packager
for the required packaging; provided that in such case the Vendor will credit
the Owner against the purchase price for the subject Products with any amounts
saved by the Vendor for not having had to perform the packaging services as
required by the Specifications.
3.18 Task Force Team; Notice of New Developments. The Owner and the Vendor
will establish a Task Force Team within sixty (60) days of the Effective Date.
The purpose of the Task Force Team will be to review the development
requirements and high level development milestones, to ensure that the Vendor
understands the Owner's requirements for each Product (including New Products)
and/or enhancements. The Task Force Team will provide an executive forum to
discuss product ideas, Owner requirements and its recommended development
prioritization for improved infrastructure-based subscriber features. The focus
of the Task Force Team will be on Product features, new CDMA products, Product
Enhancements, critical operational issues, future developments beyond CDMA
cellular without the need for System additions and on such other matters as the
Parties mutually agree upon from time to time. Throughout the Term, the Vendor
will use its reasonable efforts to provide the Owner notice of its technological
innovations and advancements relevant to the Products within a time reasonably
prior to making any such information generally available to its Customers,
provided that nothing herein will require the Vendor to disclose any information
proprietary to any other Customer.
3.19 Market Development Manager. The Vendor will provide a market
development manager to coordinate the efforts of the Vendor in meeting its
obligations relating to the Task Force Team who will specifically focus on new
Products, CDMA services and features. Such market development manager must be
reasonably knowledgeable in CDMA technology and the Owner's Nationwide Network
and must work closely, and on a regularly scheduled basis, with the Owner's
senior engineering and marketing personnel on feature development, feature
roll-out, future road maps for CDMA Products, and any other marketing aspect of
providing PCS that the Owner believes is beneficial to the Nationwide Network
and/or any PCS System and/or Products at such time. The Vendor's market
development manager and the manager's staff will serve as the Owner's direct
liaison with the Vendor to advise the Vendor's product development teams of the
Owner's priorities as described to the Vendor by the Owner from time to time
either through the Task Force Team or by any other means acceptable to the
Parties. Nothing contained in this subsection 3.19 will in any way limit and/or
modify the Owner's ability to enforce its rights under this Agreement or to
otherwise maintain contacts with the Vendor in any other way it sees fit. Within
a reasonable time after the Effective Date the Owner will use reasonable efforts
to designate appropriate personnel to coordinate with the Vendor's market
development manager pursuant to this subsection 3.19.
3.20 Applicable Law and Radio Frequency Energy Standards. All Products must
comply, to the extent applicable, with all Applicable Law including, but not
limited to, the requirements of Subpart J of Part 15 of the rules and
regulations promulgated by the FCC, as the same may be amended from time to time
(the "FCC Rules and Regulations"), including, without limitation, those
provisions concerning the labeling of Products and the suppression of radio
frequency and electromagnetic radiation to specified levels. In the event that
the Products produce radio frequency interference, notwithstanding that such
Products comply with the FCC Rules and Regulations, the Vendor will use
reasonable best efforts to provide the Owner with technical information on the
methods to suppress such interference and will exercise reasonable best efforts
to isolate and remediate any such radio frequency interference caused by the
Products which constitutes a condition materially adversely affecting the
Nationwide Network (an "RF Interference Condition") or any part thereof,
provided that the Owner will cooperate to the extent reasonable with the Vendor
to achieve such remediation. Nothing in this subsection 3.20 will be deemed to
diminish or otherwise limit the Vendor's warranty obligations pursuant to this
Agreement.
3.21 [Intentionally Omitted].
3.22 Test Products; Product Verification and Testing. (a) The Vendor agrees
to supply the Owner with ten (10) pre-production items of each Subscriber Unit
and Material Accessory no later than ninety (90) days prior to initial
commercial shipment of such Subscriber Unit to Owner, and ten (10) additional
pre-production items of each Subscriber Unit and Material Accessory no later
than thirty (30) days prior to initial commercial shipment of such Subscriber
Unit to Owner in order to allow the Owner to test such items to determine
whether such Subscriber Units and Material Accessories comply with the
requirements of this Agreement, including the Specifications; provided that no
such tests or any such knowledge or experience gained or otherwise acquired from
such tests or otherwise will in any way be deemed a waiver of or to reduce or
affect the Vendor's obligations with respect to the provision of warranties
pursuant to this Agreement. The Owner will use reasonable efforts to provide the
Vendor with the results of such tests. In the event of the Vendor's introduction
of New Products pursuant to the terms of this Agreement, the Vendor will provide
the Owner reasonably sufficient numbers of pre-production units of any such New
Product for the purposes of Owner testing at least ninety (90) days prior to the
general market availability of any such New Products. Notwithstanding anything
stated herein to the contrary, the warranties set forth in subsections 3.7, 3.8
and 3.10 will not apply to the pre-production Subscriber Units required to be
delivered by the Vendor pursuant to this subsection 3.22(a).
(b) The Vendor will test the Products and verify to the Owner their
performance in accordance with the Specifications pursuant to and in accordance
with the requirements and milestones set forth in Exhibits B1, B2 and B3. The
failure of the Vendor to verify the performance of the Products pursuant to the
requirements of Exhibits B1, B2 and B3 will result in the Owner having the
absolute right to suspend or cancel (in its sole and absolute discretion) any
then existing or future Delivery Orders for any such Products which have not in
fact complied with the requirements of Exhibits B1, B2 and B3. To the extent any
lot, batch or other separately distinguishable manufacturing run of Products do
not comply with the requirements of Exhibits B1, B2 and B3 within sixty (60)
days of the testing dates provided for any such verifications pursuant to
Exhibits B1, B2 and B3 (in the case of Exhibit B3 at the Vendor's testing
facility), the Owner will have the right, but not the obligation, to terminate
this Agreement without payment or penalty of any kind; provided that at any time
after the first fifteen (15) days of any such applicable cure period as set
forth above in this sentence, the Owner will have the right, in addition to any
other rights set forth in the immediately preceding sentence, to cancel (in its
sole and absolute discretion) any then existing or future Delivery Orders for
any such Products which have not in fact complied with the requirements of
Exhibits B1, B2 or B3 and the Vendor agrees to reimburse the Owner for any and
all reasonable direct out of pocket expenses and costs in excess of any expenses
and costs the Owner would have otherwise incurred hereunder in reasonably
replacing (using replacement Products with the most comparable specified
features and functionality available at such time) any such Products. In the
event that the Owner chooses to terminate this Agreement pursuant to this
subsection 3.22(b) such termination will be the Owner's sole and exclusive
remedy. Furthermore, in the event the Owner decides to cancel a Delivery Order
(without terminating this Agreement) and to seek reasonable cover therefor from
the Vendor pursuant to this subsection 3.22(b) such cancellation and reasonable
cover (once received by the Owner as paid by the Vendor) will be deemed the sole
and exclusive remedy available to the Owner for such cancelled Delivery Order.
Nothing contained in subsection 3.22(b) will be deemed to diminish or otherwise
limit the Vendor's warranty obligations pursuant to this Agreement.
Notwithstanding anything to the contrary stated herein above, to the extent that
the Owner decides (in its sole and absolute discretion) to take, pay for and
place into service any such Products which have failed to pass the testing
required by Exhibits B1, B2 or B3 ("Non-Conforming Products"), the Owner will be
deemed to have accepted any such Non-Conforming Products with any such
non-conformance; provided that, in such case, the Owner will in no way be deemed
to have waived any of its rights to enforce the Vendor's complete conformance
(including, but not limited to, conformance with any requirement not otherwise
met by such Non-Conforming Products) with the testing requirements set forth in
Exhibits B1, B2 and B3 and the Specifications on all other Products already then
delivered or yet to be delivered by the Vendor pursuant to the terms of this
Agreement.b) The Vendor will test the Products and verify to the Owner their
performance in accordance with the Specifications pursuant to and in accordance
with the requirements and milestones set forth in Exhibits B1, B2 and B3. The
failure of the Vendor to verify the performance of the Products pursuant to the
requirements of Exhibits B1, B2 and B3 will result in the Owner having the
absolute right to suspend or cancel (in its sole and absolute discretion) any
then existing or future Delivery Orders for any such Products which have not in
fact complied with the requirements of Exhibits B1, B2 and B3. To the extent any
lot, batch or other separately distinguishable manufacturing run of Products do
not comply with the requirements of Exhibits B1, B2 and B3 within sixty (60)
days of the testing dates provided for any such verifications pursuant to
Exhibits B1, B2 and B3 (in the case of Exhibit B3 at the Vendor's testing
facility), the Owner will have the right, but not the obligation, to terminate
this Agreement without payment or penalty of any kind; provided that at any time
after the first fifteen (15) days of any such applicable cure period as set
forth above in this sentence, the Owner will have the right, in addition to any
other rights set forth in the immediately preceding sentence, to cancel (in its
sole and absolute discretion) any then existing or future Delivery Orders for
any such Products which have not in fact complied with the requirements of
Exhibits B1, B2 or B3 and the Vendor agrees to reimburse the Owner for any and
all reasonable direct out of pocket expenses and costs in excess of any expenses
and costs the Owner would have otherwise incurred hereunder in reasonably
replacing (using replacement Products with the most comparable specified
features and functionality available at such time) any such Products. In the
event that the Owner chooses to terminate this Agreement pursuant to this
subsection 3.22(b) such termination will be the Owner's sole and exclusive
remedy. Furthermore, in the event the Owner decides to cancel a Delivery Order
(without terminating this Agreement) and to seek reasonable cover therefor from
the Vendor pursuant to this subsection 3.22(b) such cancellation and reasonable
cover (once received by the Owner as paid by the Vendor) will be deemed the sole
and exclusive remedy available to the Owner for such cancelled Delivery Order.
Nothing contained in subsection 3.22(b) will be deemed to diminish or otherwise
limit the Vendor's warranty obligations pursuant to this Agreement.
Notwithstanding anything to the contrary stated herein above, to the extent that
the Owner decides (in its sole and absolute discretion) to take, pay for and
place into service any such Products which have failed to pass the testing
required by Exhibits B1, B2 or B3 ("Non-Conforming Products"), the Owner will be
deemed to have accepted any such Non-Conforming Products with any such
non-conformance; provided that, in such case, the Owner will in no way be deemed
to have waived any of its rights to enforce the Vendor's complete conformance
(including, but not limited to, conformance with any requirement not otherwise
met by such Non-Conforming Products) with the testing requirements set forth in
Exhibits B1, B2 and B3 and the Specifications on all other Products already then
delivered or yet to be delivered by the Vendor pursuant to the terms of this
Agreement.
3.23 Change Orders. From time to time the Owner may request changes or
modifications to the Products or packaging and/or the Specifications ("Change
Orders"). All such Change Orders requested in writing by the Owner to the Vendor
will be subject to the reasonable good faith and timely agreement (including,
but not limited to, agreement on terms such as one-time charges, price increases
and minimum purchase commitments) of the Vendor and the Owner which agreement
will be evidenced by a writing executed by an authorized representative of each
of the Parties.
Section 4. Lead Times and Delay
4.1 Lead Times. Provided that the Owner submits Forecasts to the Vendor and
places Delivery Orders for Products in accordance with Section 5 below, the
Vendor will ship Products (other than as specified in the last sentence of this
subsection 4.1) ordered by the Owner against such Forecasts within the later of
(i) ten (10) Business Days after receipt and the Vendor's acknowledgement of the
Owner's Delivery Order therefor, and (ii) the shipment date specified by the
Owner in such Delivery Order pursuant to subsection 5.2(a); provided that the
Vendor has acknowledged receipt of such Delivery Order, and the time period from
the date of the Vendor's acknowledgement and the specified shipment date is
longer than ten (10) Business Days. The Vendor will be able to provide the Owner
with specific lead times (which will in no event be in excess of ten (10) days
from receipt and acknowledgement by the Vendor of the Owner's Delivery Order
subject to the terms of the first sentence of this subsection 4.1) applicable to
each Delivery Order for Products at the time the Vendor receives and
acknowledges the Owner's Delivery Order therefor.
4.2 Delivery Delay (a) For each of the first two hundred thousand (200,000)
Subscriber Units (and their accompanying Material Accessories) purchased
hereunder (the "Initial Fulfillment Units") each day beyond [___________] (the
"Delay Grace Period") that the Vendor fails to ship Initial Fulfillment Units
(which conform to the Specifications and which were ordered pursuant to a
Delivery Order in accordance with the terms of this Agreement) on the applicable
date for shipment referred to in subsection 4.1, the Vendor will pay to the
Owner as liquidated damages for such late performance (i) for each of the first
thirty (30) Business Days beyond such Delay Grace Period an amount equal to
[________________] per Business Day (for such thirty (30) Business Day period)
of the total price of such Delivery Order and (ii) on the last day of such
thirty (30) Business Day period, an amount equal to [________________] of the
total price of such Delivery Order; provided that no such delay penalty will be
due if the delay is attributable solely to (i) an event constituting a force
majeure pursuant to the terms of this Agreement or (ii) an act or omission of
the Owner. The Owner may offset the amount of such Delay Penalty against any
amounts owed to the Vendor for Products supplied under this Agreement.
(b) At any time during the Term after all of the Initial Fulfillment Units
have been purchased by the Owner pursuant to the terms of this Agreement, for
each of the first ten (10) Business Days beyond the applicable Delay Grace
Period that the Vendor fails to deliver any Subscriber Units (and their
accompanying Material Accessories) in conformance with the Specifications and
which were ordered pursuant to a Delivery Order in accordance with the terms of
this Agreement, the Vendor will pay to the Owner as liquidated damages for such
late performance (i) an amount equal to [________________] per Business Day (for
such ten (10) Business Day period) of the total price of such Delivery Order up
to an amount equal to [______________] of the total price of such Delivery Order
and (ii) on the last day of such ten (10) Business Day period, an amount equal
to [___________________] of the total price of such Delivery Order; provided
that no such delay penalty will be due if the delay is attributable solely to
(i) an event constituting a force majeure pursuant to the terms of this
Agreement or (ii) an act or omission of the Owner. The Owner may offset the
amount of any delay penalty against any amounts owed to the Vendor for Products
supplied under this Agreement.
(c) Notwithstanding anything stated in this subsection 4.2 to the contrary,
during any time that the Owner is in default under this Agreement for undisputed
payments owed to the Vendor the Owner will not be entitled to any of the delay
penalties set forth in this subsection 4.2.
(d) In the event (i) there are delivery delays in any given Annual Supply
Period which Vendor fails to cure within the applicable Delay Grace Period,
which delivery delays involve the Vendor's failure to timely deliver more than
[________________] Subscriber Units, in aggregate, and (ii) the percentage of
deliveries of Subscriber Units which are subject to delivery delays in any given
Annual Supply Period and which Vendor fails to cure within the applicable Delay
Grace Period, exceeds [_________________], then the Owner will have the right,
but not the obligation, to terminate this Agreement without any payment or
penalty. In the event the Vendor fails to cure any delivery delay within thirty
(30) days from the date delivery was due, the Owner will have the right, but not
the obligation, to cancel the Delivery Order subject to such delay without any
payment or penalty. With respect to any such cancelled Delivery Order, the Owner
will be entitled to receive from the Vendor any and all reasonable direct out of
pocket expenses and costs in excess of any expenses and costs the Owner would
have otherwise incurred hereunder in order to reasonably fulfill (using
replacement products with the most comparable features and functionality) such
cancelled Delivery Order with any third party supplier acceptable to the Owner.
(e) Notwithstanding anything in this subsection 4.2 to the contrary, the
Vendor will only be obligated to pay to the Owner one-half (1/2) of the Delay
Penalties otherwise applicable to the late delivery of Products ordered pursuant
to an Excess Delivery Order.
(f) In the event the Owner exercises its rights under this subsection 4.2
due to a Vendor delivery delay, the remedies for any such Vendor delivery delay
as set forth in this subsection 4.2 will be exclusive.
Section 5. Forecasts and Ordering
5.1 Forecasts (a) Upon execution of this Agreement and on the first of each
month thereafter, the Owner will deliver to the Vendor written forecasts (a
"Forecast") specifying its estimate of the quantity of each type of Product that
it expects to purchase on a month to month basis during the twelve (12) months
following the date of such Forecast (a "Forecast Period"), which shall be
treated as follows;
(i) quantities forecasted to be ordered during the first month of
each Forecast Period will be a firm Delivery Order which, pursuant to
the terms of this Agreement, must be taken by the Owner in the month
indicated. The Owner will place one or more Delivery Orders to
purchase Products in accordance with the applicable Forecast;
(ii) quantities forecasted to be ordered during the second month
of each such Forecast Period shall be considered reasonably accurate
estimates of prospective Delivery Orders and accordingly, the Owner
will issue the Vendor firm Delivery Orders to ensure that at least
ninety percent (90%) and not more than one hundred ten percent (110%)
of the quantities specified during this segment of the Forecast Period
are covered by firm Delivery Orders from the Owner; and
(iii) quantities forecasted to be ordered during the third month
of each such Forecast Period shall be considered reasonably accurate
estimates of prospective Delivery Orders and accordingly, the Owner
will issue the Vendor firm Delivery Orders to ensure that at least
eighty percent (80%) and not more than one hundred twenty percent
(120%) of the quantities specified during this segment of the Forecast
Period are covered by firm Delivery Orders from the Owner; and
(iv) quantities forecasted to be ordered during months four (4)
through twelve (12) of each such Forecast Period will only be
estimates of prospective Delivery Orders, and subsequent Forecasts and
actual Delivery Orders may completely vary and be completely
changeable by the Owner in its absolute discretion.
The first Forecast to be delivered by the Owner to the Vendor is attached
hereto as Schedule 8 and is expressly accepted by the Vendor. Except with
respect to such first Forecast, in no event will the Vendor be required to
accept an amount in any given month of a Forecast which is greater than
[_____________________] of the average amount forecasted by the Owner for the
three months immediately preceding the subject month. In the event the Owner
fails to deliver to the Vendor a new Forecast by the first Business Day of any
given month, then the new Forecast for such new twelve month period shall be
deemed to be the prior Forecast, adjusted by shifting the monthly quantities up
one month (i.e, the quantity that used to be forecasted for month two will
instead be the quantity for month one) with the new amount forecasted for month
twelve being the same as the amount for the new month eleven.
(b) The Forecasts will be in a format mutually acceptable to the Parties;
provided that the form of the first Forecast as set forth in Schedule 8 will at
all times be deemed a form acceptable to both Parties.
5.2 Ordering. (a) In order to be effective, all orders by the Owner for
Products will be made by the Owner in the form of written Delivery Orders,
specifying the quantity of each type of Product to be purchased and the date or
dates on which such Products are required to be shipped to the Owner, the
shipping method and the location to which such Products should be shipped;
provided that such shipment date will be no earlier than ten (10) Business Days
after the date of such Delivery Order; and provided further that the Vendor will
use its reasonable efforts to fulfill Delivery Orders in excess of forecasted
quantities that the Owner is entitled to turn into firm Delivery Orders pursuant
to and in accordance with subsection 5.1 (each an "Excess Delivery Order"). Each
Delivery Order will be submitted to the Vendor at Samsung Electronics Company,
Ltd., 1501 LBJ Freeway, Suite 410, Dallas, Texas 75234, or any other designated
location of the Vendor designated to the Owner in writing by the Vendor from
time to time, and will be subject to the acknowledgement by the Vendor in
writing to the designated authorized representative of the Owner within five (5)
Business Days of receipt of Delivery Orders for Products in Vendor stock.
Failure of the Vendor to acknowledge to the Owner in writing receipt of any
Delivery Order or Excess Delivery Order shall be deemed to render any such
Delivery Order or Excess Delivery Order acknowledged. Notwithstanding subsection
5.2(e) below, to the extent that the Vendor is actually aware that any Delivery
Order in any way contradicts or is not otherwise in conformance with the terms
of this Agreement, the Vendor agrees to promptly notify the Owner of any such
contradiction or non-conformance as soon as possible upon becoming actually
aware of such contradiction or non-conformance so that the Owner will have a
reasonable opportunity to correct any such contradiction or non-conformance and
furthermore to the extent reasonable under the circumstances the Vendor will
endeavor to fulfill any such non-conforming Delivery Order ignoring any such
non-conformity unless the Owner, after notification from the Vendor, will have
expressly refused to accept the fulfillment of such Delivery Order with any such
correcting modification.
(b) [Intentionally Omitted].
(c) Subject to subsections 3.2 (b) and 3.2(c), any Delivery Order or Excess
Delivery Order may, in the Owner's sole and absolute discretion, be postponed
once without penalty by written notice from the Owner to the Vendor at any time
prior to ninety (90) days immediately prior to the initial shipment date
established for such Delivery Order pursuant to the terms of this Agreement for
a period not in excess of sixty (60) days from such initial shipment date. If
the Owner chooses to postpone a Delivery Order (for a period not in excess of
sixty (60) days from the initial shipment date for such Delivery Order) at any
time within the ninety (90) days immediately prior to the initial shipment date
(a "Late Postponement"), the Owner will pay to the Vendor an amount equal to one
half of one percent (1/2%) of the value (based upon the prices set forth in
Appendix 1) of any increased Product inventory for each month or portion of a
month (such amount to be prorated if such time periods are not whole months) the
Vendor is required to carry such increased Product inventory due to such Late
Postponement. The Vendor will invoice any such amounts on a monthly basis. In
any event and notwithstanding anything to the contrary in this clause (c) of
subsection 5.2, no Delivery Order or Excess Delivery Order may be postponed by
the Owner (i) within (10) Business Days of the initial shipment date for such
Delivery Order or Excess Delivery Order or (ii) if an Owner Event of Default has
occurred or is continuing pursuant to subsection 10.8.
(d) The Vendor will reasonably cooperate with the Owner, and/or any Person
designated by the Owner for such purpose, (i) to utilize UPC stock control
numbering and other bar-coding requirements relating to inventory processes and
systems, and (ii) to develop processes and systems that will maximize delivery
logistics. Metric targets will be defined by the mutual good faith agreement of
the Parties for acceptable stock out percentages, delivery times and total
logistics costs.
(e) Unless the Parties otherwise expressly agree in writing, each Delivery
Order will be deemed to incorporate by reference all of the terms and conditions
of this Agreement. Should the terms of any Delivery Order conflict with the
terms of this Agreement, the terms of this Agreement will govern unless the
Parties expressly agree in writing (signed by a duly authorized representative
of both Parties) to the contrary. This Agreement will continue to apply to a
Delivery Order pursuant to the terms of this Agreement until all obligations
herein and thereunder are performed.
Section 6. Sales and Technical Support
6.1 Sales Training. The Vendor will work with the Owner, at the Vendor's
sole expense, to provide a sales training program for the distribution channel
used by the Owner for Subscriber Units. The goal of this program will be to
provide sales training ("Training") to the Owner's personnel on the features of
the Subscriber Units, as well as to provide appropriate Product related
collateral material. The training program will include, but will not be limited
to, the following topics: CDMA; Product features and usage; Subscriber Unit
programming, installation and troubleshooting; and such other matters as the
Parties may reasonably agree upon from time to time. The target audiences for
the training will be the Owner's marketing and sales personnel. These training
programs will take place at mutually agreeable locations in each of the Owner's
System Areas at least once a year for the first two (2) years after introduction
of the Subscriber Units, at no charge to the Owner. Such training program will
last for a period of time as reasonably agreed upon by the Parties. The Vendor
anticipates that the Owner may want to influence aspects of the training and
will design the training program to complement the Owner's marketing and sales
effort. Should the Owner request the Vendor to modify the program in such a way
as to increase the Vendor's actual expenses, the Owner and the Vendor will
negotiate the terms and conditions of implementing the Owner's request in good
faith.
6.2 Sales and Promotional Efforts. (a) In order to ensure that the
relationship between the Parties contemplated by this Agreement will be mutually
advantageous, and in recognition of the expertise and commitment by the Parties
necessary for the effective marketing and support of the Products, the Owner
agrees to encourage and develop the sales potential for such Products, to employ
competent personnel to meet the demands and needs for marketing and support of
the Products, and to encourage the purchase of Products by Agents and
Purchasers. Nothing contained in this subsection 6.2(a) will in any way limit or
otherwise modify the Vendor's obligations under this Agreement.
(b) In order to assist the Owner to promote sales of the Products, the
Vendor will furnish the Owner, at the Vendor's sole expense, Vendor catalogs,
point of sales literature, training documentation, printed technical
information, data sheets and other reasonable advertising materials in such
quantities and at such time as may be reasonably agreed to by the Parties.
(c) If the Owner reasonably requires customized Vendor sales and training
literature, the content of the Vendor's appropriate existing literature will be
provided to the Owner, in the Owner's discretion, at the Vendor's sole expense,
in electronic form, or CD-ROM format or artwork to allow the Owner to produce
literature and promotional pieces that are of the Owner's style and name. The
use of any such literature will be subject to the guidelines established between
the Parties pursuant to subsection 8.1(b). In addition, the Vendor hereby grants
the Owner a Territory-wide non-exclusive royalty-free license to reprint any
Vendor-owned sales literature in connection with the Owner's sales, advertising
and promotion of the Products. In addition, the Vendor hereby grants the Owner a
non-exclusive royalty-free license to distribute within the Territory any of the
Vendor's own sales literature in connection with the Owner's sales, advertising
and promotion of the Products; provided that in the event any such literature is
in fact distributed outside of the Territory by any Person other than the Owner,
the Vendor will not, in such event, take any action for damages of any nature
against the Owner under this Agreement or otherwise.
(d) The Vendor and the Owner agree to reasonably cooperate with each other
in the areas of sales and marketing in support of sales of the Vendor's Products
to customers of the Owner's telecommunications services.
Section 7. Intellectual Property Property
7.1 Intellectual Property Rights Infringement. Subject to the provisions of
subsection 7.4, the Vendor agrees that it will defend, at its own expense, all
suits and claims against the Owner, its affiliates, directors, officers, agents
and employees for infringement or violation (whether by use, sale or otherwise)
of any patent, trademark, copyright, trade secret or other intellectual property
rights of any third party (collectively, "Intellectual Property Rights"),
arising under or in connection with Applicable Law within the Territory
covering, or alleged to cover, the Products or any component thereof for its
intended use, in the form furnished or as subsequently modified by the Vendor.
The Vendor agrees that it will pay all sums, including, without limitation,
attorneys' fees and other costs, which, by final judgment or decree, or in
settlement of any suit or claim to which the Vendor agrees, may be assessed
against the Owner on account of such infringement or violation, provided that:
(i) the Vendor will be given prompt written notice of all claims
of any such infringement or violation and of any suits or claims
brought or threatened against the Owner or the Vendor of which the
Owner has actual knowledge;
(ii) the Vendor is given full authority to assume control of the
defense (including appeals) thereof through its own counsel at its
sole expense and will have the sole right to settle any suits or
claims without the consent of the Owner; provided that the Vendor has
no right and will have no right to agree to injunctive relief against
the Owner; provided further that the Vendor will notify the Owner of
any proposed settlement prior to the Vendor's acceptance of such
settlement; and
(iii) the Owner will cooperate fully with the Vendor in the
defense of such suit or claims and provide the Vendor, at the Vendor's
expense, such assistance as the Vendor may reasonably require in
connection therewith.
7.2 The Vendor's Obligation to Cure. If in any such suit so defended all or
any part of the Products or the Software or any component thereof is held to
constitute an infringement or violation of Intellectual Property Rights and its
use is enjoined, or if in respect of any claim of infringement or violation the
Vendor deems it advisable to do so, the Vendor will, within ninety (90) days, at
its sole cost and expense take one or more of the following actions: (i) procure
the right to continue the use of the same without interruption for the Owner;
(ii) replace the infringing Product, Software or component with a noninfringing
product, noninfringing Software or a non-infringing component, as applicable,
that meets the Specifications; or (iii) modify said Product, Software or any
component thereof so as to be noninfringing, provided that the Product, Software
or any component thereof as modified meets all of the Specifications. In the
event that the Vendor is not able, using best efforts, to cure the infringement
pursuant to clause (i), (ii) or (iii) in the immediately preceding sentence, the
Vendor will refund to the Owner the full purchase price paid by the Owner for
such infringing Products that are returned to the Vendor by the Owner or
otherwise at the Vendor's sole cost and expense; provided that the Vendor will
have first refunded any such monies for such infringing Products to the Owner.
The remedies under this subsection 7.2 will be the sole and exclusive remedies
available to the Owner against the Vendor in the event of a claim against the
Owner which is covered by subsection 7.1 above.
7.3 The Vendor's Obligations. The Vendor's obligations under this Section 7
will not apply to (i) any infringement or violation of Intellectual Property
Rights caused by modification of any Product, Software or any component thereof
by any Person other than the Vendor, its employees or agents acting on the
Vendor's behalf or at its direction, or (ii) any infringement caused directly by
any such Person's use and maintenance of such Product other than in accordance
with the Specifications and the purposes contemplated by this Agreement for use
in the Owner's Nationwide Network, except as authorized by the Vendor. The
Vendor's indemnification obligations specified in this Section 7 will not apply
to any intellectual property infringement caused directly and solely by an Owner
Defined Feature.
7.4 The Owner's Obligations. The Owner agrees that it will defend, at its
own expense, and indemnify and hold harmless the Vendor, its affiliates,
directors, officers, agents, employees and successors, from and against all
suits and claims for infringements or violations of any patent, trademark,
copyright, trade secret or other intellectual property rights of any third party
(i) caused directly by the Owner's (or by an affiliate's or agent's if done at
the direction of the Owner) modification, use or maintenance of any Product
other than in accordance with the Specifications and the terms of this Agreement
or the Vendor's written authorization, or (ii) to the extent, but only to such
extent, that an intellectual property infringement claim involves any markings
or logos specifically requested by the Owner in writing. The Owner agrees that
it will pay all sums, including, without limitation, reasonable attorneys' fees,
damages, losses, liabilities, expenses and other costs, which, by final judgment
or decree, or in settlement of any suit or claim to which the Owner agrees, may
be assessed against the Vendor on account of such matters, provided that:
(a) the Owner will be given prompt written notice of all claims of any such
infringement or violation and of any suits or claims brought or threatened
against the Vendor or the Owner of which the Vendor has actual knowledge;
(b) the Owner is given full authority to assume control of the defense
(including appeals) thereof through its own counsel at its sole expense and will
have the sole right to settle any suits or claims without the consent of the
Vendor, provided that the Owner has no right to agree to injunctive relief
against the Vendor; provided further that the Owner will notify the Vendor of
any proposed settlement prior to the Owner's acceptance of such settlement; and
(c) the Vendor will cooperate fully with the Owner in the defense of such
suit or claims and provide the Owner, at the Owner's expense, such assistance as
the Owner may reasonably require in connection therewith, including, but not
limited to, implementation of modifications to Products or other manufacturing
fixes.
7.5 Software License. (a) Certain Products sold to the Owner hereunder may
contain software in executable code form ("Software"), and, except as otherwise
expressly provided herein, all references to "Products" in this Agreement will
be deemed to include the accompanying Software, provided that nothing herein
will be construed as the sale of any Software to the Owner. The Vendor hereby
grants to the Owner a non-exclusive, royalty-free, Territory-wide (provided that
Purchaser or Agent use or operation of Products outside of the Territory will in
no way be deemed an infringement or violation of the Vendor's license
hereunder), perpetual license to use, and sublicense to the Owner's or its
Agents' Purchasers or end user customers (in object form only), the Software in
each of the Products purchased by the Owner from the Vendor.
(b) The Owner will not, without the prior written consent of the Vendor:
(i) alter, modify, translate or adapt any Software or create any derivative
works based thereon; (ii) copy any Software; or (iii) disclose the Software to
any third party except as required by Applicable Law or pursuant to an order of
a court of competent jurisdiction or other similar requirement of a Governmental
Entity; provided that the Owner will use reasonable efforts to provide the
Vendor prior written notice prior to any such disclosure. Except to the extent
provided herein, as between the Vendor and the Owner the entire right, title and
interest in the Software will remain with the Vendor, and the Owner will not
remove any copyright notices or other legends from the Software or any
accompanying documentation, without the prior written consent of the Vendor.
7.6 [Intentionally Omitted].
7.7 Ownership of Intellectual Property Rights. (a) Except for licenses
expressly granted under this Agreement, the sale of Products and the license of
Software to the Owner does not convey to the Owner any intellectual property
rights in such Products or Software. Neither the sale of Products, the license
of any Software, nor any provision of this Agreement will be construed to grant
to the Owner, either expressly, by implication or by way of estoppel, any
license under any patents or other intellectual property rights of the Vendor
covering or relating to any other product or invention of the Vendor or any
combination of Product or Software with any other product of the Vendor. The
foregoing notwithstanding, the Parties understand and agree that from time to
time the Owner may devise, develop or otherwise create ideas or other concepts
for services or new products which are patentable or otherwise capable of
receiving protection from duplication. In such event, the Owner will have the
right to patent or otherwise protect such ideas or concepts for its own use and
benefit; provided that if such ideas or concepts are based upon the Vendor's
proprietary intellectual property, the Owner and the Vendor will have joint
ownership of any such right.
(b) The Owner hereby acknowledges and agrees that nothing herein gives it
any right, title or interest in the Mark. The Owner will not challenge the
validity of the Vendor's ownership of or right to use of the Mark or the
Vendor's copyrights, nor otherwise impair the interest of the Vendor in the Mark
or such copyrights. Except as specifically provided for under this Agreement,
the Owner will not use any mark which is confusingly similar to, or a colorable
imitation of the Mark. The Owner will use the Products and Software furnished by
the Vendor in accordance with the terms of this Agreement, and the Owner will
not, directly or indirectly, disassemble, decompile, reverse engineer, or
analyze or copy the physical construction of, any of the Products or Software or
any component thereof for any purpose other than as permitted by the Vendor.
7.8 Intellectual Property. Subject to the Vendor's then existing reasonable
marketing policies, if any, with respect to Products sold hereunder, the Vendor
grants the Owner rights to state that it is using the Vendor's Products in the
Owner's marketing, advertising or promotion of the Nationwide Network, any PCS
System, any part thereof or any Product. Subject to the Vendor's then existing
reasonable marketing policies, if any, with respect to Products sold hereunder
the Owner has the right to use for such marketing, advertising or promotion the
Vendor's advertising and marketing materials (including pamphlets and brochures)
provided to the Owner by the Vendor describing the Nationwide Network, any PCS
System, any part thereof or any Product. Other than as set forth in this
subsection 7.8 or subsections 3.17 or 6.2, the Owner has the right to use the
trademarks and service marks of the Vendor in the Owner's marketing, advertising
and promotion of the Nationwide Network, any PCS System, any part thereof or any
Product only with the written consent of the Vendor, such consent not to be
unreasonably withheld, subject to and in accordance with the terms of subsection
8.1.
7.9 Request for Custom Development. (a) From time to time, the Owner may
have requirements for custom Software (including, but not limited to,
development of identified features or modifications to Software or Software
Enhancements) or custom development of Products (including, but not limited to,
development of identified features or modifications to Products or Product
Enhancements) to be provided by the Vendor under this Agreement (the "Custom
Material"). If the Owner has a requirement for Custom Material that is a
specific enhancement or modification of a previously licensed feature or of
previously purchased Products, the Owner will identify to the Vendor in writing
a summary of any such proposed development of Custom Material. Such summary will
provide a description of any proposed Custom Material sufficient to enable the
Vendor to determine the general demand for, and its plans, if any, to develop
the same or similar Products. The Vendor will respond to such summary within
twenty (20) Business Days after receipt thereof and indicate if it has the
ability to fulfill a subsequent Request for Proposal ("RFP") from the Owner for
such development of Custom Material.
(b) If the Vendor decides in good faith that it does not have the technical
ability or the capacity to fulfill a RFP for such Custom Material development,
the Vendor's response pursuant to subsection 7.9(a) will (i) provide the Owner
an explanation of why it cannot fulfill such RFP and (ii) use reasonable
diligence to work with the Owner to identify an alternative source for such
development reasonably acceptable to the Owner. In determining whether the
Vendor has the technical ability or the capacity to fulfill the RFP, the Vendor
may consider the following factors: (i) the Vendor's likelihood of recovering
the costs for performing such development; (ii) the impact of such development
on the Vendor's actual outstanding commitments to perform work for other
Customers and to pursue strategic development activities; and (iii) whether the
Vendor can perform the work utilizing existing software development staff
without stopping work underway.
7.10 Vendor Response. After reviewing an RFP issued to the Vendor from the
Owner for such Custom Material, the Vendor will respond to the Owner within
twenty (20) Business Days, unless otherwise agreed by the Parties, stating the
terms and conditions upon which the Vendor would be willing to undertake such
development, including, but not limited to, a listing of specifications, custom
development charges, planned license fees and a proposed delivery schedule.
7.11 License to Use Vendor Patents. In consideration of the purchase of
Products from the Vendor, the Vendor hereby grants to the Owner, under patents
associated with such Products or parts thereof and which the Vendor owns or has
a right to license ("Vendor Patents"), a Territory-wide (provided that Purchaser
or Agent use or operation of Products outside of the Territory will in no way be
deemed an infringement or violation of the Vendor's license hereunder),
royalty-free, non-exclusive license (the "Patent License") to utilize the Vendor
Patents in connection with the Owner's provision of telecommunications services
utilizing or in connection with the Products. The Patent License includes the
right to use not only the Products licensed or purchased hereunder, but also
combinations of the Products and the Software therein with other equipment and
software which are utilized by the Owner in the provision of such
telecommunications services; provided that in accordance with subsection 7.7 the
Owner and the Vendor will mutually agree in good faith as to the development,
use and licensing of any new products, features or services (not contemplated by
this Agreement prior to the creation of any such new product, feature or
service) emanating directly from any such combination not previously
contemplated by the terms of this Agreement. The scope of the Patent License
will extend only to the right to use and/or the right to sell, but not
manufacture, the Product or Products to which such Patent License relates. The
Patent License includes only those patents existing on the Effective Date. The
Patent License will continue for the entire unexpired term of the last to expire
of such Vendor Patents.
Section 8. Proprietary Information
8.1 Public Statements and Advertising. (a) Except as consented to by the
Owner (such consent not to be unreasonably withheld) or as otherwise
specifically set forth herein, the Vendor will not issue any public statement
relating to or in any way disclosing any aspect of the work contemplated by this
Agreement, the Nationwide Network, any Owner PCS System or any Product including
the scope, the specific terms of this Agreement, extent or value of the work
contemplated by this Agreement, the Products and/or the Nationwide Network or
any Owner PCS System. Except as otherwise consented to by the Vendor (such
consent not to be unreasonably withheld) the Owner will not issue any public
statement (or any private statement unless required in the performance of the
work contemplated by this Agreement) relating to or in any way disclosing any
aspect of the work contemplated by this Agreement or any Product, including the
scope, the specific terms of this Agreement, the extent or value of the work
contemplated by this Agreement and/or the Products. The Vendor agrees not to use
for publicity purposes any photographs, drawings and/or materials describing any
PCS System or any part of the Nationwide Network (other than Vendor Products),
without obtaining the prior written consent of the Owner, such consent not to be
unreasonably withheld. The obligations of the Parties under this subsection 8.1
are in addition to their respective obligations pursuant to subsection 8.2 but
in no way limit the exceptions to public disclosure specifically referred to in
subsection 8.2(a) clauses (i) through (vii). This subsection 8.1 will in no way
limit (i) either Party from responding to customary press inquiries or otherwise
making public or private statements not otherwise disclosing Proprietary
Information or the specific terms of this Agreement in the normal course of its
business and/or in connection with the obligations hereunder or (ii) the
provision of necessary information to prospective suppliers and the Vendor's or
the Owner's personnel, agents or consultants.
(b) Each Party will submit to the other proposed copies of all advertising
(other than public statements or press releases pursuant to and in accordance
with the last sentence of subsection 8.1(a) above) wherein the name, trademark
or service mark of the other Party or its Affiliates or affiliates is mentioned;
and neither Party will publish or use such advertising without the other Party's
prior written approval. Such approval will be granted as promptly as possible
and will not be unreasonably withheld. The Parties acknowledge that the
obtaining of prior written approval for each such use pursuant to this
subsection 8.1(b) may be an administrative burden. From time to time at the
request of either Party, the Owner and the Vendor will establish mutually
acceptable guidelines that will constitute pre-authorization for the uses
specified therein. Such guidelines will be subject to change from time to time
at the reasonable request of either Party subject to the mutual agreement of the
Parties.
8.2 Confidentiality. (a) Except as provided below, all information,
including without limitation all oral and written information (including, but
not limited to, determinations or reports by arbitrators pursuant to the terms
of this Agreement), disclosed to the other Party is deemed to be confidential,
restricted and proprietary to the disclosing Party (hereinafter referred to as
"Proprietary Information"). Each Party agrees to use the Proprietary Information
received from the other Party only for the purpose of this Agreement. Except as
specified in this Agreement, no other rights, and particularly licenses, to
trademarks, inventions, copyrights, patents, or any other intellectual property
rights are implied or granted under this Agreement or by the conveying of
Proprietary Information between the Parties. Proprietary Information supplied is
not to be reproduced in any form except as required to accomplish the intent of,
and in accordance with the terms of, this Agreement. The receiving Party must
provide the same care to avoid disclosure or unauthorized use of Proprietary
Information as it provides to protect its own similar proprietary information
but in no event will the receiving Party fail to use reasonable care under the
circumstances to avoid disclosure or unauthorized use of Proprietary
Information. All Proprietary Information must be retained by the receiving Party
in a secure place with access limited to only such of the receiving Party's
employees, subcontractors, suppliers or agents who need to know such information
for purposes of this Agreement and to such third parties as the disclosing Party
has consented to by prior written approval. All Proprietary Information, unless
otherwise specified in writing (i) remains the property of the disclosing Party,
(ii) must be used by the receiving Party only for the purpose for which it was
intended, and (iii) such Proprietary Information, including all copies of such
information, must be returned to the disclosing Party or destroyed after the
receiving Party's need for it has expired or upon request of the disclosing
Party, and, in any event, upon termination of this Agreement. At the request of
the disclosing Party, the receiving Party will furnish a certificate of an
officer of the receiving Party certifying that Proprietary Information not
returned to the disclosing Party has been destroyed. For the purposes hereof,
Proprietary Information does not include information that:
(i) is published or is otherwise in the public domain through no
fault of the receiving Party at the time of any claimed disclosure or
unauthorized use by the receiving Party;
(ii) prior to disclosure pursuant to this Agreement is properly
within the legitimate possession of the receiving Party as evidenced
by reasonable documentation to the extent applicable;
(iii)subsequent to disclosure pursuant to this Agreement is
lawfully received from a third party having rights in the information
without restriction of the third party's right to disseminate the
information and without notice of any restriction against its further
disclosure;
(iv) is independently developed by the receiving Party or is
otherwise received through parties who have not had, either directly
or indirectly, access to or knowledge of such Proprietary Information;
(v) is transmitted to the receiving Party after the disclosing
Party has received written notice from the receiving Party, after
termination or expiration of this Agreement, that it does not desire
to receive further Proprietary Information;
(vi) is obligated to be produced under order of a court of
competent jurisdiction or other similar requirement, rule or
regulation of a Governmental Entity, so long as the Party required to
disclose the information provides the other Party with prior notice of
such order or requirement and its cooperation to the extent reasonable
in preserving its confidentiality; or
(vii) the disclosing Party agrees in writing is free of such
restrictions.
Because damages may be difficult to ascertain, the Parties agree that,
without limiting any other rights and remedies specified herein, an injunction
may be sought against the Party who has breached or threatened to breach this
subsection 8.2. Each Party represents and warrants that it has the right to
disclose all Proprietary Information which it has disclosed to the other Party
pursuant to this Agreement, and each Party agrees to indemnify and hold harmless
the other from all claims by a third party related to the wrongful disclosure of
such third party's proprietary information. Otherwise, neither Party makes any
representation or warranty, express or implied, with respect to any Proprietary
Information.
Section 9. Indemnification/Limitation of Liability
9.1 Vendor Indemnity. (a) The Vendor will indemnify and hold the Owner and
its affiliates, partners, directors, officers, agents and employees (the
"Indemnitees") harmless from and against all third party claims, demands suits,
proceedings, damages, costs, expenses, liabilities, including, without
limitation, reasonable legal fees (collectively, "Liabilities") brought against
or incurred by any Indemnitee for (i) injury to persons, or (ii) loss or damage
to any property, or (iii) any other liability, resulting from any act or
omission, of the Vendor in the performance of this Agreement. If the Vendor and
the Owner jointly cause such Liabilities, the Parties will share the liability
in proportion to their respective degree of causal responsibility.
(b) The Vendor's obligation to indemnify under subsection 9.1(a) with
respect to any Liability will not arise unless the Indemnitee (i) notifies the
Vendor in writing of such potential Liability within a reasonable time after the
Indemnitee is aware of such potential Liability; provided that the lack of
providing such notice will not affect the Vendor's obligation hereunder (A) if
the Vendor otherwise has actual knowledge of such Liability and (B) unless such
lack of notice is the cause of the Vendor being unable to adequately and
reasonably defend such Liability, (ii) gives the Vendor the opportunity and
authority to assume the defense of and settle such Liability, subject to the
provisions set forth below, and (iii) furnishes to the Vendor all such
reasonable information and assistance available to the Owner (or other
Indemnities) as may be reasonably requested by the Vendor and necessary for the
defense against such Liability. The Vendor will assume on behalf of the
Indemnitee and conduct in good faith the defense of such Liability with counsel
(including in-house counsel) reasonably satisfactory to the Indemnitee; provided
that the Indemnitee will have the right to be represented therein by advisory
counsel of its own selection and at its own expense. If the Indemnitee will have
reasonably concluded that there may be legal defenses available to it which are
different from or additional to, or inconsistent with, those available to the
Vendor, the Indemnitee will have the right to select separate counsel reasonably
satisfactory to the Vendor to participate in the defense of such action on its
own behalf at such Indemnitee's expense. In the event the Vendor fails, after
written demand by such Indemnitee, to defend any Liability as to which an
indemnity should be provided under subsection 9.1(a), then the Indemnitee may,
at the Vendor's expense, contest or settle such matter without the Vendor's
consent. All payments, losses, damages and reasonable costs and expenses
incurred in connection with such contest, payment or settlement controlled by
such Indemnitee will be to the Vendor's account. The Vendor will not settle any
such Liability without the consent of the Indemnitee, which consent will not be
unreasonably withheld. This indemnity is in lieu of all other obligations of the
Vendor, expressed or implied, in law or in equity, to indemnify the Indemnitees
(except those other indemnity obligations expressly set forth in this
Agreement).
(c) EXCEPT AS EXPRESSLY SET FORTH IN SUBSECTIONS 3.7, 3.8 AND 3.10 OF THIS
AGREEMENT, THE VENDOR MAKES NO WARRANTIES AS TO PRODUCTS, SOFTWARE, TECHNOLOGY,
MATERIALS, SERVICES, INFORMATION OR OTHER ITEMS IT FURNISHES TO THE OWNER,
AGENTS OR PURCHASERS, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, OR THAT SUCH
ITEMS ARE FREE FROM THE RIGHTFUL CLAIM OF ANY THIRD PARTY, BY WAY OF
INFRINGEMENT OR THE LIKE.
(d) EXCEPT AS PROVIDED IN SUBSECTIONS 3.2(c), 4.2, 7.1, 7.4 AND 9.2 HEREOF
NEITHER PARTY WILL BE LIABLE TO THE OTHER (ITS AGENTS OR, IN THE CASE OF THE
VENDOR, THE PURCHASERS) FOR ANY INCIDENTAL, CONSEQUENTIAL OR SPECIAL DAMAGES OR
ANY OTHER INDIRECT LOSSES OR DAMAGES ARISING OUT OF THIS AGREEMENT, THE DELIVERY
OR THE FAILURE TO DELIVER ANY OF THE PRODUCTS OR ANY COMPONENT THEREOF, ANY
BREACH OF THIS AGREEMENT, THE FAILURE OF THE PRODUCTS TO PERFORM AS WARRANTED OR
OTHERWISE OR ANY RESULTING OBLIGATION, OR THE USE OR INABILITY TO USE OF ANY
PRODUCTS DELIVERED PURSUANT TO THIS AGREEMENT, WHETHER IN AN ACTION FOR OR
ARISING OUT OF BREACH OF CONTRACT, FOR TORT, OR ANY OTHER CAUSE OF ACTION.
EXCEPT AS PROVIDED IN SUBSECTIONS 3.2(c), 4.2, 7.1, 7.4 AND 9.2 HEREOF IN
NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER (ITS AGENTS OR, IN THE CASE OF
THE VENDOR, THE PURCHASERS) FOR ANY SPECIAL, INDIRECT, INCIDENTAL OR
CONSEQUENTIAL DAMAGE OR LOSS OF ANY NATURE WHICH MAY ARISE IN CONNECTION WITH
THE USE, DISTRIBUTION, INSTALLATION, REMOVAL, MAINTENANCE OR SUPPORT OF PRODUCTS
AND/OR SOFTWARE (SEPARATELY OR IN COMBINATION WITH EACH OTHER OR WITH OTHER
PRODUCTS AND/OR SOFTWARE NOT PROVIDED BY VENDOR) BY OWNER, AGENTS AND ANY
PURCHASER PURSUANT TO OR UNDER THIS AGREEMENT, REGARDLESS OF WHETHER SUCH CLAIMS
ARE BASED OR REMEDIES ARE SOUGHT IN WARRANTY, CONTRACT, NEGLIGENCE, STRICT
LIABILITY, TORT, PRODUCTS LIABILITY OR OTHERWISE, EVEN IF THE CLAIMANT PARTY HAS
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGE OR LOSS.
9.2 Vendor Damages for Fraud. The Vendor will be responsible for all
(including, but not limited to, actual, consequential, incidental and special)
damages incurred by the Owner as a result of any damage or injury caused by or
resulting from the fraud of the Vendor.
9.3 Owner Indemnity. (a) The Owner will indemnify and hold the Vendor and
its affiliates, partners, directors, officers, agents and employees (the "Vendor
Indemnitees") harmless from and against all third party claims, demands, suits,
proceedings, damages, costs, expenses and liabilities, including, without
limitation, reasonable legal fees (collectively, "Vendor Liabilities") brought
against or incurred by any Vendor Indemnitee for (i) injury to persons, or (ii)
loss or damage to any property, or (iii) any other liability, in each instance
resulting from any act or omission of the Owner in the performance of this
Agreement. If the Vendor and the Owner jointly cause such Vendor Liabilities,
the Parties will share the liability in proportion to their respective degree of
causal responsibility.
(b) The Owner's obligation to indemnify under subsection 9.3(a) with
respect to any Vendor Liability will not arise unless the Vendor Indemnitee (i)
notifies the Owner in writing of such potential Vendor Liability within a
reasonable time after the Vendor Indemnitee is aware of such potential Vendor
Liability; provided that the lack of providing such notice will not affect the
Owner's obligation hereunder (A) if the Owner otherwise has actual knowledge of
such Vendor Liability and (B) unless such lack of notice is the cause of the
Owner being unable to adequately and reasonably defend such Vendor Liability,
(ii) gives the Owner the opportunity and authority to assume the defense of and
settle such Vendor Liability, subject to the provisions of the next two
sentences, and (iii) furnishes to the Owner all such reasonable information and
assistance (including, but not limited to, reasonable manufacturing
modifications) available to the Vendor (or other Vendor Indemnitees) as may be
reasonably requested by the Owner and necessary for the defense against such
Vendor Liability. The Owner will assume on behalf of the Vendor Indemnitee and
conduct in good faith the defense of such Liability with counsel (including
in-house counsel) reasonably satisfactory to the Vendor Indemnitee; provided
that the Vendor Indemnitee will have the right to be represented therein by
advisory counsel of its own selection and at its own expense. If the Vendor
Indemnitee will have reasonably concluded that there may be legal defenses
available to it which are different from or additional to, or inconsistent with,
those available to the Owner, the Vendor Indemnitee will have the right to
select separate counsel reasonably satisfactory to the Owner to participate in
the defense of such action on its own behalf at such Vendor Indemnitee's
expense. In the event the Owner fails, after written demand by such Vendor
Indemnitee, to defend any Vendor Liability as to which an indemnity should be
provided under subsection 9.3(a), then the Vendor Indemnitee may, at the Owner's
expense, contest or settle such matter without the Owner's consent. All
payments, losses, damages and reasonable costs and expenses incurred in
connection with such contest, payment or settlement by such Vendor Indemnitee
will be to the Owner's account. The Owner will not settle any such Vendor
Liability without the consent of the Vendor Indemnitee, which consent will not
be unreasonably withheld. This indemnity is in lieu of all other obligations of
the Owner, expressed or implied, in law or in equity, to indemnify the Vendor
Indemnitees (except those other indemnity obligations expressly set forth in
this Agreement).
Section 10. Termination
10.1 Termination. This Agreement will terminate on the End Date, unless
extended by mutual agreement of the Parties hereto, in accordance with Section
2, or unless sooner terminated as provided herein. Any such termination in
accordance with the terms of this Section 10 will in no way terminate, modify,
amend or otherwise affect the Vendor's warranties or indemnities hereunder (or
the enforceability thereof) in connection with Products sold pursuant to the
terms of this Agreement.
10.2 Termination For Cause. In addition to any other termination right
provided the Owner pursuant to the terms of this Agreement, the Owner has the
right to terminate this Agreement in its entirety without any penalty or payment
obligation upon the occurrence of any Vendor event of default (each a "Vendor
Event of Default") as set forth below. The occurrence of any of the following
will constitute a Vendor Event of Default:
(a) the Vendor (i) files a voluntary petition in bankruptcy or has an
involuntary petition in bankruptcy filed against it that is not dismissed within
sixty (60) days of such involuntary filing, (ii) admits the material allegations
of any petition in bankruptcy filed against it, (iii) is adjudged bankrupt, or
(iv) makes a general assignment for the benefit of its creditors, or if a
receiver is appointed for all or a substantial portion of its assets and is not
discharged within sixty (60) days after his appointment; or
(b) the Vendor commences any proceeding for relief from its creditors in
any court under any state insolvency statutes; or
(c) the Vendor violates any Applicable Law and the effect of such violation
materially impairs the Vendor's ability to perform its obligation under this
Agreement; or
(d) the Vendor fails to comply with subsection 11.18; or
(e) the Vendor breaches any other provision of this Agreement and the
effect of such breach materially impairs the Vendor's ability to perform its
obligations under this Agreement.
10.3 Remedies. If any of the Vendor Events of Default exists and is
continuing, the Owner may, without prejudice to any other rights or remedies of
the Owner in this Agreement or at law or in equity (except as such legal or
equitable remedies may be limited by this Agreement), terminate this Agreement
upon written notice to the Vendor; provided that the Owner will have first
provided to the Vendor the following periods of notice and opportunity to cure:
(i) in the case of an Event of Default specified in subsections
10.2(a) and 10.2(b), no notice or opportunity to cure will be required
from the Owner; and
(ii) in the case of any other Event of Default by the Vendor, the
Owner will have provided thirty (30) days' prior written notice, and
the Vendor will have failed to diligently pursue such cure and failed
to remedy the breach entirely by the end of said thirty (30) day
notice period.
10.4 Discontinuance of Supply. Upon such notification of termination, the
Vendor must immediately discontinue all supply of Products.
10.5 Payments. When the Owner terminates this Agreement pursuant to
subsection 10.2, notwithstanding anything herein to the contrary, the Owner may
withhold payments in amounts that it reasonably believes are in dispute (any
such amount a "Disputed Amount"), if any, at such time to the Vendor for the
purposes of offset of amounts owed to the Owner pursuant to the terms of this
Agreement, until such time as the exact amount of damages due to the Owner from
the Vendor is fully determined; provided that in such event the Owner will
deposit any such Disputed Amounts in an escrow account with a reasonable
unaffiliated escrow agent of national reputation for the duration of any such
dispute.
10.6 Costs. In the event of a termination due to a Vendor Event of Default,
the Owner will be entitled from the Vendor to reasonable out of pocket increased
costs incurred by the Owner for products purchased from other vendors to replace
the Vendor's Products. The amount to be paid by the Vendor pursuant to this
subsection 10.6 will survive termination of this Agreement and will be subject
to the limitations of liability in this Agreement.
10.7 Continuing Obligations. Termination of this Agreement for any reason
(i) will not relieve either Party of its obligations with respect to the
confidentiality of the Proprietary Information as set forth in subsection 8.2,
(ii) will not relieve either Party of any obligation which applies to it and
which expressly or by implication survives termination, and (iii) except as
otherwise provided in any provision of this Agreement expressly limiting the
liability of either Party, will not relieve either Party of any obligations or
liabilities for loss or damage to the other Party arising out of or caused by
acts or omissions of such Party prior to the effectiveness of such termination.
10.8 The Vendor's Right to Terminate. The Vendor has the right to terminate
this Agreement in its entirety without any penalty or payment obligations, upon
the occurrence of any of the following (each an "Owner Event of Default"):
(a) the Owner (i) files a voluntary petition in bankruptcy or has an
involuntary petition in bankruptcy filed against it that is not dismissed within
sixty (60) days of such involuntary filing, (ii) admits the material allegations
of any petition in bankruptcy filed against it, (iii) is adjudged bankrupt, or
(iv) makes a general assignment for the benefit of its creditors, or if a
receiver is appointed for all or a substantial portion of its assets and is not
discharged within sixty (60) days after his appointment; or
(b) the Owner commences any proceeding for relief from its creditors in any
court under any state insolvency statutes; or
(c) the Owner fails to (i) make payments of undisputed amounts (considered
separately and not in aggregate) of less than ten million ($10,000,000) due to
the Vendor pursuant to the terms of this Agreement, provided that such failure
has continued for at least fifteen (15) days after the Vendor has provided the
Owner with written notice of its intent to so terminate on account of such
overdue amount or (ii) make payments of undisputed amounts in excess of ten
million ($10,000,000) due to the Vendor pursuant to the terms of this Agreement,
provided that such failure has continued for at least forty-five (45) days after
the Vendor has c) the Owner fails to (i) make payments of undisputed amounts
(considered separately and not in aggregate) of less than ten million
($10,000,000) due to the Vendor pursuant to the terms of this Agreement,
provided that such failure has continued for at least fifteen (15) days after
the Vendor has provided the Owner with written notice of its intent to so
terminate on account of such overdue amount or (ii) make payments of undisputed
amounts in excess of ten million ($10,000,000) due to the Vendor pursuant to the
terms of this Agreement, provided that such failure has continued for at least
forty-five (45) days after the Vendor has provided the Owner with written notice
of its intent to so terminate on account of such overdue amount; or
(d) the Owner repeatedly and materially breaches subsection 8.2
notwithstanding the fact that the Vendor will have provided the Owner with prior
written notice describing the alleged material breaches and will have given the
Owner a reasonable time to cure any such breaches; or
(e) the Owner fails to comply with subsection 11.19; or
(f) the Owner violates any Applicable Laws, and the effect of such
violation materially impairs the Owner's ability to perform its obligations
under this Agreement; or
(g) the Owner fails to purchase in any of the respective Annual Supply
Periods the First Annual Minimum Commitment, the Second Annual Minimum
Commitment and the Third Annual Minimum Commitment, as applicable and as such
Annual Minimum Commitments may reduced from time to time in accordance with the
terms of this Agreement; or
(h) the Owner otherwise materially breaches any provision of this Agreement
which such material breach it has not cured within a reasonable time after
notification by the Vendor thereof.
10.9 Vendor Remedies. If any of the Owner Events of Default exists and is
continuing, the Vendor may, without prejudice to any rights or remedies of the
Vendor in this Agreement or at law or in equity (except as such legal or
equitable remedies may be limited by this Agreement), terminate this Agreement
(i) immediately upon the occurrence of any Owner Event of Default specified in
clauses (a), (b), (c), (d) and (h) and (ii) after thirty (30) days prior written
notice upon the occurrence of any other Owner Event of Default. All amounts owed
by the Owner to the Vendor prior to any such termination shall be payable
immediately upon termination. Notwithstanding anything set forth in this
Agreement, immediately upon the occurrence of any Owner Event of Default the
Vendor shall have the right, without any penalty or payment obligations, to
suspend Vendor's performance with respect to manufacturing Products, to stop
shipment of all Products subject to Delivery Orders, and to recall, if possible,
all Products subject to unfulfilled or undelivered Delivery Orders.
Section 11. General Provisions
11.1 Assignment. (a) Except as otherwise permitted herein, neither this
Agreement nor any portion hereof may be assigned by either Party without the
express prior written consent of the other Party provided that such consent will
not be unreasonably withheld. Notwithstanding anything stated herein to the
contrary, the Owner may assign its rights under this Agreement to any wholly
owned direct or indirect operating subsidiary of Sprint Spectrum Holding
Company, L.P., a Delaware limited partnership. The Owner may, without the
consent of the Vendor, collaterally assign its rights hereunder (including, but
not limited to, all licenses with respect to the Software) to the parties
providing financing for any part of the Nationwide Network under a collateral
trust for the benefit of one or more other entities providing financing for any
part of the Nationwide Network or similar arrangement for the benefit of the
entities providing for the financing for any part of the Nationwide Network, in
either case. If requested by the Owner, the Vendor, will within seven (7) days
of such request, provide a written consent to any such assignment; provided that
such consent will permit reassignment if the financing parties exercise their
remedies under the documents for such financing subject to reasonable standards
as to (i) the creditworthiness of the assignee and (ii) the fact that the
assignee is not at such time a direct competitor of the Vendor or of its
subsidiaries. The foregoing rights and obligations are in addition to those set
forth in subsection 11.2. Any attempted assignment in violation of the terms of
this Agreement will be null and void.
(b) Notwithstanding anything contained in this subsection 11.1 to the
contrary, the Owner acknowledges and agrees that unless the Owner receives prior
written notice from the Vendor to the contrary, that effective automatically at
5:00 p.m. New York City time on January 2, 1997 (the "Assignment Date") all of
the Vendor's rights hereunder will be assigned by the Vendor to Samsung
Telecommunications America, Inc., a Delaware corporation ("Samsung America") and
simultaneous therewith Samsung America will automatically assume all of the
Vendor's obligations under this Agreement and for all purposes under this
Agreement the term "Vendor" will be deemed to mean Samsung America; provided
that nothing contained herein will in any way diminish or otherwise affect the
Vendor's ongoing liability and obligations after the Assignment Date to the
Owner under this Contract upon the default, breach or other failure to perform
by Samsung America. On or immediately prior to the Assignment Date the Vendor
and Samsung America will deliver to the Owner a written notice (the "Assignment
Notice") verifying the assignment to Samsung America contemplated herein and
confirming Samsung Electronics Co., Ltd.'s ongoing liability under and pursuant
to the terms of this Agreement. Furthermore, the Assignment Notice will state
that as of the Assignment Date the representations and warranties set forth in
subsection 13.1 are true and correct.
11.2 Successors and Assigns. This Agreement will bind and inure to the
benefit of the Parties to this Agreement, their successors and permitted
assigns.
11.3 Survival of Obligations. The Parties' rights and obligations which, by
their nature, would continue beyond the termination, cancellation, or expiration
of this Agreement, including but not limited to those rights and obligations of
the Parties set forth in subsections 3.7, 3.8, 10.6 and 10.9 and Sections 7, 8
and 9, will survive such termination, cancellation or expiration.
11.4 Severability. If any provision in this Agreement will be held to be
invalid or unenforceable, the remaining portions will remain in effect. In the
event such invalid or unenforceable provision is considered an essential element
of this Agreement, the Parties will promptly negotiate a replacement provision.
11.5 Non-waiver. No waiver of the terms and conditions of this Agreement,
or the failure of either party strictly to enforce any such term or condition on
one or more occasions will be construed as a waiver of the same or of any other
term or condition of this Agreement on any other occasion.
11.6 Compliance with United States Regulations. Nothing contained in this
Agreement will require or permit the Owner or the Vendor to do any act
inconsistent with the requirements of (a) the regulations of the United States
Department of Commerce, or (b) the foreign assets controls or foreign
transactions controls regulations of the United States Treasury Department, or
(c) any Applicable Law, regulation or executive order as the same may be in
effect in the Territory from time to time.
11.7 Notices. All notices, requests, demands, consents, agreements and
other communications required or permitted to be given under this Agreement will
be in writing and will be mailed to the party to whom notice is to be given, by
facsimile, and confirmed by first class mail, postage prepaid, and properly
addressed as follows (in which case such notice will be deemed to have been duly
given on the day the notice is first received by the party):
SPRINT SPECTRUM L.P.
4717 Grand Avenue
Kansas City, Missouri 64112
Attention: Vice President, Business Development
Facsimile No.: (816) 559-6040
Telephone No.: (816) 559-6000
with a copy to:
SPRINT SPECTRUM L.P.
4717 Grand Avenue
Kansas City, Missouri 64112
Attention: Vice President and General Counsel
Facsimile No.: (816) 559-2591
Telephone No.: (816) 559-2500
SAMSUNG ELECTRONICS CO., LTD.
9th Floor, Joong-ang Daily News Bldg.
7, Soonhwa-dong,
Choong-Ku,
C.P.O. Box 2775
Seoul, Korea
Attention: Mr. S.N. Lee
General Manager of International
Sales Wireless Products Group
Facsimile No.: (010) 82-2-751-6071
Telephone No.: (010) 82-2-751-6049
with a copy to:
SAMSUNG ELECTRONICS CO., LTD./
SAMSUNG TELECOMMUNICATIONS AMERICA, INC.
1501 LBJ Freeway, Suite 410
Dallas, Texas 75234
Attention: Mr. H.J. Lee
Director of Strategic Business
Development Team
Facsimile No.: (214) 484-6630
Telephone No.: (214) 484-6004
The above addresses can be changed by providing notice to the other Party
in accordance with this subsection 11.7.
11.8 Dispute Resolution. (a) Subject to subsections 10.3, 10.8, 10.9 and
subsection 11.10, in the event any controversy, claim, dispute, difference or
misunderstanding arises out of or relates to this Agreement, any term or
condition hereof, any of the work to be performed hereunder or in connection
herewith, the respective System Managers of the Owner and the Vendor will meet
and negotiate in good faith in an attempt to amicably resolve such controversy,
claim, dispute, difference or misunderstanding in writing. Such System Managers
must meet for this purpose within ten (10) Business Days, or such other time
period mutually agreed to by the Parties, after such controversy, claim,
dispute, difference or misunderstanding arises. If the Parties are unable to
resolve the controversy, claim, dispute, difference or misunderstanding through
good faith negotiations within such ten (10) Business Day period, each Party
will, within five (5) Business Days after the expiration of such ten (10)
Business Day period, prepare a written position statement which summarizes the
unresolved issues and such Party's proposed resolution. Such position statement
must be delivered by the Vendor to the Owner's Vice President of Engineering or
Operations or then equivalent officer and by the Owner to the Vendor's
corresponding officer or representative for resolution within (5) Business Days,
or such other time period mutually agreed to by the Parties.
(b) If the Parties continue to be unable to resolve the controversy, claim,
dispute, difference or misunderstanding, either Party may initiate arbitration
in accordance with the provisions of subsection 11.9. The arbitrators hired or
otherwise chosen pursuant to and in accordance with the terms of this Agreement
will determine issues of arbitrability pursuant to the terms of this Agreement
but may not in any way limit, expand or otherwise modify the terms of this
Agreement nor will they have any authority to award punitive or other damages in
excess of compensatory damages (other than as specifically set forth in this
Agreement) and each Party irrevocably waives any such claim thereto when
invoking the arbitration provisions of subsection 11.9.
11.9 Arbitration. (a) An arbitration proceeding initiated by either Party
under this Agreement with respect to any controversy, claim, dispute, difference
or misunderstanding will be conducted in New York in accordance with the
Commercial Arbitration rules of the AAA, except that, at the request of either
Party, a stenographic transcript of the testimony and proceedings will be taken
and the arbitrators will base their decision upon the records and briefs of the
Parties.
(b) Such arbitration will be initiated by either Party by notifying the
other Party in writing and will be settled before three (3) impartial
arbitrators, one of whom will be named by the Owner, one by the Vendor and the
third by the two arbitrators appointed by the Owner and the Vendor,
respectively. All of the named arbitrators will have significant experience in
the wireless telecommunications industry. If either the Owner or the Vendor
fails to select an arbitrator within ten (10) days after notice has been given
of the initiation of the arbitration, the officer in charge of the New York
office of the AAA will have the right to appoint the other arbitrator, and the
two arbitrators thus chosen will then select the third arbitrator.
(c) Except as the Parties may otherwise mutually agree, the arbitration
hearings will commence within fifteen (15) Business Days after a Party's
initiation of the arbitration. The Federal Rules of Evidence will apply and
reasonable discovery, including depositions, will be permitted. Discovery issues
will be decided by the arbitrators and post-hearing briefs will be permitted.
(d) The arbitrator will render a decision within ten (10) days after the
conclusion of the hearing(s) and submission of post-hearing briefs and a written
opinion setting forth findings of fact and conclusions of law will be made
available to the Parties within that time period. The decision of the majority
of the arbitrators regarding the matter submitted will be final and binding upon
the Parties. Judgment upon the award rendered by the arbitrators may be entered
in any court having jurisdiction thereof.
(e) Each Party will pay for the services and expenses of the arbitrator
appointed by it, its witnesses and attorneys, and all other costs incurred in
connection with the arbitration (including, without limitation, the cost of the
services and expenses of the arbitrator appointed by the two arbitrators
appointed by the Parties) will be paid in equal part by the Parties, unless the
award will specify a different division of the costs. Unless otherwise
specifically stated in this Agreement, during the pendency of any arbitration
proceedings, the Parties agree to continue to perform their obligations
hereunder in the same manner as prior to the institution of arbitration
proceedings.
11.10 Other Remedies. Notwithstanding anything to the contrary herein
contained, each Party will be entitled to pursue any equitable rights and
remedies that are available at law or in equity without complying with
subsection 11.9.
11.11 Tolling. All applicable statutes of limitation will be tolled to the
extent permitted by Applicable Law while the dispute resolution procedures
specified in subsections 11.8 and 11.9 are pending, and nothing herein will be
deemed to bar any Party from taking such action as the Party may reasonably deem
to be required to effectuate such tolling.
11.12 GOVERNING LAW AND FORUMS. THIS AGREEMENT IS GOVERNED BY THE LAW OF
THE STATE OF NEW YORK PERTAINING TO CONTRACTS AND AGREEMENTS MADE AND/OR
PERFORMED IN NEW YORK. THIS AGREEMENT AND THE WORK TO BE PERFORMED HEREUNDER
WILL BE DEEMED TO BE MADE, EXECUTED AND PERFORMED IN THE STATE OF NEW YORK. THE
VENDOR AND THE OWNER EACH HEREBY IRREVOCABLY (A) AGREES THAT ANY SUIT, ACTION OR
OTHER LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT MUST BE
BROUGHT IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW
YORK WHICH COURT WILL HAVE EXCLUSIVE JURISDICTION OVER ANY CONTROVERSY ARISING
OUT OF THIS AGREEMENT, (B) CONSENTS TO THE JURISDICTION OF SUCH COURT IN ANY
SUCH SUIT, ACTION OR PROCEEDING, (C) WAIVES ANY OBJECTION WHICH IT MAY HAVE TO
THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING IN SUCH COURT AND
CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM AND; (D) WAIVE A TRIAL BY JURY IN ANY SUCH SUIT, ACTION OR
PROCEEDING. SERVICE OF PROCESS IN ANY SUIT, ACTION OR PROCEEDING SHOULD BE
DEEMED EFFECTIVE IF MADE BY MAILING OR DELIVERING A COPY OF SUCH PROCESS TO THE
OWNER OR THE VENDOR, AS THE CASE MAY BE, AT THE ADDRESSES INDICATED IN
SUBSECTION 11.7 HEREOF AND IN THE MANNER SET FORTH IN SUCH SUBSECTION 11.7.
NOTHING IN THIS SUBSECTION 11.12 WILL AFFECT THE RIGHT OF THE OWNER OR THE
VENDOR TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
11.13 Entire Agreement. This Agreement, together with all Appendices,
Exhibits and Schedules attached hereto and the Side Letter Agreement dated as of
the date hereof between the Owner and the Vendor with respect to certain
payments by the Vendor to the Owner, which are all incorporated herein by this
reference, constitutes the entire agreement between the Parties and supersedes
all prior oral or written negotiations and agreements between the Parties with
respect to the subject matter hereof. No modification, variation or amendment to
this Agreement will be effective unless made in writing and signed by duly
authorized representatives of each of the Parties. Except as otherwise provided
in this Agreement, any additional or inconsistent terms stated by the Owner in
any Delivery Order issued hereunder will be of no force or effect other than to
express types and quantities of Products ordered and shipment destinations.
11.14 Improvements, Inventions and Innovations. All rights in any
improvements, inventions, and innovations made by the Owner will vest in the
Owner, and the Owner and its Affiliates will have the right to exploit such
improvements, inventions, and innovations. All rights in any improvements,
inventions and innovations made by the Vendor will vest in the Vendor, and the
Vendor and its affiliates will have the right to exploit such improvements,
inventions and innovations.
11.15 Conflicts. In the event of any conflict or inconsistency among the
provisions of this Agreement and the documents attached hereto and incorporated
herein, such conflict or inconsistency will be resolved by giving precedence to
this Agreement and thereafter to the Exhibits, Schedules and the Appendices.
11.16 Independent Contractors. The relationship between the Vendor and the
Owner pursuant to this Agreement is that of independent contractors. The Vendor
and the Owner are not joint venturers, partners, principal and agent, master and
servant, employer or employee, and have no other relationship pursuant to this
Agreement other than independent contracting parties.
11.17 Force Majeure. If the performance of this Agreement (including
without limitation any deliveries hereunder) is interfered with by reason of any
unforeseen circumstance beyond the reasonable control of the Party affected,
including without limitation, fire, acts of God or the public enemy, riots and
insurrections, fire, strikes, boycotts or lockouts, embargoes, judicial action,
lack of or inability to obtain export permits or approvals, components and acts
of civil or military authorities, then the Party affected will be excused from
such performance on a day-for-day basis to the extent of such interference (and
the other Party will likewise be excused from performance on a day-for-day basis
to the extent such Party's obligations relate to the performance so interfered
with); provided that the Party so affected will use its best efforts under the
circumstances to remove such causes of nonperformance. In the event of a Force
Majeure claimed by either party which lasts in excess of ninety (90) days from
the commencement of any such claim by either Party hereunder, the Party not so
claiming Force Majeure hereunder will have the right, but not the obligation, to
terminate this Agreement. The Party claiming the Force Majeure hereunder will
not be liable to the other Party terminating hereunder for any damages or other
amounts caused solely and directly by any such termination pursuant to this
subsection 11.17.
11.18 Change of Control of the Vendor. The Vendor will not consolidate with
or merge into any other Person or convey, transfer or lease (other than in
connection with sale leaseback or lease financing transactions in connection
with ongoing Vendor operations) all or substantially all of its assets to any
Person, nor will the Vendor permit any Person or group (as such term is defined
in the Securities Exchange Act of 1934, as amended (the "Exchange Act")) own or
acquire fifty percent (50%) of the Vendor's voting equity interests where such
Person or group did not own as of the Effective Date in excess of ten percent
(10%) of such equity interests (any such Person or group will be referred to as
the "Vendor's Succeeding Entity"), unless:
(i) the Vendor's Succeeding Entity will agree to assume the
obligations of the Vendor under this Agreement; and
(ii) the Owner will have approved the transaction, based solely
on (x) the creditworthiness of the Vendor's Succeeding Entity, (y)
whether the Vendor's Succeeding Entity is a competitor of the Owner
and (z) whether in the Owner's reasonable judgment the Vendor's
Succeeding Entity will be able to fulfill the obligations of the
Vendor (including, but not limited to, the Vendor's obligations as to
then present or future orders) under this Agreement.
11.19 Change of Control of the Owner. Except as otherwise permitted under
subsection 11.1, the Owner will not consolidate with or merge into any other
business entity or convey, transfer or lease all or substantially all of its
assets to any Person, nor will the Owner permit any Person or group (as such
term is defined in the Exchange Act) own or acquire fifty percent (50%) of the
Owner's voting equity interests or general partnership interests where such
Person or group did not own as of the Effective Date in excess of ten percent
(10%) of either of such partnership interests (any such Person or group will be
referred to as the "Owner's Succeeding Entity"), unless:
(i) the Owner's Succeeding Entity will agree to assume the
obligations of the Owner under this Agreement; and
(ii) the Vendor will have approved the transaction, based solely
on (x) the creditworthiness of the Owner's Succeeding Entity, (y)
whether the Owner's Succeeding Entity is a direct competitor of the
Vendor and (z) whether in the Vendor's reasonable judgement the
Owner's Succeeding Entity will be able to fulfill the obligations of
the Owner under this Agreement.
11.20 Offset. Either Party may deduct or retain out of any moneys which may
be due or become due to the other Party hereunder or otherwise any amounts such
other Party owes to such first Party hereunder or otherwise.
Section 12. Affiliates
12.1 Agreements with Initial Affiliates. During the Initial Term of this
Agreement, the Owner will have the right, but not the obligation, to require
that the Vendor enter into good faith negotiations for separate agreements with
any Initial Affiliate designated by the Owner (each, an "Initial Affiliate
Agreement") for the supply of Products pursuant to the same prices as set forth
herein and on similar warranty, Catastrophic Defect, intellectual property and
indemnity terms and conditions as those set forth in this Agreement.
12.2 Additional Affiliates. On a quarterly basis commencing on the
Effective Date and during the Initial Term of this Agreement, the Owner may,
upon fifteen (15) days' prior written notice to the Vendor, designate any Person
which has been licensed to use PCS in the Territory but which is not an Initial
Affiliate as an "Additional Affiliate"; provided that the Vendor will have a
reasonable opportunity to review and approve such designation, such approval not
to be unreasonably withheld, based upon (i) reasonable credit criteria, (ii) the
fact that such proposed Additional Affiliate has not in the past materially
breached prior material agreements with the Vendor or its affiliates, (iii) the
fact that the proposed Additional Affiliate is not, at the time of such
determination, a direct competitor to the Vendor or its affiliates in the
wireless telecommunications business and (iv) the fact that the proposed
Additional Affiliate is not, at the time of such determination, otherwise
engaged with the Vendor or its affiliates in a material agreement for the
purchase and/or supply of PCS CDMA wireless technology; and provided, further,
that (x) the Owner, any Partner or any Initial Affiliate has at least a ten
percent (10%) equity ownership in such Person, (y) such Person is controlled by
or under the common control with the Owner, any Partner or any Initial Affiliate
or (z) there exists between the Owner and such Person an Additional Affiliate
Arrangement.
12.3 Agreements with Additional Affiliates. During the Initial Term of this
Agreement, the Owner will have the right, but not the obligation, to require
that the Vendor enter into separate agreements with any Additional Affiliate
designated by the Owner (each, an "Additional Affiliate Agreement") for the
supply of Products at similar price and warranty terms as are then available to
the Owner pursuant to the terms of this Agreement. The Vendor must enter into
good faith negotiations for the establishment of such Additional Affiliate
Agreements with any such Additional Affiliate promptly upon the designation of
such Additional Affiliate by the Owner and upon notice to the Vendor that such
Additional Affiliate desires to enter into an Additional Affiliate Agreement.
Any Additional Affiliate that enters into an Additional Affiliate Agreement with
the Vendor will have the right to choose among the Products offered to the Owner
under this Agreement solely for use within the Nationwide Network.
12.4 Affiliate Rights. Notwithstanding anything herein contained to the
contrary, Affiliates will not be deemed third party beneficiaries to this
Agreement or otherwise have any rights hereunder. Only the Owner may designate a
Person as an Affiliate in accordance with the terms of this Section 12 and only
the Owner has the right and/or the ability to enforce any rights hereunder
against the Vendor.
Section 13. Representations and Warranties
13.1 Representations and Warranties of the Vendor. The Vendor hereby
represents and warrants to the Owner as follows:
(a) Due Organization of the Vendor. The Vendor is a corporation, validly
existing and in good standing under the laws of the Republic of Korea and has
all requisite power and authority to own and operate its business and properties
and to carry on its business as such business is now being conducted and is duly
qualified to do business in all jurisdictions in which the transaction of its
business in connection with the performance of its obligations under this
Agreement makes such qualification necessary or required. Samsung America is a
corporation, validly existing and in good standing under the laws of Delaware
and has all requisite power and authority to own and operate its business and
properties and to carry on its business as such business is now being conducted
and is duly qualified to do business in all jurisdictions in which the
transaction of its business in connection with the performance of its
obligations under this Agreement makes such qualification necessary or required.
(b) Due Authorization of the Vendor; Binding Obligation. The Vendor has
full corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder, and the execution, delivery and performance
of this Agreement by the Vendor has been duly authorized by all necessary
corporate action on the part of the Vendor; this Agreement has been duly
executed and delivered by the Vendor and is the valid and binding obligation of
the Vendor enforceable in accordance with its terms, except as enforcement
thereof may be limited by or with respect to the following: (i) applicable
insolvency, moratorium, bankruptcy, fraudulent conveyance and other similar laws
of general application relating to or affecting the rights and remedies of
creditors; (ii) application of equitable principles (whether enforcement is
sought in proceedings in equity or at law); and (iii) provided the remedy of
specific enforcement or of injunctive relief is subject to the discretion of the
court before which any proceeding therefore may be brought. Samsung America has
full corporate power and authority to perform its obligations under this
Agreement, and the performance of this Agreement by the Samsung America has been
duly authorized by all necessary corporate action on the part of Samsung
America.
(c) Non-Contravention. The execution, delivery and performance of this
Agreement by the Vendor and the consummation of the transactions contemplated
hereby do not and will not contravene the corporate arrangements governing the
conduct of the Vendor and do not and will not conflict with or result in (i) a
breach of or default under any material indenture, mortgage, instrument,
judgment, decree, order or ruling to which the Vendor is a party or by which it
or any of its properties is bound or affected, or (ii) a breach of any
Applicable Law. The performance of this Agreement by Samsung America and the
consummation of the transactions contemplated hereby do not and will not
contravene the corporate arrangements governing the conduct of Samsung America
and do not and will not conflict with or result in (i) a breach of or default
under any material indenture, mortgage, instrument, judgment, decree, order or
ruling to which Samsung America is a party or by which it or any of its
properties is bound or affected, or (ii) a breach of any Applicable Law.
(d) Regulatory Approvals. All material authorizations by, approvals or
orders by, consents of, notices to, filings with or other acts by or in respect
of any Governmental Entity or any other Person required in connection with the
execution, delivery and performance of this Agreement by the Vendor have been
obtained or will be obtained in due course.
(e) Non-Infringement. Except as set forth on Schedule 3 and as of the
Effective Date there are no threatened or actual claims or threatened or actual
suits in connection with patents and other intellectual property matters that
would or could materially adversely affect the Vendor's ability to perform its
obligations under this Agreement.
(f) Requisite Knowledge. The Vendor has or will obtain all requisite
knowledge, know-how, skill, expertise and experience to perform its obligations
in accordance with the terms of this Agreement. Samsung America has or will
obtain all requisite knowledge, know-how, skill, expertise and experience to
perform its obligations in accordance with the terms of this Agreement.
(g) Financial Capacity. The Vendor has the financial, management and
manufacturing capacity and capabilities to do the work in a timely manner in
accordance with the terms of this Agreement. Samsung America has the financial,
management and manufacturing capacity and capabilities to do the work in a
timely manner in accordance with the terms of this Agreement.
13.2 Representations and Warranties of the Owner. The Owner hereby
represents and warrants to the Vendor and each Guarantor as follows:
(a) Due Organization of the Owner. The Owner is a limited partnership,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite power and authority to own and operate its business and
properties and to carry on its business as such business is now being conducted
and is duly qualified to do business in Delaware and in any other jurisdiction
in which the transaction of its business makes such qualification necessary or
required.
(b) Due Authorization of the Owner; Binding Obligation. The Owner has full
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder, and the execution, delivery and performance of this
Agreement by each of the Owner have been duly authorized by all necessary
partnership action on the part of the Owner; this Agreement has been duly
executed and delivered by the Owner and is the valid and binding obligation of
the Owner enforceable in accordance with its terms, except as enforcement
thereof may be limited by or with respect to the following: (i) applicable
insolvency, moratorium, bankruptcy, fraudulent conveyance and other similar laws
of general application relating to or affecting the rights and remedies of
creditors; (ii) application of equitable principles (whether enforcement is
sought in proceedings in equity or at law); and (iii) provided the remedy of
specific enforcement or of injunctive relief is subject to the discretion of the
court before which any proceeding therefor may be brought.
(c) Non-Contravention. The execution, delivery and performance of this
Agreement by the Owner and the consummation of the transactions contemplated
hereby do not and will not contravene the partnership arrangements governing the
Owner and do not and will not conflict with or result in (i) a breach of or
default under any material indenture, agreement, instrument, judgment, decree,
order or ruling to which the Owner is a Party or by which it or any of its
properties is bound or affected, or (ii) a breach of any Applicable Law.
(d) Regulatory Approvals. All material authorizations by, approvals or
orders by, consents of, notices to, filings with or other acts by or in respect
of any Governmental Entity or any other Person required in connection with the
execution, delivery and performance of this Agreement by the Owner have been
obtained or will be obtained in due course.
(e) Financial Capacity. The Owner has or will have the financial management
capacity to perform its obligations under this Agreement.
Section 14. [Intentionally Omitted]
Section 15. Other
15.1 Owner Liabilities. The Parties understand and agree that none of the
Partners, nor any of their Affiliates, has guaranteed or otherwise is now in any
way liable with respect to any obligations or liabilities of the Owner or any of
its subsidiaries pursuant to or in connection with this Agreement. The Parties
further understand and agree that neither the Owner nor any of its subsidiaries
will guarantee or otherwise be in any way liable for any obligations or
liabilities of any of the Partners or any Affiliate of the Owner pursuant to
this Agreement unless, and only to the extent, the Owner expressly agrees in
writing to guarantee or otherwise be liable for such liability.
15.2 Counterparts. This Agreement may be executed by one or more of the
Parties to this Agreement on any number of separate counterparts, and all of
said counterparts taken together will be deemed to constitute one and the same
instrument.
<PAGE>
THE OWNER AND THE VENDOR HAVE READ THIS AGREEMENT INCLUDING ALL APPENDICES,
EXHIBITS AND SCHEDULES HERETO AND AGREE TO BE BOUND BY ALL THE TERMS AND
CONDITIONS HEREOF AND THEREOF.
IN WITNESS WHEREOF, the Parties hereto have caused their authorized
representatives to execute this Agreement effective as of the date first set
forth above.
SPRINT SPECTRUM L.P.,
Owner
By: /s/ B.A. Bianchino
Name: B.A. Bianchino
Title: Chief Business Development Officer
SAMSUNG ELECTRONICS CO., LTD.,
Vendor
By: /s/ Y.R. Song
Name: Y.R. Song
Title: Vice President
<PAGE>
SCHEDULE 1
Independent Auditors
o Ernst & Young LLP
o Arthur Andersen LLP
o Price Waterhouse LLP
o Deloitte & Touche LLP
o KPMG Peat Marwick LLP
This list will at all times throughout the Term of this Agreement
specifically exclude the then current auditor of either the Vendor, Samsung
America or the Owner.
<PAGE>
SCHEDULE 2
Initial Affiliates
(a) Each of the Partners and their operating subsidiaries.
(b) APC and its operating subsidiaries.
(c) PhillieCo and its operating subsidiaries.
(d) TCG and its operating subsidiaries.
(e) NewTelCo. and its operating subsidiaries.
<PAGE>
SCHEDULE 3
Vendor Outstanding Patent Issues
None.
<PAGE>
SCHEDULE 4
Vendor Repair Facilities
[To be completed]
<PAGE>
SCHEDULE 5
[Intentionally Omitted]
<PAGE>
SCHEDULE 6
Vendor's Proprietary Marks
[To be completed]
<PAGE>
SCHEDULE 7
[Intentionally Omitted]
<PAGE>
SCHEDULE 8
First Forecast
[-------------------------------------------------------]
<PAGE>
APPENDIX 1
Pricing
Unit Version Quantity Price (in U.S. dollars)
- ------------------------- ------------------------- ----------------------------
SCH-1000 (Exhibit A1) [__________] Subscriber $[____]
Subscriber Unit and Units and Material
Material Accessories Accessories
[__________] Subscriber $[____]
Units and Material
Accessories
[__________] Subscriber $[____]
Units and Material
Accessories
SCH-1000 Subscriber The Second Generation [________________] for the Units
and/or Second (Exhibit A2) quantities period up to June 30, 1998 Generation
(Exhibit A2) are based on average Subscriber Units and deliveries of
approximately Material Accessories [________] units At any time on or after
October 1, 1997
Commencing Based upon [________] [__________] thereafter
July 1, 1998 unit deliveries
by December 31, 1998
NOTES:
1) Co-Brand ("Samsung" and "Sprint Spectrum" brands and/or "Sprint" and
"Qualcomm" technology mark (only for so long as Vendor is using "Qualcomm"
chip-set))
<PAGE>
ADDITIONAL ACCESSORIES*
(not included with Subscriber Units as Material Accessories)
[--------------------------------------------]
<PAGE>
- --------------------------------------------------------------------------------
APPENDIX 2
- --------------------------------------------------------------------------------
Consumer Limited Warranty
SAMSUNG ELECTRONICS CO., LTD. (the "Company") warrants that the enclosed
subscriber unit and accessories (individually, a "Product" and collectively, the
"Products") will be free from defects in material and workmanship for a period
that expires one year from the date of service activation following the sale of
the Products to the purchaser.
The warranty provided herein will apply only with respect to the purchaser
who filed the enclosed Consumer Registration Card with the Company within one
(1) month after the purchase or the start of service activation, whichever comes
later, or with respect to the purchaser whose purchase and service activation is
otherwise verified.
The Company shall, in its sole and absolute discretion, either repair or
replace with a factory rebuilt unit (which unit may use refurbished parts of
similar quality and functionality) any Product if found by the Company to be
defective in material or workmanship, provided the Product is returned to a
Company authorized repair factory within the one year warranty period with the
original set of other Products, and is accompanied by a proof of purchase. In
the event a subscriber unit suffers from such a defect within ten days after the
purchase of the subscriber unit, the Company shall replace such defective
subscriber unit with a new subscriber unit, provided the defective subscriber
unit is returned to a Company authorized repair factory within the one year
warranty period with the original set of other Products, and is accompanied by a
proof of purchase.
This warranty does not cover (i) cost of removal or reinstallation, (ii)
cosmetic damage, (iii) signal reception problems (unless caused by defects in
material and workmanship), or (iv) damage the result of fire, flood, acts of God
or other acts which are not the fault of the Company and which the Product is
not specified to tolerate, including damage caused by mishandling, shipping and
blown fuses.
The warranty does not extend to and is void with respect to any Product (i)
which has been subjected to misuse, neglect, accident, or improper maintenance,
improper storage, improper installation or improper operation (including use in
conjunction with hardware electrically or mechanically incompatible), (ii) which
has been exposed to excessive moisture or dampness, (iii) which has been used
with accessories other than accessories either provided by the Company or
expressly authorized by the Company for such use, (iv) which has had its
original Product specific identification marks or serial numbers intentionally
removed or altered or (v) which has been opened, repaired, modified or altered
by anyone other than the Company or a Company authorized repair facility.
USE WITH ACCESSORIES NOT SUPPLIED BY THE COMPANY OR OTHERWISE NOT EXPRESSLY
AUTHORIZED BY THE COMPANY MAY BE DANGEROUS.
Repair or replacement, as provided under the warranty, is the sole and
exclusive remedy of the purchaser of the Products for breach of the warranty.
THE COMPANY MAKES NO OTHER WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, WITH
RESPECT TO THE PRODUCTS, INCLUDING BUT NOT LIMITED TO ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR AGAINST INFRINGEMENT, OR
ANY IMPLIED WARRANTY ARISING OUT OF TRADE USAGE OR OUT OF A COURSE OF DEALING OR
COURSE OF PERFORMANCE.
This warranty is not transferable to any third party, including but not
limited to, any subsequent purchaser or owner of the Products.
<PAGE>
- --------------------------------------------------------------------------------
APPENDIX 3
- --------------------------------------------------------------------------------
Vendor Non-Warranty Repair Fees
None.
<PAGE>
- --------------------------------------------------------------------------------
APPENDIX 4
- --------------------------------------------------------------------------------
Technology Marks
None.
<PAGE>
- --------------------------------------------------------------------------------
APPENDIX A1
- --------------------------------------------------------------------------------
SCH-1000 Products/Features
<PAGE>
- --------------------------------------------------------------------------------
APPENDIX A2
- --------------------------------------------------------------------------------
Vendor Second Generation Products/Features
<PAGE>
- --------------------------------------------------------------------------------
APPENDIX B1
- --------------------------------------------------------------------------------
Design Verification (Hardware/Software)
Received by Owner
o Vendor shall provide Owner a Draft Test Plan for Prototype, DVT, and
MVT no later than November 1, 1996.
o Vendor shall provide Owner a Final Test Plan for Prototype, DVT, and
MVT no later than December 31, 1996.
<PAGE>
- --------------------------------------------------------------------------------
APPENDIX B2
- --------------------------------------------------------------------------------
Interoperability Testing
Received by Owner
o Vendor shall review and provide comments to Owner regarding the Nortel
Interoperability Test Plan, Stage 2 and Stage 3, no later than October
15, 1996.
o Vendor shall comply with the testing requirements for the Message
Waiting Indicator feature.
o Vendor shall provide Owner with the test results of the Stage 2 Inter-
operability testing within one week from test completion.
o Stage 3 Interoperability testing shall take place at an Owner specified
location on mutually agreeable dates.
<PAGE>
- --------------------------------------------------------------------------------
APPENDIX B3
- --------------------------------------------------------------------------------
Vendor Factory Testing on Every Product
Received by Owner
o Vendor shall provide Owner a list of the "Top 10" manufacturing
problems. This information shall be provided on a monthly basis for the
duration of the Agreement.
<PAGE>
SUBSCRIBER UNIT EQUIPMENT
PURCHASE AND SUPPLY AGREEMENT
Between
SPRINT SPECTRUM L.P.,
Owner
and
SAMSUNG ELECTRONICS CO., LTD.,
Vendor
Dated as of September 17, 1996
<PAGE>
TABLE OF CONTENTS
Page
Section 1. Headings and Definitions................................ 1
Section 2. Term 9
Section 3. Product Purchases...................................... 10
3.1 Right to Purchase, Resell and Use...................... 10
3.2 Availability of Subscriber Units and Accessories; Minimum
Commitment.......................................... 10
3.3 Most Favored Customer Status; Exclusivity.............. 12
3.4 Payment Terms and Taxes................................ 14
3.5 Delivery............................................... 15
3.6 Pricing................................................ 16
3.7 Warranty to the Owner.................................. 17
3.8 Consumer Warranty...................................... 17
3.9 Repair and Replacement Services........................ 18
3.10 Catastrophic Defects................................... 19
3.11 New Generation of Products............................. 21
3.12 Right to Cease Supply of Obsolete Products............. 21
3.13 [Intentionally Omitted]................................ 21
3.14 Excess Inventory....................................... 21
3.15 Technology Mark........................................ 22
3.16 Materials and Equipment................................ 22
3.17 Logos.................................................. 23
3.18 Task Force Team; Notice of New Developments............ 24
3.19 Market Development Manager............................. 24
3.20 Applicable Law and Radio Frequency Energy Standards.... 25
3.21 [Intentionally Omitted]................................ 25
3.22 Test Products; Product Verification and Testing........ 25
3.23 Change Orders.......................................... 27
Section 4. Lead Times and Delay................................... 27
4.1 Lead Times............................................. 27
4.2 Delivery Delay......................................... 27
Section 5. Forecasts and Ordering................................. 29
5.1 Forecasts.............................................. 29
5.2 Ordering............................................... 30
Section 6. Sales and Technical Support............................ 32
6.1 Sales Training......................................... 32
6.2 Sales and Promotional Efforts.......................... 32
Section 7. Intellectual Property.................................. 33
7.1 Intellectual Property Rights Infringement.............. 33
7.2 The Vendor's Obligation to Cure........................ 34
7.3 The Vendor's Obligations............................... 34
7.4 The Owner's Obligations................................ 35
7.5 Software License....................................... 35
7.6 [Intentionally Omitted]................................ 36
7.7 Ownership of Intellectual Property Rights.............. 36
7.8 Intellectual Property.................................. 37
7.9 Request for Custom Development......................... 37
7.10 Vendor Response........................................ 38
7.11 License to Use Vendor Patents.......................... 38
Section 8. Proprietary Information................................ 39
8.1 Public Statements and Advertising...................... 39
8.2 Confidentiality........................................ 40
Section 9. Indemnification/Limitation of Liability................ 41
9.1 Vendor Indemnity....................................... 41
9.2 Vendor Damages for Fraud............................... 43
9.3 Owner Indemnity........................................ 43
Section 10. Termination............................................ 44
10.1 Termination............................................ 44
10.2 Termination For Cause.................................. 44
10.3 Remedies............................................... 45
10.4 Discontinuance of Supply............................... 45
10.5 Payments............................................... 45
10.6 Costs.................................................. 46
10.7 Continuing Obligations................................. 46
10.8 The Vendor's Right to Terminate........................ 46
10.9 Vendor Remedies........................................ 47
-i-
<PAGE>
Page
Section 11. General Provisions..................................... 47
11.1 Assignment............................................. 47
11.2 Successors and Assigns................................. 48
11.3 Survival of Obligations................................ 49
11.4 Severability........................................... 49
11.5 Non-waiver............................................. 49
11.6 Compliance with United States Regulations.............. 49
11.7 Notices................................................ 49
11.8 Dispute Resolution..................................... 50
11.9 Arbitration............................................ 51
11.10 Other Remedies......................................... 52
11.11 Tolling................................................ 52
11.12 GOVERNING LAW AND FORUMS............................... 52
11.13 Entire Agreement....................................... 52
11.14 Improvements, Inventions and Innovations............... 53
11.15 Conflicts.............................................. 53
11.16 Independent Contractors................................ 53
11.17 Force Majeure.......................................... 53
11.18 Change of Control of the Vendor........................ 54
11.19 Change of Control of the Owner......................... 54
11.20 Offset................................................. 54
Section 12. Affiliates............................................. 55
12.1 Agreements with Initial Affiliates..................... 55
12.2 Additional Affiliates.................................. 55
12.3 Agreements with Additional Affiliates.................. 55
12.4 Affiliate Rights....................................... 56
Section 13. Representations and Warranties......................... 56
13.1 Representations and Warranties of the Vendor........... 56
13.2 Representations and Warranties of the Owner............ 57
Section 14. [Intentionally Omitted]................................ 58
Section 15. Other.................................................. 59
15.1 Owner Liabilities...................................... 59
15.2 Counterparts........................................... 59
-ii-
<PAGE>
Schedules
Schedule 1 - Independent Auditors
Schedule 2 - Initial Affiliates
Schedule 3 - Vendor Outstanding Patent Issues
Schedule 4 - Vendor Repair Facilities
Schedule 5 - [Intentionally Omitted]
Schedule 6 - Vendor's Proprietary Marks
Schedule 7 - [Intentionally Omitted]
Schedule 8 - First Forecast
Appendices
Appendix 1 - Pricing
Appendix 2 - Consumer Warranty
Appendix 3 - Vendor Non-warranty Repair Fees
Appendix 4 - Technology Marks
Exhibits
Exhibit A1 - SCH-1000 Products/Features Exhibit A2 - Second Generation Vendor
Products/Features Exhibit B1 - Design Verifications (Hardware/Software) Exhibit
B2 - Interoperability Testing Exhibit B3 - Vendor Factory Testing on Every
Subscriber Unit
* Subject to further discussion and agreement between the Owner and the
Vendor, but in no event will prices for additional accessories be in excess
of the amounts set forth in this table.
Exhibit 10.10
The omitted portions indicated by brackets have been separately filed with the
Securities and Exchange Commission pursuant to a request for confidential
treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
Dated as of September 17, 1996
SAMSUNG ELECTRONICS CO., LTD.
9th Floor, Joong-ang Daily News Building
7, Soonhwa-dong, Choong-Ku
C.P.O. Box 2775
Seoul
KOREA
Attention: Mr. S. N. Lee
General Manager of International
Wireless Products Group
and
SAMSUNG ELECTRONICS CO., LTD./
SAMSUNG TELECOMMUNICATIONS AMERICA, INC.
1501 LBJ Freeway, Suite 410
Dallas, Texas 75234
Attention: Mr. H. J. Lee
Director of Strategic Business
Development Team
Gentlemen:
Reference is made to the Purchase and Supply Agreement (the "Agreement")
dated as of the date hereof among Samsung Electronics Co., Ltd., a company
organized under the laws of The Republic of Korea, as Vendor, and Sprint
Spectrum L.P., a Delaware limited partnership, as Owner. Terms used but not
defined herein shall have the meanings set forth in the Agreement.
In connection with and as consideration for the execution of the Agreement,
the Parties agree as follows:
1. Marketing Fund. Throughout the Term the Vendor will (without any other
precedent or subsequent requirement other than as specifically set forth in this
Paragraph 1) contribute cash amounts equal to [____________] of the invoiced FOB
Point price of any Subscriber Units (and any accompanying Material Accessories)
so invoiced by the Vendor to the Owner for such Products purchased and paid for
by the Owner pursuant to the terms of the Agreement to a separate fund owned by
the Owner and designated in writing to the Vendor from time to time by the Owner
(the "Marketing Fund"). Any and all amounts in the Marketing Fund may be used by
the Owner in its sole and absolute discretion for any purpose in connection with
the marketing or promotion by way of print media, broadcasting media and/or
outdoor advertising of the Nationwide Network or any part thereof which includes
the use of the Vendor's branding, subject to the terms of Subsection 3.17(b) and
Section 8 of the Agreement. On a quarterly basis, the Owner will submit to the
Vendor a report on the ongoing use of the funds in the Marketing Fund. In
accordance with the terms of this letter agreement, the Vendor must make any
such contribution to the Marketing Fund within thirty (30) days of receipt by
the Vendor of full payment by the Owner of amounts due under any such invoice
for Subscriber Units (and any accompanying Material Accessories) pursuant to the
terms of the Agreement. To the extent the Vendor fails to make any such
contribution to the Marketing Fund pursuant to and in accordance with the terms
hereof, the Owner will have the right to withhold any such amounts not so
contributed by the Vendor in contravention of the terms hereof or the Agreement,
from future invoices for Products ordered by the Owner pursuant to the terms of
the Agreement.
2. Launch Fee. Within thirty (30) days of the Commencement Date, the Vendor
will pay by wire transfer into an account designated by the Owner,
[_______________________] as payment to the Owner of the marketing launch fee
(the "First Generation Launch Fee") as further consideration for the Owner's
marketing and promotion pursuant to the terms of the Agreement. Within sixty
(60) days of the first availability of Second Generation Subscriber Units in
accordance with the terms of the Agreement, the Vendor will pay by wire transfer
into an account designated by the Owner, [______________________] as payment to
the Owner of the second generation launch fee (the "Second Generation Launch
Fee" and together with the First Generation Launch Fee, the "Launch Fees") as
further consideration for the Owner's marketing and promotion pursuant to the
terms of the Agreement. The proceeds of the Launch Fees may be used by the Owner
in its sole discretion for the marketing of and/or publicity for the Nationwide
Network, or any part thereof. Other than as specifically set forth in this
Paragraph 2, the Vendor's obligation to pay the Launch Fees on the terms set
forth in this Paragraph 2 is without any other precedent or subsequent
requirement. Until and unless the Launch Fees are paid hereunder, the Owner (at
such time) will have the right, but not the obligation, to suspend all or any
part of its performance under the Agreement.
3. The Vendor will work with the Owner to coordinate the Vendor's marketing
and promotional efforts in the United States with the Owner's city-by-city
launch of PCS commercial service.
4. Throughout the Term, the Owner will provide the Vendor quarterly
marketing strategy and expenditures reports which will describe the Owner's use
of the Launch Fees and the Marketing Fund monies.
The terms and provisions of this letter agreement shall be governed by all
of the terms of the Agreement, to the extent applicable (including, but not
limited to, Sections 5, 8, 9, 10 and 11) and shall be deemed by the Vendor and
the Owner to be a material part of and material to the Agreement. This letter
agreement shall be governed by and construed in accordance with New York law.
This letter agreement may be executed in any number of counterparts, and
each such counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute one agreement.
Please indicate your agreement with the foregoing by executing this letter
where indicated below.
Sincerely,
SPRINT SPECTRUM L.P.
By: /s/ Bernard A. Bianchino
Name: Bernard A. Bianchino
Title: Chief Business Development Officer
AGREED TO BY:
SAMSUNG ELECTRONICS CO., LTD.
By: /s/ Y.R. Song
Name: Y. R. Song
Title: Vice President
Exhibit 10.11
The omitted portions indicated by brackets have been separately filed with
the Securities and Exchange Commission pursuant to a request for confidential
treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
MASTER AGREEMENT
This Master Agreement ("Agreement") between Sprint Communications Company,
L.P., Sprint Spectrum, L.P. ("Sprint Spectrum"), Sprint United Management
Company, individually and on behalf of the affiliates listed in Attachment 1
("SUMC")(Sprint Communications Company, L.P. and SUMC collectively referred to
herein as "Sprint") and Tandy Corporation a corporation organized under the laws
of the State of Delaware, acting by and through its RadioShack division
("RadioShack"), dated this 10th day of September, 1996 along with the Addenda
executed by the Parties and currently attached to this Agreement and any future
Addenda executed by the Parties and subsequently attached to this Agreement
shall establish and set forth the terms and conditions upon which RadioShack
will market and sell, to its customers, telecommunication products and solicit
orders for services provided by Sprint and Sprint Spectrum. In this Agreement
Sprint, Sprint Spectrum, and RadioShack are sometimes referred to individually
as a "Party," and collectively as the "Parties." Unless otherwise specifically
stated herein, this Agreement applies only to RadioShack and no other division,
subsidiary or Affiliate of Tandy Corporation.
RECITALS
WHEREAS, Sprint Communications Company, L.P. is a telecommunications
company providing a variety of products and services including, but not limited
to, long distance, local telephone and internet services;
WHEREAS, Sprint Spectrum is a telecommunications company providing a
variety of telecommunication products and services including, but not limited
to, Personal Communication Services;
WHEREAS, SUMC is an Affiliate of Sprint, and has the authority to execute
this Agreement on behalf of those affiliates listed on Attachment 1.
WHEREAS, RadioShack is engaged in the business, among other things, of
selling consumer electronic products and related services through RadioShack
Company Owned Stores and independent RadioShack dealers and franchisees;
WHEREAS, Sprint, Sprint Spectrum and RadioShack wish to enter a business
relationship (the "Program") to, among other things, promote and provide
consumers access to Sprint and Sprint Spectrum products and services at
RadioShack Company Owned Stores and participating RadioShack independent dealers
and franchisees;
NOW, THEREFORE, AND IN CONSIDERATION of the foregoing premises and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Parties agree as follows:
1. Definitions - The following definitions shall govern for the purposes of this
Agreement and the Addenda, except as otherwise provided herein or therein:
"Addenda" - shall mean each and every Addendum attached to this Agreement,
and Schedules and Exhibits included therein.
"Affiliate" - shall mean an individual, association, co-partnership,
limited partnership, limited liability company, corporation or joint-stock
company, trust or other business entity (hereinafter referred to as "Person"),
however organized, that directly or indirectly, through one (1) or more
intermediaries, controls, is controlled by or is under common control with such
Person. Control shall be defined as (i) ownership of a majority of the voting
power of those classes of voting stock entitled to vote in the election of
directors or (ii) ownership of a majority of the beneficial interests in income
and capital of an entity other than a corporation.
"Agreement" - shall mean this Master Agreement, including the Addenda
attached hereto and any Addenda later executed and made part of this Master
Agreement.
"Arbitrator" - shall mean a neutral person who has no past or current
employment, contractual or attorney/client relationship with any Party, and who
is selected pursuant to Schedule 20.
"Cellular Radiotelephone Service" or "CRS" - shall mean a radio service in
which common carriers are authorized by the FCC under 47 CFR Part 22 and
licensed under 47 CFR Part 22, Subpart H to offer and provide service for hire
to the general public through a cellular system utilizing the channels and
frequency bandwidths assigned under 47 CFR Part 22, Subpart H, Section 22.905.
CRS shall not mean or include any paging services utilizing the channels and
frequency bandwidths assigned and licensed to radiotelephone service under 47
CFR Part 22, Subpart E, any Narrowband PCS services utilizing the channels and
frequency bandwidths assigned and licensed under 47 CFR Part 24, Subpart D or
any Broadband PCS services utilizing the channels and frequency bandwidths
assigned and licensed under 47 CFR Part 24, Subpart E.
"Change of Control" - shall mean (a) the consummation of a reorganization,
merger or consolidation or sale or other disposition of substantially all of the
assets of any Party; or (b) the acquisition by any Person or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under such Act) of more than 50% of either: (i) the then outstanding
shares of common stock of any Party hereto; (ii) the combined voting power of
the then outstanding voting securities of any Party hereto entitled to vote
generally in the election of directors; or (iii) the income and profits interest
of the general partners or limited partners where the entity is a limited
partnership.
"Combination Marks" - shall mean "The Sprint Store @ RadioShack," Sprint @
RadioShack," "Sprint at RadioShack," "The Sprint Store at RadioShack," or any
combination of a Sprint/Sprint Spectrum Mark interlocked or connected with a
Radio Shack Mark by "@" or "at," or such other Marks as the Joint Steering
Committee may decide from time to time to use in connection with the promotion
of the Merchandising Display and the Products and Services jointly marketed by
the Parties hereto under the terms of this Agreement, which such other
Combination Marks shall be added to this Agreement by an addendum.
Notwithstanding anything to the contrary, the Combination Marks will not include
those Marks set forth on the Excluded Marks Addendum attached hereto.
"Combination Mark Format" - shall mean "The Sprint Store @ ," "Sprint @ ,"
"The Sprint Store at ," "Sprint at ," "The Sprint Shop @ ," "The Sprint Shop at
," or any combination of Marks in which "The Sprint Store," "Sprint," "The
Sprint Shop" or a Sprint/Sprint Spectrum Mark is interlocked or connected with a
single word, symbol or letter, including, but not limited to "@" or "at," with
the name or Mark of any Retailer.
"Company Owned Stores" - shall mean a retail store owned and operated by a
Party.
"Confidentiality Agreement" - shall mean the Confidential Information
Nondisclosure Agreement executed by and between the Parties effective May 2,
1996, and attached as Exhibit 1 hereto.
"Damages" - shall have the meaning set forth in Section 14(f) below.
"Effective Date" - shall mean the date set forth in the first paragraph of
this Agreement.
"FCC" - shall mean the U.S. Federal Communications Commission.
"Initial Term" - shall mean, unless earlier terminated as provided in
Section 2 or Section 15, the date beginning on the Effective Date and ending at
12:00 a.m. on the tenth (10th) anniversary of the Effective Date.
"JSC" or "Joint Steering Committee" - shall mean the committee described in
Section 5 below.
"Mark" - shall mean any trademark, service mark, trade name, logo,
insignia, symbol or trade dress, whether or not registered.
"Market Launch Date" - means the first day of the first month after the
appropriate Merchandising Display has been installed in 4,000 Retail Stores, or
such other date established by the Joint Steering Committee.
"Merchandising Display" - shall mean the physical location(s) of the
computer interface and fixtures within each Retail Store dedicated to the
merchandising of the Products and Services as more fully described in a Computer
Interface Addendum and a Fixtures Addendum to be attached hereto, but not to
include any products or services which are not either (i) Sprint or Sprint
Spectrum Products or Services or (ii) telecommunication products or services
(but not Cellular Radiotelephone Service products or services) bearing a
RadioShack Mark, unless authorized in writing by the Sprint and Sprint Spectrum
members of the Joint Steering Committee.
"Merchandising Display Expenditures" - means the actual out-of-pocket
expenditures by Sprint and Sprint Spectrum to acquire, design, develop,
construct, ship and install, remodel and replace as a result of obsolescence the
Merchandising Displays in the RadioShack Company Owned Stores as set forth in
Section 6.
"Net Collectible Call Usage Revenue" - means the monthly revenue generated
by Sprint's Service, excluding taxes, bad debt, fraud and subsequently credited
charges.
"Party" or "Parties" - shall have the meaning set forth in the first
paragraph of this Agreement.
"Person" - shall have the meaning set forth in the definition of Affiliate.
"PCS" or "Personal Communication Service" - shall mean a radio service in
which common carriers are authorized by the FCC and licensed under 47 CFR Part
24, Subpart E as currently in effect as of the Effective Date, and amended from
time to time, to offer and provide service for hire to the general public
utilizing the following frequency bandwidths: 1850-1890 MHz, 1930-1970 MHz,
2130-2150 MHz, and 2180-2200 MHz (Broadband PCS). PCS does not include Cellular
Radiotelephone Service.
"PCS Equipment" - shall have the meaning set forth in the PCS Addendum
hereto.
"Product" - shall mean any tangible goods bearing a Sprint or Sprint
Spectrum Mark which are offered both for sale to consumers and listed on any
Addendum attached hereto.
"Product/Service Bundle" - shall mean a package including one or more
telecommunication products and one or more telecommunication services sold and
billed to the customer as a unit at a single combined price.
"Program" - shall have the meaning set forth in the Recitals above.
"Program Expenses" - shall mean those expenses related to the rollout of
the Program, advertising the Program, training costs related to implementing the
Program and other expenses set forth in Section 7.
"Proprietary Information" - shall mean all information as defined in the
Confidentiality Agreement.
"RadioShack Gift Express" - shall mean RadioShack's mail or telephone order
and delivery service.
"RadioShack Marks" - shall mean all of the Marks listed on the RadioShack
Licensed Marks Addendum attached hereto.
"RadioShack Unlimited" - shall mean the in-store catalog located in each
Retail Store, as the same may be revised and any future RadioShack Unlimited
consumer catalog supplied to consumers for out-of-store use.
"Retail Stores" means RadioShack Company Owned Stores and participating
independent RadioShack dealers and franchisees operating under RadioShack
Franchise Agreements or Authorized Sales Center Agreements with RadioShack in
the Territory.
"Retailer" - shall mean a retail merchant of products or services who sells
through one or more physical store locations directly to consumers (but not
including any entity or any division, department or subsidiary thereof that
sells to consumers directly through mail or telephone order, telephone
solicitation, the internet or any other means of distribution, which is not in
conjunction with the operation of a retail store or stores).
"Service" - shall mean any provision of telecommunication of voice or data
by either Sprint or Sprint Spectrum which is listed on any Addendum attached
hereto.
"Sprint/Sprint Spectrum Marks" - shall mean all of the Marks listed on the
Sprint Licensed Marks Addendum or Sprint Spectrum Licensed Marks Addendum
attached hereto.
"Sourced" - means the act of supplying, acquiring or procuring a product.
"Territory" - shall mean the states constituting the United States, Puerto
Rico and the U.S. Virgin Islands, except where otherwise specifically modified,
where Sprint and/or Sprint Spectrum make Products and Services available for
sale.
2. Term - This Agreement shall be effective for the Initial Term, unless earlier
terminated as provided in Section 19. This Agreement shall be automatically
renewed for two (2) successive five (5) year renewal terms.
3. Products and Services - Subject to the terms and conditions of this Agreement
and each Addendum attached hereto and existing or future laws, regulations or
orders of a court or governmental agency specifically affecting the performance
of a Party's obligations hereunder, RadioShack is authorized to and will use
commercially reasonable efforts to promote, distribute, sell and solicit orders
for the Products and solicit orders for Services as soon as made available by
Sprint/Sprint Spectrum through all, and in no event less than 4,500 RadioShack
Company Owned Stores located in the Territory.
(a) Addenda. Each Product and Service subject to this Agreement shall be
treated in a separate Addendum to this Agreement. Each Addendum shall separately
specify each Product or Service to be sold or for which orders are to be
solicited by RadioShack at the RadioShack Company Owned Stores, the terms of
compensation payable to RadioShack in connection therewith and all other terms
and conditions supplemental to this Agreement which pertain specifically to each
Product and Service which becomes subject to this Agreement.
(b) Dealers and Franchisees. RadioShack will use commercially reasonable
efforts to obtain the participation of the independent RadioShack dealers and
franchisees in the Program. RadioShack will develop and assist Sprint and Sprint
Spectrum to develop appropriate variations of the Program for presentation and
marketing to the independent RadioShack dealers and franchisees. RadioShack
shall market and shall assist Sprint and Sprint Spectrum in marketing the
Program to independent RadioShack dealers and franchisees. The participation of
independent RadioShack dealers and franchisees in the Program or a variation
thereof shall be (1) on terms and conditions negotiated among RadioShack, Sprint
and Sprint Spectrum and said participating independent RadioShack dealers and
franchisees consistent with the terms and conditions of this Agreement and (2)
subject to the terms of a separate trademark license agreement between the
independent RadioShack dealer or franchisee and Sprint or Sprint Spectrum, as
the case may be. It is agreed and understood that such dealers and franchisees
are independent businesses, not controlled by RadioShack, and participation
shall be at the mutual election of the respective dealer or franchisee and
Sprint or Sprint Spectrum, as the case may be.
(c) Purchase Orders for Products. RadioShack will issue a purchase order
for all Products to be purchased from Sprint or Sprint Spectrum, as the case may
be. The basic terms and conditions of such Purchase Order will be as set forth
in the Purchase Order Addendum attached hereto.
(d) Terms of Payment. Unless otherwise specified in this Agreement or an
Addendum, payment of all amounts due any Party, whether in the form of
residuals, sales incentive payments, market development funds, activation fees
or other payments, will be made within sixty (60) days from the end of the
calendar month in which the right to receive payment accrued. Sprint/Sprint
Spectrum will remit for deposit to the appropriate account designated by
RadioShack in writing all monthly amounts due hereunder. Each category of
payment (e.g. Sprint Residential Long Distance Service Residuals, Sprint
Residential Long Distance Service Residual Sales Incentive--each being a
category) shall be paid by a separate (i) check or (ii) EFT transmission. In
connection with each such category of payment, Sprint/Sprint Spectrum will
provide detailed documentation to be agreed upon by the Parties.
4. Program, Exclusivity and Commitments - In connection with the Program:
(a) Subject to the terms and conditions of this Agreement and each Addendum
thereto, RadioShack agrees that, after the Effective Date and in the Territory,
it will not:
(i) solicit an order for a service which is competitive with the Services
offered by Sprint or Sprint Spectrum and which are listed and
described on any Addendum attached hereto specifically including, but
not limited to, a competitor's long distance telephone service, local
telephone service, including network services, PCS, paging service, or
internet access;
(ii) offer for sale a competitor's Product/Service Bundle which is
competitive with a Product/Service Bundle offered by Sprint or Sprint
Spectrum through RadioShack;
(iii)offer for sale a third party product which is competitive with a
Product offered by Sprint or Sprint Spectrum through RadioShack and
which is listed and described on any Addendum attached hereto; or
(iv) do any of the activities described in Section 4(a)(i)-(iii) through
any Retailer Affiliate which includes the name "RadioShack" or any
RadioShack Mark in the advertised name of such Retailer Affiliate,
without the approval of the Joint Steering Committee.
(b) Notwithstanding Section 4(a) above, no restrictions shall be placed on
the rights of RadioShack to:
(i) offer for sale any product bearing a RadioShack Mark offered for sale
as of the Effective Date or at any time thereafter;
(ii) offer for sale a product otherwise subject to Section 4(a) that may be
used only in connection with Cellular Radiotelephone Service and not
in conjunction with PCS (e.g., RadioShack may not sell dual-mode
handsets that may be used both with Cellular Radiotelephone Service
and PCS without Sprint Spectrum's written consent), accessories that
may be used with either Cellular Radiotelephone Services or PCS, or to
solicit an order for the sale of Cellular Radiotelephone Service;
(iii)offer for sale any products otherwise subject to Section 4(a) supplied
by an existing vendor to RadioShack and offered or sold by RadioShack
as of the Effective Date and to continue to offer the same until such
time RadioShack is able to conduct an orderly transition out of such
competitive products in a commercially reasonable manner, and with
respect to pagers and paging service, until such time Sprint or Sprint
Spectrum is able to offer a reasonably competitive product; or
(iv) offer for sale any product through RadioShack's catalogs, including
the current or future RadioShack, RadioShack Unlimited or RadioShack
Gift Express catalogs, mail order, telephone order or internet
programs; provided, however, RadioShack will not market or otherwise
offer for sale in the Merchandising Display or in an area of the
Retail Store immediately adjacent to the Merchandising Display (taking
into account and allowing for the relatively small floor plan of a
typical Retail Store) any product or service competitive to the
Products and Services merchandised in the Merchandising Display,
except for (1) telecommunication products or services bearing a
RadioShack Mark, or (2) any other third party branded product or
service with respect to which Sprint and Sprint Spectrum have given
their prior written approval.
(c) During the term of this Agreement:
(i) Except as provided in subsection 4(c)(ii) below, RadioShack will have
the exclusive use of the Combination Marks only in connection with the
Program;
(ii) Sprint and Sprint Spectrum have the right to use the Combination Marks
only in connection with the Program.
(iii)Except for the Combination Marks, neither Sprint nor Sprint Spectrum
will create or use in the marketing or sale of Products or Services
the Combination Mark Format; provided, however, Sprint or Sprint
Spectrum will have the right to use the specific Mark combinations set
forth on the Excluded Marks Addendum with the name of any other Person
or Retailer including RadioShack (provided the name "RadioShack" is
not used in Combination Mark Format) and may use any Sprint or Sprint
Spectrum Mark together with the name of any individually identified
product or service of Sprint or Sprint Spectrum in connection with the
name of any other Person provided that such use is never interlocked
or connected with the name of a Retailer by the "@" symbol or by the
word "at" if the use of the word "at" is exclusively auditory and not
accompanied by a visual presentation (e.g., both "Sprint Sense at
Retailer" and "Sprint PCS at Retailer" would be permissible usage in
print media and on television if depicted visually, even if
accompanied by audio voice-over, but would not be permissible usage on
radio or on television if not accompanied by a visual depiction of
"Sprint Sense at Retailer." "Sprint Sense @ Retailer" or "Sprint PCS @
Retailer" are not permissible usages no matter what media or
combination of media used because of the inclusion of the "@" symbol);
(iv) Sprint and Sprint Spectrum will make available for sale by RadioShack,
and RadioShack will have the right to: (1) offer for sale or lease, as
applicable all generally available Products, (2) solicit orders for
all generally available Services, and (3) offer or solicit orders for
all generally available Product/Service Bundles which include any of
the Products and Services, offered as of the Effective Date or in the
future by Sprint or Sprint Spectrum, including all mass marketed rate
plans for those Services offered by Sprint or Sprint Spectrum;
provided, however, that Sprint and Sprint Spectrum may offer from time
to time, through direct distribution channels or special third party
corporate promotional programs, Products, Services, rate plans for
such Services, and Product/Service Bundles not advertised as being
generally available through RadioShack Retail Stores if (1) the
general terms and conditions of each such promotion to be offered to
consumers are first communicated to RadioShack by Sprint or Sprint
Spectrum, as the case may be, subject to any applicable
confidentiality agreements with respect to proprietary and
confidential information and (2) RadioShack is compensated in
accordance with the provisions of subsection 4(e) below, if such
promotion is available to, offered by and sold by RadioShack;
(v) All goodwill resulting from the use of individual trademark or service
mark usage as part of the Combination Marks by the Parties inures to
the benefit of the respective individual trademark or service mark
owner. No Party acquires rights, title or interest in the Combination
Marks or the goodwill associated with them, other than the right to
use the Combination Marks in accordance with this Agreement. In
accepting this Agreement, all Parties acknowledge ownership of the
respective individual Marks which comprise the Combination Mark, their
validity and the goodwill connected with them. The Parties further
agree not to make any application to register the Combination Marks.
This paragraph will survive the termination of this Agreement.
(vi) With respect to all Sprint branded consumer, residential, single-line
telephones (other than PCS equipment) Sourced by RadioShack,
RadioShack will have the exclusive right to sell those Products at
retail;
(vii)With respect to all Sprint branded consumer, residential, single-line
telephones (other than PCS equipment) Sourced from a vendor other than
RadioShack ("Sprint Sourced Phones"), RadioShack will be the exclusive
Retailer (other than Sprint or Sprint Spectrum Company Owned Stores)
of such Sprint Sourced Phones to the extent set forth on Addendum
6-Telephone Products;
(viii) Sprint and Sprint Spectrum will each separately designate a national
account manager dedicated to the management of the relationship with
RadioShack created hereunder;
(ix) Sprint and Sprint Spectrum will provide a dedicated 800 or 888 number
to be answered exclusively for customer support of RadioShack 24 hours
per day, seven days per week; and
(x) Sprint and Sprint Spectrum will use all commercially reasonable
efforts to assist Tandy Service, a division of Tandy Corporation, to
obtain from Sprint and Sprint Spectrum's Product vendors authorized
service center agreements permitting Tandy Service to repair all
Products subject to this Agreement.
(d) During the term of this Agreement, neither Sprint nor Sprint Spectrum
will own or lease a Company Owned Store, kiosk or other similar facility not
located within a Retailer, unreasonably close to the current location of any
RadioShack Company Owned Store or participating independent RadioShack dealer or
franchisee's store, all as of the Effective Date.
(e) RadioShack shall be compensated by Sprint or Sprint Spectrum in
accordance with the terms of each Addendum relating to a Product or Service but
in all cases (except Internet products and services and Spree cards) consistent
with the general principles that (1) if the sale of the Product is made or the
order for the Service is placed through a Retail Store, RadioShack is entitled
to be compensated for acquiring that customer, and (2) if on the date of the
sale of the Product or Service order placement the customer is not already a
current Sprint or Sprint Spectrum Service customer, said customer will be given
a unique source code by Sprint or Sprint Spectrum identifying said customer as a
RadioShack acquired customer and RadioShack shall be entitled to receive
residual compensation for the period of time said RadioShack acquired customer
remains a Sprint or Sprint Spectrum customer for any Service during the term of
this Agreement and for two years after the termination of this Agreement. In the
event a RadioShack acquired customer terminates all Service during the term of
this Agreement and subsequently resumes Service with Sprint or Sprint Spectrum
during the term of this Agreement, no residual compensation will be payable to
RadioShack with respect to said re-acquired customer unless such customer is
re-acquired by RadioShack.
(f) With respect to the offer and sale of Products and the solicitation of
orders for Services, the Parties intend this Agreement to be national in scope
and coverage. Subject to the terms and conditions of this Agreement and Addenda
attached hereto (including, without limitation, JSC approval) and unless
precluded by judicial or governmental order or action, RadioShack will commence,
and thereafter continue, the offer and sale of Sprint Spectrum PCS, and will use
commercially reasonable efforts to, and thereafter continue, the offer and sale
of Products and the solicitation of orders for Services as and when agreed as
set forth in this Agreement or any applicable Addendum after such Products
and/or Services are made available in a market within the Territory. Should
RadioShack be precluded by a judicial or governmental order or action from
offering a Product or soliciting an order for a Service, RadioShack will
expeditiously remove the impediment to continuing sales and marketing activities
and, specifically relating to the solicitation of orders for Sprint Spectrum
PCS, RadioShack shall take all necessary action to be able to solicit orders for
Sprint Spectrum PCS. In this regard, RadioShack will negotiate, renegotiate as
necessary, and include in each Cellular Radio Service Referral Agreement
executed between RadioShack and a CRS carrier after the Effective Date the
definition of CRS substantially in the form contained in this Agreement or such
other provisions as are necessary to permit RadioShack to offer for sale PCS
Equipment and solicit orders for Sprint Spectrum PCS or, in the alternative,
obtain from each CRS carrier written assurances that the offer and sale of PCS
Equipment and the solicitation of orders for Sprint Spectrum PCS is not
prohibited by the Cellular Radio Service Referral Agreement executed between
RadioShack and such CRS carrier.
5. Joint Steering Committee - RadioShack will appoint two (2) representatives
and Sprint and Sprint Spectrum will each appoint one (1) representative to serve
as members of a four (4) person Joint Steering Committee, each of whom shall
hold a position of assistant vice-president or higher within each respective
Party. The Joint Steering Committee will be responsible for all joint issues,
including Program rollout timing and strategy, and deciding which Products and
Services will be sold through certain Retail Stores. Consistent with
RadioShack's commitment to Sprint Spectrum PCS set forth in Section 4(f) of this
Agreement, RadioShack, acting through its Joint Steering Committee members, will
not use as a reason for withholding approval of the placement of PCS Equipment
and/or Sprint Spectrum PCS in a Retail Store the existence of a Cellular Radio
Service Referral Agreement with a CRS carrier or the threat of a CRS carrier to
terminate any such agreement if RadioShack introduces Sprint Spectrum PCS into a
Retail Store(s) in that CRS carrier's market(s). The Joint Steering Committee
will also meet to discuss marketing expenditures and strategies and will be
primarily responsible for providing initial approval of all joint
advertisements.
Except as provided in Section 7 below, advertising and market development
fund expenditures, expenses and allowances with regard to specific Products and
Services will not be a subject for the Joint Steering Committee, but rather will
be subject to the guidelines set forth in the specific Addendum related to that
Product or Service. The JSC will establish, from time to time, guidelines for
general routine print, broadcast and electronic media advertising to govern each
Party's unilateral advertising and promotion of the Products and Services and
which also contains one or more of the RadioShack Marks and one or more
Sprint/Sprint Spectrum Marks. Each Party agrees any other Party may unilaterally
advertise the Products and Services in this manner, without JSC approval, but
only if that Party complies in all material respects with the JSC's guidelines
for such advertising.
The Joint Steering Committee will also be responsible for operational and
implementation issues not specifically addressed in this Agreement or the
Addenda.
The JSC will also be responsible for making recommendations regarding
modifications to the terms of this Agreement, including the terms of each
Addendum attached hereto, to respond to market conditions and concerns of the
Parties hereto, subject in all cases to applicable laws, regulations and
contracts with third parties.
The JSC may authorize legal action in the name of any or all Parties in
response to legal threats to the ability of any Party to fulfill their
obligations under this Agreement, and will, in that event, have the authority to
retain counsel and allocate the costs of such counsel and related expenses among
the Parties.
The Joint Steering Committee will meet as often as necessary either in
person or by telephone, but not less than four times per year in person at
mutually acceptable times and locations. Any member of the JSC may be
represented by proxy if unavailable to attend in person or by telephone. Any
Party may call a JSC meeting upon seven (7) days written notice. At each
meeting, each member of the JSC may bring one or more additional advisors,
experts or vendors to participate in the meeting. All decisions by the Joint
Steering Committee must be unanimous to be binding on the Parties.
6. Merchandising Displays
(a) The Parties agree to collaborate on the design and approve the format
of the Merchandising Display for the promotion of the Products and Services to
be placed inside those Retail Stores deemed appropriate by the Joint Steering
Committee. Each Merchandising Display will consist of two categories of
components: (1) a computer interface with related accessories, and (2) fixtures,
each as specified in a Computer Interface, Fixtures, and Floor Plan Design
Addendum to be developed in accordance with Section 6(b) below and attached as
an Addendum hereto.
(b) The Parties acknowledge that the installation of an appropriate
Merchandising Display in the Retail Stores is fundamental and material to
achieving the goals of the Program. The Parties agree to meet and determine the
specifications of the Merchandising Displays including the cost, size and
location of the Merchandising Displays, applicable fixtures and displays within
each representative RadioShack floor plan, and the cost breakdown between the
fixtures and the computer systems, all to be set forth on Addenda to this
Agreement.
(c) Sprint and Sprint Spectrum will each commit, subject to Section 6(b)
above, $[___________], if necessary, for an aggregate total of $[_____________],
to offset the initial costs of the design, development, production, acquisition,
construction and installation of the Merchandising Displays.
(d) RadioShack, by and through its Real Estate Design and Construction
Department, will have charge and supervision of the construction, shipment,
installation, relocation, remodeling and replacement of the Merchandising
Displays in the RadioShack Company Owned Retail Stores. RadioShack, in the
performance of such work, may contract and subcontract with others for portions
of the work in the same manner as done with respect to similar work, provided
Sprint/Sprint Spectrum will have the right to approve all contractors and
subcontractors who are Affiliates of RadioShack. Sprint and Sprint Spectrum will
pay RadioShack for all actual out-of-pocket Merchandising Display Expenditures
advanced, paid or reasonably incurred by RadioShack in the course of doing such
work, provided these costs will not include a profit to RadioShack or include
RadioShack overhead, internal salaries and wages. Payment shall be made within
thirty (30) days of the date of an invoice by RadioShack for such out-of-pocket
Merchandising Display Expenditures. The invoice shall state, in reasonable
detail, the amount and nature of the out-of-pocket Merchandising Display
Expenditures and the date and to whom advanced, paid or incurred. Sprint and
Sprint Spectrum, in like manner, will pay RadioShack for all other out-of-pocket
Merchandising Display Expenditures (and any other costs, charges or expenditures
allocable to Sprint and Sprint Spectrum under this Agreement) advanced, paid or
incurred by RadioShack.
(e) Sprint and Sprint Spectrum will each have and retain all right, title
and interest to the Merchandising Displays. RadioShack will have the right to
relocate and reinstall an existing Merchandising Display upon the relocation or
closure of each respective Retail Store at RadioShack's sole cost and expense.
(f) The Parties will determine as part of the process set forth in Section
6(b) above the per store cost of the Merchandising Display for each of the
representative RadioShack Retail Store floor plans and the incremental cost over
the budgeted construction cost of installing a new Merchandising Display in a
newly builtout Retail Store. With respect to each newly builtout RadioShack
Company Owned Store opened after the Effective Date, Sprint and Sprint Spectrum
will pay the incremental cost reasonably incurred to install the Merchandising
Display in such newly builtout RadioShack Company Owned Stores, which
incremental cost shall be capped at and will not exceed the appropriate per
store cost of the Merchandising Display for an existing Retail Store on the
Effective Date.
(g) After the initial installation, RadioShack will bear the cost of
insuring, maintaining and repairing the fixtures contained in the Merchandising
Display (including replacement due to casualty loss or damage), but not the
computer interface. After the initial installation, Sprint and Sprint Spectrum
will bear the cost of insuring, maintaining, repairing and replacing the
computer interface in the Merchandising Display (including replacement due to
casualty loss or damage).
(h) If the Merchandising Display becomes obsolete, in whole or in part, or
needs remodeling, each as determined by the Joint Steering Committee, the costs
of remodeling or obsolescence replacement of the Merchandising Displays will be
borne by Sprint and Sprint Spectrum. Upon obsolescence or as otherwise
determined by the JSC, RadioShack will have the right to sell or otherwise
dispose of such Merchandising Displays at RadioShack's sole cost and the right
to retain the proceeds of any such sale or disposition without accounting to
Sprint or Sprint Spectrum, provided, however, that Sprint and Sprint Spectrum
shall have an option to retain the entirety or any useable portion of the
Merchandising Display upon replacement, by giving RadioShack written notice
within thirty (30) days after receiving written notice of RadioShack's intent to
sell or otherwise dispose of such Merchandising Display. If Sprint and Sprint
Spectrum exercise this option, the unamortized cost of such Merchandising
Display(s) or useable portion thereof shall be credited against the unamortized
costs referenced in Section 20(b) below.
(i) Sprint and Sprint Spectrum hereby grant to Tandy Cabinets, a division
of TE Electronics Inc., a wholly owned subsidiary of Tandy Corporation, a right
to bid on the fabrication and construction of the fixtures for the Merchandising
Display.
(j) Sprint and Sprint Spectrum shall be responsible for all personal
property taxes due and payable attributable to the Merchandising Displays. The
Parties shall cooperate in exchanging information necessary for a Party to file
any necessary tax returns with respect to its property. Sprint and Sprint
Spectrum will be responsible for filing all personal property tax returns with
respect to the Merchandising Displays and for the payment of all personal
property taxes in connection therewith. RadioShack will reimburse Sprint and
Sprint Spectrum for 50% of the taxes actually paid by Sprint and Sprint Spectrum
within thirty (30) days after receipt of an invoice from Sprint and/or Sprint
Spectrum with supporting documentation of the tax and payment thereof attached.
7. Program Expenses
(a) Market Launch Expenditures. Each Party will use commercially reasonable
efforts to reach the Market Launch Date no later than October 1, 1997. Sprint
will contribute $[___________] and Sprint Spectrum will contribute $[__________]
and RadioShack will contribute $[___________] to the initial promotion of the
rollout of the Program after the Market Launch Date. The Joint Steering
Committee will determine when and how to spend the combined $[___________], and
what expenditures will be counted as market launch expenditures as distinguished
from expenditures under subsection (b) below.
(b) Unilateral Advertising Commitments.
(i) During the term of this Agreement, RadioShack will include those
Combination Marks or Sprints Marks, as appropriate, in all RadioShack
advertising related to or including any of the Products or Services,
including but not limited to, print, broadcast and electronic media.
The Parties agree that RadioShack spend at least $[_____________] and
Sprint will spend at least $[_____________] and Sprint Spectrum will
spend at least $[_____________] of such Party's respective advertising
budgets for each of the first two twelve (12) month periods beginning
on the Market Launch Date, and the first anniversary thereof during
the term of this Agreement for the broadcast, print or electronic
media marketing and communications of the Products and Services. These
promotions will include one or more of the Combination Marks in
advertising consistent with the standards adopted by the Joint
Steering Committee. Beginning for the calendar year beginning January
1, 1999, each Party's advertising commitment under this subsection
(b)(i) will remain the same as their commitment for the immediately
preceding calendar year, unless such Party notifies the other Party at
least six (6) months before (beginning July 1, 1998 and each year
thereafter) the beginning of such year of that Party's desire to
change their commitment and before September 30, before the beginning
of such year (beginning September 30, 1998, and each year thereafter),
the respective Party discloses through their respective JSC member the
size of the Party's commitment, provided in no event will the size of
any Party's (i.e., Sprint and Sprint Spectrum collectively for these
purposes, and RadioShack) commitment under this subsection (b)(i) be
less than $[______________]. Each Party will be obligated to satisfy
that commitment, provided, neither party will be obligated to spend
more than the amount that is the lower of the two (2) amounts
submitted to the JSC.
(ii) Each Party may satisfy its obligation under this Section as that Party
decides in its sole discretion, provided that advertising generally
will include direct mail, newspaper inserts, television and radio
campaigns, Yellow Page advertising including the Sprint Marks or the
Sprint Spectrum Marks, RadioShack Marks and the Combination Marks, and
conspicuous store signage within each Retail Store, all subject to the
prior approval of the JSC and each Party pursuant to the terms of
their respective Mark licenses or their respective advertising
guidelines concerning Marks.
(iii)Nothing in this Section prohibits Sprint or Sprint Spectrum from
tagging or promoting any other Retailer or distribution channel in
advertising which is not designated as part of the commitment set
forth in Section 7(b)(i) above, provided the advertising does not
include any of the Combination Marks or violate Section 4(c)(i) above.
(c) Training Costs. The Parties intend that Sprint and Sprint Spectrum will
provide trainers for the purpose of training designated RadioShack employees
("RadioShack Trainers") who then will train all appropriate RadioShack employees
with respect to the Products and Services. The Joint Steering Committee will
determine the appropriate level of necessary training and the specific details
of such training. Sprint and Sprint Spectrum will be responsible for all
reasonable costs relating to the initial training of RadioShack Trainers with
respect to their individual Products and Services, and any subsequent training
of the RadioShack Trainers with respect to, and including but not limited to,
existing or new Products and Services offered during the term of this Agreement,
by such Party. Except as provided below, RadioShack will be responsible for all
costs relating to the cost of training RadioShack's employees and the cost of
meeting internal certification standards. RadioShack will pay one-half, Sprint
one-fourth, and Sprint Spectrum one-fourth of the costs of developing a
certification module for the Program and incorporating said module into
RadioShack's training program. Except as provided above, RadioShack will pay
one-half, Sprint one-fourth, and Sprint Spectrum one-fourth of the training
costs of RadioShack's employees and of meeting internal certification standards
in the following manner: RadioShack will pay one-half, Sprint one-fourth, and
Sprint Spectrum one-fourth of the initial cost of production of the
certification materials and test sheets, in a total amount estimated to be less
than $25,000 (each one-fourth to be estimated to be less than $6,250). Sprint
will pay one-half and Sprint Spectrum will pay one-half of the cost of a
certification training video (estimated total cost to be between $25,000 and
$50,000). Sprint will pay one-half and Sprint Spectrum will pay one-half of the
duplication cost of a certification training video (estimated to be $3 per tape
for 5,000 tapes for a total of $15,000). RadioShack agrees to distribute these
video tapes at no cost to Sprint and Sprint Spectrum. RadioShack will pay
one-half, Sprint one-fourth and Sprint Spectrum one-fourth of the maintenance of
this program, up to a maximum of $10,000 total per year ($2,500 per one-fourth).
The certification material and video must be approved by the JSC before
distribution and use thereof.
(d) Payment. The Party paying, advancing or incurring any cost or expense
under this Agreement shall invoice the other Party for the other's allocable
share. The other Party will pay its share within thirty (30) days of such
invoice.
(e) Other Program Expenses. The Parties anticipate that there will be
additional costs and expenses incurred by the Parties with respect to the
Program during the term of this Agreement. Unless otherwise mutually agreed by
the Parties, all such costs and expenses will be borne entirely by the Party
incurring such costs and expenses.
8. Acceptance of Orders for Services and Cancellation, Customer Service,
Discontinuance of Service or Shortage of Capacity
(a) Orders submitted by customers who sign up through RadioShack for Sprint
or Sprint Spectrum Services are not binding on Sprint or Sprint Spectrum until
accepted by Sprint or Sprint Spectrum. Each of Sprint and Sprint Spectrum
reserve the right at its sole discretion to decline to accept any order for
their respective Services solicited or taken by RadioShack, provided Sprint and
Sprint Spectrum, as the case may be, will not discriminate against or apply any
more stringent standards upon RadioShack customers than any other potential
Sprint or Sprint Spectrum customer. Sprint and Sprint Spectrum may, for a valid
business purpose, cancel or suspend any order for Services, either in whole or
in part, without liability to RadioShack, at any time after acceptance by Sprint
and Sprint Spectrum. Sprint and Sprint Spectrum further reserve the right to
allocate their Services during periods of shortages without incurring any
liability to RadioShack for payment of compensation hereunder. Sprint and Sprint
Spectrum may discontinue offering for sale or the actual sale of any Product or
Service, notwithstanding the fact that it may be listed on any of the attached
Addenda, provided in such event, RadioShack may offer in the Retail Store a
competitor's products or services (provided such products and services are not
merchandised in the immediate vicinity of the Merchandising Display) to replace
those Products or Services discontinued by Sprint or Sprint Spectrum, unless
such discontinued Products or Services are replaced by Sprint or Sprint Spectrum
with reasonably comparable services within a reasonable time after such
discontinuation.
(b) Sprint and Sprint Spectrum shall provide customer service for their
respective Services in accordance with each of their respective standard
practices and customer agreements. Customers for Services will be customers of
Sprint and/or Sprint Spectrum and shall remain customers of Sprint and/or Sprint
Spectrum after termination of this Agreement.
(c) Customer installation dates given by Sprint and Sprint Spectrum shall
be approximate only.
9. Sprint Trademark License
(a) License. Sprint grants to RadioShack a non-exclusive, nontransferable,
revocable license, without the right to sublicense, to use the Sprint Marks as
set forth in the Agreement in the Territory in connection with the provision of
the Products and Services set forth on the Addenda attached hereto. For
Services, RadioShack has the right to use the Sprint Marks to promote and
solicit orders for those Sprint Services identified in the Addenda. For
Products, RadioShack has the right to use the Sprint Marks on those quantities
of RadioShack-sourced residential consumer telephones, as defined herein,
approved by Sprint, and to promote, offer for sale and sell Sprint-sourced
Products identified in the Addenda, provided, nothing in this Agreement permits
RadioShack to use Sprint Marks to brand, co-brand or dual-brand any products or
services without Sprint's prior written consent, which consent may be withheld
in Sprint's sole discretion for any reason, including but not limited to failure
to be supplied with acceptable product warranties and indemnification relating
to such products.
(b) Use of Marks. RadioShack agrees to use the Sprint Marks only as set
forth in the Sprint Trademark Usage Guidelines, and in this Agreement and to
follow the standards of quality established by Sprint. RadioShack must not use
the Sprint Marks in combination with any other trade name, trademark or service
mark, including RadioShack's Marks except as otherwise set forth in the Sprint
Trademark Usage Guidelines and in this Agreement, without the prior written
approval of Sprint.
(c) Sprint or Sprint Spectrum after providing written notice to RadioShack
of a breach of any trademark license provision, and after providing a reasonable
time to cure such breach, but not less than thirty (30) days, may, at its
option, take those actions reasonably necessary to protect Sprint or Sprint
Spectrum's trademark rights. Notwithstanding the foregoing, a breach of these
license provisions may give rise to irreparable injury; consequently, Sprint or
Sprint Spectrum may seek injunctive relief without entering into any dispute
resolution or arbitration process.
(d) Control of Marks.
(i) Sprint has the right, at all reasonable times, to inspect RadioShack's
relevant facilities and review the manner in which RadioShack provides
products and services so that Sprint may satisfy itself that the
products and services with which the Sprint Marks are used meet
Sprint's established standards.
(ii) RadioShack agrees to adhere to the trademark usage guidelines
furnished by Sprint for the depiction of the Sprint Marks (" Sprint
Trademark Usage Guidelines"). The attached Exhibit 9(d)(ii) "Summary
of Brand Identity Standards, December, 1995" will function as the
current ver- sion of the Sprint Trademark Usage Guidelines.
(iii)RadioShack agrees to include on the packaging of each
RadioShack-sourced, Sprint-branded Product, on all advertising and
promotional materials, and on all labels bearing any of the Sprint
Marks the following notice:
"[Sprint Mark] is a registered* trademark of Sprint Communi-
cations Company L.P. Used under license."
* "Registered" - to be used only when the Mark is
registered in the USPTO.
(iv) RadioShack agrees that, except with respect to materials substantially
identical to materials that have previously been approved, it will
furnish to Sprint for trademark usage approval prior to any use of the
Sprint Marks a sample of each use of the Sprint Marks that is
different from previously approved usages on advertising, promotional
materials, packaging and labels. RadioShack agrees to amend the use of
the Sprint Marks in any such advertising, promotional materials,
packaging or labels if the use of the Sprint Marks is not approved by
Sprint in accordance with the terms of this Agreement. RadioShack will
use all commercially reasonable efforts to provide sufficient
submission lead times to allow Sprint adequate review and approval
time on trademark usage of Sprint Marks by RadioShack. Sprint will use
all commercially reasonable efforts to provide trademark usage review
and approval within the time constraints applicable to the conduct of
RadioShack's retail operations and the specific advertising,
promotional, packaging or label usage proposed for the Sprint Marks.
If, however, such approval is not received by RadioShack within 5
business days of the date of receipt by Sprint of such materials, such
materials will be deemed approved unless Sprint and RadioShack agrees
on a longer period of time for approval of specific materials. All
materials will be sent for approval to:
Patrice Dougherty, Sr. Intellectual Property Analyst
Sprint Communications Company L.P.
8140 Ward Parkway
Kansas City, MO 64114
Facsimile: (913) 624-6388
(v) RadioShack must not offer for sale, advertise, promote, distribute, or
use for any purpose any RadioShack-sourced, Sprint-branded Product or
associated packaging that is damaged, defective, is a second, or that
otherwise fails to meet the specifications and quality requirements
listed in Exhibit 12(c)(i) without the prior written consent of
Sprint.
(e) Royalties. Sprint provides this license royalty-free to RadioShack.
(f) Rights in Marks.
(i) All uses of the Sprint Marks by RadioShack inure to the benefit of
Sprint. RadioShack acquires no rights, title or interest in the Sprint
Marks or the goodwill associated with them, other than the right to
use the Sprint Marks in accordance with this Agreement. In accepting
this Agreement, RadioShack acknowledges Sprint's ownership of the
Sprint Marks, their validity and the goodwill connected with them.
RadioShack shall not attack the Sprint Marks, nor assist anyone in
attacking them. RadioShack further agrees not to make any application
to register the Sprint Marks, nor to use any confusingly similar
trademark, service mark, trade name, or derivation, during the term of
this Agreement or thereafter. This paragraph will survive the
termination of this Agreement.
(ii) At the request of Sprint, RadioShack will execute any papers or
documents reasonably necessary to protect the rights of Sprint in the
Sprint Marks and execute and deliver such other documents as may be
reasonably requested by Sprint. (g) Infringement. RadioShack shall
promptly notify Sprint of any unauthorized use of the Sprint Marks
that comes to RadioShack's attention. Sprint in its sole discretion
may take such action as may be required to prosecute the infringement.
In the event that Sprint decides that action should be taken against
such third parties, Sprint may take such action either in its own
name, or alternatively, Sprint may authorize RadioShack to initiate
such action in RadioShack's name. In either event, RadioShack agrees
to cooperate fully with Sprint to whatever extent it is necessary to
prosecute such action, all expenses being borne by Sprint and all
damages which may be recovered being solely for the account of Sprint.
(h) Indemnification.
(i) Except as set forth herein and in Section 18 of this Agreement,
RadioShack shall defend, indemnify and hold harmless Sprint and Sprint
Spectrum, their subsidiaries, officers, agents, employees and
Affiliates from all Damages arising out of or resulting from any act
or omission of RadioShack relating to claims for unauthorized use or
misuse of any Sprint/Sprint Spectrum Mark. Notwithstanding the above,
RadioShack shall not be responsible for and shall not defend,
indemnify or hold harmless Sprint or Sprint Spectrum from any Damages
arising out of or resulting from claims of trademark infringement that
are based solely on depicting the Sprint/Sprint Spectrum Marks in
accordance with the Sprint Trademark Usage Guidelines, or pursuant to
other authorization by Sprint or Sprint Spectrum, as the case may be.
10. Sprint Spectrum Trademark License
Sprint Spectrum has no marks to be licensed under this Agreement. If the
Parties later desire to license any Sprint Spectrum Marks, they agree to
negotiate a Trademark License substantially similar to the Trademark Licenses
provisions contained in this Agreement.
11. RadioShack Trademark License
(a) License. RadioShack grants to Sprint and Sprint Spectrum each a
non-exclusive, nontransferable, revocable license, without the right to
sublicense, to use the RadioShack Marks as set forth in this Agreement in the
Territory in connection with the promotion of the sale and use of the Products
and Services set forth on the Addenda attached hereto.
(b) Use of Marks. Sprint and Sprint Spectrum agree to use the RadioShack
Marks only as set forth in this Agreement and to follow the standards of quality
established by RadioShack. Sprint and Sprint Spectrum must not use the
RadioShack Marks in combination with any other trade name, trademark or service
mark, except as otherwise set forth in the RadioShack Trademark Usage Guidelines
in this Agreement, without the prior written approval of RadioShack.
(c) RadioShack after providing written notice to a Sprint or Sprint
Spectrum of a breach of any trademark license provision, and after providing a
reasonable time to cure such breach, but not less than thirty (30) days, may, at
its option, take those actions reasonably necessary to protect RadioShack's
trademark rights. Notwithstanding the foregoing, a breach of these license
provisions may give rise to irreparable injury; consequently, RadioShack may
seek injunctive relief without entering into any dispute resolution or
arbitration process.
(d) Control of Marks.
(i) Sprint and Sprint Spectrum agree to adhere to the trademark usage
guidelines furnished by RadioShack for the depiction of the RadioShack
Marks ("RadioShack Trademark Usage Guidelines"). The attached Exhibit
11(d)(ii) will function as the current version of the RadioShack
Trademark Usage Guidelines.
(ii) Sprint and Sprint Spectrum agree to include on all advertising and
promotional materials bearing any of the RadioShack Marks the
following notice:
"[RadioShack Mark] is a registered* Trademark of Technology
Properties,Inc. Used under license."
* "Registered" to be used only when the Mark is registered in the
USPTO.
(iii)Sprint agrees that, except with respect to materials substantially
identical to materials that have previously been approved, it will
furnish to RadioShack for trademark usage approval prior to any use of
the RadioShack Marks a sample of each use of the RadioShack Marks that
is different from previously approved usages on advertising,
promotional materials, packaging and labels. Sprint agrees to amend
the use of the RadioShack Marks in any such advertising, promotional
materials, packaging or labels if the use of the RadioShack Marks is
not approved by Radioshack in accordance with the terms of this
Agreement. Sprint will use all commercially reasonable efforts to
provide sufficient submission lead times to allow RadioShack adequate
review and approval time on trademark usage of RadioShack Marks by
Sprint. Radioshack will use all commercially reasonable efforts to
provide trademark usage review and approval within the time
constraints applicable to the conduct of Sprint's operations and the
specific advertising, promotional, packaging or label usage proposed
for the RadioShack Marks. If, however, such approval is not received
by Sprint within 5 business days of the date of receipt by RadioShack
of such materials, such materials will be deemed approved unless
Sprint and RadioShack agree on a longer period of time for approval of
specific materials. All materials will be sent for approval to:
General Counsel
Tandy Corporation
1800 One Tandy Center
Fort Worth, TX 76102
(e) Royalties. RadioShack provides this license royalty-free to Sprint and
Sprint Spectrum.
(f) Rights in Marks.
(i) All uses of the RadioShack Marks by Sprint and Sprint Spectrum inure
to the benefit of RadioShack. Sprint and Sprint Spectrum acquire no
rights, title or interest in the RadioShack Marks or the goodwill
associated with them, other than the right to use the RadioShack Marks
in accordance with this Agreement. In accepting this Agreement, Sprint
and Sprint Spectrum acknowledge RadioShack's ownership of the
RadioShack Marks, their validity and the goodwill connected with them.
Sprint and Sprint Spectrum shall not attack the RadioShack Marks, nor
assist anyone in attacking them. Sprint and Sprint Spectrum further
agree not to make any application to register the RadioShack Marks,
nor to use any confusingly similar trademark, service mark, trade
name, or derivation, during the term of this Agreement or thereafter.
This paragraph will survive the termination of this Agreement.
(ii) At the request of RadioShack, Sprint and Sprint Spectrum will execute
any papers or documents reasonably necessary to protect the rights of
RadioShack in the RadioShack Marks and execute and deliver such other
documents as may be reasonably requested by RadioShack.
(g) Infringement. Sprint and Sprint Spectrum shall promptly notify
RadioShack of any unauthorized use of the RadioShack Marks that comes to Sprint
or Sprint Spectrum's attention. RadioShack in its sole discretion may take such
action as may be required to prosecute the infringement. In the event that
RadioShack decides that action should be taken against such third parties,
RadioShack may take such action either in its own name, or alternatively,
RadioShack may authorize Sprint or Sprint Spectrum to initiate such action in
Sprint or Sprint Spectrum's name. In either event, Sprint and Sprint Spectrum
agree to cooperate fully with RadioShack to whatever extent it is necessary to
prosecute such action, all expenses being borne by RadioShack and all damages
which may be recovered being solely for the account of RadioShack.
(h) Indemnification.
(i) Except as set forth herein and in Section 18 of this Agreement, Sprint
and Sprint Spectrum, as the case may be, shall defend, indemnify and
hold harmless RadioShack, its officers, agents, employees and
Affiliates from all Damages arising out of or resulting from any act
or omission of Sprint or Sprint Spectrum, as the case may be, relating
to claims for unauthorized use or misuse of any RadioShack Mark.
Notwithstanding the above, Sprint and Sprint Spectrum shall not be
responsible for and shall not defend, indemnify or hold harmless
RadioShack from any Damages arising out of or resulting from claims of
trademark infringement that are based solely on depicting the
RadioShack Marks in accordance with the RadioShack Trademark Usage
Guidelines, or pursuant to other authorization by RadioShack.
(ii) Except as set forth herein and in Section 18 of this Agreement,
RadioShack shall defend, indemnify and hold harmless Sprint and Sprint
Spectrum, their subsidiaries, offices, agents, employees and
Affiliates from all Damages arising out of the proper use of
RadioShack Marks.
12. Quality Control and Approval
(a) Quality Control, Approvals, and Samples--RadioShack-Sourced Products.
(i) RadioShack agrees that RadioShack-sourced, Sprint-branded products
will meet the applicable quality and standard requirements furnished
by Sprint ("Sprint Quality Standards"). The Attached Exhibit 12(a)(i)
will function as the current version of the Sprint Quality Standards.
Approval of a particular product pursuant to Section 12(a)(ii) below
will not be deemed a waiver of any of the quality and standard
requirements set forth in Exhibit 12(a)(i) with respect to any other
product.
(ii) RadioShack agrees to submit a reasonable number of representative
samples of each RadioShack-sourced, Sprint-branded product at no cost
for review and written approval prior to any use, sale or other
distribution by RadioShack. RadioShack must not distribute any
RadioShack-sourced, Sprint-branded product until final approval of
such samples is received in writing from Sprint, such approval not to
be unreasonably withheld. Samples are to be provided to the person
designated by Sprint in writing to RadioShack.
(iii)RadioShack agrees that all RadioShack-sourced, Sprint-branded products
that it advertises, distributes and sells will be substantially
identical to and of no lesser quality than the final samples approved.
RadioShack agrees to submit to Sprint for written approval any
proposed change from the final samples approved involving any material
alteration in the form fit and structure, design or quality of the
RadioShack-sourced, Sprint-branded products prior to RadioShack's
advertisement, sale or distribution.
(b) Quality Control, Approvals, and Samples--Sprint-Sourced Products.
(i) Sprint agrees that the Sprint-sourced, Sprint-branded Products will
meet the applicable quality and standard requirements furnished by
RadioShack ("RadioShack Quality Standards"). The Attached Exhibit
12(b)(i) will function as the current version of the RadioShack
Quality Standards. Approval of a particular product pursuant to
Section 12(b)(ii) below will not be deemed a waiver of any of the
quality and standard requirements set forth in Exhibit 12(b)(i) with
respect to any other product.
(ii) Sprint agrees to submit a reasonable number of representative samples
of each Sprint-sourced, Sprint-branded product at no cost for review
and written approval prior to any use, sale or other distribution by
RadioShack. RadioShack must not distribute any Sprint-sourced,
Sprint-branded product until final approval of such samples is
received in writing from Sprint, such approval not to be unreasonably
withheld. Samples are to be provided to the person designated by
RadioShack in writing to Sprint.
(iii)Sprint agrees that all Sprint-sourced, Sprint-branded products that
Sprint advertises, distributes and sells will be substantially
identical to and of no lesser quality than the final samples approved.
Sprint agrees to submit to RadioShack for written approval any
proposed change from the final samples approved involving any material
alteration in the form fit and structure, design or quality of the
Sprint-sourced, Sprint-branded products prior to RadioShack's
advertisement, sale or distribution.
13. Copyright and Patent Indemnification and Infringement
(a) RadioShack shall promptly notify Sprint or Sprint Spectrum of any event
of third party infringement of Sprint or Sprint Spectrum copyrights in a work or
authorship related to this Agreement ("Works") that comes to RadioShack's
attention. RadioShack agrees to reasonably assist Sprint and Sprint Spectrum in
the prosecution of any claim or lawsuit against infringement of the Sprint or
Sprint Spectrum Works by providing such relevant evidence as RadioShack may have
within its control. Sprint and Sprint Spectrum agree to reimburse RadioShack for
RadioShack's out-of-pocket expenses (including attorney's fees and expenses)
reasonably and solely incurred in providing such evidence and reasonable
assistance. To the extent permitted by law, RadioShack shall have the right to
intervene at its own expense in any legal proceedings affecting its copyrights.
Sprint and Sprint Spectrum may at their own expense and in the exercise of their
sole discretion bring a claim or lawsuit to restrain any infringement of the
Sprint and Sprint Spectrum Works, in its own name, and shall be entitled to
receive and retain for its own use and benefit any recovery awarded in such
lawsuit. Sprint and Sprint Spectrum may only name RadioShack as a plaintiff or
join RadioShack as a party to any such lawsuit after obtaining RadioShack's
prior written permission and after Sprint and Sprint Spectrum have agreed in
writing to reimburse RadioShack for all reasonable attorney's fees, costs and
expenses incurred.
Sprint and Sprint Spectrum shall defend, indemnify and hold RadioShack
harmless from any Damages imposed on or incurred by RadioShack as a result of
any claim or lawsuit brought against RadioShack: (A) claiming direct or
contributory infringement or inducement to infringe a third party's patent,
copyright or similar intellectual property of right arising out of RadioShack's,
Sprint's or Sprint Spectrum's importing, using, soliciting orders for, or
selling Products or Services supplied by Sprint or Sprint Spectrum or made to
specifications supplied by Sprint or Sprint Spectrum for compatibility with the
Services; (B) claiming contributory infringement of or inducement to infringe a
third party's patent, copyright or similar intellectual property right arising
out of RadioShack's: (1) importing or making Products for sale; or (2) using or
selling Products or products, in association with the Services of Sprint or
Sprint Spectrum, wherein such Products or products do not directly infringe such
third party's intellectual property right; or (C) claiming infringement of a
third party's copyright or similar intellectual property right resulting from
RadioShack's exercise of any of the exclusive rights of an owner of copyright or
similar intellectual property right with respect to any work or material
supplied by Sprint or Sprint Spectrum under this Agreement for use by
RadioShack, provided that RadioShack complies with the procedure set forth in
Section 14(g) below.
(b) Sprint or Sprint Spectrum shall promptly notify RadioShack of any event
of third party infringement of RadioShack copyrights in a work or authorship
related to this Agreement ("Works") that comes to Sprint or Sprint Spectrum's
attention. Sprint or Sprint Spectrum agrees to reasonably assist RadioShack in
the prosecution of any claim or lawsuit against infringement of RadioShack Works
by providing such relevant evidence as Sprint or Sprint Spectrum may have within
its control. RadioShack agrees to reimburse Sprint or Sprint Spectrum for Sprint
or Sprint Spectrum's out-of-pocket expenses (including attorney's fees and
expenses) reasonably and solely incurred in providing such evidence and
reasonable assistance. To the extent permitted by law, Sprint or Sprint Spectrum
shall have the right to intervene at its own expense in any legal proceedings
affecting Sprint's or Sprint Spectrum's copyrights. RadioShack may at
RadioShack's own expense and in the exercise of RadioShack's sole discretion
bring a claim or lawsuit to restrain any infringement of the RadioShack Works,
in its own name, and shall be entitled to receive and retain for its own use and
benefit any recovery awarded in such lawsuit. RadioShack may only name Sprint or
Sprint Spectrum as a plaintiff or join Sprint or Sprint Spectrum as a party to
any such lawsuit after obtaining Sprint or Sprint Spectrum's prior written
permission and after RadioShack agrees in writing to reimburse Sprint or Sprint
Spectrum for all reasonable attorney's fees, costs and expenses incurred.
RadioShack shall defend, indemnify and hold Sprint or Sprint Spectrum
harmless from any Damages imposed on or incurred by Sprint or Sprint Spectrum as
a result of any claim or lawsuit brought against Sprint or Sprint Spectrum: (A)
claiming direct or contributory infringement of or inducement to infringe a
third party's patent, copyright or similar intellectual property right arising
out of Sprint or Sprint Spectrum's or RadioShack's importing, using, soliciting
orders for, or selling products or services supplied by RadioShack or made to
specifications supplied by RadioShack for compatibility with the Services; (B)
claiming contributory infringement of or inducement to infringe a third party's
patent, copyright or similar intellectual property right arising out of Sprint
or Sprint Spectrum's: (1) importing or making products for sale; or (2) using or
selling Products or products, in association with the services of RadioShack,
wherein such Products or products do not directly infringe such third party's
intellectual property right; or (C) claiming infringement of a third party's
copyright or similar intellectual property right resulting from Sprint or Sprint
Spectrum's exercise of any of the exclusive rights of an owner of copyright or
similar intellectual property right with respect to any work or material
supplied by RadioShack under this Agreement for use by Sprint or Sprint
Spectrum, provided that Sprint or Sprint Spectrum as the case may be, comply
with the procedure set forth in Section 14(g) below.
14. Representations and Warranties: Indemnification - Each Party represents
and warrants to the other Parties that:
(a) Due Incorporation or Formation; Authorization of Agreements - The Party
is a limited partnership or corporation as the case may be duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization, and is duly qualified or licensed to do business as a foreign
corporation, limited partnership, or entity and is in good standing in each
jurisdiction in which it will conduct business or carry out the transactions
contemplated under this Agreement, if the failure to be so qualified would have
a material adverse effect on the business or assets of the respective Party or
materially affects its ability to perform its obligations hereunder. The Party
has the full power and authority to own its property and carry on its business
as owned and carried on at the date of this Agreement. The Party has the full
power and authority to execute and deliver this Agreement, to perform its
obligations under this Agreement and to consummate the transactions contemplated
by this Agreement. The execution, delivery and performance of this Agreement by
the Party has been duly authorized by all necessary corporate/partnership
action. This Agreement constitutes the legal, valid and binding obligation of
the Party, enforceable in accordance with its terms, subject as to
enforceability limits imposed by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and the availability of equitable
remedies. The Party has all necessary licenses to market and sell the Products
and Service as contemplated by this Agreement.
(b) No Conflict; No Default - Except under subparagraph (b) (iii) with
respect to any lease of any Retail Store and except as set forth on Schedule
14(b), to the best of the knowledge, information and belief of the Party,
neither the execution, delivery and performance of this Agreement nor the
consummation by the Party of the transactions contemplated hereby:
(i) will violate or cause a breach of any of the terms, conditions or
provisions of any existing law, regulation, order, writ, injunction,
decree, determination or award of any governmental authority or any
arbitrator, applicable to such Party,
(ii) will violate or cause a breach of or constitute a default under any of
the terms, conditions or provisions of the certificate or articles of
incorporation or bylaws (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, including the course of conduct between the Party and the
other party(ies) to such agreement,
(iii)will violate or cause a breach of, constitute a default under (whether
with notice or lapse of time or both), accelerate or permit the
acceleration of the performance required by, give to others any
interests or rights or require any consent, authorization or approval
under any indenture, mortgage or lease agreement or material financial
obligation to which such Party or by which such Party is or may be
bound, or
(iv) will require any consent, approval or authorization of, or
declaration, filing a registration with, any governmental or
regulatory authority, or
(v) will require any license, other than those currently held by a Party
with the good faith belief that such license will endure or is
renewable and will be renewed by such Party for the full term of this
Agreement, under the intellectual property rights of a third party.
In addition, except as provided in Schedule 14(b) attached to this
Agreement, RadioShack represents and warrants to the other Parties that it has
contacted each of the Cellular Radiotelephone Service Carriers listed on Exhibit
14(b) and that, to the best of its information, knowledge and belief, the
execution, delivery and performance of this Agreement will not violate or cause
a breach or constitute a default under (whether with notice or lapse of time or
both) of any existing contract by and between RadioShack and any of the Cellular
Radio Telephone Service Carriers listed on Exhibit 14(b) in any of the Licensed
Markets listed on Schedule III.1 of the National Agreement to Market Personal
Communications Services Addendum attached hereto.
(c) Litigation - There are no claims, actions, suits, proceedings or
investigations 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 department, board, agency or instrumentality,
domestic or foreign, or any arbitrator which could, if adversely determined (or,
in the case of an investigation, could lead to any action, suit or proceeding,
which if adversely determined could) reasonably be expected to have a material
adverse effect on the Party's ability to perform its obligations under this
Agreement. The Party has not received any currently effective notice of default
under any law, regulation, contract, agreement or otherwise which if not timely
cured could have a material adverse effect on the Party's ability to perform its
obligations under this Agreement. The Party is not in default under any
applicable order, writ, injunction, decree, permit, determination or award of
any governmental authority or any arbitrator which could reasonably be expected
to have a material adverse effect on the Party.
(d) Right to Disclose; Marks, Ownership and Registration - Each Party
warrants that it has the right to disclose all Proprietary Information which it
has disclosed to the other Party pursuant to this Agreement. Except as expressly
provided otherwise in this Agreement, none of the Parties make any
representation or warranty, express or implied, with respect to any Proprietary
Information.
Each respective Party's Marks and the registration thereof are good, valid
and enforceable at law and in equity. Marks which are being applied for and
those for which registrations have not been renewed are not included in this
representation and warranty (it being understood no Party, by this exception,
waives its claim to such Marks and this Agreement shall apply to such Marks even
if only applied for or currently not registered).
(e) Indemnification - Each Party hereto (the "Indemnifying Party") agrees
to indemnify and hold harmless the other Parties hereto and their permitted
assigns, and their partners, officers, directors, employees and agents, and each
of their representatives, and their successors and assigns (collectively, the
"Indemnitees") at all times from and after the Effective Date against and in
respect of any Damages (hereinafter defined) suffered by the Indemnitees as a
direct or indirect result of any claims, actions or demands by a third party,
who is not an Affiliate of a Party hereto, to the extent caused by (i) any
breach of any representation or warranty made by the Indemnifying Party in this
Agreement or any agreement executed by the Indemnifying Party in connection
herewith; (ii) breach or default in the performance by the Indemnifying Party of
any of the covenants to be performed by the Indemnifying Party under this
Agreement or any agreement executed by the Indemnifying Party in connection
herewith; (iii) any debts, liabilities or obligations of the Indemnifying Party,
whether accrued, absolute, contingent, or otherwise, due or to become due; (iv)
any claim by a third party preventing the Indemnifying Party from substantially
performing its material obligations hereunder; (v) the Indemnifying Party's acts
or omissions with respect to any advertising (other than claims arising out of
(A) the proper use of the Indemnified Party's Marks, and (B) advertising that is
specifically approved in form and content by the Parties, or (vi) any other act
or omission of the Indemnifying Party, or any occurrence on the property of the
Indemnifying Party, unrelated to this Agreement. In addition, notwithstanding
any term or provision of any purchase order or Addendum to this Agreement,
RadioShack will indemnify and hold harmless Sprint and Sprint's Indemnitees from
all Damages relating to or arising out of the manufacture, sale or distribution
of any RadioShack-sourced, Sprint-branded products, not attributable to any act
or omission of Sprint or otherwise addressed herein; and notwithstanding any
term or provision of any purchase order or Addendum to this Agreement, Sprint
will indemnify and hold harmless RadioShack and RadioShack's Indemnitees from
all Damages relating to or arising out of the manufacture, sale or distribution
of any Sprint-sourced, Sprint-branded products, not attributable to any act or
omission of RadioShack or otherwise addressed herein. PROVIDED, HOWEVER, that
claims, actions and judgments against an Indemnitee for wrongful or tortious
interference with contractual relationships or wrongful or tortious inducement
of breach of contract or like claims or actions under the case law, statutes or
regulations of any jurisdiction, and all Damages awarded in respect of such
claims (including any actual or punitive damages) are specifically excluded from
this indemnification obligation.
(f) For the purposes of this Agreement and unless otherwise specifically
provided, the term "Damages" shall include (i) all amounts finally awarded or
charged against an Indemnitee and all actual out-of-pocket expenses or costs
incurred by such Indemnitee(s), including reasonable professional and attorneys'
fees and expenses incurred in investigating or in attempting to avoid the same
or oppose the imposition thereof and (ii) interest at a rate per annum equal to
that announced from time to time by the Wall St. Journal as the "prime rate" or
"base rate" (or the legal rate of interest, if lower) from the date thirty (30)
days after notice of any such claim for indemnification under this Agreement is
given, or if an unliquidated claim, from such later date as the claim is
liquidated, to the date full indemnification is made therefor, but Damages shall
not include any amounts for which any one of the Indemnitees actually receives
payment under an insurance policy, excluding self-insured amounts and deductible
amounts.
(g) Promptly upon receipt by it of notice of any demand, assertion, claim,
action or proceeding, judicial or otherwise, with respect to any matter as to
which an Indemnifying Party has agreed to indemnify an Indemnitee under the
provisions of this Agreement, the Indemnitee will give prompt notice thereof in
writing to the Indemnifying Party, together with the statement of such
information respecting such demand, assertion, claim, action or proceeding as
the Indemnitee shall then have. If the Indemnifying Party acknowledges full
liability or potential liability without admitting same under this Agreement,
the Indemnifying Party shall have the right to contest and defend by all
appropriate legal or other proceedings any demand, assertion, claim, action or
proceeding with respect to which it has been called upon to indemnify the
Indemnitee under the provisions of this Agreement; provided, however, that:
(i) notice of intention so to contest shall be delivered to the Indemnitee
within twenty (20) calendar days from the receipt by the Indemnifying
Party of notice of the assertion of such demand, assertion, claim,
action or proceeding;
(ii) the Indemnifying Party will pay all costs and expenses of such contest
or defense, including all attorneys' and accountants' fees, and the
cost of any bond required by law to be posted in connection with such
contest or defense;
(iii)such contest or defense shall be conducted by reputable attorneys
employed by the Indemnifying Party and reasonably approved by the
Indemnitee, at the Indemnifying Party's sole cost and expense, but the
Indemnitee shall have the right to participate in such proceedings and
to be represented by attorneys of its own choosing, at the
Indemnitee's cost and expense without contribution or indemnification
by the Indemnifying Party for such costs or expenses;
(iv) if after such opportunity, the Indemnifying Party does not elect to
assume the defense in any such proceedings, the Indemnifying Party
shall be bound by the results obtained by the Indemnitee, including
without limitation any out-of-court settlement or compromise;
(v) if the Indemnifying Party assumes the defense, the Indemnitee(s) will
not settle, or attempt to settle, such claim without the Indemnifying
Party's consent; and
(vi) the Indemnifying Party will not settle any claim without the prior
written consent of the Indemnitees, unless the settlement contains a
complete and unconditional release of the Indemnitee(s), and the
settlement does not involve the imposition of any nonmonetary relief
on the Indemnitees.
(h) Remedies in General - No delay or omission on the part of any Party in
exercising any right or remedy shall operate as a waiver of said right or remedy
or any other right or remedy. A waiver on any one occasion shall not be
construed as a bar to or a waiver of any right on any future occasion. Every
right and remedy of a Party shall be cumulative and in addition to every other
right and remedy expressed in this Agreement or allowed by law or equity, and
may be exercised singularly or concurrently.
15. Publicity - Except for legally mandated disclosures, any press releases or
public announcements relating to this Agreement or the terms of the Agreement
must be mutually agreed upon by the Parties.
16. Independent Contractors - Nothing contained in this Agreement is intended or
shall be construed to create or establish any agency, partnership, joint venture
or other profit-sharing arrangement, landlord-tenant, or lessor-lessee
relationship between the Parties. No Party shall have any authority, express or
implied, to create or assume any obligation, enter into any agreement, make any
representation or warranty, file any document with any governmental body, or
serve or accept legal process on behalf of any other Party, settle any claim by
or against any other Party, or to bind or otherwise render any other Party
liable in any way to any other person, without the prior express written consent
of the Party to be affected by such action.
17. Product and Service Representations - All Product and Service warranties
will be limited to, and be as set forth, on each respective Addendum attached
hereto. RadioShack will not make to any customer or potential customer any
representation or warranties whatsoever on behalf of Sprint or Sprint Spectrum,
and shall effectively disclaim any authority to make such warranty or
representation on Sprint's or Sprint Spectrum's behalf, to any customer or
potential customer regarding any of the Products or Services, except as
specifically authorized by Sprint or Sprint Spectrum on an Addendum attached
hereto, as appropriate.
Sprint and Sprint Spectrum will not make to any customer or potential
customer any representation or warranty whatsoever on behalf of RadioShack, and
shall effectively disclaim any authority to make such warranty or representation
on RadioShack's behalf, to any customer or potential customer regarding any of
the Products or Services, except as specifically authorized by RadioShack on an
Addendum attached hereto, as appropriate.
18. Limitation of Liability - IN NO EVENT WILL ANY PARTY BE LIABLE TO THE OTHER
PARTIES FOR SPECIAL, INDIRECT, INCIDENTAL, EXEMPLARY, CONSEQUENTIAL, PUNITIVE
DAMAGES, OR LIKE DAMAGES, HOWEVER CALLED, 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.
NOTWITHSTANDING ANY INDICATION TO THE CONTRARY HEREIN, IN NO EVENT WILL ANY
PARTY, INCLUDING SPRINT AND SPRINT SPECTRUM, BE LIABLE OR HAVE ANY JOINT AND
SEVERAL OBLIGATION FOR THE INDEMNIFICATION OBLIGATIONS, OR ANY OTHER OBLIGATIONS
OR LIABILITIES, OF ANY OTHER PARTY UNDER THIS AGREEMENT OR ANY ADDENDUM HERETO.
THIS COVENANT DOES NOT AFFECT THE OBLIGATION OF A PARTY TO INDEMNIFY ANOTHER
PARTY AS SPECIFICALLY PROVIDED HEREIN.
19. Termination
(a) Termination Events. No Party will have the right to terminate this
Agreement for a period of thirty-six (36) months after the Effective Date unless
the grounds for termination are:
(i) that another Party has been convicted of a violation of a Federal,
state or local criminal statute and such conviction actually and
materially adversely affects that Party's ability to perform its
obligations under this Agreement;
(ii) that a final judgment has been entered against another Party finding
said Party in violation of a Federal, state or local statute or
regulation and such final judgment actually and materially affects
that Party's ability to perform its obligations under this Agreement;
(iii)that another Party has (a) filed a voluntary petition in bankruptcy or
voluntary petition or an answer seeking reorganization, arrangement,
readjustment of its debts, or any other relief under the Federal
Bankruptcy Code or under any other insolvency act or law now or
hereafter existing, (b) made a general assignment for the benefit of
creditors, or (c) admitted in writing its inability to pay its debts
as they mature;
(iv) that another Party has had (a) an involuntary petition filed against
it seeking reorganization, arrangement, readjustment of its debts, or
any other relief under the Federal Bankruptcy Code or under any other
insolvency act or law now or hereafter existing (b) a receiver or
trustee appointed involuntarily, and such petition or action is not
suspended, stayed or dismissed within sixty (60) days after filing or
appointment, as the case may be.
(v) that a Final Order has been issued by the Arbitrator containing a
finding of a material breach of contract, representation or warranty
given by a Party in this Agreement or of any other material breach of
this Agreement by the Party against which termination is sought; or
(vi) that a Change of Control has occurred involving a Party, other than a
transaction constituting a Change of Control by one Party of another
Party.
With respect to a termination pursuant to subsections (i)-(iv) the Party
seeking termination will provide the other Parties sixty (60) days written
notice following the occurrence of the event creating the grounds for
termination; and, with respect to a termination pursuant to subsection (vi), the
Party seeking termination will provide the other Parties one hundred twenty
(120) days written notice following the occurrence of the event creating the
grounds for termination; and with respect to a termination pursuant to
subsection (v), the Party seeking termination will have the right to an
immediate termination following receipt of the Final Order, but in no event
sooner than sixty (60) days from the date a Party first notifies the others in
writing of a breach.
(b) Intentionally left blank.
(c) Termination after Thirty-Six Months. Each Party may unilaterally
terminate this Agreement at any time after the end of the thirty-sixth (36th)
month after the Effective Date upon one hundred eighty (180) days written notice
following the unsatisfactory conclusion of the Dispute Resolution procedure set
forth in Section 20(a) below. The Parties may by mutual agreement terminate this
Agreement at any time after the end of the thirty-sixty (36th) month after the
Effective Date by the following procedure:
(i) A Party who desires to initiate the mutual termination process
described herein (the "Initiating Party") shall notify each other
Party to this Agreement (each a "Responding Party") in writing
pursuant to Section 26 and signed by the Chief Executive Officer of
the Initiating Party. Such notice shall state conspicuously that it is
a "Notice of Request for Mutual Termination of Master Agreement." The
Notice of Request for Mutual Termination may be withdrawn by the
Initiating Party if the Initiating Party notifies each Responding
Party of such withdrawal in writing signed by the said Chief Executive
Officer prior to receiving the appropriate written responses from all
Responding Parties described below.
(ii) Within thirty (30) days from receipt of a Notice of Request for Mutual
Termination from the Initiating Party or within such extended period
as may be agreed upon by all Parties in writing, each Responding Party
shall respond in writing signed by its Chief Executive Officer to the
Initiating Party and send a copy of its response to the other
Responding Party. The content of such responses shall only state:
a. "Notice of Request for Mutual Termination of Master Agreement by
(Party Name)" (if the Responding Party concurs with the Initiating
Party and wishes to mutually terminate the Master Agreement); or
b. "Rejection of Request for Mutual Termination of Master Agreement by
(Party Name)" (if Responding Party does not concur with the Initiating
Party and does not wish to mutually terminate the Master Agreement).
Each Responding party shall use its best efforts to respond within the time
period provided. Failure of any Responding Party to respond within the time
period shall be deemed an automatic withdrawal of all Notices of Request for
Mutual Termination of the Master Agreement by the Initiating Party and all
Responding Parties.
(iii)If all parties send the required Notice of Request for Mutual
Termination of the Master Agreement as set forth above, the Parties
shall, within the next thirty (30) days or within such extended period
as may be agreed by all Parties in writing, negotiate to determine and
resolve all outstanding issues, including all amounts payable under
Section 20(b)(iii) and all other amounts payable by a Party to the
other Parties. Any such outstanding issues that are not resolved
within the time provided will be submitted to arbitration in the
manner set forth in this Agreement.
(d) Termination Applies to All Parties. If this Agreement is terminated by
a Party, this Agreement will be terminated in its entirety.
(e) Mitigation of Losses. Upon the occurrence of an event creating grounds
for termination under Section 19(a) above, including but not limited to, a claim
that any Party has breached this Agreement or any representation or warranty
given in this Agreement, the Parties shall use commercially reasonable efforts
to mitigate damages caused by the occurrence of such event.
(f) Duties Upon Termination. Upon the expiration or termination of this
Agreement:
(i) Except as otherwise provided herein, the Parties will use all
commercially reasonable efforts to cease immediately all of their
respective efforts to promote the sale of the Products and Services
through the Retail Stores including the use of the Combination Marks
but in any event no later than sixty (60) days after expiration or
termination of this Agreement;
(ii) Except as otherwise provided herein, RadioShack will cease immediately
the use of any Sprint and/or Sprint Spectrum Marks, and Sprint and
Sprint Spectrum will cease immediately the use of RadioShack Marks,
and each will cease immediately the use of the Combination Marks;
(iii)Except as otherwise provided herein, the Parties will discontinue
immediately making any statements or taking any actions that might
cause third parties to infer that any business relationship continues
to exist between the Parties pursuant to this Agreement, and where
necessary or advisable, inform third parties that the Parties no
longer have a business relationship pursuant to this Agreement; and
(iv) RadioShack will retain possession of and take title to the
Merchandising Display (if neither Sprint or Sprint Spectrum notifies
RadioShack within thirty (30) days after the effective date of
termination of such Party's intent to take and remove the
Merchandising Display at such Party's expense), and RadioShack will
remove and destroy the Sprint and/or Sprint Spectrum Marks and other
designations from all Retail Stores, including the Merchandising
Displays, at RadioShack's sole cost and expense, within sixty (60)
days following termination of this Agreement.
Notwithstanding anything to the contrary herein, following a termination of
this Agreement, RadioShack may continue to advertise and sell the Products for
the time period necessary to sell through or sell out each Product remaining in
current inventories to the extent provided in each Addendum hereto, but in any
event no later than twenty-four (24) months after expiration or termination of
this Agreement. During such time, RadioShack may continue to use the Sprint
Marks (but not in Combination Mark Format), but such use shall be subject to the
terms of this Agreement and limited to the Products RadioShack has on order and
in inventory as of the termination of this Agreement.
(g) Subsequent Marketing. During the term of this Agreement, and for a
period equal to the greater (i) five years following termination of this
Agreement, or (ii) the time period set forth in any applicable governmental law
or regulations, RadioShack will not sort out and use for its own purposes,
including any target marketing, a list of customers who have purchased any of
the Sprint or Sprint Spectrum Products or Services which are the subject of this
Agreement, or make such list or any portion thereof available to another PCS or
telecommunications carrier for the purpose of sale of products or services
similar to those set forth on any Addendum attached hereto; provided, however,
that this paragraph shall not be construed in any way to limit general use by
RadioShack of RadioShack's lists compiled by RadioShack of its own customers
purchasing products or services, including Products or Services.
(h) Post Termination Compensation. For a period of twenty-four (24) months
following the expiration or termination of this Agreement, Sprint and Sprint
Spectrum shall pay RadioShack residual commissions and compensation at the rate
and pursuant to the terms set forth on the applicable Addendum in effect on the
effective date of termination or expiration of this Agreement.
Upon a unilateral termination of this Agreement, Sprint or Sprint Spectrum,
as the case may be, has the option in Sprint or Sprint Spectrum's sole
discretion, but not the obligation, to pay to RadioShack, in one lump sum,
within sixty (60) days after the termination date, an amount equal to the
present value as of the effective date of (using a discount factor equal to the
then current two year Federal T-Bill interest rate per annum) of a stream of
Assumed Payments, as defined below) for 24 months, less payments made to
RadioShack between the date of termination and the date of payment of the lump
sum in full satisfaction of their respective obligations, as the case may be, to
pay residual commissions hereunder. For the purposes of this option, the lump
sum payment will be equal to the Assumed Payment multiplied by 24, and then
discounted at the rate set forth above. For the purposes of this Agreement,
"Assumed Payment" means the amount equal to 1/12th of the residuals actually
earned by RadioShack from all Sprint or Sprint Spectrum Services, as the case
may be, sold on a residual basis by RadioShack on behalf of Sprint or Sprint
Spectrum during the twelve (12) month period immediately preceding a termination
of this Agreement. Any bounties, activation fees, incentive program payments,
marketing development funds, advertising funds or any other non-residual or one
time payments made by Sprint or Sprint Spectrum to RadioShack will not be
included in this calculation. If the Agreement is in effect for fewer than
twelve (12) months prior to termination, the monthly average will be multiplied
by twelve in order to arrive at the twelve month period.
20. Dispute Resolution
(a) Procedures - In the event of a dispute arising between any of the
Parties, out of or relating to the Agreement or the performance of any
obligations under the Agreement, the Parties agree to attempt, in good faith, to
resolve such disputes through the escalation procedure set forth below:
(i) The Joint Steering Committee members for the Parties shall meet by
telephone or in person and attempt to resolve any dispute in good
faith;
(ii) If the Joint Steering Committee members are unable to resolve the
dispute within five (5) business days, or such longer period of time
as agreed by the Joint Steering Committee, the Parties' respective
Joint Steering Committee members shall provide a written summary of
the disputed issues to a senior division officers for each Party. The
senior division officers (i.e., the president or titular head of each
appropriate division or designated group of such Party) for each Party
shall then meet by telephone or in person and attempt to resolve such
dispute in good faith;
(iii)If the senior division officers are unable to resolve the dispute
within ten (10) business days, the senior division officers will
provide a written summary of the disputed issues to the chief
executive officers of each Party. The chief executive officers of each
Party will then meet by telephone or in person and attempt to resolve
such dispute in good faith;
(iv) If the chief executive officers are unable to resolve the dispute
within ten (10) business days, then either Party may terminate this
Agreement as provided in Section 19(a)(v) or 19(c) above.
(b) Termination Payments and Arbitration.
(i) Upon a unilateral termination of this Agreement by RadioShack under
Section 19(c), or by Sprint or Sprint Spectrum under Section 19(a),
RadioShack will pay to Sprint and Sprint Spectrum an amount equal to
the unamortized Merchandising Display Expenditures (less any credits
or payments for the same previously received) as of the termination
date of this Agreement, and Radio Shack will be entitled to receive
only one-half of the amount otherwise payable by Sprint and Sprint
Spectrum under Section 19(h) above;
(ii) Upon a unilateral termination of this Agreement by Sprint or Sprint
Spectrum under Section 19(c), or by RadioShack under Section 19(a),
RadioShack will pay to Sprint and Sprint Spectrum an amount equal to
one-half of the unamortized Merchandising Display Expenditures (less
any credits or payments for the same previously received) as of the
termination date of this Agreement, and RadioShack will be entitled to
receive all of the amounts otherwise payable under Section 19(h).
(iii)Upon a mutual termination of this Agreement by the Parties under
Section 19(c), the Parties will meet and agree upon the amount of the
unamortized Merchandising Display Expenditures, if any, payable to
Sprint and Sprint Spectrum by Radio Shack and the amount of money
otherwise payable under Section 19 (h), if any, payable to RadioShack
by Sprint and Sprint Spectrum. taking into consideration the
principles set forth in Section 20(b)(i) and Section 20(b)(ii).
(iv) All payments due under this Section will be due and payable in
immediately available funds within thirty (30) days of the effective
date of the termination of this Agreement. If Sprint or Sprint
Spectrum, as the case may be, elect the lump sum payment option in
Section 19(h) above, the lump sum payment will be offset against the
payment payable by Radio Shack hereunder.
(v) Solely for the purposes of this Section 20(b), and notwithstanding any
inconsistent period of amortization or depreciation schedule claimed
or used by a Party hereto, the Merchandising Display Expenditures will
be amortized as follows: the Merchandising Display Expenditures
attributable to the fixtures will be amortized on the straight-line
basis over one hundred (100) months; and Merchandising Display
Expenditures attributable to the computer interface will be amortized
on the straight-line basis over thirty-six (36) months. The starting
date for the amortization with respect to each computer interface and
fixtures for each Retail Store will be the first day of the first
month in which a Merchandising Display is installed and operational in
that Retail Store.
Except for termination payment disputes under Section 20(b)(i) and (ii),
the Parties will submit to an Arbitrator any dispute which cannot be resolved by
the Parties regarding the unwinding of this relationship and any alleged breach
of contract issues. The Arbitrator will determine what, if any, measures should
be taken by the Parties to unwind the relationship; provided, however, that the
Parties will not submit any trademark license provision to arbitration.
Irrespective of termination, following the dispute resolution procedure set
forth above, a Party may submit a good faith allegation of a breach of contract
claim to the Arbitrator for determination by the Arbitrator, who will also
determine the amount of damages, if any, to be paid by a Party to another Party
for a breach of this Agreement. This Arbitration process shall be conducted in
accordance with the procedures set forth on Schedule 20(b) attached hereto.
21. Confidentiality
(a) Restriction - All Proprietary Information disclosed by one Party to the
other Parties is deemed to be confidential, restricted and proprietary to the
disclosing Party.
(b) Use - The Parties agree to use the Proprietary Information received
from the other Parties only to accomplish the intent of this Agreement. No other
rights to trademarks, inventions, copyrights, patents, or any other intellectual
property rights are implied or granted under this Agreement or by the conveying
of Proprietary Information between the Parties. Notwithstanding anything to the
contrary herein or in the Confidentiality Agreement, either Party may attach
this Agreement and attachments hereto to any public filing to the extent counsel
for such Party reasonably determines necessary.
(c) Copying - Proprietary Information supplied is not to be reproduced in
any form except as required to perform a Party's obligations under this
Agreement.
(d) Care - The receiving Parties must provide the same degree of care to
avoid disclosure or unauthorized use of the Proprietary Information as they
provide to protect their own similar proprietary information. All Proprietary
Information must be retained by the receiving Parties in a secure place with
access limited to only such of the receiving Party's employees, attorneys,
accountants or agents who need to know such information to perform a Party's
obligations under this Agreement and to such third parties as the disclosing
Party has consented to by prior written approval.
(e) Ownership - All Proprietary Information, unless otherwise specified in
writing, (a) remains the property of the disclosing Party, (b) must be used by
the receiving Parties only for the purpose of performing its obligations under
this Agreement, and (c) such Proprietary Information, including all copies of
such information, must be returned to the disclosing Party or destroyed after
the receiving Party's need for it has expired or upon request of the disclosing
Party, and, in any event, upon termination of this Agreement. At the request of
the disclosing Party, the receiving Party will furnish a certificate of an
officer of the receiving Party certifying that Proprietary Information not
returned to disclosing Party has been destroyed.
(f) Limitation - The Parties agree that the term "Proprietary Information"
does not include information which:
(i) has been or may in the future be published or is now or may in the
future be otherwise in the public domain through no fault of the
receiving Party;
(ii) prior to disclosure pursuant to this Agreement is property within the
legitimate possession of the receiving Party;
(iii)subsequent to disclosure pursuant to this Agreement is lawfully
received from a third party having rights in the information without
restriction of the third party's right to disseminate the information
and without notice of any restriction against its further disclosure;
(iv) is independently developed by the receiving Party through parties who
have not had, either directly or indirectly, access to or knowledge of
such Proprietary Information; or
(v) is obligated to be produced under order of a court of competent
jurisdiction or other similar requirement of a governmental agency, so
long as the Party required to disclose the information provides the
other Party with prior notice of such order or requirement.
(g) Relief - The Parties agree that a breach of this Section 21 may give
rise to irreparable injury to the non-breaching Party(ies) that cannot be
compensated for adequately by damages. Consequently, the Parties agree that each
Party shall be entitled, in addition to all other remedies available, to
injunctive and other equitable relief to prevent a breach of this Section 21 of
this Agreement and to secure the enforcement of the provisions of this Section
21 in any court of competent jurisdiction in the United States or any state
thereof (and the Parties agree to waive any requirement for the posting of bond
in connection with such remedy).
(h) Term - A Party must not disclose the Proprietary Information for a
period which is the longer of (a) four years from the date of disclosure or (b)
two years following the date of termination of this Agreement.
22. Insurance
(a) Required Insurance - Each Party must, during the term of this Agreement
and at its sole expense, obtain and keep in force, the following insurance:
(i) Commercial General Liability Coverage, including personal injury,
bodily injury, property damage, operations hazard, independent
contractor coverage, contractual liability, and products and completed
operations liability, in limits not less than $5,000,000 for each
occurrence (combined single limit); and
(ii) Worker's Compensation and Employer's Liability insurance.
(b) Request for Certificates - Each Party shall promptly comply with
another Party's request for a certificate of insurance evidencing such coverage.
(c) Policies of Insurance - All required insurance policies must be taken
out with reputable national insurers that are licensed to do business in the
jurisdictions where the Parties are doing business.
(d) No Limitation On Liability - The provision of insurance required in
this Agreement will not be construed to limit or otherwise affect the liability
of any Party to the other Parties.
(e) Release - The Parties agree to release each other, and their respective
principals, employees, representatives and agents, from any claims for damage to
any person or property, that are caused by, or result from, risks insured
against under any insurance policies carried by the Parties and in force at the
time of any such damage. Each Party will cause each insurance policy obtained by
it to provide that the insurance company waives all right of recovery by way of
subrogation against the other Party in connection with any damage covered by any
such policy. Neither Party will be liable to the other for any damage caused by
fire or any of the risks insured against under any insurance policy required by
this Section.
23. Ethical Conduct and Related Covenants - Each Party will perform its
obligations under this Agreement, in a diligent, legal, ethical, and
professional manner. Any representation made by either Party concerning Products
or Services shall be in compliance with the covenants in of this Agreement.
Neither Party will disparage the other Party, or the other Party's products or
services.
24. Compensation Disputes and Audit
(a) Disputes Concerning Compensation Payments - If any dispute arises
concerning any compensation payment due hereunder, the disputing Party must give
the other Parties written notice of the nature and amount of the dispute within
ninety (90) days of receipt of payment and supporting documentation. If a Party
does not receive such written notice within that ninety (90) day period, all
compensation payments made will be final and the other Parties may not
thereafter dispute the nature or amount of the compensation payment. If,
however, the complaining party did not have knowledge of the compensation due it
because of fraud, intentional failure to disclose, breach of this Agreement or
any other act or omission of the other Party, this provision shall not apply and
the complaining Party shall have two (2) years from the date of discovery of the
relevant facts in which to make a claim.
(b) Audit - Each Party will maintain complete and accurate accounting
records during the term of this Agreement and for twelve (12) months following
conclusion or expiration of all post-agreement payment obligations of all
Parties in a consistent form to substantiate the direct monetary payments and
reporting obligations of one Party to any other Party under this Agreement. Each
Party may, upon reasonable advanced written notice, conduct during the other
Party's regular business hours, and in accordance with applicable law and
reasonable security requirements, audits of such direct monetary payment and
reporting obligation accounts and records, in accordance with the following
guidelines and restrictions: (a) the audit may be conducted by members of the
internal audit department who are employees of the auditing Party, (b) the
audited Party may require the auditing Party's employee to conduct the audit on
the premises of the audited Party, (c) the audited Party will have the right to
have an employee or representative present at all times during the audit, (d)
the auditing Party will not have direct unrestricted access to the audited
Party's computer database without the consent of the audited Party, and will be
entitled to review only those specific records of the audited Party directly
related to the monetary obligations of the audited Party hereunder or the
applicable Addendum, specifically limited to customer activations,
deactivations, customer billing records, records related to media/advertising
expenditures (excluding advertising rate information subject to third party
confidentiality and non-disclosure agreements), Merchandising Display
Expenditures and reimbursements, market launch expenditures, market development
funds/escrow arrangements, and any other records directly related to the
monetary rights and obligations of such Party hereunder, and (e) the auditing
Party's audit of activation, deactivation, and customer billing records will be
limited to a reasonable random sampling audit of those records.
Subject to the restrictions set forth above, the audited Party shall
cooperate fully with the auditing Party. All reasonable fees and costs incurred
(including a reasonable charge for the services of any employee of the audited
Party directly involved in the audit) by either Party in connection with such
audits shall be paid by the auditing Party. The audited Party will have the
right to have the results of any such audit reviewed by the audited Party's
internal auditing staff or by the audited Party's independent accountants who
then audit the financial statements of the audited Party ("Independent
Auditors"). The cost of such internal or Independent Auditors review shall be
borne by the audited Party. The audited Party shall use its commercially
reasonable efforts to immediately correct any deficiencies related to
performance uncovered by such audit.
Each Party may seek an audit of the other Party, pursuant to this Section,
no more than once every six (6) months. These audit rights shall survive until
the period ending twelve (12) months following conclusion or expiration of all
post-agreement payment obligations of all Parties under this Agreement.
25. Taxes - RadioShack is responsible for payment of all taxes due as a result
of compensation payable by Sprint and Sprint Spectrum to RadioShack.
26. Notices - Notices under this Agreement shall be given in writing, either by:
personal delivery; prepaid certified or registered mail return receipt
requested; recognized overnight courier or; facsimile transmission with receipt
confirmed (with a copy of the original of the facsimile transmission sent by
certified or registered mail to follow) addressed as follows: RadioShack Sprint
RadioShack Sprint
100 Throckmorton Street Consumer Services Group
Suite 1600 8140 Ward Parkway
Fort Worth, TX 76102 Kansas City, MO 64114
Attn: Vice-President Attn: Director/RadioShack
Advertising and Marketing
with a copy (only of claims, with a copy to:
indemnity matters, notices of
default and termination):
Tandy Corporation Sprint
1800 One Tandy Center Consumer Services Group
Fort Worth, TX 76102 8140 Ward Parkway
Attn: General Counsel Kansas City, MO 64111
Attn: Legal Department
Sprint Spectrum
Sprint Telecommunications Venture
4717 Grand
Kansas City, MO 64112
Attn: Vice-President Business
Development with a copy
to Law Department
with a copy (only of claims,
indemnity matters, notices of
default and termination):
Sonnenschein Nath & Rosenthal
Twentieth Century Tower II
4520 Main Street, 11th Floor
Attention: David D. Gatchell
or to such other address as the Party to receive the notices shall from time to
time designate in writing to the other Parties.
27. Assignment - The Parties shall not assign or in any other way transfer
this Agreement or any right or obligation hereunder, whether by operation of law
or otherwise, without the prior written consent of the other Parties, which
consent shall not unreasonably be withheld or delayed; provided, however, such
consent shall not be required in the event this Agreement, or any rights or
obligations hereunder, is assigned by a Party: (i) to a person or entity with
which that Party may merge or consolidate, or (ii) to a person or entity which
purchases all or substantially all of that Party's business or assets, or (iii)
to a person or entity which is an Affiliate of that Party.
28. Miscellaneous Provisions
(a) Force Majeure. Any Party's delay in, or failure of, performance under
this Agreement shall be excused where such delay or failure is caused by an act
of nature, fire, or other catastrophe, electrical, computer or mechanical
failure, work stoppage, delays or failure to act of any carrier or agent,
direction or effect of an order from a court or government agency or body, or
any other cause beyond a Party's direct control. Any Party seeking to be excused
for a delay in performing any obligation due to force majeure must exercise
reasonable efforts to minimize the delay in performing such obligation.
(b) Entire Agreement. This Agreement, together with the Addenda to the
Agreement, set forth the entire understanding of the Parties with respect to the
subject matters contained therein, and supersede any prior or contemporaneous
agreements, understandings and representations, whether oral or written, made by
or among the Parties hereto. No supplement, modification or amendment of this
Agreement shall be binding, unless executed in writing by the Parties hereto.
(c) Amendments. Any amendments to the Agreement must be in writing and
signed by the Parties.
(d) Waiver. If any Party fails, at any time, to enforce any right or remedy
available to it under this Agreement, that failure shall not be construed to be
a waiver of the right or remedy with respect to any other breach or failure by
the other Party.
(e) Validity. If for any reason any clause or provision of this Agreement,
or the application of any such clause or provision in a particular context or to
a particular situation, circumstance, or person, should be held unenforceable,
invalid or in violation of law by any court or other tribunal, then the
application of such clause or provision in contexts or to situations,
circumstances or persons other than that in or to which it is held
unenforceable, invalid or in violation of law shall not be affected thereby, and
the remaining clauses and provisions hereof shall nevertheless remain in full
force and effect. Further, where state or federal law governs any aspect of
matters or services covered by this Agreement, such state or federal law shall
prevail over inconsistent provisions in this Agreement.
(f) Choice of Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to its
principles of conflicts of law.
(g) Captions. The captions included in this Agreement have been inserted as
a matter of convenience only and in no way are intended to define, limit or to
be used in connection with the interpretation of this Agreement.
(h) Approvals. This Agreement is subject to any necessary approval and/or
modification required by any local, state and federal regulatory agencies having
jurisdiction over the subject matter hereof.
(i) Unforeseen Expenses. The Parties shall address any future unforeseen
mutual Program expenses which result in a significant financial impact on the
Program in such a way as to not disadvantage one or the other.
(j) Nonrecourse. Unless a Party to this Agreement, no past, present or
future shareholder, limited or general partner in or of RadioShack or Sprint
Spectrum, no parent or other Affiliate of any company comprising RadioShack and
no parent or other affiliate of any company comprising Sprint Spectrum, and no
shareholder, officer, employee, servant, executive, director, agent or
authorized representative of any of them (each, an "Operative") will be liable
by virtue of the direct or indirect ownership interest of such Operative in such
Party for payments due under this Agreement or for the performance of any
obligation, or breach of any representation or warranty made by such Party
hereunder. The sole recourse of RadioShack or Sprint Spectrum for satisfaction
of the obligations of Sprint Spectrum or RadioShack under this Agreement will be
against the Party and the Party's assets and not against any Operative or any
assets or property of any such Operative. In the event that a default occurs in
connection with such obligations, no action will be brought against any such
Operative by virtue of its direct or indirect ownership interest in RadioShack
or Sprint Spectrum, as the case may be.
(k) Counterparts. This Agreement may be executed in any number of
counterparts, all of which when taken together shall constitute one and the same
instrument. Any Party hereto may execute this Agreement by signing any such
counterpart.
<PAGE>
Signature Page of Master Agreement
SPRINT UNITED MANAGEMENT SPRINT COMMUNICATIONS COMPANY, L.P.
COMPANY
By: /s/ D. Wayne Peterson By: /s/ Gary D. Forsee
Name: D. Wayne Peterson Name: Gary D. Forsee
Its: President and Chief Operating Its: President and Chief Executive
Officer, Local Telecommunications Officer
Division
SPRINT SPECTRUM, L.P.
By: Sprint Spectrum Holding
Company, L.P.
Its: General Partner
By: /s/ Andrew Sukawaty
Name: Andrew Sukawaty
Its: CEO
TANDY CORPORATION, acting by and
through its RadioShack Division
By: /s/ John V. Roach
Name: John V. Roach
Its: Chairman and CEO
<PAGE>
Attachment 1
SUMC Affiliates
Carolina Telephone & Telegraph Co. Central Telephone Company - Nevada Division
Central Telephone Company - North Carolina Division Central Telephone Company of
Florida Central Telephone Company of Illinois Central Telephone Company of Texas
Central Telephone Company of Virginia The United Telephone Company of
Pennsylvania United Telephone Company of Eastern Kansas United Telephone Company
of Florida United Telephone Company of Indiana, Inc. United Telephone Company of
Kansas United Telephone Company of Minnesota United Telephone Company of
Missouri United Telephone Company of New Jersey, Inc. United Telephone Company
of Ohio United Telephone Company of Southcentral Kansas United Telephone Company
of Texas, Inc. United Telephone Company of the Carolinas United Telephone
Company of the Northwest United Telephone Company of the West United
Telephone-Southeast, Inc.
<PAGE>
Computer Interface and Fixtures Addendum
To Be Determined
<PAGE>
Excluded Marks Addendum
"Sprint available1/4"
<PAGE>
Exhibit 1
Confidentiality Agreement
(to be attached)
<PAGE>
Purchase Order Addendum
<PAGE>
RadioShack Marks
SERVICE MARK APPLICATION NO. REGISTRATION NO.
1-800-THE SHACK 1,981,542
CIRCLE R RADIOSHACK logo 74-703,498
CROPPED CIRCLE R logo 75-019,807
CROPPED CIRCLE R logo 75-019,808
CROPPED CIRCLE R logo 75-019,809
MAKE RADIOSHACK YOUR
TELEPHONE COMPANY 1,353,351
RADIO SHACK 1,676,195
RADIO SHACK logo 1,707,423
RADIOSHACK 75-975,233
THE REPAIR SHOP AT RADIOSHACK 1,887,479
YOU'VE GOT QUESTIONS
WE'VE GOT ANSWERS 1,909,013
<PAGE>
Sprint Marks
To Be Supplied
<PAGE>
Schedule 20(b)
ARBITRATION PROCEDURES
1. Controversies and Claims Subject to Arbitration.
Any controversy arising out of or related to the relationship of the
Parties, (excluding the determination of termination payments under Section
20(b)(i), (ii) or a good faith allegation of a breach of the terms of the
Agreement or other matters for which arbitration is specifically provided in the
Agreement (collectively, "Claims"), will be settled by a single Arbitrator in
accordance with the arbitration rules of the American Arbitration Association,
governed by the United States Arbitration Act, 9 U.S.C. Sec. 1., et. seq. The
Arbitrator shall apply the common law of Delaware with respect to any breach of
contract claims. If the Parties cannot agree on the selection of the Arbitrator
within ten (10) days of the request for arbitration, any Party may immediately
request the appointment of the Arbitrator in accordance with the governing
rules. Arbitration shall occur at any location to which the Parties and the
Arbitrator agrees or, in the absence of agreement, in Oklahoma City, Oklahoma.
2. When Arbitration May Be Demanded.
Demand for arbitration may not be made until the later of the expiration of
any period for notice and time to cure, or the tenth (10th) day after the
Parties have presented evidence to each other or have been given reasonable
opportunity to do so, with respect to their position regarding their Claims.
A demand for arbitration shall be made within a reasonable time after the
Parties have exchanged their position, and in no event shall it be made after
the date when institution of legal or equitable proceedings based on a breach of
contract would be barred by the applicable statute of limitations.
3. Factors for Consideration.
Each Party may propose in writing, within fifteen (15) days of the
selection of an Arbitrator, those factors that it contends should be applied by
the Arbitrator in reaching a decision, and may submit a supporting brief.
The Parties may, within twenty (20) days following the conclusion of the
discovery provided for in Section 6 below, propose additional factors that they
contend should be applied by the Arbitrator and may submit supporting briefs.
The Arbitrator shall receive evidence and hear arguments on each factor
proposed as hereinbefore provided ("proposed factor(s)"), for inclusion as a
factor to be applied in reaching a decision. The Arbitrator shall select for
application any proposed factor if there is sufficient information in the record
as a whole to permit its rational application. In applying the proposed factors
selected, the Arbitrator may weigh the proposed factors, including giving no
weight, to any one or more proposed factors. The Arbitrator also shall apply
each proposed factor consistently to the maximum extent possible, provided,
however, that the Arbitrator may not decline to apply a proposed factor to a
Party solely because information in the record as a whole concerning that
proposed factor may not apply to, or is insufficient to allow application of
that proposed factor to, all Parties. The Arbitrator shall apply only proposed
factors. The Arbitrator shall, in his final order, an explanation of the
reason(s) why any proposed factor was or was not applied, and if applied, the
manner in which it was applied.
4. Contract Performance During Arbitration.
During arbitration proceedings, the Parties will continue to perform their
respective responsibilities under the terms and conditions of the Agreement and
each Addendum thereto.
5. Claims and Timely Assertion of Claims.
A Party who files notice of demand for arbitration must assert in the
demand all Claims then known to that Party on which arbitration is permitted to
be demanded. When a Party fails to include a claim through oversight,
inadvertence or excusable neglect, or when a claim has matured or been acquired
subsequently, the Arbitrator may permit amendment.
6. Discovery.
Within thirty (30) days of appointment, the Arbitrator shall prepare
written information and document requests to the Parties for the purpose of
eliciting the facts necessary to make a decision. The Parties may make
suggestions by letter to the Arbitrator as to the information and documents they
deem necessary for a decision and the form of the requests; however, the
Arbitrator's decision with respect to the information and document requests is
final. The Arbitrator shall give liberal consideration to the Parties'
suggestions and shall thereafter submit proposed information and document
requests to the Parties and allow them fifteen (15) days after the mailing
thereof to comment on such proposals. The Arbitrator shall prescribe a
reasonable time within which to respond to the information and document
requests, may grant those extensions of time he deems appropriate, and may,
after the responses have been served, submit additional information and document
requests until satisfied there is sufficient information to make an allocation.
Responses to information and document requests must be signed and sworn to by an
authorized representative of each respective Party. The Parties may object to
information and document requests on the grounds set forth in Fed. R. Civ. P.
26(b)(1) and (c) within fifteen (15) days of the mailing of such information and
document requests, and the Arbitrator shall establish a reasonable procedure to
rule promptly on such objections. Following the information and document
exchange, the Parties will have ninety (90) days in which to conduct and
complete depositions under a reasonable procedure established by the Arbitrator.
The Parties may object to depositions or deposition questions on the grounds set
out in Fed. R. Civ. P. 26(b)(1) and (c), and the Arbitrator shall establish a
procedure to rule promptly on such objections. The Arbitrator shall have
available for enforcement of rulings relating to the information and document
exchange and depositions the sanctions set forth in Fed. R. Civ. P. 37(b)(2),
except contempt, as well as the right to adjust a Party's award, if any, as a
sanction.
7. Hearing Procedure. The following procedure shall govern the Arbitration
hearing.
A. After presentation of evidence, each Party shall have thirty (30) days
for submission of Proposed Findings of Fact and Briefs. Within fifteen
(15) days of the last day for such submissions, any Party may file a
Reply to the Brief of any other Party or Parties.
B. Within sixty (60) days of the last day for submission of Proposed
Findings of Fact and Briefs, the Arbitrator shall issue a Preliminary
Order. The Preliminary Order shall provide a specific reasoned
justification for the Preliminary Order consistent with the
requirements of Section 3 above.
C. Each Party will have thirty (30) days from the date of the Preliminary
Order to file written exceptions to the Order.
D. Within thirty (30) days of the deadline for filing exceptions, the
Arbitrator shall issue a Final Order, and provide a specific reasoned
justification for the Final Order consistent with the requirements of
Section 3 above.
E. The failure of the Arbitrator to meet the deadlines established in
subparagraphs B and D of this Section will not affect the validity or
enforceability of the Final Order.
8. Settlement Offers and Judgment on Final Award.
At least ten (10) calendar days before the commencement of the arbitration
hearings, each side shall provide a written offer of settlement to the other
side. Each side shall concurrently provide to the Arbitrator the same such
written offer of settlement at the time of the commencement of the first day of
arbitration hearings. The Arbitrator shall review each of the offers in camera.
The Arbitrator shall make the award in the amount of one settlement offer or the
other settlement offer. The Arbitrator may not decide upon a dollar figure
different than the dollar figure appearing in one or the other of the settlement
offers submitted by the Parties.
The Arbitrator may select such non-economic procedures to be used in
connection with the unwinding based upon the proposals of the Parties, as the
Arbitrator may decide in his/her sole discretion.
9. Enforcement.
The award rendered by the Arbitrator shall be final, and judgment may be
entered upon it in accordance with applicable law in any court having
jurisdiction of the Party against whom the award was rendered.
<PAGE>
SPRINT SPECTRUM, L.P.
NATIONAL AGREEMENT TO MARKET
PERSONAL COMMUNICATION SERVICES
ADDENDUM TO MASTER AGREEMENT
September 10, 1996
Except as otherwise provided herein, all terms of the Master
Agreement by and between Sprint Spectrum, L.P. ("Sprint Spectrum") and Tandy
Corporation, acting by and through its RadioShack division ("RadioShack") and
other Parties, dated September 10, 1996 (the "Master Agreement") are hereby
incorporated by reference.
I. Definitions.
All capitalized terms not otherwise defined below have the meanings
given to them in the Master Agreement.
"Activation" - means when Sprint Spectrum initially activates PCS to a
subscriber, provided, initiation of service will not begin until Sprint Spectrum
has sufficient customer information to bill a RadioShack PCS Customer for all
PCS Service.
"Activation Fee" - has the meaning set forth in Section IV.A.1 below.
"Activation Period" - means a twelve calendar month period, provided;
the "First Activation Period" set forth in Section VIII.C for a Licensed Market
begins on the first day of the first full month during which RadioShack has PCS
Equipment and solicits orders for Sprint Spectrum's Commercially Operational PCS
Services in that Licensed Market and ends on the last day of the twelfth
calendar month from that date; the "Second Activation Period" for that Licensed
Market is the next succeeding twelve month period; and the "Third Activation
Period" for that Licensed Market is the next succeeding twelve month period, and
so forth.
"Additional Provider" - means a PCS provider added as a party to this
Addendum, as provided in Section III.D. below.
"Commission Period" - means with respect to each RadioShack PCS
Customer for whom a PCS Residual Commission is due, the period beginning on the
date of Activation of the RadioShack PCS Customer and ending on the earlier of
(i) the date such customer is Deactivated from PCS service with Sprint Spectrum
(whether or not such customer subsequently resumes PCS service with Sprint
Spectrum), (ii) the last day of the twenty-fourth (24th) calendar month
following a termination of the Master Agreement.
"Commercially Operational" - means the operation of PCS, which Sprint
Spectrum has made available to the public, in a market with the minimum
standards set forth in 47 CFR Part 24.203.
"Deactivate" or "Deactivation" - means the act of, or when, Sprint
Spectrum terminates the PCS of any RadioShack PCS Customer (whether on Sprint
Spectrum's initiative or the request of the Customer) in a Licensed Market which
does not constitute a Temporary Suspension of PCS.
"Licensed Market" - means a Market area for which Sprint Spectrum
either owns, controls, or has a contractual relationship with a party that owns
or controls, an FCC license to provide PCS.
"Market" - means a Broadband PCS Major Trading Area ("MTA") or Basic
Trading Area ("BTA") service area as defined and specified in 47 CFR Part
24.202, as amended.
"Market Share" - means, for a calendar month in a Licensed Market, the
total number of Net Activations attributable to the sale of Service by
RadioShack during that month divided by the total number of Net Activations
attributable to Sprint Spectrum, RadioShack and all other authorized
distributors of Services in that Licensed Market during that calendar month.
Market Share will be expressed as a percentage.
"Master Agreement" - means the Master Agreement by and between Sprint
Spectrum and RadioShack dated September 10, 1996.
"Net Collected PCS Fees" - means total revenues received from
RadioShack PCS Customers for a given month less taxes, interconnection fees
(local and long distance), any non-recurring charges, charges subsequently
credited to a customer and revenues for excluded services not provided by Sprint
Spectrum but billed by Sprint Spectrum. These excluded services could include
but are not limited to long distance, local phone service, and cable television.
In situations where a RadioShack PCS Customer partially pays a bill, RadioShack
will receive commissions based on the prorated PCS revenues.
"Net Activations" - means Activations for a given month less activated
customers that do not maintain PCS Service with Sprint Spectrum for a period
exceeding thirty (30) days or any offered money back guarantee period, whichever
is longer.
"PCS Equipment" - means Sprint Spectrum PCS handsets (including dual
mode handsets designed to transmit and receive both PCS and Cellular
Radiotelephone Service) and related accessories included in the original
manufacturer's packaging with the handset ("PCS Equipment").
"PCS Residual Commission" - has the meaning set forth in Section IV.A.2
below.
"Product" - has the meaning set forth in Section II.B below.
"RadioShack PCS Customer" - means a retail consumer who (a) purchases
PCS Equipment from a RadioShack Company Owned Retail Store, and (b) Activates
Sprint Spectrum PCS on that PCS Equipment as identified by the PCS Equipment's
unique equipment serial number ("ESN"); provided, however, a consumer will cease
to be a RadioShack PCS Customer upon the date the consumer's PCS is Deactivated
with Sprint Spectrum for whatever reason.
"Service" - means Sprint Spectrum's "Personal Communication Service" or
"PCS." As defined in the Master Agreement, PCS does not include Cellular
Radiotelephone Service.
"S.S.S.R.P." - means Sprint Spectrum's suggested retail price as set
forth on Schedule II.B.
"Temporary Suspension" - means the temporary interruption by Sprint
Spectrum of PCS to any subscriber for any reason.
"Uncovered Market" - means any Market for which Sprint Spectrum does
not offer Commercially Operational PCS whether because the Market is an
Unlicensed Market or Sprint Spectrum has not completed the necessary buildout to
have Commercially Operational PCS.
"Unlicensed Market" - means any Market that is not a Licensed Market.
"Weighted Average S.S.S.R.P." - means with respect to each separate
model of PCS Equipment, the amount determined by dividing X by Y where:
Y = the total number of units of that model of PCS Equipment
sold by RadioShack in all Licensed Markets during the
immediately preceding month;
X = the sum of all Z's determined for all Licensed Markets; and
Z = the product determined by multiplying the S.S.S.R.P. for
that model of PCS Equipment in that Licensed Market as of the
beginning of the immediately preceding month by the number of
units of that model of PCS Equipment sold in that Licensed
Market during the immediately preceding month. For example,
assume the S.S.S.R.P. for Model 1 of PCS Equipment in Licensed
Market A is $225, $200 in Licensed Market B and $175 in
Licensed Market C and RadioShack sold 100 units in A, 200
units in B and 300 units in C.
<PAGE>
Licensed Market Number of Units Sold S.S.S.R.P. Z
A 100 $225 $ 22,500
B 200 $200 $ 40,000
C 300 $175 $ 52,500
Y = Total Units Sold = 600 X = $115,000
Weighted Average S.S.S.R.P. = $115,000 = $191.67
--------
600
II. Product or Service Description
A. Description. All PCS Equipment will have the design specifications
and features determined by Sprint Spectrum in its sole commercially reasonable
discretion. All PCS Equipment subject to this Addendum is and will be separately
identified by model number and other description, the wholesale price to
RadioShack, and the S.S.S.R.P. set forth on Schedule II.B to this Addendum,
which may be amended, including the removal or addition of specified Products,
from time to time, by Sprint Spectrum.
B. Price. Sprint Spectrum will sell to RadioShack the Products at the
wholesale price set forth on Schedule II.B, as amended from time to time by
Sprint Spectrum, which wholesale price will be no more than sixty-five percent
(65%) of the S.S.S.R.P. set forth on Schedule II.B., or otherwise published in
writing by Sprint Spectrum to RadioShack. If Sprint Spectrum designates, in its
sole discretion one or more different S.S.S.R.P.s for a model of PCS Equipment
for different Licensed Markets, the wholesale price to RadioShack will be
sixty-five percent (65%) of the Weighted Average S.S.S.R.P. for that model. Upon
ten (10) business days notice by RadioShack Sprint Spectrum agrees to calculate
and publish a Weighted Average S.S.S.R.P. if such price exists. Sprint Spectrum
retains the right in its sole discretion to increase or decrease the S.S.S.R.P.,
nationally or for an individual Licensed Market, and may take into account all
factors, including, but not limited to supply, demand, and any other prevailing
competitive forces. RadioShack may sell such Products at any legal price.
All invoices for Products supplied to RadioShack will allow RadioShack
a discount of two percent (2%) of the aggregate purchase price due for the
Products if paid within ten (10) days of receipt of the invoice by RadioShack,
with full payment (without any discount) due within thirty (30) days from the
date of RadioShack's receipt of the invoice covering those products.
III. Geographic Coverage (Rollout)
A. Licensed Markets. Sprint Spectrum has identified on Schedule III.1 and
Exhibit III.2 to this Addendum each Licensed Market, as amended by
Sprint Spectrum from time to time. Sprint Spectrum will amend Schedule
III.1 within ninety (90) days from the date of this Addendum with the
estimated dates that Sprint Spectrum will have PCS Commercially
Operational in each Licensed Market, and will update these dates on
Schedule III.1 from time to time as and when the estimated dates are
adjusted and will immediately notify RadioShack of any date
adjustments to Schedule III.1 by telecopy notice to RadioShack's
Director of Cellular Marketing. The dates set forth on Schedule III.1
are good faith estimates only and Sprint Spectrum will have no
obligation to provide PCS in any Market on or before such dates.
B. Unlicensed Markets. Sprint Spectrum desires to, and will continue to
strive to, obtain access to and PCS coverage of all Unlicensed Markets
and Uncovered Markets through acquisitions, buildout, joint ventures,
affiliations, resale agreements or other contractual relationships of
or with third party entities, necessary to provide PCS in such
Unlicensed Markets or Uncovered Markets.
C. Uncovered Markets. Notwithstanding anything to the contrary herein,
RadioShack may offer PCS products and/or solicit orders for PCS in one
or more Uncovered Markets. Sprint Spectrum will provide RadioShack
with written notice at least [_________________] prior to the date on
which Sprint Spectrum projects a previously Uncovered Market will be-
come a License Market ("Licensed Market Notice"). [________________].
Sprint Spectrum will not deliver a Licensed Market Notice until such
time that Sprint Spectrum, in its reasonable business judgment, esti-
mates that it will [___________________].
After the Effective Date, neither RadioShack nor any Affiliate of Ra-
dioShack will enter any contract to solicit orders for PCS in an Un-
covered Market unless RadioShack first uses all commercially reason-
able efforts to include each such contract a term authorizing Radio-
Shack to [_________________]; provided that in no event will the term
of any such contract extend beyond [__________________].
With respect to the solicitation of orders for a third party's PCS in
a Licensed Market, in no event will the term of any contract executed
after the Effective Date extend beyond [__________________], provided
that any amendment to Schedule III.1 after a contract has been exe-
cuted by RadioShack after the Effective Date will not affect Radio-
Shack's obligation under this paragraph.
Following receipt of the Licensed Market Notice, the Joint Steering
Committee will decide which Retail Stores will provide the Product and
Service in that Licensed Market as set forth in the Master Agreement.
The Joint Steering Committee may place or remove any Service or
Products in or from any Retail Stores in any Licensed Market from time
to time as and when determined by the Joint Steering Committee.
Sprint Spectrum wil use all commercially reasonable efforts to coordi-
nate the issuance of a Licensed Market Notice with RadioShack to allow
RadioShack to [_____________________] specified in the Licensed Market
Notice or as soon as possible thereafter.
D. Additional Providers. Subject to RadioShack's reasonable consent
(except as provided below), Sprint Spectrum may add one or more
Additional Providers who have a license or contractual right to
provide PCS in one or more Markets as a party to this Addendum, but
only if such Additional Provider agrees to execute a copy of this
Addendum and be bound and subject to the terms and conditions
hereunder. RadioShack's consent will not be unreasonably withheld and
cannot be withheld for compensation reasons. Notwithstanding, Sprint
Spectrum may add any Additional Provider to this Addendum who is an
Affiliate of Sprint Spectrum, or who is an Affiliate of any equity
owner of Sprint Spectrum, without RadioShack's consent. Further,
notwithstanding the first sentence of this paragraph, Sprint Spectrum
may add any other Additional Provider, without RadioShack's consent if
Sprint Spectrum guarantees the payments and performance of such
Additional Provider's obligations to RadioShack under this Addendum.
Subject to RadioShack's contractual obligations with third parties,
RadioShack agrees to solicit orders for the PCS Services of each such Additional
Provider in that provider's Market(s), and be compensated for such service as
set forth in this Addendum. Notwithstanding anything to the contrary herein, the
Additional Provider will have no liability for the direct obligations of Sprint
Spectrum or any other Additional Provider in the Master Agreement or this
Addendum, and Sprint Spectrum will have no liability for the direct obligations
of any Additional Provider hereunder, except as provided above. Upon addition as
a party, the Additional Provider's Market and Roll-Out Date(s) will be listed on
Schedule III.1 hereto.
All references herein to "Sprint Spectrum" shall mean the applicable
Additional Provider with respect to Activations and PCS Services on the
Additional Provider's PCS network(s), which such PCS Service shall in all cases
be marketed and sold by RadioShack as Sprint Spectrum Service.
IV. Compensation/Terms of Payment
A. Compensation.
1. Activation Fee. Except as provided below, Sprint Spectrum will pay to
RadioShack an "Activation Fee" of [_________________] multiplied by
the number of Net Activations obtained by RadioShack. Sprint Spectrum
will not pay RadioShack the Activation Fee in cases where PCS Service
is established with respect to an item of PCS Equipment stolen from
RadioShack. Sprint Spectrum will not pay RadioShack an Activation Fee
in cases where PCS Service is established in violation of either
subscriber enrollment procedures or fraud prevention policies
developed by Sprint Spectrum and reasonably agreed upon by RadioShack
in writing and attached to this Addendum as an exhibit or exhibits.
2. Service Residual Commissions. During the Commission Period, Sprint
Spectrum will pay to RadioShack a residual commission of
[________________] of the Net Collected PCS Fees attributable to a
RadioShack PCS Customer during the term of this Agreement (the "PCS
Residual Commissions").
Upon a unilateral termination of the Master Agreement or this
Addendum, and in lieu of the first paragraph of Section 19(h) of the
Master Agreement (subject further to Section 20(b)(i) of the Master
Agreement), Sprint Spectrum has the option in Sprint Spectrum's sole
discretion, but not the obligation, to pay to RadioShack, in one lump
sum, within 60 days after the termination date, an amount equal to the
present value as of the effective date of termination (using a
discount factor equal to the then current two year Federal T-Bill
interest rate per annum) of a stream of Assumed Payments, as defined
below) for 24 months, less payments made to RadioShack between the
date of termination and the date of payment of the lump sum payment
under this Subsection 2 in full satisfaction of Sprint Spectrum's
obligations to pay PCS Residual Commissions hereunder. For the
purposes of this option, the lump sum payment will be equal to the
Assumed Payment multiplied by 24, and then discounted at the rate set
forth above. For the purposes of this Agreement, "Assumed Payment"
means the amount equal to 1/12th of the Service Residual Commissions
actually earned by RadioShack from all Spectrum Services on which a
Service Residual Commission was earned by RadioShack during the twelve
(12) month period immediately preceding a termination of the Master
Agreement. Any bounties, Activation Fees, incentive program payments,
market development funds, advertising funds or any other non-residual
or one time payments made by Sprint Spectrum to RadioShack will not be
included in this calculation.
3. Product Price Protection. If Sprint Spectrum's wholesale price, as set
forth on Schedule II.B, to RadioShack for any Product shall decline,
RadioShack shall receive a credit in an amount equal to the amount of
the price decrease multiplied by the sum of the applicable quantity of
such PCS Equipment (i) in transit by Sprint Spectrum's carrier to any
one of RadioShack's warehouse distribution centers and (ii) inventory
landed in the distribution centers during the thirty (30) days
immediately preceding the effective date of such price decrease, which
credit Sprint Spectrum agrees may be offset by RadioShack against
other amounts owed by RadioShack to Sprint Spectrum.
4. Product Stock Balancing. Product stock balancing will be addressed on
a case-by-case basis on terms negotiated in good faith by the parties
and based upon prevailing market conditions at the time.
B. Incentive Programs. Sprint Spectrum may, from time to time, offer
RadioShack and/or RadioShack employees incentive compensation
programs to promote the sale of PCS Equipment and the
solicitation of orders for the Service. All such incentive
compensation programs will be coordinated through the Cellular
Marketing Department of RadioShack. To the extent of any cash
payments, Sprint Spectrum will pay all amounts payable hereunder
directly to RadioShack; RadioShack will disburse the payments to
the applicable employees in accordance with any applicable
agreements between RadioShack and Sprint Spectrum. All such
programs may be terminated by Sprint Spectrum in Sprint
Spectrum's sole reasonable discretion.
C. Market Development Fund. Sprint Spectrum will pay
[_________________] per Net Activation to a market development
fund to be used for the promotion of the PCS Equipment and
Services in the form and mediums determined by the RadioShack and
Sprint Spectrum members of the Joint Steering Committee. Unless
otherwise decided by the unanimous vote of the RadioShack and
Sprint Spectrum members of the JSC all balances remaining in the
market development fund in excess of the budget for the following
calendar quarter as determined by the RadioShack and Sprint
Spectrum members of the JSC at the end of each calendar quarter
will be returned to Sprint Spectrum, at Sprint Spectrum's option.
Upon termination of the Master Agreement or this Addendum, and
after payment of all prior market development binding commitments
and obligations made by the RadioShack and Sprint Spectrum
members of the JSC, all balances in the market development fund
will be returned to Sprint Spectrum.
D. Terms of Payment. Within thirty (30) days from the end of each
calendar month, Sprint Spectrum will remit to the appropriate
account for deposit designated by RadioShack in writing all
monthly amounts due hereunder including: (1) Activation Fees
earned for Activations during that month, (2) PCS Residual
Commissions due for Net Collected PCS Fees received by Sprint
Spectrum during such calendar month, (3) any incentive program
payments, if any with respect to incentive programs offered by
Sprint Spectrum and in effect during such month in accordance
with the terms of such program, and (4) any market development
funds, to be segregated and held in an interest-bearing escrow
account, instrument or fund subject to the mutual control of
RadioShack and Sprint Spectrum. In connection with such payments,
Sprint Spectrum will provide the documentation listed on Schedule
IV.D attached hereto.
E. Rights of Setoff. If RadioShack incurs obligations to Sprint
Spectrum pursuant to the Master Agreement or under this Addendum,
Sprint Spectrum will be entitled to offset any such obligations
first against Activation Fee payments (other than Activation Fee
payments being withheld, if any), and thereafter against
aggregate compensation payments due RadioShack from Sprint
Spectrum as provided under the terms of this Addendum.
V. Customer Offer
Sprint Spectrum will offer PCS through one or more rate plans, the
specifics of which will be attached as Schedule IV.C to this Addendum, as
amended.
VI. Terms of Warranty/Customer Service
Sprint Spectrum will assign to RadioShack and customers who purchase
PCS Equipment all warranties provided by manufacturers of the respective PCS
Equipment, which will be included in the packaging of the respective PCS
Equipment.
Sprint Spectrum agrees to maintain a support staff to provide telephone
support to RadioShack Retail Stores and their customers in the installation and
use of the PCS Equipment. Telephone support will be provided to RadioShack at no
charge and to RadioShack PCS Customers at a charge not to exceed that assessed
to other customers supported by Sprint Spectrum.
VII. Marketing/Merchandising
A. Merchandising Display. See Master Agreement.
B. Demonstration Units. The Merchandising Display will include one
or more demonstration units at no cost to RadioShack.
C. Literature. Sprint Spectrum will supply reasonably adequate point
of purchase brochures and marketing materials at no cost to
RadioShack to assist RadioShack sales presentations. Sprint
Spectrum will also supply, and RadioShack will use, materials at
no cost to RadioShack which set forth Sprint Spectrum's rate
plans and terms of service.
VIII. RadioShack's Operational Duties and Responsibilities
RadioShack will perform the following duties, responsibilities, and
obligations with respect to the Products and PCS during the term of this
Addendum:
A. Licensed Markets. RadioShack will distribute Products and
Services designated by the JSC in each Licensed Market once
Sprint Spectrum has PCS Commercially Operational in that Licensed
Market. The Products will be distributed and orders for Service
solicited through those Retail Stores in that Market designated
by the Joint Steering Committee, subject to the terms of written
legally binding contracts with third party vendors in the Market
executed by RadioShack before Sprint Spectrum's Operational
Notice as provided in Section III.C. above.
B. Customers. RadioShack will use commercially reasonable efforts to
solicit customer orders for the Services within each applicable
Market and promote the sale of the Products and solicitation of
orders for Services to the extent reasonable, lawful, and
consistent with RadioShack's written contractual obligations with
providers of cellular products and Cellular Radiotelephone
Services, where applicable, all subject to and in accordance with
the terms and conditions hereof.
C. Minimum Activation Level/Sales Quotas. In exchange for the
payment of the Activation Fee attributable to Net Activations in
a Licensed Market for a given calendar month, RadioShack agrees
to use all commercially reasonable efforts to attain average Net
Activations greater than or equal to the Minimum Activation
Levels established for that Licensed Market for that calendar
month. Sprint Spectrum may withhold payment of the Activation Fee
attributable to a Licensed Market if RadioShack fails to satisfy
the Minimum Activation Levels for that Licensed Market during any
three (3) consecutive month period. Sprint Spectrum will make
payment of any withheld Activation Fees and reinstate current
payment of the Activation Fee for that Licensed Market as of the
first day of the first month after which RadioShack satisfies the
Minimum Activation Levels for at least two (2) consecutive
months. Any Activation Fees withheld pursuant to this Section
VIII.C. as of the termination of this Addendum, that are not
payable to RadioShack as provided in this Section VIII.C., will
be retained by Sprint Spectrum.
For the purposes of this Addendum, "Minimum Activation Levels"
for a Licensed Market will be: [ ]
The Minimum Activation Levels in any Licensed Market will be
waived for the purposes of achieving Activation Period
requirements in any month where there is a shortage of PCS
Equipment or Service supplied by Sprint Spectrum or Additional
Providers that would restrict or limit the sales of PCS through
the Retail Stores in that Market. A shortage of PCS Equipment is
defined as an average per Retail Store availability quantity,
evenly distributed throughout the month, of less than one and
one-half times the previous month's sales per Retail Store.
Notwithstanding the first paragraph of this Section C, RadioShack will
no longer be required to satisfy the Minimum Activation Levels in a Market after
the Third Activation Period for that Market.
D. Establishment of PCS Service. Schedule VIII.D sets forth the
process by which RadioShack PCS Customers will activate and
establish a PCS customer account with Sprint Spectrum.
E. Equipment Purchases. RadioShack may purchase Product from Sprint
Spectrum's inventory, subject to availability, and for
RadioShack's own account, solely for the purpose of resale to end
users within the Licensed Markets; provided, however, that except
where prohibited by law, the resale of any Product to an end user
must be for the purpose of using Sprint Spectrum's Service by an
end user within the Licensed Markets. RadioShack may, from time
to time, purchase PCS Equipment from another source, provided the
PCS equipment satisfies Sprint Spectrum's technical
specifications. With the approval of the JSC, Sprint Spectrum
will, upon execution of the Master Agreement, provide the
technical specifications for PCS Equipment to RadioShack, subject
to applicable supplier contracts. In no event will Sprint
Spectrum have any liability with respect to the wholesale price
paid by RadioShack with respect to the sale of PCS equipment
provided by anyone other than Sprint Spectrum. Without limitation
of the foregoing, and excluding sales and shipments of Products
to Retail Stores, RadioShack will not transship, sell, transfer
or otherwise distribute outside the Licensed Markets where
RadioShack solicits orders for the Services any Products
purchased from Sprint Spectrum. All purchase orders will be
subject to and incorporate the terms of the P.O. Addendum
attached to the Master Agreement.
F. Intentionally left blank.
G. Diligence. RadioShack will at all times exert all commercially
reasonable efforts to promote and enhance the objectives of this
Addendum. In connection therewith, and except as may be provided
otherwise in advertising guidelines established under Section 5
of the Master Agreement, RadioShack will not define, describe or
market Cellular Radiotelephone Service as PCS, or PCS as Cellular
Radiotelephone Service, in its advertising and promotional
efforts in Licensed Markets and will take those actions
commercially reasonable to ensure RadioShack's employees and
associates comply with this covenant. If, however, RadioShack's
abilities to compete and to maximize sales of Product and orders
for Services (for example, where the accepted or general
marketing and promotion methods of other PCS or cellular
providers with whom RadioShack must compete equate cellular
service with PCS or vice-versa, or where the consumer perception
in the marketplace so equates the two) are limited by this
provision, RadioShack may use all lawful means to meet the
competition and to market the PCS Product and Service to
consumers.
IX. Sprint Spectrum's Operational Duties and Responsibilities
Sprint Spectrum will perform the following duties, responsibilities,
and obligations with respect to the Service and Products during the term of this
Addendum in each of the Licensed Markets:
A. PCS System. Sprint Spectrum will construct, maintain and operate,
or contract with a third party for the production, maintenance or
operation of, a Commercially Operational PCS system;
B. Rates. Sprint Spectrum will establish the rates and reasonable
terms and conditions of the sale of Sprint Spectrum's Service to
subscribers;
C. Product Samples. Unless otherwise agreed, Sprint Spectrum agrees
to provide a minimum of seven (7) samples of all Products with
written specifications for evaluation to RadioShack's Quality
Control Department at no charge to RadioShack. RadioShack may
dispose of all samples in the exercise of its sole discretion and
without any obligation to return same to Sprint Spectrum or to
compensate Sprint Spectrum in any way therefor. Sprint Spectrum
understands that the submission of any software samples will also
include the rights to a full non-exclusive revocable site license
for use within RadioShack headquarters.
D. Administrative Procedure. Sprint Spectrum will establish
reasonable administrative procedures and guidelines for sale of
PCS, enrollment of PCS subscribers set forth on Schedule VIII.D,
and customer service to be provided to subscribers;
E. Illustrative Materials. Sprint Spectrum will provide to
RadioShack without charge sufficient information and illustrative
material on Sprint Spectrum's PCS Equipment and Service for the
preparation of catalogs, advertising and other promotional
activities by RadioShack;
F. Forms and Applications. Sprint Spectrum will provide all
applications, forms and other documentation necessary for
referring a customer to Sprint Spectrum without charge to
RadioShack;
G. PCS Capability. Sprint Spectrum will use all commercially
reasonable efforts to provide sufficient PCS Equipment and
Service capacity for sales of Products by RadioShack in the
Licensed Markets.
H. Billing. Sprint Spectrum will bill subscribers for Sprint
Spectrum's Service charges and provide customer service and
assistance, including collections of Service charges;
I. Monthly Report. Sprint Spectrum will provide RadioShack, within
thirty (30) days from the end of each calendar month billing
cycle, with a monthly report, in EDI format if possible, of all
RadioShack PCS Customer Deactivations made by Sprint Spectrum
during such calendar month billing cycle, which monthly report
will include, but not be limited to, the following information:
subscriber name, ESN, PCS phone number, date of activation, and
date of deactivation.
J. Site Listing. Sprint Spectrum will provide RadioShack's Accounts
Receivable Department with a NPA-NXX by site listing, or
functional equivalent, of all area code/exchange combinations in
use in the Licensed Markets and update such listing at least
quarterly during the term of this Agreement to reflect new or
changed area code/exchange combinations as are issued to Sprint
Spectrum.
K. Diligence. Sprint Spectrum will at all times faithfully, honestly
and diligently perform its obligations hereunder and exert all
commercially reasonable efforts to promote and enhance the
objectives of this Addendum.
X. Regulatory Approvals
A. Personal Communications Services. Sprint Spectrum will be
responsible for securing and maintaining the necessary regulatory
approvals to operate a PCS system.
B. Approvals. This Addendum is subject to any necessary approval
and/or modification required by any local, state and federal
regulatory agencies having jurisdiction over the provision of PCS
in the Licensed Markets.
C. Sprint Spectrum as Licensee. No provision of this Addendum will
be construed as vesting in RadioShack any control whatsoever in
any facilities and operations of Sprint Spectrum, or the
operations of any Affiliate or contractual third-party of Sprint
Spectrum. RadioShack will not represent itself as an FCC, federal
or state certified licensee for PCS. Nothing in this Addendum
will be construed to make RadioShack a carrier or obligate
RadioShack to provide Service or obtain any license to solicit
orders for Service.
D. Compliance with Laws. RadioShack and Sprint Spectrum will comply
with all applicable federal, state, county and local laws, rules,
regulations and orders which apply to the performance of their
obligations under this Addendum.
E. Rate Approvals. The basic charges to customers for Service will
be those as set forth by Sprint Spectrum, which may be amended
from time to time as hereinafter provided. To the extent that any
rate or category of classification is subject to regulation or
tariff, Sprint Spectrum, in its sole discretion, may change such
rate or category of classification, effective when specified in
any such regulation or tariff. To the extent that any rate or
category of classification is not subject to regulation or
tariff, Sprint Spectrum, in its sole discretion, may modify such
rate or category of classification at anytime, but will make
reasonable efforts to the extent commercially reasonable provide
thirty (30) days prior written notice to RadioShack.
XI. Termination of Agreement
A. Shipped Purchase Orders. In the event a notice of termination of
the Master Agreement is received by either Sprint Spectrum or
RadioShack, all unshipped purchase orders placed by RadioShack
and accepted by Sprint Spectrum will be canceled, provided,
however that RadioShack will be obligated to provide Sprint
Spectrum with (1) a written good faith estimate of RadioShack's
anticipated PCS Equipment requirements for the duration of the
termination notice period within fifteen (15) calendar days from
the date of the termination notice and (2) a purchase order for
said requirements which will be placed by RadioShack with Sprint
Spectrum which will be subject to acceptance by Sprint Spectrum
in accordance with the P.O. Addendum attached to the Master
Agreement.
B. Repurchase of Products by Sprint Spectrum. During the thirty (30)
calendar day period after the date of expiration or termination
of this Addendum, Sprint Spectrum will repurchase from
RadioShack, at the net price (net of any product price protection
credits used by RadioShack with respect to such Products) paid by
RadioShack to Sprint Spectrum, any and all of the Products on
hand at the Retail Stores and RadioShack's other places of
business or otherwise in the possession of RadioShack, which
Products RadioShack cannot use with any other PCS provider's
system or handsets. Upon notice thereof and tender by Sprint
Spectrum of such purchase price, RadioShack will deliver such
Products and all right, title and interest therein, free and
clear of all liens and encumbrances, to Sprint Spectrum and
Sprint Spectrum will prepay all costs associated with shipping
such Products back to Sprint Spectrum. Sprint Spectrum, however,
will not be required to repurchase and will be entitled to, and
will receive from RadioShack a credit to the extent that any such
repurchased Products are not in acceptable condition, as
reasonably determined by Sprint Spectrum.
XII. Nonrecourse
Unless a Party to this Addendum, no past, present or future
shareholder, limited or general partner in or of RadioShack or Sprint Spectrum
or any Additional Provider, no parent or other Affiliate of any company
comprising RadioShack, and no parent or other affiliate of any company
comprising Sprint Spectrum or an Additional Provider, and no shareholder,
officer, employee, servant, executive, director, agent or authorized
representative of any of them (each, an "Operative") will be liable by virtue of
the direct or indirect ownership interest of such Operative in such Party for
payments due under this Addendum or for the performance of any obligation, or
breach of any representation or warranty made by such Party hereunder. The sole
recourse of RadioShack or Sprint Spectrum or an Additional Provider for
satisfaction of the obligations of Sprint Spectrum or an Additional Provider or
RadioShack under this Agreement will be against the Party and the Party's assets
and not against any Operative or any assets or property of any such Operative.
In the event that a default occurs in connection with such obligations, no
action will be brought against any such Operative by virtue of its direct or
indirect ownership interest in RadioShack or Sprint Spectrum or an Additional
Provider, as the case may be.
XIII. Counterparts
This Addendum may be executed in any number of counterparts, all of
which when taken together shall constitute one and the same instrument. Any
Party hereto may execute this Addendum by signing any such counterpart.
<PAGE>
SIGNATURE PAGE FOR NATIONAL PCS ADDENDUM
IN WITNESS WHEREOF, the parties have executed this Addendum as of the
date first above written.
SPRINT SPECTRUM, L.P.
By: Sprint Spectrum Holding Company, L.P.
Its: General Partner
By: /s/ Andrew Sukawaty
Name: Andrew Sukawaty
Its: CEO
TANDY CORPORATION, acting by and through
its RadioShack Division
By: /s/ John V. Roach
Name: John V. Roach
Its: Chairman and CEO
<PAGE>
Schedule II.B
LIST OF PRODUCTS
Model No. Wholesale Price S.S.S.R.P.
(To be Determined)
<PAGE>
Schedule III.1
LICENSED MARKETS
[ ].
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> (17,190)
<SECURITIES> 477,486
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 477,485
<PP&E> 1,089,146
<DEPRECIATION> (2,035)
<TOTAL-ASSETS> 3,776,264
<CURRENT-LIABILITIES> 118,606
<BONDS> 527,722
0
0
<COMMON> 0
<OTHER-SE> 2,414,965
<TOTAL-LIABILITY-AND-EQUITY> 3,776,264
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 165,011
<OTHER-EXPENSES> 570
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (4,043)
<INCOME-PRETAX> (252,682)
<INCOME-TAX> 0
<INCOME-CONTINUING> (252,682)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (252,682)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
