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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 23, 1999
REGISTRATION NO. 333-89995
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Amendment No. 1
to
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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ALAMOSA PCS HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
DELAWARE 4812 75-2843707
(State or other jurisdiction (Primary standard industrial (I.R.S. employer
of incorporation or organization) classification code number) identification no.)
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4403 BROWNFIELD HIGHWAY
LUBBOCK, TEXAS 79407
(806) 722-1100
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
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DAVID E. SHARBUTT
CHIEF EXECUTIVE OFFICER
4403 BROWNFIELD HIGHWAY
LUBBOCK, TEXAS 79407
(806) 722-1100
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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Copies of communications to:
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WM. S. KLEINMAN MARC S. ROSENBERG
HAYNES AND BOONE, LLP CRAVATH, SWAINE & MOORE
901 MAIN STREET, SUITE 3100 WORLDWIDE PLAZA
DALLAS, TEXAS 75202-3789 825 EIGHTH AVENUE
(214) 651-5000 NEW YORK, NEW YORK 10019
(212) 474-1000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM
AMOUNT TO OFFERING PRICE PROPOSED MAXIMUM
TITLE OF SECURITIES TO BE REGISTERED BE REGISTERED PER SECURITY(2) AGGREGATE OFFERING PRICE
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<S> <C> <C> <C>
Common Stock, $.01 par value... 12,321,100(1) $15.00 $184,816,500(2)
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AMOUNT OF
TITLE OF SECURITIES TO BE REGISTERED REGISTRATION FEE
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<S> <C>
Common Stock, $.01 par value... (3)
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(1) Includes 1,607,100 shares that are issuable upon exercise of the
underwriters' over-allotment option.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933.
(3) A filing fee of $51,430 was previously paid to the Securities and Exchange
Commission.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
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<PAGE> 2
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE
MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS
NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO
BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
SUBJECT TO COMPLETION, DATED , 1999
PROSPECTUS
10,714,000 SHARES
[ALAMOSA LOGO]
ALAMOSA PCS HOLDINGS, INC.
COMMON STOCK
$ PER SHARE
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We are selling 10,714,000 shares of our common stock. The underwriters
named in this prospectus may purchase up to 1,607,100 additional shares of
common stock from us after the closing of this offering.
This is an initial public offering of our common stock. We currently expect
the initial public offering price to be between $13.00 and $15.00 per share. We
have applied for quotation of the common stock on the Nasdaq National Market
under the symbol "APCS."
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INVESTING IN THESE NOTES INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON
PAGE 6.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
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PER SHARE TOTAL
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<S> <C> <C>
Public Offering Price $ $
Underwriting Discount $ $
Proceeds to Alamosa PCS Holdings, Inc. (before expenses) $ $
</TABLE>
The underwriters are offering the shares subject to various conditions. The
underwriters expect to deliver the shares to purchasers on or about
, 2000.
SALOMON SMITH BARNEY
CREDIT SUISSE FIRST BOSTON
DEUTSCHE BANC ALEX. BROWN
, 1999
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TABLE OF CONTENTS
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PAGE
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Prospectus Summary.......................................... 1
Risk Factors................................................ 6
This Prospectus Contains Forward-Looking Statements......... 17
Use of Proceeds............................................. 18
Dividend Policy............................................. 18
Capitalization.............................................. 19
Dilution.................................................... 20
Selected Financial Data..................................... 21
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 23
Business.................................................... 31
Our Affiliation Agreements with Sprint PCS.................. 53
Description of Our Indebtedness............................. 61
Management.................................................. 69
Principal Stockholders...................................... 80
Certain Relationships and Related Transactions.............. 83
The Reorganization.......................................... 86
Regulation of the Wireless Telecommunications Industry...... 87
Description of Capital Stock................................ 92
Shares Eligible for Future Sale............................. 98
Important United States Federal Tax Consequences of Our
Common Stock to Non-U.S. Holders.......................... 100
Underwriting................................................ 103
Legal Matters............................................... 105
Experts..................................................... 105
Where You Can Find Additional Information................... 105
Index to Financial Statements............................... F-1
</TABLE>
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PROSPECTUS SUMMARY
This summary highlights information that we believe is especially important
concerning our business and this offering of common stock. It does not contain
all of the information that may be important to your investment decision. You
should read the entire prospectus, including "Risk Factors" and our financial
statements and related notes, before deciding to invest in our common stock.
ALAMOSA
GENERAL
Alamosa is a provider of wireless personal communications services,
commonly referred to as PCS, in the southwestern and midwestern United States.
We are part of the Sprint PCS network. Sprint PCS is the personal communications
services group of Sprint Corporation. Sprint PCS, directly and through
affiliates such as us, provides wireless services in more than 4,000 cities and
communities across the country. We have the exclusive right to provide digital
personal communications services under the Sprint and Sprint PCS brand names in
a territory comprising approximately 8.4 million residents. These residents are
primarily located in smaller cities and in markets with above average growth
rates in Texas, New Mexico, Arizona, Colorado and Wisconsin. We are a
development stage company with very limited operations, very limited revenues,
significant losses, substantial future capital requirements and an expectation
of continued significant losses.
We entered into our affiliation agreements with Sprint PCS in July 1998. We
have recently amended these affiliation agreements to expand our territory so
that it will include approximately 8.4 million residents. We launched Sprint PCS
service in Laredo in June 1999, and have since commenced service in ten
additional markets: Albuquerque, Santa Fe, El Paso, Las Cruces, Lubbock,
Amarillo, Midland, Odessa, Abilene and San Angelo. Our systems cover
approximately 2.7 million residents out of approximately 3.9 million total
residents in those markets. We expect to cover a total of approximately 4.2
million residents by the end of 2000, and 5.5 million residents by the end of
2001, at which point we expect to have completed our build-out obligations to
Sprint PCS and expect to have covered approximately 65% of the resident
population in our territory. As of November 30, 1999, we served approximately
20,329 Sprint PCS subscribers based in our territory.
We were formed in July 1998, as a Texas limited liability company.
Immediately before the closing of this offering, we will reorganize into a
Delaware holding company structure. See "The Reorganization." Our principal
executive office is located at 4403 Brownfield Highway, Lubbock, Texas 79407.
Our telephone number is (806) 722-1100.
STRATEGIC RELATIONSHIP WITH SPRINT PCS
We believe that our strategic relationship with Sprint PCS provides
significant competitive advantages. Sprint PCS is a national provider of
wireless services and products. Sprint PCS's subscriber base has more than
tripled in size since the end of June 1998, making Sprint PCS one of the fastest
growing wireless service providers in the United States.
Under our affiliation agreements with Sprint PCS, we have the exclusive
right to provide wireless services under the Sprint and Sprint PCS brand names
in our territory. Sprint PCS handles our billing and collections and pays us 92%
of "collected revenues" from subscribers based in our territory and retains the
remaining 8%, as more fully described in "Our Affiliation Agreements with Sprint
PCS -- The Management Agreement -- Service Pricing, Roaming and Fees." We also
receive other revenues, including (1) Sprint PCS roaming revenues for each
minute that Sprint PCS customers based outside our territory use our portion of
the Sprint PCS network and (2) 100% of revenues from handset sales.
1
<PAGE> 5
We believe that our affiliation with Sprint PCS allows us to establish high
quality, branded wireless services more quickly, at a lower cost and with lower
initial capital requirements than would otherwise be possible. For example, we
benefit from Sprint PCS's:
- Marketing. We market products and services through Sprint PCS's existing
relationships with major national retailers under the highly recognizable
Sprint and Sprint PCS brand names.
- National Network. Customers in our territory can immediately access
Sprint PCS's growing national network.
- Advanced Technology. We believe that the technology used by Sprint PCS
provides advantages in capacity and voice-quality, as well as access to
advanced features, such as wireless Internet access.
- Handset and Equipment Availability and Pricing. Sprint PCS's purchasing
leverage allows us to acquire handsets and network equipment more quickly
and at a lower cost than we could without our affiliation with Sprint
PCS.
ATTRACTIVE TERRITORY
We believe that our territory is attractive for several reasons, including:
- High Growth Markets. The overall population growth rate in our territory
has been approximately 42% above the national average.
- Fewer Competitors. We expect to face fewer competitors in our markets
than is generally the case for wireless service providers operating in
more urban areas.
- Opportunity for Sprint PCS Roaming Revenue. We anticipate that we will
have significant roaming revenue from Sprint PCS subscribers based
outside our territory who use our portion of the Sprint PCS network.
ADEQUATE FUNDING TO COMPLETE OUR NETWORK
Starting in June 1999, we have launched Sprint PCS service in eleven
markets. We anticipate that the proceeds of this offering, when combined with
the committed level of debt financing from Nortel Networks, Inc., will be
adequate to fund future required capital expenditures, working capital
requirements, operating losses and other cash needs of our business. Further, we
believe that this level of financing is adequate to achieve the objective in our
business plan of covering approximately 65% of the resident population in our
territory by the end of 2001 and to exceed the build-out requirements contained
in our affiliation agreements with Sprint PCS. However, we may need additional
capital or debt financing due to greater than expected operating losses, the
addition of new markets to our territory or unanticipated increases in the
capital required to build-out our portion of the Sprint PCS network.
We anticipate that the proceeds from our proposed offering of senior
discount notes will not be needed to fund the required capital expenditures,
working capital requirements, operating losses and other cash needs of our
current business plan.
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THE OFFERING
Common stock offered....... 10,714,000 shares
Common stock outstanding
after the offering......... 59,214,000 shares
Use of proceeds............ We will use the proceeds from this sale of our
common stock, together with the financing provided
by Nortel, to fund the following:
- capital expenditures, including the build-out
of our portion of the Sprint PCS network;
- operating losses and working capital
requirements;
- interest and principal payments and related
debt financing costs; and
- general corporate purposes.
See "Use of Proceeds" for more detailed
information.
Proposed Nasdaq National
Market symbol............ "APCS"
Dividend policy............ We do not intend to pay cash dividends on our
common stock in the foreseeable future. See
"Dividend Policy" for more information.
As part of this sale of our common stock, the underwriters have agreed to
reserve a maximum of 10% of the shares of our common stock to be sold in this
offering for sale to our current stockholders at a price per share equal to the
public offering price less the underwriting discount.
Unless otherwise indicated, the share information in this prospectus
excludes:
- up to 1,607,100 shares that may be issued to the underwriters to cover
over-allotments. See "Underwriting."
- 388,000 shares of common stock issuable upon exercise of options granted
to our employees in connection with their employment agreements, but not
under the 1999 Long Term Incentive Plan. See "Management -- Employment
Agreements."
- 7,000,000 shares of common stock reserved for issuance under our 1999
Long Term Incentive Plan, including grants to employees, directors and
consultants of options to acquire 4,893,500 shares to be effective as of
the closing of this offering. See "Management -- Benefit Plans -- 1999
Long Term Incentive Plan."
- 1,184,280 shares of our common stock representing two percent of the
total equity outstanding as of the closing date, which shares are
issuable upon exercise of warrants at an exercise price equal to the
initial public offering price. See "Description of Our
Indebtedness -- The Nortel Credit Facility -- Warrants."
THE NOTES OFFERING
We are also proposing to offer senior discount notes in a separate public
offering pursuant to a separate prospectus. The completion of this offering of
common stock is not conditioned on a successful completion of the offering of
senior discount notes and we cannot assure you that our offering of senior
discount notes will be completed. This prospectus relates only to the offering
of common stock and not to the offering of notes.
3
<PAGE> 7
SUMMARY FINANCIAL AND OPERATING DATA
The financial data presented below under the captions "Statement of
Operations Data," "Per Share Data," "Other Data" and "Balance Sheet Data" for,
and as of the end of, the period from inception to December 31, 1998, the
nine-month period ended September 30, 1999 and the period from inception to
September 30, 1999 are derived from the audited financial statements of Alamosa
PCS LLC, the predecessor to Alamosa PCS Holdings, Inc. These financial
statements have been audited by PricewaterhouseCoopers LLP, independent
certified public accountants.
It is important that you also read "Selected Financial Data," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the financial statements for the periods ended December 31, 1998 and September
30, 1999, the related notes and the independent auditors' report.
The summary unaudited financial data presented below as of and for the
period from inception to September 30, 1998 are derived from our unaudited
financial statements included elsewhere in this prospectus. The unaudited
financial statements include all adjustments, consisting of normal recurring
accruals, that management considers necessary for a fair presentation of
financial position and results of operations. Operating results for the
nine-month period ended September 30, 1999 are not necessarily indicative of the
results that may be expected for the entire year ending December 31, 1999.
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FOR THE PERIOD JULY 16, FOR THE PERIOD JULY 16, FOR THE NINE-MONTH FOR THE PERIOD JULY 16,
1998 (INCEPTION) 1998 (INCEPTION) PERIOD ENDED 1998 (INCEPTION)
THROUGH DECEMBER 31, THROUGH SEPTEMBER 30, SEPTEMBER 30, THROUGH SEPTEMBER 30,
1998 1998 1999 1999
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(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AND SUBSCRIBER DATA)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues................. $ -- $ -- $ 2,000 $ 2,000
Cost of sales............ -- -- 1,614 1,614
Total operating
expenses............... 958 401 17,634 18,592
Operating loss........... (958) (401) (17,247) (18,206)
Net loss................. (924) (400) (17,688) (18,612)
PER SHARE DATA:
Basic and diluted net
loss per share of
common stock(1)(2)..... $(0.02) $(0.01) $ (0.36) $ (0.38)
Pro forma net loss per
share of common
stock(1)(2)............ (0.02) (0.01) (0.36) (0.38)
OTHER DATA:
Number of subscribers.... -- -- 9,850 9,850
</TABLE>
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AS OF AS OF
DECEMBER 31, 1998 SEPTEMBER 30, 1999
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AS FURTHER
ACTUAL AS ADJUSTED(3) ADJUSTED(4)
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(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents....................... $13,529 $ 7,454 $ 146,305 $237,587
Construction in progress........................ 1,979 28,940 28,940 28,940
Property and equipment, net..................... 114 36,930 36,930 36,930
Total assets.................................... 15,674 88,412 227,263 323,585
Total debt...................................... 752(5) 60,885(6) 60,885(6) 157,207
Equity.......................................... 14,076 13,210 152,061 152,061
</TABLE>
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(1) For the periods ended September 30, 1999, diluted weighted average shares
outstanding exclude the common shares issuable on exercise of stock options
because inclusion would have been antidilutive. The presentation of the pro
forma net loss per share of common stock gives effect to adjustments for
federal and state income taxes as if Alamosa had been taxed as a C
Corporation for the periods presented.
(2) Reflects the reorganization as if it had occurred upon inception of Alamosa
PCS, LLC.
(3) As adjusted Balance Sheet Data reflects the sale in the common stock
offering of 10,714,000 shares of common stock at an initial offering price
of $14.00 per share, the midpoint of the range on the cover of the
prospectus, less underwriting discounts and commissions and estimated
offering expenses of $11.1 million.
(4) As further adjusted Balance Sheet Data reflects (a) the sale in the common
stock offering of 10,714,000 shares of common stock at an initial offering
price of $14.00 per share, the midpoint of the range on the cover of the
prospectus, less underwriting discounts and commissions and estimated
offering expenses of $11.1 million, (b) the issuance of an aggregate
principal amount at maturity of $ million in senior discount notes with
estimated gross proceeds of $156.0 million, less underwriting discounts and
commissions and estimated offering expenses of $5.0 million and (c) the
prepayment of an aggregate of $75.0 million of indebtedness under the Nortel
facility, consisting of the prepayment of $59.7 million outstanding on
September 30, 1999 and cash equal to $15.3 million designated to prepay
future borrowings under the Nortel facility.
(5) Reflects capital lease obligations of $728,219 and other notes payable of
$23,637.
(6) Reflects indebtedness incurred under the Nortel facility of $59,678,288,
other notes payable of $352,988 and capital lease obligations of $853,965.
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<PAGE> 9
RISK FACTORS
You should carefully consider the following risk factors in addition to the
other information contained in this prospectus before purchasing our common
stock.
RISKS RELATED TO OUR RELATIONSHIP WITH SPRINT PCS
THE TERMINATION OF OUR AFFILIATION AGREEMENTS WITH SPRINT PCS WOULD
SEVERELY RESTRICT OUR ABILITY TO CONDUCT OUR BUSINESS
Our relationship with Sprint PCS is governed by our affiliation agreements
with Sprint PCS. Since we do not own any licenses to operate a wireless network,
our business depends on the continued effectiveness of our affiliation
agreements with Sprint PCS. However, Sprint PCS can terminate our affiliation
agreements with Sprint PCS if we materially breach them. Among other things, a
failure to meet our build-out requirements for any one of the individual markets
in our territory or a failure to meet Sprint PCS's technical or customer service
requirements would constitute a material breach of our management agreement with
Sprint PCS that could lead to its termination. If Sprint PCS terminated any of
our affiliation agreements with Sprint PCS, we would no longer be a part of the
Sprint PCS network and it would be extremely difficult to conduct our business.
IF SPRINT PCS DOES NOT RENEW OUR AFFILIATION AGREEMENTS WITH THEM, OUR
ABILITY TO CONDUCT OUR BUSINESS WOULD BE SEVERELY RESTRICTED
Our affiliation agreements with Sprint PCS are not perpetual, and will
eventually expire. Sprint PCS can choose not to renew these agreements at the
expiration of the 20-year initial term or any ten-year renewal term. If Sprint
PCS decides not to renew or our affiliation agreements with Sprint PCS terminate
in accordance with their terms, we would no longer be a part of the Sprint PCS
network and it would be extremely difficult to conduct our business.
PROVISIONS OF OUR AFFILIATION AGREEMENTS WITH SPRINT PCS MAY DIMINISH OUR
VALUE AND RESTRICT THE SALE OF OUR BUSINESS
Under specific circumstances and without further stockholder approval,
Sprint PCS may purchase our operating assets or capital stock for 72% or 80% of
the "entire business value" of Alamosa, which includes the value of the spectrum
licenses, business operations and other assets more fully described in "Our
Affiliation Agreements with Sprint PCS -- The Management
Agreement -- Determination of Entire Business Value." In addition, Sprint PCS
must approve any change of control of our ownership and consent to any
assignment of our affiliation agreements with Sprint PCS. Sprint PCS has a right
of first refusal if we decide to sell our operating assets to a third party. We
are also subject to a number of restrictions on the transfer of our business
including a prohibition on the sale of Alamosa or our operating assets to
competitors of Sprint or Sprint PCS. These restrictions and other restrictions
in our affiliation agreements with Sprint PCS could adversely affect the value
of our common stock, may limit our ability to sell the business, may reduce the
value a buyer would be willing to pay for our business and may operate to reduce
the "entire business value" of Alamosa.
SPRINT PCS MAY MAKE BUSINESS DECISIONS THAT WOULD NOT BE IN OUR BEST
INTEREST
Sprint PCS, under our affiliation agreements with them, has a substantial
amount of control over the conduct of our business. Accordingly, Sprint PCS may
make decisions that adversely affect our business, such as the following:
- Sprint PCS prices its national plans based on its own objectives and
could set price levels that may not be economically sufficient for our
business.
- Sprint PCS could change the per minute rate for Sprint PCS roaming fees
and the costs for Sprint PCS to perform back office services.
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<PAGE> 10
- We must obtain Sprint PCS's consent to sell non-Sprint PCS approved
equipment, which consent could be withheld.
- Sprint PCS may alter its network and technical requirements or request
that we build-out additional areas within our territory, which could
result in increased equipment and build-out costs or in Sprint PCS
building-out that area itself or assigning it to another affiliate.
- Sprint or Sprint PCS could make decisions which could adversely affect
the Sprint and Sprint PCS brand names, products or services.
- If Sprint PCS decided to no longer perform its obligations under our
affiliation agreements with Sprint PCS, our ability to conduct business
would be severely restricted.
A CHANGE OF CONTROL OF SPRINT OR SPRINT PCS MAY NEGATIVELY ALTER OUR
CURRENT AFFILIATION ARRANGEMENT
Sprint or Sprint PCS may experience a change of control, sale or merger
that could adversely affect our relationships with them or result in a name
change. MCI WorldCom Inc. and Sprint have announced a proposed merger in which
owners of each class of Sprint's common stock would exchange their Sprint stock
for MCI common stock. If the merger is completed, we expect that affiliate and
related contracts with the merged company would be on the same terms as our
affiliation agreements with Sprint PCS. However, these contracts and the terms
of the merger may alter the nature of our relationship with Sprint PCS and
restrict our ability to operate successfully.
PROBLEMS EXPERIENCED BY SPRINT PCS WITH ITS INTERNAL SUPPORT SYSTEMS COULD
LEAD TO CUSTOMER DISSATISFACTION OR INCREASED COSTS FOR US
We rely on Sprint PCS's internal support systems, including customer care,
billing and back-office support. As Sprint PCS has expanded, its internal
support systems have been subject to increased demand and in some cases,
suffered a degradation in service. We cannot assure you that Sprint PCS will be
able to successfully add system capacity or that its internal support systems
will be adequate. It is likely that problems with Sprint PCS's internal support
systems could cause:
- delays or problems in our own operations or service;
- delays or difficulty in gaining access to customer and financial
information, which we are currently experiencing with respect to our
direct electronic access to significant aspects of Sprint PCS's internal
support systems and financial data;
- a loss of Sprint PCS customers; and
- an increase in the costs of those services.
OUR COSTS FOR INTERNAL SUPPORT SYSTEMS MAY INCREASE IF SPRINT PCS
TERMINATES OUR SERVICES AGREEMENT
Our services agreement with Sprint PCS provides that, upon nine months'
prior written notice, Sprint PCS may terminate any service provided under that
agreement. If Sprint PCS terminates a service for which we have not developed a
cost-effective alternative or increases the amount it charges us for these
services, our operating costs may increase beyond our expectations and our
operations may be interrupted or restricted.
WE MAY HAVE DIFFICULTY IN OBTAINING HANDSETS AND EQUIPMENT, WHICH ARE IN
SHORT SUPPLY
We depend on our relationship with Sprint PCS to obtain handsets and
equipment. The demand for the equipment we require to construct our portion of
the Sprint PCS network is considerable, and manufacturers of this equipment have
substantial order backlogs. In addition, the demand for specific types of
handsets is strong and the manufacturers of those handsets may have to
distribute their limited supply of products among the manufacturers' numerous
customers. If Sprint PCS modifies its handset logistics and delivery plan or if
we are not able to continue to rely on Sprint PCS's relationships with suppliers
and
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<PAGE> 11
vendors, some of which provide us with vendor discounts on equipment, we could
have difficulty obtaining specific types of handsets and equipment in a timely
manner and our equipment costs would increase. As a result, we could suffer
delays in the build-out of our portion of the Sprint PCS network, disruptions in
service and a reduction in subscribers.
OUR ROAMING ARRANGEMENTS MAY NOT BE COMPETITIVE WITH OTHER WIRELESS SERVICE
PROVIDERS, WHICH MAY RESTRICT OUR ABILITY TO ATTRACT AND RETAIN CUSTOMERS
We rely on roaming arrangements with other wireless service providers for
coverage in some areas. Some risks related to these arrangements are as follows:
- the quality of the service provided by another provider during a roaming
call may not approximate the quality of the service provided by Sprint
PCS;
- the price of a roaming call may not be competitive with prices of other
wireless companies for roaming calls;
- customers may have to use a more expensive dual-band/dual mode handset
with diminished standby and talk time capacities;
- customers must end a call in progress and initiate a new call when
leaving the Sprint PCS network and entering another wireless network; and
- Sprint PCS customers may not be able to use Sprint PCS advanced features,
such as voicemail notification, while roaming.
If Sprint PCS customers are not able to roam instantaneously or efficiently onto
other wireless networks, we may lose current Sprint PCS subscribers and our
Sprint PCS services will be less attractive to new customers.
IF WE FAIL TO PAY OUR DEBT, OUR LENDERS MAY SELL OUR LOANS TO SPRINT PCS
AND GIVE SPRINT PCS RIGHTS OF A CREDITOR TO FORECLOSE ON OUR ASSETS
Sprint PCS has contractual rights to purchase Nortel's rights as a senior
lender under the Nortel financing documents. These rights are triggered by an
acceleration of the maturity of the Nortel financing. To the extent Sprint PCS
purchases these obligations, Sprint PCS's interests as a creditor could conflict
with ours. Sprint PCS's rights as a senior lender would enable it to exercise
rights with respect to our assets, including the right to foreclose on those
assets, in a manner not otherwise permitted under our affiliation agreements
with Sprint PCS.
IF SPRINT PCS DOES NOT MAINTAIN CONTROL OVER ITS LICENSED SPECTRUM, OUR
AFFILIATION AGREEMENTS WITH SPRINT PCS MAY BE TERMINATED
Sprint PCS, not Alamosa, owns the licenses necessary to provide wireless
services in our territory. The Federal Communications Commission requires that
licensees like Sprint PCS maintain control of their licensed systems and not
delegate control to third party operators or managers like Alamosa. Although our
affiliation agreements with Sprint PCS reflect an arrangement that the parties
believe meets the Federal Communications Commission requirements for licensee
control of licensed spectrum, we cannot assure you that the Federal
Communications Commission will agree with us. If the Federal Communications
Commission were to determine that our affiliation agreements with Sprint PCS
need to be modified to increase the level of licensee control, we have agreed
with Sprint PCS to use our best efforts to modify the agreements to comply with
applicable law. If we cannot agree with Sprint PCS to modify the agreements,
they may be terminated. If the agreements are terminated, we would no longer be
a part of the Sprint PCS network and it would be extremely difficult to conduct
our business.
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THE FEDERAL COMMUNICATIONS COMMISSION MAY NOT RENEW THE SPRINT PCS
LICENSES, WHICH WOULD PREVENT US FROM PROVIDING WIRELESS SERVICES
We do not own any licenses to operate a wireless network. We are dependent
on Sprint PCS's licenses, which are subject to renewal and revocation. Sprint
PCS's licenses in our territory will expire in 2005 or 2007 but may be renewed
for additional ten-year terms. The Federal Communications Commission has adopted
specific standards that apply to wireless personal communications services
license renewals. Any failure by Sprint PCS or us to comply with these standards
could cause revocation or forfeiture of the Sprint PCS licenses for our
territory. Additionally, if Sprint PCS does not demonstrate to the Federal
Communications Commission that Sprint PCS has met the five-year and ten-year
construction requirements for each of its wireless personal communications
services licenses, it can lose those licenses.
RISKS PARTICULAR TO ALAMOSA
WE MAY NOT ACHIEVE OR SUSTAIN OPERATING PROFITABILITY OR POSITIVE CASH FLOW
FROM OPERATING ACTIVITIES
Our operating history is very limited. We initiated commercial operations
in our first market in June 1999. We expect to incur significant operating
losses and to generate significant negative cash flow from operating activities
at least through the year ending December 31, 2001. Our operating profitability
will depend upon many factors, including, among others, our ability to market
Sprint PCS services, achieve our projected market penetration and manage
customer turnover rates. If we do not achieve and maintain operating
profitability and positive cash flow from operating activities on a timely
basis, we may require additional funds to build-out our portion of the Sprint
PCS network or continue operations. We cannot assure you that we would have
access to additional funds at that time.
WE MAY NEED MORE CAPITAL THAN WE CURRENTLY PROJECT TO BUILD-OUT OUR PORTION
OF THE SPRINT PCS NETWORK
The build-out of our portion of the Sprint PCS network will require
substantial capital. Additional funds could be required for a variety of
reasons, including unanticipated expenses or the expansion of our territory.
Additional funds may not be available. Even if those funds are available, we may
not be able to obtain them on a timely basis, on terms acceptable to us or
within limitations permitted under our existing debt covenants or the covenants
with respect to the senior discount notes. Failure to obtain additional funds,
should the need for them develop, could result in the delay or abandonment of
our development and expansion plans.
WE MAY NOT BE ABLE TO SERVICE OUR SUBSTANTIAL DEBT, WHICH MAY RESULT IN OUR
LENDERS CONTROLLING OUR ASSETS
As of September 30, 1999, our outstanding long-term debt totaled $60.7
million. In addition, under our current business plan, we expect to incur
substantial additional debt, including an anticipated $156.0 million, if we
complete our senior discount notes offering, before achieving break-even
operating cash flow.
Our substantial debt will have a number of important consequences for our
operations and our investors, including the following:
- we will have to dedicate a substantial portion of any cash flow from
operations to the payment of interest on, and principal of, our debt,
which will reduce funds available for other purposes;
- we may not have sufficient funds to pay interest on, and principal of,
our debt;
- we may not be able to obtain additional financing for currently
unanticipated capital requirements, capital expenditures, working capital
requirements and other corporate purposes;
- our Nortel loan agreement places restrictions on the ability of our
subsidiaries to raise additional debt or equity capital without Nortel's
consent;
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- borrowings under our financing from Nortel are at variable rates of
interest, which would result in higher interest expense in the event of
increases in market interest rates;
- due to the liens on substantially all of our assets that secure our
senior debt, lenders or holders of our senior debt may control our assets
or our subsidiaries' assets upon a default;
- we may be more highly leveraged than some of our competitors, which may
put us at a competitive disadvantage; and
- we may be unable to repay the Nortel financing at maturity, or refinance
the Nortel financing before we are required to issue the warrants to
Nortel, if we do not have access to the capital markets on terms
reasonably satisfactory to us.
IF WE DO NOT MEET ALL OF THE CONDITIONS REQUIRED UNDER OUR NORTEL FINANCING
AGREEMENTS, WE MAY NOT BE ABLE TO DRAW DOWN ALL OF THE FUNDS WE ANTICIPATE
RECEIVING FROM NORTEL AND MAY NOT BE ABLE TO COMPLETE THE BUILD-OUT OF OUR
PORTION OF THE SPRINT PCS NETWORK
We have received $59.7 million as of September 30, 1999 under our financing
agreements with Nortel. The remaining $190.3 million which we expect to receive
in the future is subject at each funding date to several conditions, including:
- acquiring minimum numbers of Sprint PCS subscribers and providing
coverage to a minimum number of residents on schedule; and
- the adherence to financial covenants.
If we do not meet these conditions at each funding date, Nortel may choose
not to lend any or all of the remaining amounts. If other sources of funds are
not available, we may be unable to complete the build-out of our portion of the
Sprint PCS network. If we do not have sufficient funds to complete our network
build-out, we may be in breach of our management agreement with Sprint PCS and
be in default under our financing from Nortel.
OUR NEW INDEBTEDNESS WILL PLACE RESTRICTIONS ON US WHICH MAY LIMIT OUR
OPERATING FLEXIBILITY AND OUR ABILITY TO PAY DIVIDENDS.
The indenture governing the senior discount notes we plan to sell will
impose material operating and financial restrictions on us. These restrictions,
subject to ordinary course of business exceptions, may limit our ability to
engage in some transactions, including the following:
- designated types of mergers or consolidations;
- paying dividends or other distributions to our stockholders;
- making investments;
- selling assets;
- repurchasing our common stock;
- changing lines of business;
- borrowing additional money; and
- transactions with affiliates.
These restrictions could limit our ability to obtain debt financing,
repurchase stock, refinance or pay principal or interest on our outstanding
debt, consummate acquisitions for cash or debt or react to changes in our
operating environment.
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BECAUSE WE DEPEND HEAVILY ON OUTSOURCING, THE INABILITY OF THIRD PARTIES TO
FULFILL THEIR CONTRACTUAL OBLIGATIONS TO US MAY DISRUPT OUR SERVICES OR THE
BUILD-OUT OF OUR PORTION OF THE SPRINT PCS NETWORK
Because we decided to outsource portions of our business, we depend heavily
on third-party vendors, suppliers, consultants, contractors and local exchange
carriers. We have retained those persons to:
- design and engineer our systems;
- construct base stations, switch facilities and towers;
- lease base stations;
- install T-1 lines; and
- deploy our wireless personal communications services network systems.
Specifically, our financing arrangements with Nortel make us especially
dependent on them for network equipment, since we must use a specified amount of
any funds borrowed from Nortel to purchase their equipment. In addition, we
lease almost all of the tower sites for our wireless systems through a master
lease agreement with American Tower Corporation. American Tower Corporation in
turn has separate leasing arrangements with each of the owners of the sites. If
American Tower Corporation were to become insolvent or were to breach those
arrangements, we may lose access to those base stations and experience extended
service interruption in the areas serviced by those sites. The failure by any of
our vendors, suppliers, consultants, contractors or local exchange carriers to
fulfill their contractual obligations to us could materially delay construction
and adversely affect the operations of our portion of the Sprint PCS network.
BECAUSE OF THE NATURE OF OUR RELATIONSHIP WITH CHR SOLUTIONS, INC., ANY
CONFLICTS THAT ARISE BETWEEN US AND CHR SOLUTIONS COULD NEGATIVELY AFFECT OUR
ABILITY TO EFFECTIVELY CONDUCT OUR BUSINESS
We rely heavily on CHR Solutions, Inc. for engineering, marketing,
operating and other consulting services. We pay CHR Solutions substantial
amounts for these services, including approximately:
- $3.4 million paid or to be paid during 1999;
- $3.5 million that we estimate will be paid during 2000; and
- an aggregate of $7.4 million in current and prior contractual commitments
beginning in 1998.
Additionally, David Sharbutt, our chairman and chief executive officer, is
also a senior consultant, director and shareholder of CHR Solutions. If CHR
Solution's interests become adverse to ours, Mr. Sharbutt may face a conflict of
interest or we may be forced to acquire consulting services from an alternate
source. In addition, the employment agreement related to Mr. Sharbutt's position
as a senior consultant of CHR Solutions does not specify the time requirements
of his employment. However, his employment agreement with us requires Mr.
Sharbutt to devote his full time and effort to the business and affairs of
Alamosa. Mr. Sharbutt's responsibilities as an employee of CHR Solutions,
however, may require significant professional time and effort. See "Certain
Relationships and Related Transactions" for details related to this and other
related party transactions.
WE MAY NOT RECEIVE AS MUCH SPRINT PCS ROAMING REVENUE AS WE ANTICIPATE
We are paid a fee from Sprint PCS or a Sprint PCS affiliate for every
minute that a Sprint PCS subscriber based outside of our territory uses the
Sprint PCS network in our territory. Similarly, we pay a fee to Sprint PCS for
every minute that a Sprint PCS subscriber based in our territory uses the Sprint
PCS network outside our territory. Sprint PCS customers from our territory may
spend more time in other Sprint PCS coverage areas than we anticipate and Sprint
PCS customers from outside our territory may spend less time in our territory or
may use our services less than we anticipate. Sprint PCS could also change the
current fee for each Sprint PCS roaming minute used. As a result, we may receive
less Sprint
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PCS roaming revenue than we anticipate or we may have to pay more Sprint PCS
roaming fees than we collect. For more information on roaming, see
"Business -- Roaming."
WE ARE LIKELY TO RECEIVE VERY LITTLE NON-SPRINT PCS ROAMING REVENUE
A portion of our revenue may be derived from payments by other wireless
service providers for use by their subscribers of the Sprint PCS network in our
territory. However, the technology used in the Sprint PCS network is not
compatible with the technology used by other systems, which diminishes the
ability of other wireless service providers' subscribers to use our services.
Sprint PCS has entered into few agreements that enable customers of other
wireless service providers to roam onto the Sprint PCS network. As a result, the
actual non-Sprint PCS roaming revenue that we receive in the future is likely to
be low relative to other wireless service providers. For more information on
roaming, see "Business -- Roaming." For further information on the Sprint PCS
network technology, see "Business -- Technology."
OUR RAPID GROWTH MAY BECOME DIFFICULT TO MANAGE
Since our inception in July 1998, we have experienced rapid growth and
development in a relatively short period of time. As we open more markets, we
expect to continue to experience growth. The management of that growth will
require, among other things:
- continued development of our operational and administrative systems;
- stringent control of costs of network build-out;
- integration of our network infrastructure with the rest of the Sprint PCS
network;
- increased marketing activities;
- the ability to attract and retain qualified management, technical and
sales personnel; and
- the training of new personnel.
Failure to successfully manage our expected rapid growth and development
could impair our ability to achieve profitability and expand the coverage in our
territory.
REGIONAL ECONOMIC AND ENVIRONMENTAL RISKS MAY REDUCE OUR REVENUES AND
INCREASE OUR COSTS
Our territory consists of two regions in the southwestern and the
midwestern United States, and includes several border markets. Accordingly, our
revenues may be adversely affected as a result of downturns in the economies in
either of those two regions or in Mexico. In addition, different regions in our
territory are subject to various extreme weather conditions such as high heat,
snow, ice, freezing temperatures, wind and tornadoes. Any or all of these
conditions could result in damage to our network equipment or base stations thus
increasing our equipment costs.
OUR PLAN OF COVERAGE FOR OUR TERRITORY MAY BE INADEQUATE TO PROFITABLY
OPERATE OUR BUSINESS
Our projected build-out plan for our territory does not cover all areas of
our territory. As a result, our plan may not adequately serve the needs of the
potential customers in our territory or attract enough subscribers to operate
our business successfully. To correct this potential problem, we may have to
cover a greater percentage of our territory than we anticipate, which we may be
unable to do profitably.
PARTS OF OUR TERRITORY HAVE LIMITED LICENSED SPECTRUM, AND THIS MAY AFFECT
THE QUALITY OF OUR SERVICE OR RESTRICT OUR ABILITY TO PURCHASE SPECTRUM LICENSES
FROM SPRINT PCS IN THOSE AREAS
While Sprint PCS has licenses to use 30 MHz of spectrum throughout most of
our territory, it has licenses covering only 10 MHz in New Mexico and Durango
and 20 MHz in El Paso. In the future, as the number of subscribers in those
areas increases, this limited licensed spectrum may not be able to accommodate
any increases in call volume and may lead to more dropped calls than in other
parts of our territory. In addition, under our affiliation agreements with
Sprint PCS, we have no right to compel Sprint PCS to sell spectrum licenses to
us in areas where Sprint PCS owns less than 20 MHz of spectrum.
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Accordingly, if Sprint PCS were to terminate our affiliation agreements with
Sprint PCS, it is likely that we would be unable to operate our business in New
Mexico and Durango.
THE TECHNOLOGY WE USE MAY BECOME OBSOLETE OR LIMIT OUR ABILITY TO COMPETE
EFFECTIVELY WITHIN THE WIRELESS INDUSTRY
The wireless telecommunications industry is experiencing significant
technological change. We employ code division multiple access digital
technology, the digital wireless communications technology selected by Sprint
PCS for its network. Code division multiple access technology may not provide
the advantages expected by Sprint PCS. If another technology becomes the
preferred industry standard, we would be at a competitive disadvantage and
competitive pressures may require Sprint PCS to change its digital technology.
We may be unable to respond to these pressures and implement new technology on a
timely basis or at an acceptable cost. For more information on technology,
including code division multiple access technology, see
"Business -- Technology."
UNAUTHORIZED USE OF, OR INTERFERENCE WITH, THE SPRINT PCS NETWORK COULD
DISRUPT OUR SERVICE AND INCREASE OUR COSTS
Although code division multiple access technology reduces some of the risks
associated with fraud and cloning, we may incur costs associated with the
unauthorized use of the Sprint PCS network. Fraudulent use of the Sprint PCS
network increases operating costs. In addition, our border markets are
susceptible to uncertainties related to areas not governed by the Federal
Communications Commission. For example, unauthorized microwave radio signals
near the border in Mexico could disrupt our service in the United States.
RISKS RELATING TO THE YEAR 2000 ISSUE MAY CAUSE INTERRUPTIONS IN SERVICE
Our systems, the systems of Sprint or Sprint PCS and the systems of other
third parties upon whom we depend may be unable to recover from system
interruptions resulting from the year 2000 date change. If difficulties do
arise, our business may not be operational for a period of time. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Impact of Year 2000 Issue on the Operations and Financial
Condition of Alamosa."
INDUSTRY RISKS
WE MAY EXPERIENCE A HIGH RATE OF CUSTOMER TURNOVER WHICH WOULD INCREASE OUR
COSTS OF OPERATIONS AND REDUCE OUR REVENUE
The wireless personal communications services industry in general and
Sprint PCS in particular have experienced a higher rate of customer turnover as
compared to cellular industry averages. In particular, our customer turnover may
be high because (1) Sprint PCS does not require its customers to sign long term
contracts and (2) their handset return policy allows customers to return used
handsets within 30 days of purchase and receive a full refund. A high rate of
customer turnover could adversely affect our competitive position, results of
operations and our costs of, or losses incurred in, obtaining new subscribers,
especially because we subsidize some of the costs of initial purchases of
handsets by customers.
REGULATION BY GOVERNMENT AGENCIES AND TAXING AUTHORITIES MAY INCREASE OUR
COSTS OF PROVIDING SERVICE OR REQUIRE US TO CHANGE OUR SERVICES
The licensing, construction, use, operation, sale and interconnection
arrangements of wireless telecommunications systems are regulated to varying
degrees by the Federal Communications Commission, the Federal Trade Commission,
the Federal Aviation Administration, the Environmental Protection Agency, the
Occupational Safety and Health Administration and, depending on the
jurisdiction, state and local regulatory agencies and legislative bodies.
Adverse decisions regarding these regulatory requirements could negatively
impact Sprint PCS's operations and our costs of doing business. For example,
changes in tax laws or the interpretation of existing tax laws by state and
local authorities could subject us to
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increased income, sales, gross receipts or other tax costs or require us to
alter the structure of our relationship with Sprint PCS.
USE OF WIRELESS HANDSETS MAY POSE HEALTH RISKS
Media reports have suggested that radio frequency emissions from wireless
handsets may: (1) be linked to various health problems, including cancer; (2)
interfere with various electronic medical devices, including hearing aids and
pacemakers; and (3) cause explosions if used while fueling an automobile.
Concerns over radio frequency emissions may discourage use of wireless handsets
or expose us to potential litigation.
WORSE THAN EXPECTED FOURTH QUARTER RESULTS MAY CAUSE OUR STOCK PRICE TO
DROP AND SIGNIFICANTLY REDUCE OUR OVERALL RESULTS OF OPERATIONS
The wireless industry is heavily dependent on fourth quarter results. Among
other things, the industry relies on significantly higher customer additions and
handset sales in the fourth quarter as compared to the other three fiscal
quarters.
The price of our common stock may drop and our overall results of
operations could be significantly reduced if Alamosa has a worse than expected
fourth quarter for any reason, including the following:
- Alamosa's inability to match or beat pricing plans offered by
competitors;
- the failure to adequately promote Sprint PCS's products, services and
pricing plans;
- the inability of Alamosa to obtain an adequate supply or selection of
handsets;
- a downturn in the economy of some or all markets in our territory; or
- a poor holiday shopping season.
WE MAY NOT BE ABLE TO RESPOND EFFECTIVELY TO THE SIGNIFICANT COMPETITION IN
THE WIRELESS COMMUNICATIONS SERVICES INDUSTRY
Competition in the wireless communications services industry is intense. We
anticipate that competition will cause the market prices for two-way wireless
products and services to decline in the future. Our ability to compete will
depend, in part, on our ability to anticipate and respond to various competitive
factors affecting the telecommunications industry. Several of these factors
include:
- the introduction of new services;
- changes in consumer preferences, demographic trends or economic
conditions; and
- discount pricing strategies by competitors.
Our dependence on Sprint PCS to develop competitive products and services
and the requirement that we obtain Sprint PCS's consent to sell non-Sprint PCS
approved equipment may limit our ability to keep pace with our competitors on
the introduction of new products, services and equipment. Some of our
competitors:
- have substantially greater financial, technological, marketing and sales
and distribution resources than us;
- have more extensive coverage in specific areas of our territory or have
broader regional coverage than us; and
- may market other services, such as traditional landline telephone
service, cable television access and access to the Internet, with their
wireless communications services.
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Furthermore, there has been a recent trend in the wireless communications
industry towards consolidation of wireless service providers through joint
ventures, mergers and acquisitions. We expect this consolidation to lead to
larger competitors over time. Several large competitors already exist, such as
AT&T Wireless with over 11 million subscribers and the recent partnership of
Bell Atlantic-GTE and Vodafone AirTouch with over 19 million combined
subscribers. We may be unable to compete successfully with larger competitors
who have substantially greater resources or who offer more services than we do.
For more information on the competition we face in the wireless communications
industry see "Business -- Competition."
A LACK OF SUITABLE TOWER SITES MAY DELAY THE BUILD-OUT OF OUR PORTION OF
THE SPRINT PCS NETWORK AND RESTRICT OUR OPERATING CAPACITY
A lack of tower site availability due to difficulty in obtaining local
regulatory approvals or other reasons may delay the build-out of our portion of
the Sprint PCS network, delay the opening of markets, limit network capacity or
reduce the number of new Sprint PCS subscribers. The local governmental
authorities in various locations in our territory have at times placed
moratoriums on the construction of additional towers and base stations. These
moratoriums may materially and adversely affect the timing of the planned
build-out and quality of the network operations in those markets. We have
experienced difficulty, and may continue to have difficulty, in obtaining tower
sites in some areas of our territory on a timely basis.
RISKS RELATING TO THE OFFERING
OUR EXISTING STOCKHOLDERS, DIRECTORS AND OFFICERS MAY BE ABLE TO CONTROL
THE OUTCOME OF SIGNIFICANT MATTERS PRESENTED TO STOCKHOLDERS FOLLOWING THE
COMPLETION OF THIS OFFERING
Upon completion of this offering of common stock, our existing
stockholders, directors and officers will beneficially own between approximately
84% to 85% of our outstanding common stock on a diluted basis, depending on how
many shares our existing stockholders purchase in this offering, or between
approximately 82% to 83% if the underwriters' over-allotment option is exercised
in full, depending on how many shares our existing stockholders purchase in this
offering. Consequently, those persons, if they act as a group, will be able to
control the outcome of matters submitted for stockholder action including the
election of members to our board of directors and the approval of significant
change in control transactions. This may have the effect of delaying or
preventing a change in control. For more information on this subject, please
refer to "Management" and "Principal Stockholders."
OUR STOCKHOLDERS, MEMBERS OF MANAGEMENT AND DIRECTORS MAY BE SUBJECT TO
CONFLICTS OF INTEREST
Some of our stockholders and members of management have significant
investments in communications services companies that compete with Alamosa. In
addition, several of our directors serve as directors of other communications
services companies. As a result, these directors may be subject to conflicts of
interest during their tenure as directors of Alamosa that will have to be
resolved by those persons and Alamosa.
THE PRICE OF OUR COMMON STOCK MAY BE VOLATILE
The market price of our common stock could be subject to significant
fluctuations due to a variety of factors. Those factors include:
- variations in quarterly operating results and financial performance;
- announcements of technological innovations or new products and services
by Sprint PCS, us or our competitors;
- our failure to achieve operating results consistent with securities
analysts' projections;
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- the operating and stock price performance of, or rumors related to,
Sprint PCS, our competitors or other companies that investors may deem
comparable to us;
- announcements of the introduction of new or enhanced services or related
products by Sprint PCS, us or our competitors;
- announcements of joint development efforts, mergers or corporate
partnerships in the wireless telecommunications market; and
- market conditions in the technology, telecommunications and other
emerging growth sectors.
The stock market has recently experienced extreme price volatility. Under
these market conditions, stock prices of many emerging growth and development
stage companies like us have often fluctuated in a manner unrelated or
disproportionate to the operating performance of those companies.
PURCHASERS IN THIS OFFERING WILL EXPERIENCE DILUTION
The initial public offering price is substantially higher than the net
tangible book value per share of our common stock after the offering. Any common
stock you purchase in the offering will have a post-offering net tangible book
value per share of $2.57, which will be $11.43 less than the price you paid for
the share, assuming an initial public offering price of $14.00 per share, the
midpoint of the range on the cover page of this prospectus. See "Dilution" for
more information.
POSSIBLE SALES OF OUR COMMON STOCK COULD CAUSE THE MARKET PRICE OF OUR
COMMON STOCK TO DECREASE
Many of our current stockholders hold large portions of our common stock.
The occurrence of sales of a large number of shares of our common stock, or the
perception that these sales could occur, could cause a drop in our stock price
and could impair our ability to obtain capital through an offering of equity
securities. See "Shares Eligible for Future Sale" for more information.
ANTI-TAKEOVER PROVISIONS IN OUR CHARTER AND BYLAWS COULD LIMIT OUR SHARE
PRICE AND DELAY A TAKEOVER OR CHANGE IN CONTROL OF ALAMOSA
Our certificate of incorporation provides that our board of directors may
issue preferred stock without stockholder approval. In addition, our bylaws
provide for a classified board, with each board member serving a three-year
term. These provisions, among others, may have the effect of discouraging a
third party from making a tender offer or otherwise attempting to obtain control
of Alamosa, even though a change in ownership might be economically beneficial
to us and our stockholders. See "Description of Capital Stock -- Provisions of
the Certificate of Incorporation That May Prevent Takeovers" for more
information.
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THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS
This prospectus contains statements about future events and expectations,
which are "forward-looking statements." Any statement in this prospectus that is
not a statement of historical fact may be deemed to be a forward-looking
statement. These forward-looking statements include:
- forecasts of growth in the number of consumers using wireless personal
communications services and in estimated populations;
- statements regarding our plans for, schedule for and costs of the
build-out of our portion of the Sprint PCS network;
- statements regarding our anticipated revenues, expense levels, liquidity
and capital resources, operating losses and projections of when we will
launch commercial wireless personal communications service in particular
markets;
- statements regarding expectations or projections about markets in our
territory;
- statements regarding our preparedness for the year 2000 date change; and
- other statements, including statements containing words such as "may,"
"might," "could," "would," "anticipate," "believe," "plan," "estimate,"
"project," "expect," "seek," "intend" and other similar words that
signify forward-looking statements.
These forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause our actual results, performance
or achievements to be materially different from any future results, performance
or achievements expressed or implied by these forward-looking statements.
Specific factors that might cause such a difference include, but are not limited
to:
- our dependence on our affiliation with Sprint PCS;
- the need to successfully complete the build-out of our portion of the
Sprint PCS network on our anticipated schedule;
- our limited operating history and anticipation of future losses;
- our dependence on Sprint PCS's back office services;
- potential fluctuations in our operating results;
- our potential need for additional capital or the need for refinancing
existing indebtedness;
- our potential inability to expand our services and related products in
the event of substantial increases in demand for these services and
related products;
- changes or advances in technology;
- our competition; and
- our ability to attract and retain skilled personnel.
For a discussion of some of these factors, see "Risk Factors" beginning on
page 6.
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USE OF PROCEEDS
We estimate that the net proceeds we will receive from the sale of the
common stock we are offering, after deducting underwriting discounts and
commissions and estimated offering expenses, will be approximately $138.9
million, or approximately $11.1 million if the underwriters exercise their over-
allotment option in full, based on an assumed initial public offering price of
$14.00 per share, the midpoint of the range set forth on the cover page of this
prospectus. We intend to use the net proceeds from the common stock offering,
together with remaining amounts available under the Nortel loan financing at
January 1, 2000 of $167.6 million, to fund:
- capital expenditures of approximately $196 million, representing the
build-out of markets in Wisconsin, Arizona and Colorado, as well as the
further expansion of coverage in existing markets in Texas and New
Mexico;
- net operating losses and working capital requirements of approximately
$14 million;
- interest expense, principal payments and loan origination fees of
approximately $64.1 million; and
- general corporate purposes.
We will retain broad discretion in the allocation of the net proceeds of
this offering. This discussion represents our best estimate of the allocation of
the net proceeds of this offering based upon our current plans. Actual
expenditures may vary substantially from these estimates and we may find it
necessary or advisable to reallocate the net proceeds within the above-described
categories or to use portions for other purposes. The timing and the coverage of
our build-out plan may change due to various reasons, including shifts in
populations or network focus, changes or advances in technology, acquisition of
other markets, businesses, products or technologies and factors causing a delay
in the build-out of some markets. Any changes in the timing or build-out plan
may cause changes in our use of proceeds. Additionally, we may use a portion of
the net proceeds to acquire or invest in businesses, products or technologies
that are complementary to our business. Other than the proposed changes to our
affiliation agreements with Sprint PCS, we currently do not have any commitments
or agreements for any acquisitions or investments of this kind.
Pending these uses, we expect to invest the net proceeds from the sale of
the common stock in short-term investment grade securities which will earn
interest.
We anticipate that the proceeds from our proposed offering of senior
discount notes will not be needed to fund the required capital expenditures,
working capital requirements, operating losses and other cash needs of our
current business plan. However, we cannot assure you that our notes offering
will be completed or that we will prepay any portion of the Nortel financing.
DIVIDEND POLICY
We do not expect to pay cash dividends on our capital stock in the
foreseeable future. We currently intend to retain our future earnings, if any,
to fund the development and growth of our business. Future dividends, if any,
will be determined by our board of directors and will depend upon our results of
operations, financial condition and capital expenditure plans, as well as other
factors that our board of directors considers relevant. The Nortel financing
does not restrict Alamosa PCS Holdings, Inc.'s ability to pay dividends.
However, the Nortel financing prohibits our subsidiaries from paying dividends
or making distributions, except for stock dividends and for distributions to
fund the payment of the interest and principal on our senior discount notes,
without Nortel's consent. Accordingly, the Nortel financing makes it very
difficult for us to pay any cash dividends to our stockholders.
18
<PAGE> 22
CAPITALIZATION
The following table shows our cash and cash equivalents, short term debt
and capitalization:
- as of September 30, 1999;
- as adjusted to reflect the sale in the offering of 10,714,000 shares of
common stock at an initial offering price of $14.00 per share, the
midpoint of the range on the cover of the prospectus, less underwriting
discounts and commissions and estimated offering expenses of $11.1
million; and
- as further adjusted to reflect (1) the sale in the offering of 10,714,000
shares of common stock at an initial offering price of $14.00 per share,
the midpoint of the range on the cover of the prospectus, less
underwriting discounts and commissions and estimated offering expenses of
$11.1 million, (2) the issuance of an aggregate principal amount at
maturity of $ million in senior discount notes with estimated gross
proceeds of $156.0 million, less underwriting discounts and commissions
and estimated offering expenses of $5.0 million and (3) the prepayment of
an aggregate of $75.0 million of indebtedness under the Nortel facility,
consisting of the prepayment of $59.7 million outstanding on September
30, 1999 and cash equal to $15.3 million designated to prepay future
borrowings under the Nortel facility.
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1999
---------------------------------------
AS FURTHER
ACTUAL(1) AS ADJUSTED ADJUSTED
--------- ----------- -----------
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<S> <C> <C> <C>
Cash and cash equivalents................................. $ 7,454 $146,305 $237,587
======== ======== ========
Short-term debt
Notes payable........................................... $ 144 $ 144 $ 144
Long-term debt:
Nortel financing........................................ 59,678 59,678 --
Senior discount notes -- -- 156,000
Other notes payable..................................... 209 209 209
Capital lease obligations(2)............................ 854 854 854
-------- -------- --------
Total long-term debt.................................... 60,741 60,741 157,063
Stockholders' equity (deficit):
Preferred stock, par value $.01 per share; 5,000,000
shares authorized; no shares issued and
outstanding.......................................... -- -- --
Common stock, par value $.01 per share, 95,000,000
shares authorized; 48,500,000 shares outstanding,
actual; 59,214,000 shares outstanding, as adjusted... 485 592 592
Additional paid-in capital.............................. 35,709 174,453 174,453
Unearned compensation................................... (4,372) (4,372) (4,372)
Accumulated deficit..................................... (18,612) (18,612) (18,612)
-------- -------- --------
Total stockholders' equity (deficit)................. 13,210 152,061 152,061
-------- -------- --------
Total capitalization............................ $ 74,095 $212,946 $309,268
======== ======== ========
</TABLE>
- ---------------
(1) Reflects the reorganization as if it had occurred upon the inception of
Alamosa PCS, LLC.
(2) Includes current maturities.
19
<PAGE> 23
DILUTION
Our net tangible book value at September 30, 1999, was $13.2 million or
$0.27 per share of common stock. Net tangible book value per share represents
the amount of our total tangible assets reduced by the amount of total
liabilities and divided by the number of shares of common stock outstanding.
After giving effect to our sale of 10,714,000 shares of common stock in the
offering, and deducting underwriting discounts and commissions and estimated
offering expenses, our as-adjusted net tangible book value as of September 30,
1999 would have been approximately $152 million, or $2.57 per share. This
represents an immediate dilution of $11.43 per share to new investors purchasing
shares of common stock in the offering and an immediate increase in net tangible
book value to existing stockholders of $2.30 per share.
Dilution per share represents the difference between the price per share to
be paid by new investors and the net tangible book value per share immediately
after the sale of common stock in this offering. The following table illustrates
the per share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............. $14.00
Net tangible book value per share as of September 30,
1999...................................................... $0.27
Increase in net tangible book value per share attributable
to the offering........................................... 2.30
-----
As adjusted net tangible book value per share after the
offering.................................................. 2.57
------
Dilution per share to new investors......................... $11.43
======
</TABLE>
The following table summarizes, on an as-adjusted basis as of September 30,
1999, the number of shares of common stock purchased, the total consideration
paid and the average price per share paid by our existing stockholders and by
new investors purchasing shares of common stock in the offering, assuming an
offering price of $14.00 per share, the midpoint of the range on the cover page
of this prospectus, before the deduction of underwriting discounts and
commissions and estimated offering expenses of $11.1 million payable by us:
<TABLE>
<CAPTION>
SHARES TOTAL
PURCHASED CONSIDERATION AVERAGE
---------------------- ------------------------- PRICE PER
NUMBER PERCENT AMOUNT ($) PERCENT SHARE($)
----------- -------- ------------- -------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders(1)........ 48,500,000 81.9% 37,000,000 19.8% 0.76
New investors................... 10,714,000 18.1% 149,996,000 80.2% 14.00
----------- -------- ------------- -------- --------
Total................. 59,214,000 100% 186,996,000 100% 3.16
</TABLE>
- ---------------
(1) Reflects the reorganization as if it had occurred upon the inception of
Alamosa PCS, LLC.
The foregoing tables assume no exercise of the underwriters' over-allotment
option and no exercise of outstanding stock options and warrants. To the extent
that any shares are issued in connection with the underwriters' over-allotment
option, outstanding options or warrants, you will experience further dilution.
See "Management -- Benefit Plans -- 1999 Long Term Incentive Plan,"
"Management -- Employment Agreements" and "Description of Our
Indebtedness -- The Nortel Credit Facility -- Warrants."
As part of this sale of our common stock, the underwriters agreed to
reserve a maximum of 10% of the shares of our common stock to be sold in this
offering for sale to our current stockholders at a price per share equal to the
public offering price less the underwriting discount. The underwriters will not
be entitled to any discount or commission on these shares and the proceeds to us
will be the same as if the shares were sold to the general public. However, the
number of shares of common stock available for sale to the general public will
be reduced to the extent of sales of shares to our current stockholders.
20
<PAGE> 24
SELECTED FINANCIAL DATA
The selected financial data presented below under the captions "Statement
of Operations Data," "Per Share Data," "Other Data" and "Balance Sheet Data"
for, and as of the end of, the period from inception to December 31, 1998, the
nine month period ended September 30, 1999 and the period from inception to
September 30, 1999 are derived from the audited financial statements of Alamosa
PCS LLC, the predecessor to Alamosa PCS Holdings, Inc. These financial
statements have been audited by PricewaterhouseCoopers LLP, independent
certified public accountants.
It is important that you also read the section of this prospectus titled
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the financial statements for the periods ended December 31, 1998
and September 30, 1999, the related notes and the independent auditors' report.
The selected unaudited financial data presented below as of and for the
period from inception to September 30, 1998 are derived from our unaudited
financial statements included elsewhere in this prospectus. The unaudited
financial statements include all adjustments, consisting of normal recurring
accruals, that management considers necessary for a fair presentation of
financial position and results of operations. Operating results for the
nine-month period ended September 30, 1999 are not necessarily indicative of the
results that may be expected for the entire year ending December 31, 1999.
<TABLE>
<CAPTION>
FOR THE FOR THE
PERIOD PERIOD FOR THE PERIOD
JULY 16, 1998 JULY 16, 1998 FOR THE NINE- JULY 16, 1998
(INCEPTION) (INCEPTION) MONTH PERIOD (INCEPTION)
THROUGH THROUGH ENDED THROUGH
DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1998 1998 1999 1999
-------------- -------------- -------------- ---------------
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AND SUBSCRIBER DATA)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues...................................... $ -- $ -- $ 2,000 $ 2,000
Cost of sales................................. -- -- 1,614 1,614
Total operating expenses...................... 958 401 17,634 18,592
Operating loss................................ (958) (401) (17,247) (18,206)
Net loss...................................... (924) (400) (17,688) (18,612)
PER SHARE DATA:
Basic and diluted net loss per share of common
stock(1)(2)................................. $ (.02) $ (.01) $ (.36) $ (.38)
Pro forma net loss per share of common
stock(1)(2)................................. (.02) (.01) (.36) (.38)
OTHER DATA:
Number of subscribers......................... -- -- 9,850 9,850
</TABLE>
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30,
1999
AS OF -----------------------------------
DECEMBER 31, AS AS FURTHER
1998 ACTUAL ADJUSTED(3) ADJUSTED(4)
------------ ------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.............................. $13,529 $ 7,454 $146,305 $237,587
Construction in progress............................. 1,979 28,940 28,940 28,940
Property and equipment, net.......................... 114 36,930 36,930 36,930
Total assets......................................... 15,674 88,412 227,263 323,585
Short-term debt(5)................................... 44 165 165 165
Long-term debt....................................... 708(6) 60,720(7) 60,720(7) 157,042
Total liabilities.................................... 1,598 75,202 75,202 171,524
Equity............................................... 14,076 13,210 152,061 152,061
</TABLE>
- ---------------
21
<PAGE> 25
(1) For the periods ended September 30, 1999, diluted weighted average shares
outstanding exclude the common shares issuable on the exercise of stock
options because inclusion would have been antidilutive. Pro forma net loss
per share of common stock has been presented for the latest fiscal year and
interim period. The presentation of the pro forma net loss per share of
common stock gives effect to adjustments for federal and state income taxes
as if Alamosa had been taxed as a C Corporation for the periods presented.
(2) Reflects the reorganization as if it had occurred upon inception of Alamosa
PCS, LLC.
(3) As adjusted Balance Sheet Data reflects the sale in the common stock
offering of 10,714,000 shares of common stock at an initial offering price
of $14.00 per share, the midpoint of the range on the cover of the
prospectus, less underwriting discounts and commissions and estimated
offering expenses of $11.1 million.
(4) As further adjusted Balance Sheet Data reflects (a) the sale in the common
stock offering of 10,714,000 shares of common stock at an initial offering
price of $14.00 per share, the midpoint of the range on the cover of the
prospectus, less underwriting discounts and commissions and estimated
offering expenses of $11.1 million, (b) the issuance of an aggregate
principal amount at maturity of $ million in senior discount notes with
estimated gross proceeds of $156.0 million, less underwriting discounts and
commissions and estimated offering expenses of $5.0 million and (c) the
prepayment of an aggregate of $75.0 million of indebtedness under the Nortel
facility, consisting of the prepayment of $59.7 million outstanding on
September 30, 1999 and cash equal to $15.3 million designated to prepay
future borrowings under the Nortel facility.
(5) Reflects notes payable of $20,145 and capital lease obligations of $23,637
as of December 31, 1998 and notes payable of $143,690 and capital lease
obligations of $21,281 as of September 30, 1999.
(6) Reflects capital lease obligations of $708,074.
(7) Reflects indebtedness incurred under the Nortel facility of $59,678,288
capital lease obligations of $832,684 and other long term notes payable of
$209,298.
22
<PAGE> 26
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis when you read the
consolidated financial statements and the related notes included in this
prospectus. The discussion contains forward-looking statements that involve
risks and uncertainties. Our actual results could differ materially from the
results anticipated in these forward-looking statements as a result of factors
including, but not limited to, those under "Risk Factors" and "This Prospectus
Contains Forward-Looking Statements."
OVERVIEW
Since our inception, we have incurred substantial costs to negotiate our
contracts with Sprint PCS and our debt financing from Nortel, to engineer our
wireless system, to develop our business infrastructure and distribution
channels and to begin the build-out of our portion of the Sprint PCS network.
Prior to the opening of Laredo on June 22, 1999, we did not have any markets in
operation. As of September 30, 1999, we had not generated significant revenues
from customers and our accumulated deficit was $18.6 million. Through September
30, 1999, we incurred $67 million of capital expenditures and construction in
progress related to the build-out of our portion of the Sprint PCS network.
While we anticipate operating losses to continue, we expect revenue to increase
substantially as the base of Sprint PCS subscribers located in our territory
increases.
On July 17, 1998, we entered into our affiliation agreements with Sprint
PCS. We have recently amended our affiliation agreements with Sprint PCS to
expand our territory so that it will include approximately 8.4 million
residents.
As a Sprint PCS affiliate, we have the exclusive right to provide digital
wireless personal communication services under the Sprint and Sprint PCS brand
names in our territory. We are responsible for building, owning and managing the
portion of the Sprint PCS network located in our territory. We market wireless
products and services in our territory under the Sprint and Sprint PCS brand
names. We offer national plans designed by Sprint PCS and intend to offer
specialized local plans tailored to our market demographics. Our portion of the
Sprint PCS network is designed to offer a seamless connection with Sprint PCS's
national, 100% digital wireless network. We market wireless products and
services through a number of distribution outlets located in our territory,
including our own Sprint PCS stores, major national distributors and third party
local representatives.
We launched Sprint PCS service in our first market, Laredo, in June 1999,
and have since commenced service in ten additional markets: Albuquerque, Santa
Fe, El Paso, Las Cruces, Lubbock, Amarillo, Midland, Odessa, Abilene and San
Angelo. Our systems cover approximately 2.7 million residents out of
approximately 3.9 million total residents in those markets.
We recognize 100% of revenues from Sprint PCS subscribers based in our
territory, proceeds from the sales of handsets and accessories and fees from
Sprint PCS and other wireless service providers when their customers roam onto
our portion of the Sprint PCS network. Sprint PCS handles our billing and
collections and retains 8% of all collected revenue from Sprint PCS subscribers
based in our territory and fees from wireless service providers other than
Sprint PCS when their subscribers roam onto our portion of the Sprint PCS
network. We report the amount retained by Sprint PCS as an operating expense.
As part of our affiliation agreements with Sprint PCS, we have the option
of contracting with Sprint PCS to provide back office services such as customer
activation, handset logistics, billing, customer service and network monitoring
services. We have elected to delegate the performance of these services to
Sprint PCS to take advantage of Sprint PCS's economies of scale, to accelerate
our build-out and market launches and to lower our initial capital requirements.
The cost for these services is primarily calculated on a per subscriber and per
transaction basis and is recorded as an operating expense.
23
<PAGE> 27
REGULATORY DEVELOPMENTS
See "Regulation of the Wireless Telecommunications Industry" for a
discussion of regulatory developments that could have a future impact on us.
SEASONALITY
Our business is subject to seasonality because the wireless industry is
heavily dependent on fourth quarter results. Among other things, the industry
relies on significantly higher customer additions and handset sales in the
fourth quarter as compared to the other three fiscal quarters. A number of
factors contribute to this trend, including the increasing use of retail
distribution, which is dependent upon the year-end holiday shopping season, the
timing of new product and service announcements and introductions, competitive
pricing pressures and aggressive marketing and promotions.
RESULTS OF OPERATIONS
FOR THE PERIOD JULY 16, 1998 (INCEPTION) THROUGH DECEMBER 31, 1998
Revenues, Direct Costs and Net Loss. From inception through December 31,
1998, our operating activities were directed towards the development of our
business. During July 1998, we signed our affiliation agreements with Sprint PCS
to operate as the exclusive affiliate of Sprint PCS in our territory. Our
operating activities were focused on executing our build-out plan and developing
our network infrastructure. As our first market did not launch until June 1999,
the 1998 period reflects no service revenues, product sales or related costs
associated with services or products. Our net loss for the period was $923,822,
which was principally comprised of selling, general and administrative expenses.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses for the period in the amount of $949,445 were comprised
primarily of legal and other professional services of $704,341 related to the
start up of our business and the development of our systems. In addition, we
incurred $167,246 of human resource costs related to preparation for the 1999
launch of our network. Virtually all selling, general and administrative
expenses during this period related to the start-up of the business and were
expensed according to American Institute of Certified Public Accountants
Statement of Position 98-5, "Reporting on the Costs of Start-up Activities."
NINE MONTH PERIOD ENDED SEPTEMBER 30, 1999
Net Loss. Our net loss for the nine months ended September 30, 1999 was
$17,688,419 and was comprised primarily of the continued incurrence of start-up
expenses relative to the preparation of our initial commercial market launch in
June 1999 and six other market launches during the period.
Service Revenues. Service revenues during the period in the amount of
$1,187,008 are comprised of subscriber revenue, Sprint PCS roaming revenue,
non-Sprint PCS roaming revenue and long distance revenue, all of which initially
began accruing to us at or near our first initial commercial launch in June
1999. Subscriber revenue consists of payments received from Sprint PCS
subscribers based in our territory for monthly Sprint PCS service in our
territory under a variety of service plans. These plans generally reflect the
terms of plans offered by Sprint PCS nationally and are issued on a
month-to-month basis. We receive Sprint PCS roaming revenue at a per minute rate
from Sprint PCS or another Sprint PCS affiliate when Sprint PCS subscribers
based outside of our territory use our portion of the Sprint PCS network.
Pursuant to our affiliation agreements with Sprint PCS, Sprint PCS can change
this per minute rate. Non-Sprint PCS roaming revenue primarily consists of fees
collected from Sprint PCS customers based in our territory when they roam on
non-Sprint PCS networks. These fees are based on rates specified in the
customers' contracts. However, it is possible that in some cases these fees may
be less than the amount we must pay to other wireless service providers that
provide service to Sprint PCS customers based in our territory. Non-Sprint PCS
roaming revenue also includes payments from wireless service providers, other
than Sprint PCS, when those providers' customers roam on our portion of the
Sprint PCS network. Our
24
<PAGE> 28
average monthly revenue per user for Sprint PCS customers in our territory,
including long distance and roaming revenue, was $64.82 for the period from June
26, 1999 to September 30, 1999.
Product Sales. 100% of the revenue from the sale of handsets and
accessories are recorded, net of an allowance for returns, as product sales. The
amount recorded during this period totaled $813,052. Sprint PCS's handset return
policy allows customers to return their handsets for a full refund within 30
days of purchase. When handsets are returned to us, we may be able to reissue
the handsets to customers at little additional cost to us. However, when
handsets are returned to Sprint PCS for refurbishing, we receive a credit from
Sprint PCS, which is less than the amount we originally paid for the handset.
Cost of Services. Expenses totaling $818,678 during this period related to
providing wireless services to customers and are included in cost of services.
Among these costs are the cost of operations, fees related to data transfer via
T-1 and other transport lines, inter-connection fees, Sprint PCS roaming fees,
non-Sprint PCS roaming fees and other expenses related to operations. We pay
Sprint PCS roaming fees when Sprint PCS subscribers based in our territory use
the Sprint PCS network outside of our territory. Pursuant to our affiliation
agreements with Sprint PCS, Sprint PCS can change this per minute rate. We pay
non-Sprint PCS roaming fees to other wireless service providers when Sprint PCS
customers based in our territory use their network.
Cost of Products Sold. The cost of products sold totaling $794,963 during
this period includes the cost of accessories and the cost of handsets up to the
retail sales price. We expect the cost of handsets to exceed the retail sales
price because we subsidize the price of handsets for competitive reasons. We
recognize any excess of the cost of handsets over the retail sales price as an
advertising expense. For the nine months ended September 30, 1999, the handset
subsidy totaled $1,194,000 and there was no expense related to handset subsidy
in the period prior to the nine months ended September 30, 1999.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses totaling $9,194,937 during the period include sales and
marketing expenses of $2,282,000, the 8% of collected revenue retained by Sprint
PCS of $54,000 and amounts retained by Sprint PCS for customer service of
$212,000, as well as billing, network monitoring, human resources and other
services. Sales and marketing expenses include advertising expenses, promotion
costs, sales commissions and expenses related to our distribution channels.
Advertising expenses include any excess of the cost of a handset over the retail
price. We have incurred significant selling, general and administrative expenses
related to the development of our system. Virtually all of these expenses are
related to the start-up of the business and were expensed according to American
Institute of Certified Public Accountants Statement of Position 98-5, "Reporting
on the Costs of Start-up Activities."
Equity Participation Compensation Expense. Equity participation
compensation expense totaled $6,822,037 for the period. This expense was
determined using the provisions of Accounting Principles Board Opinion No. 25
"Accounting for Stock Issued to Employees" for variable options and was based on
the estimated intrinsic value of the options at September 30, 1999. The
estimated intrinsic value represents the excess of the estimated fair value
equal to the initial public offering price over the exercise price of the
option.
General and Administrative Expenses -- Related Parties. General and
administrative expenses -- related parties totaled $680,006 for the period and
was primarily comprised of information technology and other professional
consulting expenses incurred in connection with a contract between us and a
telecommunications engineering and consulting firm. Several key officers and
owners of this consulting firm have an equity ownership interest in us.
Depreciation and Amortization. Depreciation and amortization during the
period totaled $936,736. Depreciation is calculated using the straight line
method over the useful life of the asset. We begin to depreciate the assets for
each market only after we open that market.
Interest and Other Income. Interest and other income totaling $444,746
during this period generally have been generated from the investment of equity
and loan proceeds held in liquid accounts waiting to be deployed.
25
<PAGE> 29
Interest Expense. Interest expense totaled $885,868 during this period and
primarily related to the Nortel financing. Interest on the Nortel financing may
be paid with loans obtained under the Tranche C Commitment of the Nortel
financing until, in most circumstances, February 2002. See "Description of Our
Indebtedness -- The Nortel Credit Facility -- Loans and Interest Options." Gains
or losses on hedging transactions related to interest rates will be netted
against interest expense.
INCOME TAXES
Our financial statements did not report any benefit for federal and state
income taxes since we had elected to be taxed as a partnership prior to our
reorganization. For the periods presented, the members of the limited liability
company recorded our tax losses on their own income tax returns. Subsequent to
the reorganization, we will account for income taxes in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes." Had we applied the provisions of SFAS No. 109 for the period from
inception on July 16, 1998 through September 30, 1999, the deferred tax asset
generated, primarily from temporary differences related to the treatment of
start-up costs, unearned compensation and from net operating loss carry
forwards, would have been offset by a full valuation allowance.
LIQUIDITY AND CAPITAL RESOURCES
Since inception, we have financed our operations through capital
contributions from our owners and through debt financing provided by Nortel. As
of September 30, 1999, we had a $123.0 million senior credit facility with
Nortel, of which $59.7 million had been drawn. The agreement has since been
amended to increase the facility to $250.0 million to be effective as of the
closing of this offering. The terms of the facility do not require cash interest
payments until the earlier of (1) February 2001, only if we have not borrowed at
least $100.0 million under the Nortel financing by that time, (2) February 2002
and (3) the date the Tranche C Commitment is fully funded. Principal payments
are scheduled to begin on the earlier of (a) June 30, 2001, only if we have not
borrowed at least $100.0 million under the Nortel financing by February 2001 and
(b) December 31, 2002. Our financing with Nortel will be used to purchase
equipment, pay interest and cover approved working capital costs. In connection
with the facility, we are required, unless we meet specified conditions, to
issue warrants to Nortel on the second anniversary of the closing of the
facility. We intend to use a portion of the proceeds from our offering of senior
discount notes to prepay a portion of the Nortel financing, thus preventing the
issuance of the warrants to Nortel. However, we cannot assure you that we will
choose to complete our notes offering or that we will prepay any portion of the
Nortel financing. The warrants are exercisable to purchase shares of our common
stock representing 2% of the total shares outstanding as of the closing of the
offering. The exercise price of the warrants would be equal to the initial
public offering price of the common stock sold in this offering. We will
amortize the fair value of these contingent warrants as debt issuance costs over
the term of the Nortel loans. For more information on the financing facility,
see "Description of Our Indebtedness -- The Nortel Credit Facility."
Net cash used by operating activities was $127,954 for the inception period
ending December 31, 1998, and $9,338,888 for the nine months ending September
30, 1999. Cash used in operating activities for the periods were attributable to
operating losses and working capital needs.
Net cash used in investing activities was $1,342,969 for the inception
period ending December 31, 1998, and $18,784,600 for the nine month period
ending September 30, 1999. The expenditures were related primarily to the
purchase of office equipment, telephone equipment and network infrastructure
needed to begin construction of our portion of the Sprint PCS network.
Net cash provided by financing activities was $15,000,000 consisting of
capital contributions for the inception period ending December 31, 1998 and
$22,048,720 consisting primarily of capital contributions of $10,000,000 and
Nortel draws of $12,000,000 for the nine month period ending September 30, 1999.
As of September 30, 1999, the primary sources of liquidity for Alamosa were
$7.5 million in cash and $63.3 million of unused capacity under the Nortel
credit facility.
26
<PAGE> 30
We anticipate that the proceeds from this offering, when combined with the
committed level of debt financing from Nortel, will be adequate to fund required
capital expenditures, working capital requirements, operating losses and other
cash needs of our current business plan. We estimate that we will require
approximately $290 million to complete the current build-out plan and fund
working capital losses through the year 2001. The following table does not
reflect the consummation of our senior discount notes offering and sets forth
our current estimates at January 1, 2000, in millions, of our sources and uses
of funds necessary to fund our capital expenditures through the completion of
our network build-out plan in 2002:
<TABLE>
<S> <C>
SOURCES:
Cash on hand at January 1, 2000............................. $ 4.0
Gross proceeds of this offering of common stock............. 150.0
Proceeds from the Nortel financing -- cash proceeds
(Tranches A and B)(1)..................................... 149.8
Proceeds from the Nortel financing -- deferred financing
costs (Tranche C)......................................... 17.8
------
Total sources..................................... 321.6
======
USES:
Capital expenditures and microwave relocation............... 195.7
Working capital needs and cash operating gains
(losses)(2)............................................... 14.0
Debt service(3)............................................. 64.1
Fees and expenses(4)........................................ 15.0
------
Total uses........................................ 288.8
------
Cash on hand at December 31, 2002................. 32.8
------
Total uses and cash on hand at December 31,
2002.......................................... 321.6
======
</TABLE>
- ---------------
(1) Portions of this committed financing may be refinanced with proceeds from
our offering of senior discount notes. We anticipate that the proceeds from
our proposed offering of senior discount notes will not be needed to fund
the required capital expenditures, working capital requirements, operating
losses and other cash needs of our current business plan. We plan to use a
portion of the proceeds of that offering to prepay $75.0 million of
indebtedness outstanding under the Nortel credit facility. We may decide to
use the remaining proceeds of that offering to:
- expand our existing territory;
- build-out additional areas or accelerate coverage within our existing
territory;
- pursue additional wireless telecommunications business opportunities or
acquire other wireless telecommunications businesses or assets; or
- cover general corporate purposes.
However, if we do not use the remaining proceeds of that offering for
these purposes, we may decide to:
- prepay additional debt outstanding under the Nortel facility; or
- avoid drawing additional amounts under the Nortel facility.
We cannot assure you that we will choose to complete our notes offering or
that we will prepay any portion of the Nortel financing.
(2) We expect to incur losses in earnings before interest, taxes, depreciation
and amortization in excess of $65 million through 2001, but expect to offset
these losses in 2002.
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<PAGE> 31
(3) Debt service payments are composed of:
<TABLE>
<S> <C>
Cash interest payment....................................... $34.1
Payment of capitalized interest............................. 14.0
Payment of equipment financing debt principal............... 14.1
Payment of capitalized interest equipment debt principal and
origination fee........................................... 1.9
-----
$64.1
</TABLE>
(4) Fees and expenses include estimated offering expenses and underwriting
discounts and commissions for the common stock offering and origination fees
related to the Nortel financing.
The actual funds required to build-out our portion of the Sprint PCS
network and to fund operating losses and working capital needs may vary
materially from these estimates, and additional funds could be required in the
event of unforeseen delays, cost overruns, unanticipated expenses, engineering
design changes and other technology risks. In addition, if we complete our
build-out more rapidly than currently anticipated, or if we contract to develop
additional markets, we will need to raise additional equity or debt capital. We
cannot be sure that we will be able to obtain the additional financing necessary
to satisfy our cash requirements or to implement our growth strategy on
acceptable terms or at all. In particular, covenants in our loan agreement with
Nortel place restrictions on our subsidiaries' ability to raise additional
equity or debt capital without Nortel's consent. If we cannot obtain financing
on terms acceptable to us, we may be forced to curtail our planned business
expansion and may be unable to fund our ongoing operations. For information see
"Risk Factors -- Risks Particular to Alamosa -- We may need more capital than we
currently project to build-out our portion of the Sprint PCS network."
We include capital leases related to network equipment and build-out in
construction in progress until service has commenced in their respective
markets. Once that service has commenced, those capital leases are reclassified
to property and equipment. At December 31, 1998, capital leases totaled $728,219
and included long-term capital lease obligations of $708,074. At September 30,
1999 the capital leases totaled $853,965 and included long-term capital lease
obligations of $832,684. See "Description of Our Indebtedness -- The Nortel
Credit Facility -- Loans and Interest Options." Amortization in the amount of
$20,661 was recorded under these leases through September 30, 1999.
IMPACT OF YEAR 2000 ISSUE ON THE OPERATIONS AND FINANCIAL CONDITION OF ALAMOSA
The year 2000 issue arises as the result of computer programs having been
written, and systems having been designed, using two digits rather than four to
define the applicable year. Consequently, that software has the potential to
recognize a date using "00" as the year 1900 rather than the year 2000. This
could result in a system failure or miscalculations causing disruptions of
operations, including, among other things, a temporary inability to process
transactions, send invoices or engage in normal business activities.
We began acquiring items that comprise our internal information technology
systems in late 1998 when we commenced operations. As we purchased those
components, we determined their year 2000 readiness. As a result, our direct
costs with respect to year 2000 compliance have not been significant and we do
not expect any significant costs in the future. Our non-information technology
systems, particularly our network equipment, have been acquired from Nortel and
are susceptible to year 2000 issues. Nortel has represented to us that such
systems are year 2000 ready.
To determine the state of readiness of our internal systems, we performed
steps that included the following:
- the compilation of an inventory of core critical systems and
applications, facilities and processes;
- the review of core critical systems and applications;
- the testing and validation of core critical systems and applications;
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<PAGE> 32
- the development of contingency and continuity plans for all core critical
systems and applications independent of Sprint PCS.
We depend on several third-party vendors and providers to operate our
business, particularly Sprint PCS and local exchange carriers. Sprint PCS
provides us with critical back office services as well as access to its national
network. We have contacted Sprint PCS and other third party vendors and
providers and believe they will be year 2000 compliant.
While we believe our systems will be year 2000 compliant, there is the risk
they may not be compliant. We believe our greatest risk is the failure of the
systems of our third-party vendors or providers. However, should any failure
occur which affects us, we believe it would result in only a temporary
disruption of our service. Should a disruption occur, there could be a material
loss of revenue; however, we do not believe such losses, if any, will be
significant.
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
We do not engage in commodity futures trading activities and do not enter
into derivative financial instrument transactions for trading or other
speculative purposes. We also do not engage in transactions in foreign
currencies that could expose us to market risk.
We are subject to some interest rate risk on our financing from Nortel and
any future floating rate financing.
The following table presents the estimated future outstanding long-term
debt at the end of each year and future required annual principal payments for
each year then ended associated with the senior discount notes, capital leases
and the Nortel financing based on our projected level of long-term indebtedness:
<TABLE>
<CAPTION>
YEARS ENDING DECEMBER 31,
---------------------------------------
1999 2000 2001 2002 2003 2004 THEREAFTER
---- ---- ---- ---- ---- ---- ----------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
Fixed Rate Instruments:
Senior discount notes.................................. --
Fixed interest rate.................................. --
Principal payments................................... -- -- -- -- -- --
Capital Leases -- Annual Minimum Lease Payments(1)..... $.05 $.11 $.11 $.11 $.11 $.11 $ 1.09
Average Interest Rate................................ 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0%
Variable Rate Instruments:
Nortel Senior Debt(2).................................. $ 87 $ 64 $158 $158 $114 $ 38 --
Average Effective Interest Rate...................... 9.3% 9.3% 9.3% 9.3% 9.3% 9.3% --
Principal payments................................... -- -- -- $ 17 $ 38 $195 --
</TABLE>
- ---------------
(1) These amounts represent the estimated minimum annual payments due under our
estimated capital lease obligations for the periods presented.
(2) These amounts represent estimated year-end balances under the Nortel
facility based on a projection of the funds borrowed under that facility
pursuant to our current plan of network build-out.
(3) Interest rate on the Nortel financing equals, at our option, either the
London Interbank Offered Rate (LIBOR) + 3.75%, or the prime or base rate of
Citibank, N.A. plus 2.75%. LIBOR is assumed to equal 5.5% for all periods
presented.
Our primary market risk exposure relates to:
- the interest rate risk on long-term and short-term borrowings;
- our ability to refinance our senior discount notes at maturity at market
rates; and
- the impact of interest rate movements on our ability to meet interest
expense requirements and meet financial covenants.
The carrying value of the financial instruments approximates fair value.
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<PAGE> 33
As a condition to the Nortel financing, we must maintain one or more
interest rate protection agreements in an amount equal to 50% of the total debt
under the financing. While we cannot predict our ability to refinance existing
debt or the impact interest rate movements will have on our existing debt, we
continue to evaluate our financial position on an ongoing basis.
INFLATION
Management believes that inflation has not had, and is not likely to have,
a material adverse effect on our results of operations.
EFFECT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
We do not believe that any recently issued accounting pronouncements will
have any material impact on our financial position, results of operations or
cash flows.
30
<PAGE> 34
BUSINESS
References in this prospectus to Alamosa as a provider of wireless personal
communications services or similar phrases generally refer to our building,
owning and managing our portion of the Sprint PCS network pursuant to our
affiliation agreements with Sprint PCS. Sprint PCS holds the spectrum licenses
and controls the network through its agreements with us.
All references contained in this prospectus to resident population and
residents are based on projections of year-end 1999 population counts calculated
by applying the annual growth rate from 1990 to 1998 to estimates of 1998
population counts compiled by the U.S. Census Bureau. Unless otherwise
indicated, growth rate statistics are based on U.S. Census Bureau data for
growth during the period from 1990 to 1998.
OVERVIEW
Alamosa is a provider of wireless personal communication services in the
southwestern and midwestern United States. We are part of the Sprint PCS
network. Sprint PCS, directly and through affiliates such as us, provides
wireless services in more than 4,000 cities and communities across the country.
We have the exclusive right to provide digital wireless personal communications
services under the Sprint and Sprint PCS brand names in our territory. We have
recently amended our affiliation agreements with Sprint PCS to expand our
territory so that it will include approximately 8.4 million residents. These
residents are primarily located in smaller cities and in markets with above
average growth rates in Texas, New Mexico, Arizona, Colorado and Wisconsin.
We believe that our strategic relationship with Sprint PCS provides
significant competitive advantages by allowing us to establish high quality,
branded wireless services more quickly, at a lower cost and with lower initial
capital requirements than would be possible without our affiliation with Sprint
PCS.
Our territory offers several competitive advantages. Our territory is a
high growth area. The overall population growth rate in our territory for the
period from 1990 to 1998 was approximately 1.5% per year, approximately 42%
above the national average. We expect to face fewer competitors in our territory
than is generally the case for wireless service providers operating in more
urban markets. We expect to have significant Sprint PCS roaming revenue because
our territory adjoins several major Sprint PCS markets and contains several
vacation destinations and border markets.
Since inception in July 1998, we have launched Sprint PCS service in eleven
markets in which our systems cover approximately 2.7 million residents out of
approximately 3.9 million total residents. We anticipate that the proceeds of
this offering, when combined with previously funded equity and the committed
level of debt financing from Nortel, will be adequate to fund required capital
expenditures, working capital requirements, operating losses and other cash
needs of our business.
WIRELESS INDUSTRY GROWTH
Wireless communications systems use a variety of radio frequencies to
transmit voice and data. Broadly defined, the wireless communications industry
includes one-way radio applications, such as paging or beeper services, and
two-way radio applications, such as wireless personal communications services,
cellular telephone services and enhanced specialized mobile radio service.
Since the introduction of commercial cellular service in 1983, the wireless
communications industry has experienced dramatic growth. The number of wireless
subscribers for cellular, wireless personal communications services and enhanced
specialized mobile radio service has increased from an estimated 340,213 at the
end of 1985 to an estimated 79.7 million as of October 7, 1999, according to the
Cellular Telecommunications Industry Association, an international association
for the wireless industry. The
31
<PAGE> 35
following chart sets forth statistics for the domestic wireless telephone
industry as a whole, as published by the Cellular Telecommunications Industry
Association.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------
1994 1995 1996 1997 1998
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
WIRELESS INDUSTRY STATISTICS(1)
Total service revenues (in billions).............. $14.2 $19.1 $23.6 $27.5 $33.1
Wireless subscribers at end of period (in
millions)....................................... 24.1 33.8 44.0 55.3 69.2
Subscriber growth................................. 50.8% 40.0% 30.4% 25.6% 25.1%
Average local monthly bill(2)..................... $56.21 $51.00 $47.70 $42.78 $39.43
</TABLE>
- ---------------
(1) Reflects domestic commercial cellular, enhanced specialized mobile radio
service and wireless personal communications services providers.
(2) Does not include revenue from roaming and long distance.
Paul Kagan Associates, Inc., an independent media and telecommunications
research firm, estimates in its publication, Kagan's Wireless Telecom Financial
Databook - 1998, that the number of wireless users will increase to
approximately 131 million by the end of 2002 and 160 million by the end of 2005.
This growth is expected to be driven largely by a substantial projected increase
in wireless personal communications services users, who are forecast to account
for approximately 29% of total wireless users in 2002 and 36% in 2005,
representing a significant increase from approximately 8% as of the end of 1998.
Paul Kagan Associates, Inc. projects that total wireless industry penetration,
defined as the number of wireless subscribers nationwide divided by total United
States population, will grow from an estimated 26% in 1998 to 54% in 2005.
We believe that a significant portion of the predicted growth in the
consumer market for wireless telecommunications will result from:
- anticipated declines in costs of service;
- increased versatility; and
- increased awareness of the productivity, convenience and privacy benefits
associated with the services offered by wireless personal communications
services providers.
We also believe that the rapid growth in the use of notebook computers and
personal digital assistants, combined with emerging software applications for
delivery of electronic mail, fax and database searching, will contribute to the
growing demand for wireless services.
SPRINT PCS
Sprint is a diversified telecommunications service provider whose principal
activities include:
- long distance service;
- local service;
- wireless telephone products and services;
- product distribution and directory publishing activities; and
- other telecommunications activities, investments and alliances.
Sprint PCS is a wholly-owned operating unit of Sprint and operates the only
100% digital wireless personal communications services network in the United
States with licenses to provide service nationwide using a single technology.
Sprint PCS owns licenses to provide wireless service to an area containing
approximately 270 million residents located throughout the United States,
including Puerto Rico and the U.S. Virgin Islands. The Sprint PCS network uses
code division multiple access technology nationwide.
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<PAGE> 36
Sprint PCS launched commercial wireless personal communications services in
the United States in November 1995. Since then, Sprint PCS has experienced rapid
customer growth and has reported providing service to approximately 4.0 million
customers with average revenue per subscriber of $54 as of June 30, 1999. In the
fourth quarter of 1998, Sprint PCS added approximately 836,000 net wireless
subscribers. Sprint PCS added approximately 1.4 million net wireless subscribers
in the first six months of 1999. As of June 30, 1999, Sprint PCS, directly and
through affiliates such as us, operated wireless personal communications
services systems in more than 4,000 cities and communities across the United
States. The following table, showing the quarterly end-of-period subscriber data
for Sprint PCS, illustrates Sprint PCS's subscriber growth from the beginning of
1997 to the end of the second quarter of 1999.
<TABLE>
<CAPTION>
1997 1998 1999
--------------------- ----------------------------- -------------
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
--- --- --- --- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Total subscribers
(in thousands).......... 192 347 570 887 1,114 1,365 1,751 2,587 3,350 3,967
</TABLE>
Statements in this prospectus regarding Sprint or Sprint PCS are derived
from information contained in our affiliation agreements with Sprint and Sprint
PCS and periodic reports and other documents filed with the Securities and
Exchange Commission by, or press releases issued by, Sprint and Sprint PCS.
COMPETITIVE STRENGTHS
STRATEGIC RELATIONSHIP WITH SPRINT PCS
We are one of the largest affiliates of Sprint PCS based on the resident
population in our territory and our territory adjoins several major Sprint PCS
markets. The build-out of our territory will significantly extend Sprint PCS's
coverage in the southwestern and midwestern United States, which we believe is
important to Sprint PCS's national strategy. We believe that our affiliation
with Sprint PCS allows us to establish high quality, branded wireless services
more quickly, at a lower cost and with lower initial capital requirements than
would otherwise be possible. Specifically, we benefit from:
Immediate Brand Recognition. We market products and services directly under
the Sprint and Sprint PCS brand names. We immediately benefit from the
recognizable Sprint and Sprint PCS brand names and national advertising as we
open markets. We offer pricing plans, promotional campaigns and handset and
accessory promotions of Sprint PCS. We expect that customers will choose Sprint
PCS services in large part based on the Sprint and Sprint PCS brand names and
national advertising. Furthermore, because of the Sprint and Sprint PCS brand
names, we are able to reduce the advertising costs that would be required to
establish our own brand in the wireless services market.
Existing Distribution Channels. We benefit from relationships with major
national retailers who distribute Sprint PCS products and services under
existing Sprint PCS contracts. Approximately 300 retail outlets will sell and
distribute Sprint PCS products and services throughout our territory.
Furthermore, we will benefit from sales made by Sprint PCS to customers in our
territory through its national telemarketing sales force, national account sales
team and Internet sales capability. These existing distribution channels provide
immediate access to customers as our services become available in their area.
For more information on our distribution plan, see "-- Sales and Distribution."
Sprint PCS's National Network. We believe that our ability to offer access
to Sprint PCS's national wireless network represents a competitive advantage
over regional offerings. We also expect to derive additional revenue from Sprint
PCS when its customers based outside of our territory roam on our portion of the
Sprint PCS network.
High Capacity Network. Sprint PCS built its network around code division
multiple access digital technology, which we believe provides advantages in
capacity, voice-quality, security and handset battery life. For more information
on the benefits of this technology, see "-- Technology -- Code Division Multiple
Access Technology."
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<PAGE> 37
Sprint PCS's Licensed Spectrum. Sprint PCS has invested approximately $100
million to purchase the wireless personal communications services licenses in
our territory and to pay costs to remove sources of microwave signals that
interfere with the licensed spectrum, a process generally referred to as
microwave clearing. Our early stage financing requirements have been
significantly reduced as a result of this investment by Sprint PCS.
Better Equipment Availability and Pricing. We expect to be able to acquire
handsets and network equipment more quickly and at a lower cost than we would
without our affiliation with Sprint PCS. For example, Sprint PCS will use
commercially reasonable efforts to obtain for us the same discounted
volume-based pricing on wireless-related products and warranties as Sprint PCS
receives from its vendors.
Established Back Office Support Services. We have contracted with Sprint
PCS to provide critical back office services, including customer activation,
handset logistics, billing, customer care and network monitoring services.
Because we do not have to establish and operate our own systems, we are able to
accelerate our market launches and capitalize upon Sprint PCS's economies of
scale.
Access to the Sprint PCS Wireless Web. We support the recently announced
Sprint PCS Wireless Web service in our portion of the Sprint PCS network. For
more information on the Sprint PCS Wireless Web, see "-- Products and
Services -- Access to the Sprint PCS Wireless Web."
ATTRACTIVE TERRITORY
We believe that our territory is attractive for several reasons, including:
Favorable Demographics. The overall population growth rate in our territory
was approximately 1.5% per year from 1990 to 1998, approximately 42% above the
national average. We serve nine of the 50 fastest growing markets in the United
States, including all of Laredo and a portion of Las Vegas, the two fastest
growing markets. Furthermore, the cities in Mexico directly across from our
border markets have over one million residents and the northbound border
crossings for these markets are approximately 165,000 persons per day. We expect
that some of these people who enter our territory will use the Sprint PCS
network.
Fewer Competitors. We expect to face fewer competitors in our markets than
is generally the case for wireless service providers operating in more urban
markets. As of September 30, 1999, three or fewer wireless service providers,
other than Alamosa, operated in markets that comprise over 80% of the residents
in our territory. By comparison, less than 10% of the resident population in the
50 most populated markets in the United States are served by four or fewer
wireless service providers. In addition, no single competitor or affiliated
group of competitors has launched service that reaches more than half of the
residents in our territory. We believe that our most extensive competition comes
from Nextel Communications, Inc., which has launched service to less than 40% of
the residents in our territory, followed by the contemplated partnership between
Bell Atlantic Corp./GTE Corp. and Vodafone AirTouch Plc, that has launched
service to less than 30% of the residents in our territory. AT&T Wireless
Services, Inc. has launched service to less than 20% of the residents in our
territory. We anticipate that the Sprint PCS brand and the bundled long distance
offers of the "Free and Clear" plans will be effective in this competitive
environment. Sprint PCS's "Free and Clear" calling plans includes free long
distance calling from anywhere on its national network to anywhere in the United
States.
Opportunity for Sprint PCS Roaming Revenue. We receive Sprint PCS roaming
revenue from Sprint PCS when its subscribers based outside our territory roam on
our portion of the Sprint PCS network. For a more detailed description of Sprint
PCS roaming, see "-- Roaming." We anticipate that we will have significant
Sprint PCS roaming revenue for several reasons, including the following:
- Our territory adjoins several major Sprint PCS markets that are already
operational, including Dallas/Ft. Worth, Phoenix, Minneapolis, Las Vegas,
Milwaukee, San Antonio and Colorado
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<PAGE> 38
Springs. These metropolitan statistical areas contain approximately 19.3
million residents and the growth rates in these markets was approximately
2.5% from 1990 to 1998.
- We plan to build-out numerous interstate corridors in our territory,
including:
- I-17 (Phoenix to Flagstaff);
- I-25 (El Paso to Albuquerque/Santa Fe and Pueblo to Colorado
Springs);
- I-27 (Lubbock to Amarillo);
- I-35 (San Antonio to Laredo);
- I-20 (Abilene to Dallas);
- I-43 (Green Bay to Milwaukee);
- I-94 (Eau Claire to Minneapolis);
- I-90 (LaCrosse to Madison); and
- I-39 (Madison to Wausau).
While we believe that the build-out of these interstate corridors will
generate revenue for us, the cost of build-out per resident will be
higher than other areas due to the lower resident population counts along
those interstate corridors.
- Our territory contains popular vacation and tourist destinations,
including major ski resorts in Colorado and New Mexico such as Taos and
Telluride.
- Our territory contains several markets near the Mexico border which we
believe will benefit from high Sprint PCS roaming revenues generated from
U.S. business travel to factories along the border and other border
traffic. From November 1998 to October 1999, Laredo had border crossings
of approximately:
- 17 million cars;
- two million trucks, the highest number of truck crossings along the
U.S.-Mexico border; and
- 8 million pedestrians.
In the same period, El Paso had border crossings of approximately:
- 14 million cars; and
- 12 million pedestrians.
Source: Texas A&M International University, Texas Center for Border
Economic and Enterprise Development, as published in Border Business
Indicators, December 1999, Volume 23, Number 12.
ADEQUATE FUNDING TO COMPLETE OUR NETWORK
We entered into our affiliation agreements with Sprint PCS in July 1998. We
launched Sprint PCS service in Laredo in June 1999, and have since commenced
service in ten additional markets: Albuquerque, Santa Fe, El Paso, Las Cruces,
Lubbock, Amarillo, Midland, Odessa, Abilene and San Angelo. Our systems cover
approximately 2.7 million residents out of approximately 3.9 million total
residents in these markets. We expect to cover a total of approximately 4.2
million residents by the end of 2000, and 5.5 million residents by the end of
2001, at which point we expect to have completed our build-out obligations to
Sprint PCS and expect to have covered approximately 65% of the resident
population in our territory. As of November 30, 1999, we served approximately
20,329 Sprint PCS subscribers based in our territory.
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<PAGE> 39
We anticipate that the proceeds of this offering, when combined with
previously funded equity and the committed level of debt financing from Nortel,
will be adequate to fund required capital expenditures, working capital
requirements, operating losses and other cash needs of our business. Further, we
believe that this level of financing is adequate to achieve the objective in our
business plan of covering approximately 65% of the resident population in our
territory by the end of 2001 and to exceed the build-out requirements contained
in our affiliation agreements with Sprint PCS. We anticipate that the proceeds
from our proposed offering of senior discount notes will not be needed to fund
the required capital expenditures, working capital requirements, operating
losses and other cash needs of our current business plan. For more information,
see "Risk Factors -- Risks Particular to Alamosa -- We may not achieve or
sustain operating profitability or positive cash flow from operating activities"
and "-- We may need more capital than we currently project to build-out our
portion of the Sprint PCS network."
BUSINESS STRATEGY
We intend to become a leading provider of wireless personal communications
services in our territory. We believe that the following elements of our
business strategy will enable us to rapidly launch our portion of the Sprint PCS
network, distinguish our wireless service offerings from those of our
competitors and compete successfully in the wireless communications marketplace.
CAPITALIZE ON OUR AFFILIATION WITH SPRINT PCS
In all of our markets, we plan to capitalize upon the extensive benefits of
our Sprint PCS affiliation, in particular the Sprint and Sprint PCS brands and
established distribution system. We also plan to emphasize the nationwide
roaming and bundled long distance aspects of the "Free and Clear" plans,
particularly in those markets where competitors are not offering nationwide one
rate plans.
ACCELERATE MARKET LAUNCH THROUGH EXPERTISE OF THIRD PARTIES
We have entered into outsourcing or other relationships to benefit from
specialized expertise or economies of scale of third parties and to build-out
our portion of the Sprint PCS network more quickly and with lower initial
capital and staffing requirements. Specifically, those relationships include:
- The radio frequency design, project management, and networking
interconnection is being performed by CHR Solutions, Inc., a national
engineering consulting firm formerly known as Hicks & Ragland Engineering
Co., Inc. This relationship allows us to quickly plan and begin network
operations without the initial need to hire additional specialized
technical personnel.
- We entered into a "build-to-suit" contract with Specialty Capital
Services, Inc., now a subsidiary of American Tower Corporation. Specialty
is responsible for:
- site acquisition;
- zoning;
- tower construction; and
- identifying collocation opportunities.
This arrangement allows us to focus on the development of a distribution
network rather than the time consuming task of site acquisition and zoning.
- We entered into a supply and installation contract with Nortel for
network infrastructure. Nortel is an international equipment supplier
well-known for its leadership in code division multiple access technology
networks. In addition to assuming the responsibility for the integration
of system operations, Nortel provides us with resources for product and
service development.
- We have contracted with Sprint PCS to provide back office services, such
as:
- customer activation;
- handset logistics;
- billing;
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<PAGE> 40
- customer care; and
- network monitoring services.
Because Sprint PCS provides these services, we can be sure that those
services are compatible with, and similar to, the rest of Sprint PCS's
infrastructure and services and that we are in compliance with Sprint
PCS's customer service standards.
For more information, see "-- Network Operations" and "-- Competitive
Strengths -- Strategic Relationship with Sprint PCS -- Established Back Office
Support Services."
EXECUTE OPTIMAL BUILD-OUT PLAN
We have targeted the high population density areas within our territory for
network build-out as well as areas expected to generate significant Sprint PCS
roaming revenue such as major interstates and the border crossings. We are
building an all digital wireless personal communications services network. Our
radio frequency design is optimized to provide in-building coverage with high
capacity traffic. We believe that our cell density, together with the use of
code division multiple access technology, will allow our system to handle more
customers with fewer dropped calls and better clarity than our competitors.
IMPLEMENT EFFECTIVE OPERATING STRUCTURE
Our organization and management structure is based on a market-focused
model. Each market area, averaging 1.5 million residents, will be supported by a
small corporate staff that provides services including:
- network technical support;
- accounting;
- human resources;
- roaming administration;
- marketing; and
- Sprint liaison.
The general manager in each market has responsibility for the profits and
losses for his or her region. We believe that by placing experienced managers in
these markets with the authority to tailor our marketing programs to local
conditions, we can effectively market our products across a wide geographic
area.
EXPLORE STRATEGIC OPPORTUNITIES TO EXPAND AND FURTHER BUILD-OUT OUR
TERRITORY IN THE FUTURE
Upon the successful build-out of our current territory, we plan to explore
strategic expansion of our territory through additional affiliations and further
build-out of our existing territory.
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<PAGE> 41
MARKETS AND NETWORK BUILD-OUT PLAN
The following table lists the location, actual or projected launch date for
network coverage, frequency, megahertz of spectrum, estimated total residents,
estimated covered residents and population growth rates, for each of the markets
that comprise our territory under our affiliation agreements with Sprint PCS.
<TABLE>
<CAPTION>
ESTIMATED ESTIMATED POPULATION
BTA LAUNCH MHZ OF TOTAL COVERED GROWTH
DESCRIPTION NO.(1) DATE(2) FREQUENCY SPECTRUM RESIDENTS(3) RESIDENTS(4) RATE(5)
- ----------- ------ ------------ --------- -------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Laredo, TX................ 242 June 1999 A 30 223,000 185,000 4.0%
El Paso, TX............... 128 Aug 1999 D/E 20 787,000 652,000 2.0%
Las Cruces, NM............ 244 Aug 1999 D 10 251,000 209,000 2.5%
Amarillo, TX.............. 013 Sept 1999 B 30 405,000 255,000 0.7%
Lubbock, TX............... 264 Sept 1999 B 30 400,000 251,000 0.2%
Midland, TX............... 296 Sept 1999 B 30 127,000 80,000 1.4%
Odessa, TX................ 327 Sept 1999 B 30 221,000 135,000 0.3%
Albuquerque, NM........... 008 Oct 1999 D 10 812,000 544,000 1.7%
Santa Fe, NM.............. 407 Oct 1999 D 10 213,000 142,000 2.1%
San Angelo, TX............ 400 Nov 1999 B 30 164,000 110,000 0.5%
Abilene, TX............... 003 Nov 1999 B 30 258,000 172,000 0.2%
--------- ---------
SUBTOTAL........ 3,861,000 2,735,000
Flagstaff, AZ............. 144 2nd Qtr 2000 B 30 118,000 77,000 2.1%
Prescott, AZ.............. 362 2nd Qtr 2000 B 30 157,000 103,000 4.0%
Del Rio/Eagle Pass, TX.... 121 2nd Qtr 2000 A 30 121,000 79,000 1.9%
--------- ---------
SUBTOTAL........ 4,257,000 2,994,000
Grand Junction, CO........ 168 3rd Qtr 2000 A 30 242,000 145,000 2.7%
Pueblo, CO................ 366 3rd Qtr 2000 A 30 304,000 184,000 1.4%
--------- ---------
SUBTOTAL........ 4,803,000 3,323,000
Appleton/Oshkosh, WI...... 018 4th Qtr 2000 A 30 443,000 303,000 1.1%
Fond du Lac, WI........... 148 4th Qtr 2000 A 30 96,000 65,000 0.6%
Green Bay, WI............. 173 4th Qtr 2000 A 30 345,000 235,000 1.1%
Manitowoc, WI............. 276 4th Qtr 2000 A 30 83,000 56,000 0.3%
Sheboygan, WI............. 417 4th Qtr 2000 A 30 111,000 76,000 0.7%
Milwaukee, WI(6).......... 297 4th Qtr 2000 A 30 85,000 59,000 1.5%
Brownwood, TX............. 057 4th Qtr 2000 B 30 62,000 37,000 0.7%
Colorado Springs, CO(6)... 089 4th Qtr 2000 A 30 17,000 17,000 0.1%
--------- ---------
SUBTOTAL........ 6,045,000 4,171,000
Eau Claire, WI............ 123 2nd Qtr 2001 A 30 192,000 120,000 0.6%
El Centro/Calexico, CA.... 124 2nd Qtr 2001 A 30 151,000 101,000 3.4%
La Crosse, WI/Winona,
MN...................... 234 2nd Qtr 2001 A 30 312,000 153,000 0.6%
Las Vegas, NV(6).......... 245 2nd Qtr 2001 A 30 139,000 83,000 4.1%
Madison, WI(6)............ 272 2nd Qtr 2001 A 30 147,000 106,000 1.5%
Minneapolis/St. Paul,
MN(6)................... 298 2nd Qtr 2001 A 30 84,000 52,000 1.1%
Phoenix, AZ(6)............ 347 2nd Qtr 2001 B 30 7,000 7,000 0.1%
Sierra Vista/Douglas,
AZ...................... 420 2nd Qtr 2001 B 30 115,000 92,000 1.7%
Wausau/Rhinelander, WI.... 466 2nd Qtr 2001 A 30 244,000 102,000 1.1%
Yuma, AZ.................. 486 2nd Qtr 2001 B 30 137,000 117,000 2.6%
</TABLE>
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<PAGE> 42
<TABLE>
<CAPTION>
ESTIMATED ESTIMATED POPULATION
BTA LAUNCH MHZ OF TOTAL COVERED GROWTH
DESCRIPTION NO.(1) DATE(2) FREQUENCY SPECTRUM RESIDENTS(3) RESIDENTS(4) RATE(5)
- ----------- ------ ------------ --------- -------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Stevens Point/Marshfield/
Wisconsin Rapids, WI...... 432 2nd Qtr 2001 A 30 214,000 120,000 0.6%
Big Spring, TX............ 040 2nd Qtr 2001 B 30 34,000 28,000 -0.1%
Clovis, NM................ 087 2nd Qtr 2001 B 30 77,000 55,000 0.9%
Hobbs, NM................. 191 2nd Qtr 2001 B 30 56,000 42,000 0.1%
Farmington, NM/ Durango,
CO...................... 139 2nd Qtr 2001 D 10 200,000 82,000 2.2%
Roswell, NM............... 386 2nd Qtr 2001 D 10 81,000 26,000 1.5%
Carlsbad, NM.............. 068 2nd Qtr 2001 D 10 55,000 18,000 1.2%
Gallup, NM................ 162 2nd Qtr 2001 D 10 139,000 46,000 1.3%
Tucson, AZ(6)............. 447 2nd Qtr 2001 B 30 5,000 5,000 0.0%
San Diego, CA(6).......... 402 2nd Qtr 2001 A 30 5,000 5,000 0.0%
--------- --------- ---------
TOTAL........... 8,439,000 5,531,000 1.5%
</TABLE>
- ---------------
(1) BTA No. refers to the basic trading area number assigned to that market by
the Federal Communications Commission for the purposes of issuing licenses
for wireless services.
(2) These projected launch dates may change based on a number of factors,
including shifts in populations or network focus, changes or advances in
technology, acquisition of other markets and delays in market build-out due
to reasons identified in "Risk Factors -- Risks Particular to Alamosa."
(3) Estimated total residents is based on projections of year-end 1999
population counts calculated by applying the annual growth rate from 1990 to
1998 to estimates of 1998 population counts compiled by the U.S. Census
Bureau.
(4) Estimated covered residents are based on our actual or projected network
coverage in markets at the launch date using current projections of year-end
1999 population counts calculated by applying the annual growth rate from
1990 to 1998 to estimates of 1998 population counts compiled by the U.S.
Census Bureau.
(5) Population growth rate represents the average annual growth rate during the
period from 1990 to 1998, based on U.S. Census Bureau data.
(6) Total residents for these markets reflect only those residents contained in
our territory, not the total residents in the entire basic trading area.
Pursuant to our affiliation agreements with Sprint PCS, we have agreed to
cover a minimum percentage of the resident population in our territory within
specified time periods. We plan to build-out our territory more rapidly than
those network build-out requirements. For more information on the network
build-out requirements, see "Our Affiliation Agreements with Sprint PCS -- The
Management Agreement -- Network Build-Out." We believe that our build-out plan
is achievable based on our progress to date, the proven digital wireless
personal communications services technology we will use to build our portion of
the Sprint PCS network and the established standards of Sprint PCS. However, our
build-out plan may change for a number of reasons, including those described in
footnote (1) to the table above.
NETWORK OPERATIONS
GENERAL
The effective operation of our portion of the Sprint PCS network requires
public switched and long distance interconnection, the implementation of roaming
arrangements, and the development of network monitoring systems. Our network
connects to the public switched telephone network to facilitate the origination
and termination of traffic between our network and both local exchange and long
distance carriers. Sprint provides preferred rates for long distance services.
Through our arrangements with Sprint
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<PAGE> 43
PCS and Sprint PCS's arrangements with other wireless service providers, Sprint
PCS subscribers based in our territory have roaming capabilities on other
networks. We have a network monitoring system in our Lubbock switching center
where we monitor our portion of the Sprint PCS network during normal business
hours. For after hours monitoring, Sprint PCS's Network Operation Center
provides 24 hour, seven day a week monitoring of our portion of the Sprint PCS
network and notification to our designated personnel. This network monitoring
process assists our staff in improving our network reliability without having to
staff 24 hours a day.
As of September 30, 1999, our portion of the Sprint PCS network currently
includes 180 base stations and four switching centers. As of December 31, 2000,
we anticipate our portion of the Sprint PCS network will include 588 base
stations and nine switching centers.
NORTEL EQUIPMENT AGREEMENT
On December 21, 1998, we entered into a three year agreement with Nortel
for our network equipment and infrastructure, including switches, base stations
and controllers. Pursuant to the agreement, as amended effective as of the
closing of the Nortel financing, Nortel will also provide installation and
optimization services, such as network engineering and radio frequency
engineering, for the equipment and grant us a nonexclusive license to use all
the software associated with the Nortel equipment. During the term of the
agreement we have committed to purchase a specified amount of equipment and
services from Nortel. Nortel finances these purchases pursuant to the Nortel
credit facility described in "Description of Our Indebtedness -- The Nortel
Credit Facility." We submit purchase orders to Nortel for the equipment and
services as needed. Under the agreement, we receive a discount on the network
equipment and services because of our affiliation with Sprint PCS, but we must
pay a premium on any equipment and services financed by Nortel until the closing
of the Nortel financing. After the closing of the Nortel financing, we are not
required to pay this premium. If our affiliation with Sprint PCS ends, Nortel
has the right to either terminate the agreement or, with our consent, modify the
agreement to establish new prices, terms and conditions.
TOWER AGREEMENT WITH SPECIALTY
In August 1998, we entered into a nonexclusive master site development and
lease agreement for tower sites with Specialty, now a subsidiary of American
Tower Corporation. Pursuant to the agreement, Specialty arranges for collocation
of our equipment, or constructs new facilities, in areas we identify for
build-out. Subject to our approval, Speciality provides site acquisition,
leasing and construction services and secures zoning, permitting and surveying
approvals and licenses for each base station location. The initial term of the
master agreement expires in August 2003, with automatic renewal for three
additional terms of five years each. We lease all individual tower sites that
Specialty provides for an initial term of five years, with automatic renewals at
our option for three additional terms of five years each. We pay monthly rental
payments to Specialty, in the amounts indicated on each individual leased site
schedule, subject to an annual adjustment based on the Consumer Price Index. In
any situation where Specialty's rights in a site are derived from a lease with a
third party, the terms of our agreement with Specialty, including the lease
term, are subordinate to the terms of that lease.
AGREEMENTS WITH CHR SOLUTIONS
We have entered into a number of agreements with CHR Solutions to perform
aspects of our network build-out. CHR Solutions resulted from a merger between
Hicks & Ragland Engineering Co., Inc., and Cathey, Hutton & Associates, Inc.
effective as of November 1, 1999. Those agreements include the following:
Engineering Service Contract. Pursuant to an engineering service contract
dated July 27, 1998, as amended, CHR Solutions performs design and construction
inspection services in connection with the deployment of switching centers and
base stations. The term of the contract covers three periods through August
2001, though either party may terminate the agreement for cause before August
2001. We pay
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<PAGE> 44
CHR Solutions hourly rates for the employees who work on the project as well as
the employees' associated expenses. We also pay CHR Solutions for the costs of
test equipment and computer usage. The hourly rates and the test equipment and
computer usage costs are reviewed and modified by mutual agreement annually
until completion of the services or termination of the agreement. A guaranteed
maximum fee amount has been set for each period of the contract, and those fees
aggregate to approximately $7.0 million, excluding taxes. If the total billing
for the project is less than the guaranteed maximum fee amount for the
agreement, then we will pay an incentive bonus to CHR Solutions equal to 50% of
the difference.
Data Communications Services Contract. We entered into a data
communications services contract with H&R Data Com, an affiliate of CHR
Solutions, as of April 9, 1999, for the design and implementation of network
interconnection systems for our local area networks and wide area network.
Similar to the engineering service contract, we pay CHR Solutions hourly rates
and test equipment and computer usage costs, subject to a guaranteed maximum fee
amount for the project of $262,040, excluding taxes. If the total billing for
the project is less than the guaranteed maximum fee amount, then we will pay an
incentive bonus to CHR Solutions equal to 50% of the difference. We may also
require additional services during the course of the contract and have been
guaranteed a fee not to exceed $50,000 for any of those services. The agreement
lasts until the project is completed, unless either party terminates it earlier
for cause.
Marketing and Operations Consulting Services Contract. Pursuant to a
special service contract, from September 20, 1998 through January 15, 1999, CHR
Solutions provided marketing and operations consulting services relating to the
setup and operation of our wireless personal communications services system.
Wisconsin Marketing and Operations Consulting Services Contract. As of
October 8, 1999, we entered into a similar marketing and operations consulting
services contract with CHR Solutions relating to the setup and operation of the
wireless personal communications services system in selected areas in Wisconsin.
We pay CHR Solutions hourly rates for the employees who work on the project as
well as the employees' associated expenses. We also pay CHR Solutions for the
costs of computer usage. The hourly rates and computer usage costs are reviewed
and modified by mutual agreement annually until completion of the services or
termination of the agreement. The maximum fee for the services is not to exceed
$100,000, excluding taxes. The agreement lasts until the project is completed,
unless either party terminates it earlier.
Business Planning and Consulting Services Contracts. Pursuant to a special
service contract dated as of October 8, 1999, CHR Solutions provides us with
business planning and consulting services and a feasibility study for selected
areas of Wisconsin for a fixed fee of $81,000. The agreement lasts until the
project is completed, unless either party terminates it earlier.
We have entered into an additional special service contract with CHR
Solutions dated as of October 8, 1999. Pursuant to this contract, CHR Solutions
provides us with business planning and consulting services and a feasibility
study for additional selected areas in our territory. We pay CHR Solutions
hourly rates for the employees who work on the project as well as the employees'
associated expenses. We also pay CHR Solutions for the costs of computer usage.
The hourly rates and computer usage costs are reviewed and modified by mutual
agreement annually until completion of the services or termination of the
agreement. The estimated probable cost of the services is $200,000, excluding
taxes. The agreement lasts until the project is completed, unless either party
terminates it earlier.
Radio Frequency "Drive Testing" Contract. Pursuant to a special service
contract dated as of October 8, 1999, CHR Solutions provides us with "drive
testing" to predict the radio frequency propagation characteristics of given
areas. We pay CHR Solutions hourly rates for the employees who work on the
project as well as the employees' associated expenses. We also pay CHR Solutions
for the costs of computer usage. The hourly rates and computer usage costs are
reviewed and modified by mutual agreement annually until completion of the
services or termination of the agreement. The estimated
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<PAGE> 45
probable cost of the services is $62,085, excluding taxes. The agreement lasts
until the project is completed, unless either party terminates it earlier.
PRODUCTS AND SERVICES
We offer established products and services throughout our territory under
the Sprint and Sprint PCS brand names. Our products and services are designed to
mirror the service offerings of Sprint PCS and to integrate with the Sprint PCS
network. The Sprint PCS service packages we currently offer include the
following:
100% DIGITAL WIRELESS NETWORK WITH NATIONAL SERVICE
We are part of the largest 100% digital wireless personal communications
services network in the nation. Sprint PCS customers based in our territory may
access Sprint PCS services throughout the Sprint PCS national network, which
includes more than 4,000 cities and communities across the United States.
Dual-band/dual-mode handsets allow roaming on wireless networks where Sprint PCS
has roaming agreements.
ACCESS TO THE SPRINT PCS WIRELESS WEB
We support the recently announced Sprint PCS Wireless Web offer in our
portion of the Sprint PCS network. The Sprint PCS Wireless Web allows customers
with data capable handsets to connect their portable computers or personal
digital assistants to the Internet. Sprint PCS customers with data capable
handsets also have the ability to receive periodic information updates such as
stock prices, sports scores and weather reports. Sprint PCS customers with
web-browser enabled handsets have the ability to connect to and browse specially
designed text-based Internet sites on an interactive basis. Sprint PCS has
agreements with Internet providers including Yahoo!, Bloomberg.com, CNN
Interactive, Amazon.com, AmeriTrade.com, MapQuest.com and Weather.com to provide
services for the Sprint PCS Wireless Web. Sprint PCS offers various pricing
options including a fixed number of updates or a bundle of data minutes as
add-ons to existing Sprint PCS "Free and Clear" plans or a bundle of minutes for
a set price that can be used for either data or voice.
PRICING AND FEATURES
Sprint PCS's consumer pricing plans are typically structured with:
- monthly recurring charges;
- large local calling areas;
- bundles of minutes; and
- service features such as voicemail, caller ID, call waiting, call
forwarding and three-way calling.
The increased capacity of code division multiple access technology allows
us to market high usage customer plans at per minute rates lower than analog
cellular and certain digital providers. All of Sprint PCS's current national
plans:
- include minutes on any portion of the Sprint PCS network with no roaming
charges for the customer;
- offer advanced features and generally require no long-term contracts;
- offer a selection of handsets to meet the needs of individual consumers
and businesses;
- provide a limited-time money back guarantee on Sprint PCS handsets; and
- provide the first incoming minute free.
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In addition, Sprint PCS's "Free and Clear" calling plans include free long
distance calling from anywhere on its national network to anywhere in the United
States.
ADVANCED HANDSETS
We offer a selection of single and dual-band handsets with various advanced
features and technology, such as Internet readiness described in "-- Access to
the Sprint PCS Wireless Web" above. All handsets are sold under the Sprint and
Sprint PCS brand names and are equipped with preprogrammed features such as:
- caller ID;
- call waiting;
- phone books;
- speed dial; and
- last number redial.
Code division multiple access single-band/single-mode handsets weighing
approximately 5 - 7 ounces offer up to five days of standby time and
approximately four hours of talk time. We also offer dual-band/ dual-mode
handsets that allow customers to make and receive calls on both wireless
personal communications services and cellular frequency bands with the
applicable digital or analog technology. These handsets allow roaming on
cellular networks where Sprint PCS digital service is not available.
PRIVACY AND SECURITY
Sprint PCS provides voice transmissions encoded into a digital format with
a significantly lower risk of cloning and eavesdropping than on analog-based
systems. Sprint PCS customers using dual-band/dual-mode handsets in analog mode
do not have the benefit of digital security.
SIMPLE ACTIVATION
Customers can purchase a Sprint PCS handset at a retail location and
activate their service and program the handset by calling Sprint PCS customer
care.
CUSTOMER CARE
Sprint PCS provides customer care services to customers based in our
territory under our services agreement. Sprint PCS offers customer care 24 hours
a day, seven days a week. Customers can call the Sprint PCS toll-free customer
care number from anywhere in the country. All Sprint PCS handsets are
preprogrammed with a speed dial feature that allows customers to easily reach
customer care at any time.
OTHER SERVICES
In addition to these services, we may also offer wireless local loop
services in our territory, but only where Sprint is not a local exchange
carrier. Wireless local loop is a wireless substitute for the landline-based
telephones in homes and businesses. We also believe that new features and
services will be developed on the Sprint PCS national network to take advantage
of code division multiple access technology. Sprint PCS conducts ongoing
research and development to produce innovative services that are intended to
give Sprint PCS a competitive advantage. We may incur additional expenses in
modifying our technology to provide these additional features and services.
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ROAMING
SPRINT PCS ROAMING
Sprint PCS roaming includes both inbound Sprint PCS roaming, when a Sprint
PCS subscriber based outside of our territory uses our portion of the Sprint PCS
network, and outbound Sprint PCS roaming, when a Sprint PCS subscriber based in
our territory uses the Sprint PCS network outside of our territory. Sprint PCS
pays us a per minute fee for inbound Sprint PCS roaming. Similarly, we pay a per
minute fee to Sprint PCS for outbound Sprint PCS roaming. Pursuant to our
affiliation agreements with Sprint PCS, Sprint PCS has the discretion to change
the per minute rate for Sprint PCS roaming fees. Because we serve smaller
markets adjacent to larger metropolitan areas, we believe inbound Sprint PCS
roaming will exceed outbound Sprint PCS roaming. See "Risk Factors -- Risks
Particular to Alamosa -- We may not receive as much Sprint PCS roaming revenue
as we anticipate."
NON-SPRINT PCS ROAMING
Non-Sprint PCS roaming includes both inbound non-Sprint PCS roaming, when a
non-Sprint PCS subscriber uses our portion of the Sprint PCS network, and
outbound non-Sprint PCS roaming, when a Sprint PCS subscriber based in our
territory uses a non-Sprint PCS network. Pursuant to roaming agreements between
Sprint PCS and other wireless service providers, when another wireless service
provider's subscriber uses our portion of the Sprint PCS network, we earn
inbound non-Sprint PCS roaming revenue. These wireless service providers must
pay fees for their subscribers' use of our portion of the Sprint PCS network,
and as part of our collected revenues, we are entitled to 92% of these fees.
Currently, pursuant to our services agreement with Sprint PCS, Sprint PCS bills
these wireless service providers for these fees. When another wireless service
provider provides service to one of the Sprint PCS subscribers based in our
territory, we pay outbound non-Sprint PCS roaming fees directly to that
provider. Sprint PCS, pursuant to our current services agreement with Sprint
PCS, then bills the Sprint PCS subscriber for use of that provider's network at
rates specified in his or her contract and pays us 100% of this outbound
non-Sprint PCS roaming revenue collected from that subscriber on a monthly
basis. As a result, we retain the collection risk for outbound non-Sprint PCS
roaming fees incurred by the subscribers based in our territory.
MARKETING STRATEGY
Our marketing strategy is to complement Sprint PCS's national marketing
strategies with techniques tailored to each of the specific markets in our
territory.
USE SPRINT PCS'S BRAND EQUITY
We feature exclusively and prominently the nationally recognized Sprint and
Sprint PCS brand names in our marketing and sales effort. From the customers'
point of view, they use our portion of the Sprint PCS network and the rest of
the Sprint PCS network as a unified national network.
ADVERTISING AND PROMOTIONS
Sprint PCS uses national as well as regional television, radio, print,
outdoor and other advertising campaigns to promote its products. We benefit from
the national advertising at minimal costs to us. In addition to Sprint PCS's
national advertising campaigns, we advertise and promote Sprint PCS products and
services on a local level in our markets at our cost. We have the right to use
any promotion or advertising materials developed by Sprint PCS and only have to
pay the incremental cost of using those materials, such as the cost of local
radio and television advertisement placements, advertisement production and
material costs and incremental printing costs. We also benefit from any
advertising or promotion of Sprint PCS products and services by third party
retailers in our territory, such as RadioShack, Circuit City and Best Buy. We
must pay the cost of specialized Sprint PCS print advertising by third party
retailers. Sprint PCS also runs numerous promotional campaigns which provide
customers with benefits such as additional features at the same rate or free
minutes of use for limited time periods. We offer these promotional campaigns to
potential customers in our territory.
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SPONSORSHIPS
Sprint PCS is a sponsor of numerous national, regional and local events.
These sponsorships provide Sprint PCS with brand name and product recognition in
high profile events and provide a forum for sales and promotions. Additionally,
we have been a sponsor for events and activities in our territory such as:
- the Albuquerque Balloon Fest;
- the Western Professional Hockey League;
- minor league baseball teams;
- local school programs;
- March of Dimes; and
- other charity events.
BUNDLING OF SERVICES
We expect to take advantage of the complete array of communications
services offered by Sprint PCS and Sprint, which may include bundling wireless
personal communications services with other Sprint products, such as long
distance and Internet access.
SALES FORCE WITH LOCAL PRESENCE
We have established local sales forces to execute our marketing strategy
through direct business-to-business contacts, our company-owned retail stores,
local distributors and other channels. In addition, we have targeted
maquiladoras, which are factories with locations on both sides of the border,
and the numerous college campuses in our territory. Our market teams also
participate in local clubs and civic organizations such as the Chamber of
Commerce, Rotary and Kiwanis.
SALES AND DISTRIBUTION
Our sales and distribution plan is designed to exploit Sprint PCS's
multiple channel sales and distribution plan and to enhance it through the
development of local distribution channels. Key elements of our sales and
distribution plan consist of the following:
SPRINT PCS RETAIL STORES
As of December 31, 1999, we owned and operated ten Sprint PCS stores. These
stores provide us with a local presence and visibility in the markets within our
territory. Following the Sprint PCS model, these stores are designed to
facilitate retail sales, activation, bill collection and customer service,
although we currently do not have direct electronic access to Sprint PCS
customer care at these stores. We plan to add 17 new stores by year-end 2000 and
another five new stores by year-end 2001.
SPRINT STORE WITHIN A RADIOSHACK STORE
Sprint has an exclusive arrangement with RadioShack to install a "store
within a store," making Sprint PCS the exclusive brand of wireless personal
communications services and products sold through RadioShack stores. RadioShack
has approximately 165 stores in our territory.
OTHER NATIONAL THIRD PARTY RETAIL STORES
In addition to RadioShack, we benefit from the distribution agreements
established by Sprint PCS with other national and regional retailers which
currently include:
- Best Buy;
- Circuit City;
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- Office Depot;
- Office Max;
- Dillards;
- The Sharper Image;
- Montgomery Ward;
- Ritz Camera;
- K-Mart;
- Sam's Wholesale Clubs; and
- selected May Company department stores.
These retailers have approximately 118 stores in our territory.
NATIONAL ACCOUNTS AND DIRECT SELLING
We participate in Sprint PCS's national accounts program. Sprint PCS has a
national accounts team which focuses on the corporate headquarters of large
companies. Once a representative reaches an agreement with the corporate
headquarters, we service the offices of that corporation located in our
territory. Our direct sales force targets the employees of these corporations in
our territory and contacts other local business clients.
TELEMARKETING
Sprint PCS provides telemarketing sales when customers call from our
territory. As the exclusive provider of Sprint PCS products and services in our
market, we will benefit from the national Sprint PCS 1-800-480-4PCS number
campaigns that generate call-in leads. These leads are then handled by Sprint
PCS's inbound telemarketing group.
ELECTRONIC COMMERCE
Sprint PCS maintains an Internet site, www.sprintpcs.com, which contains
information on Sprint PCS products and services. A visitor to Sprint PCS's
Internet site can order and pay for a handset and select a rate plan. Sprint PCS
customers visiting the site can review the status of their account, including
the number of minutes used in the current billing cycle. We will recognize the
revenues generated by Sprint PCS customers in our territory who purchase
products and services over the Sprint PCS Internet site.
TECHNOLOGY
GENERAL
In the commercial wireless communication industry there are two principal
services licensed by the Federal Communications Commission for transmitting
two-way, real time voice and data signals: "cellular" and wireless "personal
communications services." In addition, enhanced specialized mobile radio
service, a new but not yet widely used technology, also allows for
interconnected two-way real time voice and data services. The Federal
Communications Commission licenses these applications, each of which operates in
a distinct radio frequency block. Cellular, which uses the 800 MHz frequency
block, was the original form of widely-used commercial wireless voice
communications. Cellular systems are predominantly analog-based, but over the
last several years cellular operators have started to use digital service in the
800 MHz frequency block. Digital services have been deployed, as a complement to
the analog based services, in most of the major metropolitan markets.
In 1993, the Federal Communications Commission allocated the 1900 MHz
frequency block of the radio spectrum for wireless personal communications
services. Wireless personal communications services differ from traditional
analog cellular telephone service principally in that wireless personal
communications services systems operate at a higher frequency and employ
advanced digital technology.
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Analog-based systems send signals in which the transmitted signal resembles the
input signal, the caller's voice. Digital systems convert voice or data signals
into a stream of digits that permit a single radio channel to carry multiple
simultaneous transmissions. Digital systems also achieve greater frequency reuse
than analog systems resulting in greater capacity than analog systems. This
enhanced capacity, along with enhancements in digital protocols, allows
digital-based wireless technologies, whether using wireless personal
communications services or cellular frequencies, to offer new and enhanced
services, such as greater call privacy and more robust data transmission, such
as facsimile, electronic mail and connecting notebook computers with
computer/data networks.
Wireless communications systems, whether wireless personal communications
services or cellular, are divided into multiple geographic coverage areas, known
as "cells." In both wireless personal communications services and cellular
systems, each cell contains a transmitter, a receiver and signaling equipment,
known as the "base station." The base station is connected by microwave or
landline telephone lines to a switch that uses computers to control the
operation of the cellular or wireless personal communications services system.
The system:
- controls the transfer of calls from cell to cell as a subscriber's
handset travels;
- coordinates calls to and from handsets;
- allocates calls among the cells within the system; and
- connects calls to the local landline telephone system or to a long
distance carrier.
Wireless communications providers establish interconnection agreements with
local exchange carriers and interexchange carriers, thereby integrating their
system with the existing landline communications system. Because the signal
strength of a transmission between a handset and a base station declines as the
handset moves away from the base station, the switching office and the base
station monitor the signal strength of calls in progress. When the signal
strength of a call declines to a predetermined level, the switching office may
"hand off" the call to another base station where the signal strength is
stronger.
Wireless digital signal transmission is accomplished through the use of
various forms of frequency management technology or "air interface protocols."
The Federal Communications Commission has not mandated a universal air interface
protocol for wireless personal communications services systems. Wireless
personal communications systems operate under one of three principal air
interface protocols, code division multiple access, time division multiple
access, commonly referred to as TDMA, or global system for mobile
communications, commonly referred to as GSM. Time division multiple access and
global system for mobile communications are both time division multiple access
systems but are incompatible with each other. The code division multiple access
system is incompatible with both global system for mobile communications and
time division multiple access systems. Accordingly, a subscriber of a system
that utilizes code division multiple access technology is unable to use a code
division multiple access handset when traveling in an area not served by code
division multiple access-based wireless personal communications services
operators, unless the customer carries a dual-band/dual-mode handset that
permits the customer to use the analog cellular system in that area. The same
issue would apply to users of time division multiple access or global system for
mobile communications systems. All of the wireless personal communications
services operators now have dual-mode or tri-mode handsets available to their
customers. Because digital networks do not cover all areas in the country, these
handsets will remain necessary for segments of the subscriber base.
CODE DIVISION MULTIPLE ACCESS TECHNOLOGY
Sprint PCS's national network and its affiliates' networks all use digital
code division multiple access technology. We believe that code division multiple
access provides important system performance benefits such as:
Greater capacity. We believe, based on studies by code division multiple
access manufacturers, that code division multiple access systems can provide
system capacity that is approximately seven to ten times
47
<PAGE> 51
greater than that of current analog technology and approximately three times
greater than time division multiple access and global system for mobile
communications systems.
Privacy and security. One of the benefits of code division multiple access
technology is that it combines a constantly changing coding scheme with a low
power signal to enhance call security and privacy.
Soft hand-off. Code division multiple access systems transfer calls
throughout the code division multiple access network using a technique referred
to as a soft hand-off, which connects a mobile customer's call with a new base
station while maintaining a connection with the base station currently in use.
Code division multiple access networks monitor the quality of the transmission
received by multiple base stations simultaneously to select a better
transmission path and to ensure that the network does not disconnect the call in
one cell unless replaced by a stronger signal from another base station. Analog,
time division multiple access and global system for mobile communications
networks use a "hard hand-off" and disconnect the call from the current base
station as it connects with a new one without any simultaneous connection to
both base stations.
Simplified frequency planning. Frequency planning is the process used to
analyze and test alternative patterns of frequency use within a wireless network
to minimize interference and maximize capacity. Unlike time division multiple
access and global system for mobile communications based systems, code division
multiple access based systems can reuse the same subset of allocated frequencies
in every cell, substantially reducing the need for costly frequency reuse
patterning and constant frequency plan management.
Longer battery life. Due to their greater efficiency in power consumption,
code division multiple access handsets can provide longer standby time and more
talk time availability when used in the digital mode than handsets using
alternative digital or analog technologies.
While code division multiple access has the inherent benefits discussed
above, time division multiple access networks are generally less expensive when
overlaying existing analog systems since the time division multiple access
spectrum usage is more compatible with analog spectrum planning. In addition,
global system for mobile communications technology, unlike code division
multiple access, allows multi-vendor equipment to be used in the same network.
This, along with the fact that the global system for mobile communications
technology is currently more widely used throughout the world than code division
multiple access, provides economies of scale for handset and equipment
purchases. A standards process is also underway which will allow wireless
handsets to support analog, time division multiple access and global system for
mobile communications technologies in a single unit. Currently, there are no
plans to have code division multiple access handsets that support either the
time division multiple access or global system for mobile communications
technologies.
COMPETITION
Competition in the wireless communications services industry is intense. We
compete with a number of wireless service providers in our markets. We believe
that our primary competition is with national wireless providers such as:
- Nextel Communications, Inc.;
- AT&T Wireless Services, Inc.;
- the company that will result from the pending merger between Bell
Atlantic Corp. and GTE Corp.; and
- Bell Atlantic Corp.-GTE Corp.'s recently announced partnership with
Vodafone AirTouch Plc.
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We also compete with regional wireless providers. The principal regional
wireless competitors are:
- the company that will result from the pending merger between SBC
Communications Inc. and Ameritech Corporation;
- VoiceStream Wireless; and
- United States Cellular Corporation.
Furthermore, a number of wireless service providers compete with us on a
local basis, such as:
- Airadigm Communications;
- Poka Lambro PCS, Inc.; and
- Amarillo CellTelCo.
We also face competition from resellers, which provide wireless services to
customers but do not hold Federal Communications Commission licenses or own
facilities. Instead, the resellers buy blocks of wireless telephone numbers and
capacity from a licensed carrier and resell services through their own
distribution network to the public. The Federal Communications Commission
currently requires all cellular and wireless personal communications services
licensees to permit resale of carrier services to a reseller.
In addition, we compete with existing communications technologies such as
paging, enhanced specialized mobile radio service dispatch and conventional
landline telephone companies in our markets. Potential users of wireless
personal communications services systems may find their communications needs
satisfied by other current and developing technologies. One or two-way paging or
beeper services that feature voice messaging and data display as well as
tone-only service may be adequate for potential customers who do not need to
speak to the caller.
In the future, we expect to face increased competition from entities
providing similar services using other communications technologies, including
satellite-based telecommunications and wireless cable systems. While some of
these technologies and services are currently operational, others are being
developed or may be developed in the future.
Many of our competitors have access to more licensed spectrum than the 10
MHz licensed to Sprint PCS in New Mexico and Durango and the 20MHz licensed to
Sprint PCS in El Paso. Among other things, increased spectrum allows for higher
call volume and fewer dropped calls. Cellular service providers have licenses
covering 25 MHz of spectrum, and three competing wireless personal
communications services providers have licenses to use 30 MHz in New Mexico.
Except for New Mexico (10 MHz), Durango (10 MHz) and El Paso (20 MHz), Sprint
PCS has licenses to use 30 MHz of spectrum throughout our territory.
Many of our competitors have significantly greater financial and technical
resources and subscriber bases than we do. Some of our competitors also have
established infrastructures, marketing programs and brand names. In addition,
some of our competitors may be able to offer regional coverage in areas not
served by the Sprint PCS network, or, because of their calling volumes or
relationships with other wireless providers, may be able to offer regional
roaming rates that are lower than those we offer. Wireless personal
communications services operators will likely compete with us in providing some
or all of the services available through the Sprint PCS network and may provide
services that we do not. Additionally, we expect that existing cellular
providers will continue to upgrade their systems to provide digital wireless
communication services competitive with Sprint PCS. Recently, there has been a
trend in the wireless communications industry towards consolidation of wireless
service providers through joint ventures, mergers and acquisitions. We expect
this consolidation to lead to larger competitors over time. These larger
competitors may have substantial resources or may be able to offer a variety of
services to a large customer base.
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Over the past several years the Federal Communications Commission has
auctioned and will continue to auction large amounts of wireless spectrum that
could be used to compete with Sprint PCS services. Based upon increased
competition, we anticipate that market prices for two-way wireless services
generally will decline in the future. We will compete to attract and retain
customers principally on the basis of:
- the strength of the Sprint and Sprint PCS brand names, services and
features;
- the size of our territory;
- the location of our markets;
- our network coverage and reliability;
- customer care; and
- pricing.
Our ability to compete successfully will also depend, in part, on our ability to
anticipate and respond to various competitive factors affecting the industry,
including:
- new services and technologies that may be introduced;
- changes in consumer preferences;
- demographic trends;
- economic conditions; and
- discount pricing strategies by competitors.
INTELLECTUAL PROPERTY
The Sprint diamond design logo is a service mark registered with the United
States Patent and Trademark Office. The service mark is owned by Sprint. We use
the Sprint and Sprint PCS brand names, the Sprint diamond design logo and other
service marks of Sprint in connection with marketing and providing wireless
services within our territory. Under the terms of the trademark and service mark
license agreements with Sprint and Sprint PCS, we do not pay a royalty fee for
the use of the Sprint and Sprint PCS brand names and Sprint service marks.
Except in certain instances and other than in connection with the national
distribution agreements, Sprint PCS has agreed not to grant to any other person
a right or license to use the licensed marks in our territory. In all other
instances, Sprint PCS reserves the right to use the licensed marks in providing
its services within or without our territory.
The trademark license agreements contain numerous restrictions with respect
to the use and modification of any of the licensed marks. See "Our Affiliation
Agreements with Sprint PCS -- The Trademark and Service Mark License Agreements"
for more information on this topic.
EMPLOYEES
As of November 30, 1999, we employed 160 full-time employees. None of our
employees are represented by a labor union. We believe that our relations with
our employees are good.
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PROPERTIES
Our headquarters are located in Lubbock, Texas and we lease space in a
number of locations, primarily for our Sprint PCS stores, base stations and
switching centers. As of September 30, 1999, we leased space on 229 towers and
owned four towers. We collocate with other wireless service providers on
approximately 40% of our towers. As of September 30, 1999, our material leased
properties were as listed below:
<TABLE>
<CAPTION>
PURPOSE LOCATION SQUARE FEET LEASE TERM
- ------- -------- ----------- ----------
<S> <C> <C> <C>
Switching Center Albuquerque, New Mexico 3,120 Five years beginning on
January 1, 1999 and ending on
December 31, 2004 with two
five-year renewal options
Retail Store and Switching
Center Laredo, Texas 5,000 Five years beginning on
February 1, 1999 and ending
on January 31, 2004 with two
five-year renewal options
Retail Store and Regional
Office Space Lubbock, Texas 8,000 15 years beginning on July 1,
1999
Retail Store, Switching
Center and Office Space El Paso, Texas 11,970 Ten years and two months
beginning on February 1, 1999
and ending on March 31, 2009
Retail Store and Office Space Albuquerque, New Mexico 9,000 Seven years beginning on July
1, 1999 and ending on June
30, 2006
Retail Store, Switching
Center and Corporate Office
Space Lubbock, Texas 11,011 Ten years beginning on June
1, 1999
Retail Store and Office Space Abilene, Texas 3,200 Five years and five months
beginning on October 15, 1999
and ending on March 14, 2005
with one five year renewal
option
Retail Store and Office Space Amarillo, Texas 6,840 Five years beginning on June
1, 1999 and ending on May 31,
2004 with one five year
renewal option
Retail Store and Office Space Las Cruces, New Mexico 1,020 Five years beginning on June
1, 1999 and ending on May 31,
2004 with one five year
renewal option
Retail Store and Office Space Midland, Texas 3,628 Five years beginning on May
1, 1999 and ending on April
30, 2004 with one five year
renewal option
Retail Store and Office Space Odessa, Texas 3,000 Five years beginning on June
1, 1999 and ending on May 31,
2004 with one five year
renewal option
Retail Store and Office Space San Angelo, Texas 3,782 Five years beginning on
October 1, 1999 and ending on
September 30, 2004
Retail Store and Office Space Santa Fe, New Mexico 2,415 Five years beginning on
August 1, 1999 and ending on
July 31, 2004 with one five
year renewal option
</TABLE>
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LEGAL PROCEEDINGS
We are not a party to any pending legal proceedings that we believe would,
if adversely determined, individually or in the aggregate, have a material
adverse effect on our financial condition or results of operations.
ENVIRONMENTAL COMPLIANCE
Our environmental compliance expenditures primarily result from the
operation of standby power generators for our telecommunications equipment and
compliance with various environmental rules during network build-out and
operations. The expenditures arise in connection with standards compliance or
permits which are usually related to generators, batteries or fuel storage. Our
environmental compliance expenditures have not been material to our financial
statements or to our operations and are not expected to be material in the
future.
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OUR AFFILIATION AGREEMENTS WITH SPRINT PCS
Our four major agreements with Sprint and Sprint PCS, are:
- the management agreement;
- the services agreement; and
- two trademark and service mark license agreements with different Sprint
entities.
The following is a description of the material terms and provisions of our
affiliation agreements with Sprint PCS and the consent and agreement with Nortel
modifying the Sprint PCS management agreement. We have filed the text of our
affiliation agreements with Sprint PCS and the consent and agreement as exhibits
to the registration statement of which this prospectus is a part.
Under our affiliation agreements with Sprint PCS, we have the exclusive
right to provide wireless services under the Sprint and Sprint PCS brand names
in our territory. We have recently amended our affiliation agreements with
Sprint PCS to include additional markets in our territory. Sprint PCS holds the
spectrum licenses and controls the network through its agreements with us. Our
affiliation agreements with Sprint PCS require us to interface with the Sprint
PCS wireless network by building our portion of the Sprint PCS network to
operate on the 10, 20 or 30 MHz of wireless personal communications services
frequencies licensed to Sprint PCS in the 1900 MHz range. The management
agreement has an initial term of 20 years with three 10-year renewal options,
which would lengthen the contract to a total term of 50 years. The three 10-year
renewal terms automatically occur unless we or Sprint PCS provide the other with
two years prior written notice to terminate the agreements or unless we are in
material default of our obligations under the agreements.
In addition, we have entered into a consent and agreement with Sprint PCS
and Nortel that modifies the management agreement for the benefit of Nortel and
the holders of any refinancing of the Nortel indebtedness.
THE MANAGEMENT AGREEMENT
Under our management agreement with Sprint PCS, we have agreed to:
- own, construct and manage a wireless personal communications services
network in our territory in compliance with Federal Communications
Commission license requirements and other technical requirements
contained in the management agreement;
- distribute Sprint PCS products and services;
- use Sprint PCS's and our own distribution channels in our territory;
- conduct advertising and promotion activities in our territory; and
- manage that portion of Sprint PCS's customer base assigned to our
territory.
Sprint PCS will supervise our wireless personal communications services
network operations and has the right to unconditional access to our portion of
the Sprint PCS network, including the right to test and monitor any of our
facilities and equipment.
EXCLUSIVITY
We are designated as the only person or entity that can manage or operate a
wireless personal communications services network for Sprint PCS in our
territory. Sprint PCS is prohibited from owning, operating, building or managing
another wireless communications network in our territory while our management
agreement is in place and no event has occurred that would permit the agreement
to terminate. Sprint PCS is permitted to make national sales to companies in our
territory and, as required by the Federal Communications Commission, to permit
resale of the Sprint PCS products and services in our
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territory. The management agreement prohibits us from interfering with others
who resell Sprint PCS products and services in our territory. If Sprint PCS
decides to expand the geographic size of our build-out, Sprint PCS must provide
us with written notice of the proposed expansion. We have 90 days to determine
whether we will build-out the proposed area. If we do not exercise this right,
Sprint PCS can build-out the territory or permit a third party to do so.
NETWORK BUILD-OUT
The management agreement specifies the terms of the Sprint PCS affiliation,
including the required network build-out plan. We have agreed to cover a
specified percentage of the population within each of the markets which make up
our territory by specified dates. Our current build-out plan will satisfy the
network build-out requirements set forth in the management agreement. If
technically feasible and commercially reasonable, we have agreed to provide for
a seamless handoff of a call initiated in our territory to a neighboring Sprint
PCS network. The management agreement requires us to reimburse Sprint PCS
one-half of the microwave clearing costs for our territory.
PRODUCTS AND SERVICES
The management agreement identifies the products and services that we can
offer in our territory. These services include, but are not limited to, Sprint
PCS consumer and business products and services available as of the date of the
agreement, or as modified by Sprint PCS. We are allowed to sell wireless
products and services that are not Sprint PCS products and services if those
additional products and services do not cause distribution channel conflicts or,
in Sprint PCS's sole determination, consumer confusion with Sprint PCS's
products and services. We also cannot sell non-Sprint PCS products and services
if it would hamper our build-out of the network. We may also sell services such
as specified types of long distance service, Internet access, handsets, and
prepaid phone cards with Sprint, Sprint PCS and other Sprint PCS affiliates. If
we decide to use third parties to provide these services, we must give Sprint
PCS an opportunity to provide the services on the same terms and conditions. We
cannot offer wireless local loop services specifically designed for the
competitive local exchange market in areas where Sprint owns the local exchange
carrier unless we name the Sprint-owned local exchange carrier as the exclusive
distributor or Sprint PCS approves the terms and conditions. Sprint does not own
the local exchange carrier in a majority of the markets in our territory.
NATIONAL SALES PROGRAMS
We must participate in the Sprint PCS sales programs for national sales to
customers, and will pay the expenses and receive the compensation from Sprint
PCS sales to national accounts located in our territory. We must use Sprint's
long distance service, which we can buy at the best prices offered to comparably
situated Sprint customers.
SERVICE PRICING, ROAMING AND FEES
We must offer Sprint PCS subscriber pricing plans designated for regional
or national offerings, including Sprint PCS's "Free and Clear" plans. We are
permitted to establish our own local price plans for Sprint PCS's products and
services offered only in our territory, subject to Sprint PCS's approval. We are
entitled to receive a weekly fee from Sprint PCS equal to 92% of "collected
revenues" for all obligations under the management agreement, adjusted by the
cost of customer services provided by Sprint PCS. "Collected revenues" include
revenue from Sprint PCS subscribers based in our territory and inbound non-
Sprint PCS roaming. Sprint PCS will retain 8% of the collected revenues.
Outbound non-Sprint PCS roaming revenue, inbound and outbound Sprint PCS roaming
fees, proceeds from the sales of handsets and accessories, proceeds from sales
not in the ordinary course of business and amounts collected with respect to
taxes are not considered collected revenues. Except in the case of taxes, we
will retain 100% of these revenues. Many Sprint PCS subscribers purchase bundled
pricing plans that allow Sprint PCS roaming anywhere on the Sprint PCS network
without incremental Sprint PCS roaming charges. However, we will earn Sprint PCS
roaming revenue for every minute that a Sprint PCS subscriber from outside our
territory
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enters our territory and uses our services. We will earn revenue from Sprint PCS
based on a per minute rate established by Sprint PCS when Sprint PCS's or its
affiliates' subscribers roam on our portion of the Sprint PCS network.
Similarly, we will pay the same rate for every minute Sprint PCS subscribers who
are based in our territory use the Sprint PCS network outside our territory. The
analog roaming rate onto a non-Sprint PCS provider's network is set under Sprint
PCS's third party roaming agreements.
VENDOR PURCHASE AGREEMENTS
We may participate in discounted volume-based pricing on wireless-related
products and warranties Sprint PCS receives from its vendors. Sprint PCS will
use commercially reasonable efforts to obtain for us the same prices as Sprint
PCS receives from its vendors.
ADVERTISING AND PROMOTIONS
Sprint PCS uses national as well as regional television, radio, print,
outdoor and other advertising campaigns to promote its products. We benefit from
the national advertising at no additional cost to us. In addition to Sprint
PCS's national advertising campaigns, we advertise and promote Sprint PCS
products and services on a local level in our markets at our cost. We have the
right to use any promotion or advertising materials developed by Sprint PCS and
only have to pay the incremental cost of using those materials, such as the cost
of local radio and television advertisement placements and incremental printing
costs. Sprint PCS also runs numerous promotional campaigns which provide
customers with benefits such as additional features at the same rate or free
minutes of use for limited time periods. We offer these promotional campaigns to
potential customers in our territory.
PROGRAM REQUIREMENTS
We must comply with Sprint PCS's program requirements for technical
standards, customer service standards, roaming coverage and national and
regional distribution and national accounts programs. Sprint PCS can adjust the
program requirements at any time. We have the right to appeal to management of
Sprint PCS if adjustments to program requirements will: (1) cause us to incur a
cost exceeding 5% of the sum of our stockholders' equity plus our outstanding
long term debt, or (2) cause our operating expenses on a per-unit basis using a
ten year time frame to increase by more than 10% on a net present value basis.
If Sprint PCS denies our appeal and we fail to comply with the program
adjustment, Sprint PCS has the termination rights described below.
NON-COMPETITION
We may not offer Sprint PCS products and services outside our territory
without the prior written approval of Sprint PCS. Within our territory we may
offer, market or promote telecommunications products and services only under the
Sprint PCS brands, our own brand, brands of related parties of ours or other
products and services approved under the management agreement, except that no
brand of a significant competitor of Sprint PCS or its related parties may be
used for those products and services. To the extent we have or obtain licenses
to provide wireless personal communications services outside our territory, we
may not use the spectrum to offer Sprint PCS products and services without prior
written consent from Sprint PCS.
INABILITY TO USE NON-SPRINT PCS BRAND
We may not market, promote, advertise, distribute, lease or sell any of the
Sprint PCS products and services on a non-branded, "private label" basis or
under any brand, trademark or trade name other than the Sprint PCS brand, except
for sales to resellers or as otherwise permitted under the trademark and service
mark license agreements.
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TRANSFER OF SPRINT PCS NETWORK
Sprint PCS can sell, transfer or assign its wireless personal
communications services network to a third party if the third party agrees to be
bound by the terms of the management agreement and the services agreement.
CHANGE IN CONTROL
Sprint PCS must approve a change in control of Alamosa, but this consent
cannot be unreasonably withheld.
RIGHTS OF FIRST REFUSAL
Sprint PCS has rights of first refusal, without further stockholder
approval, to buy our assets upon a proposed sale of all or substantially all of
our assets used in the operation of our portion of the Sprint PCS network.
TERMINATION OF MANAGEMENT AGREEMENT
The management agreement can be terminated as a result of the following
events:
- termination of Sprint PCS's spectrum licenses;
- an uncured breach under the management agreement;
- bankruptcy of a party to the management agreement;
- the management agreement not complying with any applicable law in any
material respect; or
- the termination of either of the trademark and service mark license
agreements.
The termination or non-renewal of the management agreement triggers some of
our rights and those of Sprint PCS. The right of either party to require the
other to purchase or sell the operating assets is discussed below.
If we have the right to terminate the management agreement because of an
event of termination caused by Sprint PCS, generally we may:
- require Sprint PCS to purchase all of our operating assets used in
connection with our portion of the Sprint PCS network for an amount equal
to at least 80% of our Entire Business Value as defined below;
- in all areas in our territory where Sprint PCS is the licensee for 20 MHz
or more of the spectrum on the date we terminate the management
agreement, require Sprint PCS to assign to us, subject to governmental
approval, up to 10 MHz of licensed spectrum for an amount equal to the
greater of (1) the original cost to Sprint PCS of the license plus any
microwave clearing costs paid by Sprint PCS or (2) 9% of our Entire
Business Value; or
- choose not to terminate the management agreement and sue Sprint PCS for
damages or submit the matter to arbitration.
See "Business -- Markets and Network Build-Out Plan" for a listing of our
markets in which Sprint PCS is currently the licensee for 20 MHz or more of the
spectrum.
If Sprint PCS has the right to terminate the management agreement because
of an event of termination caused by us, generally Sprint PCS may:
- require us, without further stockholder approval, to sell our operating
assets to Sprint PCS for an amount equal to 72% of our Entire Business
Value;
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- require us to purchase, subject to governmental approval, the licensed
spectrum in our territory for an amount equal to the greater of (1) the
original cost to Sprint PCS of the license plus any microwave relocation
costs paid by Sprint PCS or (2) 10% of our Entire Business Value;
- take any action as Sprint PCS deems necessary to cure our breach of the
management agreement, including assuming responsibility for, and
operating, our portion of the Sprint PCS network; or
- not terminate the management agreement and sue us for damages or submit
the matter to arbitration.
NON-RENEWAL
If Sprint PCS gives us timely notice that it does not intend to renew the
management agreement, we may:
- require Sprint PCS to purchase all of our operating assets used in
connection with our portion of the Sprint PCS network for an amount equal
to 80% of our Entire Business Value; or
- in all areas in our territory where Sprint PCS is the licensee for 20 MHz
or more of the spectrum on the date we terminate the management
agreement, require Sprint PCS to assign to us, subject to governmental
approval, up to 10 MHz of licensed spectrum for an amount equal to the
greater of (1) the original cost to Sprint PCS of the license plus any
microwave relocation costs paid by Sprint PCS or (2) 10% of our Entire
Business Value.
If we give Sprint PCS timely notice of non-renewal, or we both give notice
of non-renewal, or the management agreement expires with neither party giving a
written notice of non-renewal, or the management agreement can be terminated for
failure to comply with legal requirements or regulatory considerations, Sprint
PCS may:
- purchase all of our operating assets, without further stockholder
approval, for an amount equal to 80% of our Entire Business Value; or
- require us to purchase, subject to governmental approval, the licensed
spectrum in our territory for an amount equal to the greater of (1) the
original cost to Sprint PCS of the license plus any microwave clearing
costs paid by Sprint PCS or (2) 10% of our Entire Business Value.
See "Risk Factors -- Risks Related to our Relationship with Sprint
PCS -- Provisions of our affiliation agreements with Sprint PCS may diminish our
value and restrict the sale of our business" for a discussion of possible
effects of this part of the management agreement.
DETERMINATION OF ENTIRE BUSINESS VALUE
If the Entire Business Value is to be determined, we and Sprint PCS will
each select one independent appraiser and the two appraisers will select a third
appraiser. The three appraisers will determine the Entire Business Value on a
going concern basis using the following guidelines:
- the Entire Business Value is based on the price a willing buyer would pay
a willing seller for the entire on-going business;
- then-current customary means of valuing a wireless telecommunications
business will be used;
- the business is conducted under the Sprint and Sprint PCS brands and our
affiliation agreements with Sprint PCS;
- that we own the spectrum and frequencies presently owned by Sprint PCS
and subject to our affiliation agreements with Sprint PCS; and
- the valuation will not include any value for businesses not directly
related to the Sprint PCS products and services, and those businesses
will not be included in the sale.
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The rights and remedies of Sprint PCS outlined in the management agreement
resulting from an event of termination of the management agreement have been
materially amended by the consent and agreement as discussed below.
INSURANCE
We are required to obtain and maintain with financially reputable insurers
who are licensed to do business in all jurisdictions where any work is performed
under the management agreement and who are reasonably acceptable to Sprint PCS,
workers' compensation insurance, commercial general liability insurance,
business automobile insurance, umbrella excess liability insurance and "all
risk" property insurance.
INDEMNIFICATION
We have agreed to indemnify Sprint PCS and its directors, employees and
agents and related parties of Sprint PCS and their directors, employees and
agents against any and all claims against any of the foregoing arising from our
violation of any law, a breach by us of any representation, warranty or covenant
contained in the management agreement or any other agreement between us and
Sprint PCS, our ownership of the operating assets or the actions or the failure
to act of anyone employed or hired by us in the performance of any work under
this agreement, except we will not indemnify Sprint PCS for any claims arising
solely from the negligence or willful misconduct of Sprint PCS. Sprint PCS has
agreed to indemnify us and our directors, employees and agents against all
claims against any of the foregoing arising from Sprint PCS's violation of any
law and from Sprint PCS's breach of any representation, warranty or covenant
contained in this agreement or any other agreement between Sprint PCS and us,
except Sprint PCS will not indemnify us for any claims arising solely from our
negligence or willful misconduct.
DISPUTE RESOLUTION
If the parties cannot resolve any dispute between themselves and the
management agreement itself does not provide a remedy, then either party may
require that any dispute be resolved by a binding arbitration.
THE SERVICES AGREEMENT
The services agreement outlines various back office services provided by
Sprint PCS and available to us for an adjustment to our 92% fee. Sprint PCS can
change the amount of adjustment for any or all of the services one time in any
12 month period. We have the option to cancel a service upon notification of a
fee increase, and if we decide to cancel the service, then Sprint PCS, at our
option, must continue to provide that service for nine months at the original
price. Some of the available services include: billing, customer care,
activation, credit checks, handset logistics, home locator record, voice mail,
prepaid services, directory assistance, operator services, roaming fees, roaming
clearinghouse fees, interconnect fees and inter-territory fees. Sprint PCS
offers three packages of available services. Each package identifies which
services must be purchased from Sprint PCS and which may be purchased from a
vendor or provided in-house. Essentially, services such as billing, activation
and customer care must all be purchased from Sprint PCS or none may be purchased
from Sprint PCS. We have chosen to initially delegate the performance of these
services to Sprint PCS but may develop an independent capability with respect to
these services over time. Sprint PCS may contract with third parties to provide
expertise and services identical or similar to those to be made available or
provided to us. We have agreed not to use the services performed by Sprint PCS
in connection with any other business or outside our territory. We may
discontinue use of any service upon three months' prior written notice, while
Sprint PCS must give nine months notice if it will no longer offer any service.
We have agreed with Sprint PCS to indemnify each other as well as officers,
directors, employees and other related parties and their officers, directors and
employees for violations of law or the services agreement except for any
liabilities resulting from the negligence or willful misconduct of the person
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seeking to be indemnified or its representatives. The services agreement also
provides that no party to the agreement will be liable to the other party for
special, indirect, incidental, exemplary, consequential or punitive damages, or
loss of profits arising from the relationship of the parties or the conduct of
business under, or breach of, the services agreement except as may otherwise be
required by the indemnification provisions. The services agreement automatically
terminates upon termination of the management agreement, and neither party may
terminate the services agreement for any reason other than the termination of
the management agreement.
THE TRADEMARK AND SERVICE MARK LICENSE AGREEMENTS
We have non-transferable licenses to use, at no additional cost to us, the
Sprint and Sprint PCS brand names and "diamond" symbol, and several other U.S.
trademarks and service marks such as "The Clear Alternative to Cellular" and
"Clear Across the Nation" on Sprint PCS products and services. We believe that
the Sprint and Sprint PCS brand names and symbols enjoy a high degree of
awareness, providing us an immediate benefit in the market place. Our use of the
licensed marks is subject to our adherence to quality standards determined by
Sprint and Sprint PCS and use of the licensed marks in a manner which would not
reflect adversely on the image of quality symbolized by the licensed marks. We
have agreed to promptly notify Sprint and Sprint PCS of any infringement of any
of the licensed marks within our territory of which we become aware and to
provide assistance to Sprint and Sprint PCS in connection with Sprint's and
Sprint PCS's enforcement of their respective rights. We have agreed with Sprint
and Sprint PCS to indemnify each other for losses incurred in connection with a
material breach of the trademark license agreements. In addition, we have agreed
to indemnify Sprint and Sprint PCS from any loss suffered by reason of our use
of the licensed marks or marketing, promotion, advertisement, distribution,
lease or sale of any Sprint or Sprint PCS products and services other than
losses arising solely out of our use of the licensed marks in compliance with
certain guidelines.
Sprint and Sprint PCS can terminate the trademark and service mark license
agreements if we file for bankruptcy, materially breach the agreement or our
management agreement is terminated. We can terminate the trademark and service
mark license agreements upon Sprint's or Sprint PCS's abandonment of the
licensed marks or if Sprint or Sprint PCS files for bankruptcy or the management
agreement is terminated. However, Sprint and Sprint PCS can assign their
interests in the licensed marks to a third party if that third party agrees to
be bound by the terms of the trademark and service mark license agreements.
CONSENT AND AGREEMENT FOR THE BENEFIT OF THE HOLDER OF NORTEL FINANCING
Sprint PCS has entered into a consent and agreement with Nortel, which has
been acknowledged by Alamosa, that modifies Sprint PCS's rights and remedies
under our management agreement, for the benefit of Nortel and future holders of
the Nortel senior financing and any refinancing thereof, which was a condition
to the funding of any amounts under the Nortel financing.
The consent and agreement with Nortel generally provides, among other
things, the following:
- Sprint PCS's consent to the pledge of substantially all of our assets,
including our rights in our affiliation agreements with Sprint PCS;
- that our affiliation agreements with Sprint PCS may not be terminated by
Sprint PCS until the Nortel financing is satisfied in full pursuant to
the terms of the consent and agreement with Nortel, unless our
subsidiaries or assets are sold to a purchaser who does not continue to
operate the business as a Sprint PCS network, which sale requires the
approval of the administrative agent, who will initially be Nortel as
discussed in more detail in "Description of Our Indebtedness -- The
Nortel Credit Facility -- Syndication;"
- for Sprint PCS to maintain 10 MHz of wireless personal communications
services spectrum in all of our markets until the Nortel financing is
satisfied or our operating assets are sold after our default under the
Nortel financing;
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- for redirection of payments due to Alamosa under the management agreement
from Sprint PCS to the administrative agent during the continuation of
our default under the Nortel financing;
- for Sprint PCS and the administrative agent to provide to each other
notices of default by us under the Sprint PCS management agreement and
Nortel financing, respectively;
- the ability to appoint interim replacements, including Sprint PCS or a
designee of the administrative agent, to operate our portion of the
Sprint PCS network under our affiliation agreements with Sprint PCS after
an acceleration of our financing from Nortel or an event of termination
under our affiliation agreements with Sprint PCS;
- subject to certain requirements and limitations, the ability of the
administrative agent or Sprint PCS to assign our affiliation agreements
with Sprint PCS and sell our assets or the partnership interests of our
operating subsidiaries to a qualified purchaser that is not a major
competitor of Sprint PCS or Sprint, free of the restrictions on
assignment and change of control in the management agreement, if the
Nortel financing has been accelerated after our default; and
- subject to certain requirements and limitations, that if Sprint PCS
enters consent and agreement documents with similarly-situated lenders
that have provisions that are more favorable to the lender, Sprint PCS
will give the administrative agent written notice of the amendments and
will amend the consent and agreement with Nortel in the same manner at
the administrative agent's request.
SPRINT PCS'S RIGHT TO PURCHASE ON ACCELERATION OF AMOUNTS OUTSTANDING UNDER
THE NORTEL FINANCING
Subject to the requirements of applicable law, so long as the Nortel
financing remains outstanding, Sprint PCS has the right to purchase our
operating assets or the partnership interests of our operating subsidiaries,
upon its receipt of notice of an acceleration of the Nortel financing, under the
following terms:
- Sprint PCS elects to make such a purchase within a specified period;
- the purchase price is the greater of an amount equal to 72% of our Entire
Business Value or the amount we owe under the Nortel financing;
- if Sprint PCS has given notice of its intention to exercise the purchase
right, then the administrative agent is prohibited for a specified period
after the acceleration or until Sprint PCS rescinds its intention to
purchase, from enforcing its security interest; and
- if we receive a written offer that is acceptable to us to purchase our
operating assets or the partnership interests of our operating
subsidiaries after the acceleration, then Sprint PCS has the right to
purchase our operating assets or the partnership interests of our
operating subsidiaries on terms at least as favorable to us as the offer
we receive. Sprint PCS must agree to purchase the operating assets or the
partnership interests of our operating subsidiaries within 14 business
days of its receipt of the offer, on acceptable conditions, and in an
amount of time acceptable to us.
SALE OF OPERATING ASSETS OR THE PARTNERSHIP INTERESTS OF OUR OPERATING
SUBSIDIARIES TO THIRD PARTIES
If Sprint PCS does not purchase our operating assets or the partnership
interests of our operating subsidiaries after an acceleration of the obligations
under the Nortel financing, then the administrative agent may sell the operating
assets or partnership interests. Subject to the requirements of applicable law,
including the law relating to foreclosures of security interests, the
administrative agent has two options:
- to sell the assets or partnership interests to an entity that meets the
requirements to be our successor under our affiliation agreements with
Sprint PCS; or
- to sell the assets or partnership interests to any third party, subject
to specified conditions.
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DESCRIPTION OF OUR INDEBTEDNESS
THE NORTEL CREDIT FACILITY
GENERAL
We entered into a credit facility effective June 10, 1999 with Nortel for
$123.0 million. We have since entered into a new credit facility with Nortel to
increase the credit facility to $250.0 million to be effective as of the closing
of this offering. As of September 30, 1999, we had borrowed $59.7 million under
the facility. This facility constitutes senior debt secured by a first priority
security interest in substantially all of our assets, including all the assets
of Texas Telecommunications, LP and Alamosa Wisconsin Limited Partnership, our
operating subsidiaries. This facility will be between Nortel and our subsidiary,
Alamosa PCS, Inc., a Delaware corporation, as borrower. We have agreed, and our
current and future subsidiaries have agreed, to guarantee this facility. This
description of the facility assumes that the terms of the commitment letter are
currently in place. Nortel will not fund this increase in the facility unless
various conditions are met, such as the negotiation, execution and delivery of
definitive loan documents and the absence of adverse changes affecting us or our
operations. There can be no assurance that we will fulfill all of these
conditions.
AMOUNT AND PURPOSE OF LOANS
The credit agreement provides for three different tranches of borrowings
evidenced by a single promissory note of $250.0 million. The Tranche A
Commitment provides for borrowings up to $167.0 million, the Tranche B
Commitment provides for borrowings up to $58.0 million and the Tranche C
Commitment provides for borrowings up to $25.0 million. This facility is used to
purchase equipment and services from Nortel, to fund other costs of the
build-out of our portion of the Sprint PCS network and to fund costs associated
with the financing. Nortel is the primary vendor of the equipment and services
necessary to install our portion of the Sprint PCS network.
The amount that can be borrowed under Tranche B, and the amount that can be
borrowed under Tranche C to pay third party expenses, is further limited to a
borrowing base that is computed by the administrative agent at specified times,
as provided in the credit agreement. The borrowing base is defined as 50% of the
amount paid to Nortel to purchase equipment and services used in our portion of
the Sprint PCS network. We have the option to reduce the amount of any of the
commitments, and avoid the periodic fee charged on those unborrowed amounts. Any
reduction must be at least $3.0 million. This is not a revolving credit
arrangement so reductions cannot be reinstated.
COMMITMENT TERMINATION
The Tranche A Commitment and the Tranche B Commitment are both scheduled to
terminate 30 months from the closing date of the credit facility. The Tranche C
Commitment is scheduled to terminate six months earlier. These commitments may
also terminate:
- when any commitment is fully funded;
- on the first anniversary of the closing date if we have borrowed less
than an aggregate of $100.0 million under all three commitments by that
date;
- upon a change of control of Alamosa PCS, Inc.;
- if we voluntarily terminate any commitment; and
- if the administrative agent terminates one or all of the commitments due
to the occurrence of an event of default under the credit agreement.
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SYNDICATION
Nortel may reduce part or all of its total commitment through syndicating
the loan to other lenders. If the loan is syndicated, then the administrative
agent may change from Nortel to any successor administrative agent, acting on
behalf of the lenders in the syndicated group.
LOANS AND INTEREST OPTIONS
We have multiple interest rate options available under the credit
agreement:
- we may borrow money as either a base rate loan with an interest rate
equal to the prime or base rate of Citibank, N.A. (New York), plus 2.75%,
or a Eurodollar loan with an interest rate equal to the London interbank
offered rate, as adjusted for reserve requirements, plus 3.75%;
- we may convert a base rate loan to a Eurodollar loan, or a Eurodollar
loan to a base rate loan, at any time;
- accrued interest is payable either on the last day of each month for base
rate loans, the last day of the interest period for Eurodollar loans or,
in the case of an interest period greater than three months, at three
month intervals after the first day of such interest period;
- we have the option to pay interest due on the loans with borrowings
obtained under the Tranche C Commitment until the earlier of (1) the
second anniversary of the closing date, (2) the date the Tranche C
Commitment is fully funded and (3) the first anniversary of the closing
date only if we have not borrowed at least $100.0 million under the
Nortel financing by that date;
- interest is due upon any prepayment or conversion from one interest type
to another; and
- all outstanding interest is due on the maturity date, which is 90 months
after the closing date of the credit facility unless all of the
commitments are terminated on the first anniversary of the closing date
because we have borrowed less than $100.0 million, in which case the
maturity date is the sixth anniversary of the closing date.
PAYMENT OF PRINCIPAL
Scheduled. At the termination of the Tranche A and Tranche B Commitments,
we must begin to repay, in quarterly installments, the principal on all
borrowings made under that commitment. A fixed percentage is due each quarter:
- for the first eight quarters, 3.75% of the principal balance of the loan
is due per quarter;
- for quarters nine through twelve, 5.00% per quarter; and
- for quarters thirteen through the maturity date, 6.25% per quarter.
Any principal that has not been paid by the maturity date is due at that time.
Optional Prepayments. We may voluntarily prepay any of the loans at any
time, but any amount repaid may not be reborrowed since there are no revolving
credit features.
Mandatory Prepayments. We also must make mandatory prepayments under
certain circumstances, including among others:
- 50% of Alamosa PCS, Inc.'s excess cash flow, after March 31, 2003, or
after March 31, 2001 if the commitments terminate on the first
anniversary of the closing date; and
- any amount in excess of $250,000 received for asset sales outside the
ordinary course of business or insurance proceeds, to the extent not
reinvested in property or assets within a stated period of time.
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All prepayments are applied to the outstanding loan balances pro rata in
the inverse order of maturity, except where there is a borrowing base shortage,
in which case prepayments are first applied there, and then pro rata among all
three commitment tranches.
All payments of principal, including voluntary and mandatory prepayments,
reduce the amount of the commitments by the amount of the principal paid.
FEES
We are required to pay (1) an origination fee of $3.8 million, 3% of the
additional $127.0 million loan commitment made in the amended and restated
credit agreement, at the execution of the credit agreement and (2) a fee on the
unfunded portion of each commitment, computed by multiplying the average daily
unused amount of each commitment by 0.75% per year. This second fee begins to
accrue on the date which is six months after the closing date, and is payable in
arrears on the last day of each calendar quarter until the termination of the
relevant commitment. We must also pay a separate, annual agent's fee of $35,000
to the administrative agent.
WARRANTS
As additional consideration to Nortel for its financing commitment, we are
required to issue to Nortel warrants for 2% of our total equity as of the
closing date, on a fully-diluted basis. The warrants will be issued and will be
exercisable by Nortel on the second anniversary of the closing date, unless,
among other options, we contribute $75.0 million of equity to Alamosa PCS, Inc.
and prepay indebtedness outstanding under the Nortel facility. We intend to use
a portion of the proceeds from our offering of senior discount notes to prepay
enough of the Nortel financing to prevent the issuance of the warrants. However,
we cannot assure you that we will choose to complete our notes offering or that
we will prepay any portion of the Nortel financing. Other options to terminate
the warrants include (1) the assignment of a portion of the loans by Nortel to
unrelated lenders, (2) a minimum combination of loan prepayments and assignment
of the loans or (3) a maximum ratio of senior debt to total capitalization as of
the second anniversary of the closing date and for the two consecutive calendar
quarters immediately prior to the second anniversary of the closing date.
However, if we do not complete an additional offering of equity or debt, we do
not anticipate that the warrants will be terminated. The exercise price for the
warrants will be the price paid for our common stock in this offering. Nortel
may not transfer any of its rights with respect to the warrants before the first
anniversary of the closing date, and any warrants transferred before the second
anniversary of the closing date will be subject to the provisions preventing
exercise of the warrants. In no event may the warrants be exercised after the
eighth anniversary of the closing date.
Nortel is entitled to multiple demand registration rights and unlimited
piggyback registration rights of the common stock warrants.
BOARD OBSERVATION RIGHT
So long as Nortel holds any loans or commitments under the credit
agreement, it is entitled to receive notices of all of our board and committee
meetings and to have a non-voting observer in attendance at any of those
meetings. However, Nortel will not have these rights if Alamosa PCS, Inc.'s
ratio of annualized earnings before interest, taxes, depreciation and
amortization to annualized cash interest expense plus principal payments is 1.0
to 1 or more for four consecutive quarters. Nortel may share information learned
at those meetings with employees, officers, directors and attorneys who have a
professional need to know the information, but the information must be kept
confidential by those persons. The observer may be excused from a meeting at the
request of a majority of the directors present during discussions involving
sensitive information regarding Nortel or competitors of Nortel.
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MANAGEMENT TEAM; EMPLOYMENT AGREEMENTS
The credit agreement requires us to have an experienced telecommunications
management team reasonably satisfactory to the administrative agent, including a
chief executive officer, chief financial officer, chief operating officer and
chief technology officer. As a condition to closing the financing, key
management is required to enter into employment agreements with a minimum term
of two years, non-competition agreements and non-disclosure agreements.
COLLATERAL
The Nortel financing is secured by:
- a perfected first priority lien on substantially all of Alamosa PCS
Holdings, Inc.'s, Alamosa PCS, Inc.'s and the operating subsidiaries'
current and future assets, and the assets of future subsidiaries;
- a collateral assignment of our affiliation agreements with Sprint PCS;
- a pledge by Alamosa PCS Holdings, Inc. to Nortel of Borrower's capital
stock and by Borrower of its ownership interests in the operating
subsidiaries; and
- guarantees from Alamosa PCS Holdings, Inc., the operating subsidiaries
and all future direct or indirect subsidiaries of Alamosa PCS, Inc..
We are obligated to grant to the administrative agent a first lien mortgage
on any real property we acquire, together with a mortgagee policy of title
insurance, a survey, an appraisal and an environmental survey.
MINIMUM EQUITY REQUIREMENTS
As a closing condition of the credit facility, we must raise a combined
$148.0 million in equity capital. This amount will be comprised of the net
proceeds from this offering of our common stock and the amount of capital
contributed by our current stockholders. The current stockholders will have
contributed an aggregate of $37.0 million by December 31, 1999.
CONDITIONS
Alamosa PCS, Inc. must meet certain conditions before it may obtain any
future borrowings under the credit agreement, including:
- that there has been no event of default;
- a reaffirmation of representations;
- Alamosa PCS, Inc. has a debt to contributed capital ratio of less than or
equal to 1.5 to 1;
- submission of a borrowing base report;
- that the loan would not exceed the borrowing base, if applicable; and
- that there has not been a Material Adverse Effect, as defined in the
credit agreement.
NEGATIVE COVENANTS
Other Debt. With limited exceptions such as intercompany debt incurred in
the ordinary course of business, Alamosa PCS, Inc. and the operating
subsidiaries have agreed not to incur additional debt.
Organizational Issues and Capital Stock. Alamosa PCS, Inc. and the
operating subsidiaries have agreed, with an exception for mergers with
subsidiaries, not to:
- become a party to a merger or a consolidation,
- wind-up, dissolve or liquidate, or
- acquire all or a material or substantial part of the business or
properties of another person.
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Alamosa PCS, Inc. further agreed not to issue, sell, assign or otherwise
dispose of, to any person (a) any of its capital stock; (b) any securities
exchangeable for or convertible into or carrying any rights to acquire any of
its capital stock; or (c) any option to acquire its capital stock.
Payments and Investments. Alamosa PCS, Inc. and the operating subsidiaries
have agreed not to make any "restricted payments." Restricted payments include:
- dividends or distributions on account of shares of capital stock, except
one payable solely in shares of stock;
- any redemption, conversion, exchange, retirement, sinking fund, or other
similar purchase of shares of capital stock;
- any payment or prepayment of principal, premium, if any, or interest on,
or any redemption, conversion, exchange, purchase, retirement, or
defeasance of, or payment with respect to any subordinated debt;
- any loan, advance or payment to any officer, director or shareholder,
except for reasonable compensation paid to officers or directors in the
ordinary course; and
- any payment made to retire any outstanding warrants, options or other
rights to acquire capital stock.
Modification of Agreements. Alamosa PCS, Inc. has agreed that, with limited
exceptions, it will not consent to or implement any termination, amendment,
modification, supplement or waiver of:
- the capital contribution agreement;
- our affiliation agreements with Sprint PCS;
- its business plan; or
- any material contract.
Other Negative Covenants. Alamosa PCS, Inc. and the operating subsidiaries
have agreed not to:
- dispose of property except in certain circumstances;
- enter into any sale/leaseback transactions;
- engage in any line of business other than operation of our portion of the
Sprint PCS network, and related ownership and financing activities;
- conduct any activity on real property that would violate environmental
laws;
- restrict any subsidiary's ability to pay dividends;
- pay management fees other than to Sprint PCS;
- terminate the Supply Agreement, the agreement pursuant to which Nortel
provides goods and services to us relating to the Sprint PCS network,
before the third anniversary of the closing date, or before the first
anniversary of the closing date if less than $100.0 million has been
borrowed at that time;
- take certain actions that would violate ERISA; or
- prepay fees owed to Sprint PCS.
Alamosa PCS Holdings, Inc. has agreed not to engage in any business other
than the ownership of capital stock and other capital raising activities.
Alamosa PCS Holdings, Inc. has also agreed to maintain a ratio of total debt to
total capitalization of 0.75 to 1 or less when its senior debt is 40% or more of
its total debt and 0.80 to 1 or less when its senior debt is less than 40% of
its total debt.
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FINANCIAL AND OPERATING COVENANTS
Alamosa PCS, Inc. is subject to financing and operating covenants
including:
- a maximum ratio of total debt to total capitalization;
- a maximum ratio of total debt to annualized earnings before interest,
taxes, depreciation and amortization, referred to as EBITDA, for each
quarter;
- minimum annualized EBITDA for each quarter;
- minimum number of subscribers;
- minimum quarterly revenue;
- maximum cumulative capital expenditures not to exceed a specified amount;
- maximum yearly payments under operating leases; and
- minimum quarterly fixed charge coverage ratio, which is the ratio of
EBITDA plus cash and the unused portion of the loan to consolidated fixed
charges.
EVENTS OF DEFAULT
In addition to failing to perform, observe or comply with the covenants,
agreements and terms of the credit agreement, it is an event of default under
the credit agreement if any party with financial responsibility for the loans or
the outstanding, unsecured equity commitments, or Sprint PCS signatory to the
management agreement with Sprint PCS:
- becomes insolvent, commences or suffers bankruptcy proceedings or suffers
other indicia of extreme financial duress.
Other events of default include:
- an attachment against Alamosa PCS, Inc.'s or its subsidiaries' property
that is not released within 30 days and the amount of the proceedings is
greater than $500,000;
- a judgment against Alamosa PCS, Inc. or its subsidiaries of greater than
$500,000;
- failure to pay other loans as they become due;
- a breach by Alamosa PCS, Inc. under the supply agreement with Nortel, the
consent and agreement with Nortel or our affiliation agreements with
Sprint PCS;
- any change in control of Alamosa PCS Holdings, Inc.; or
- any Material Adverse Effect occurs, which effect is broadly defined in
the credit agreement to include things that could have a material adverse
effect on Alamosa PCS, Inc.'s business, on Alamosa PCS, Inc.'s ability to
repay the loan, or on Nortel's collateral.
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SENIOR DISCOUNT NOTES
We intend to raise approximately $156 million through a public offering of
our senior discount notes. The senior discount notes will be unsecured
obligations, will rank equally with all our existing and future senior debt and
will rank senior to all our existing and future subordinated debt.
The senior discount notes will be guaranteed on a senior subordinated basis
by our current subsidiaries and our future restricted subsidiaries. The
guarantees will be unsecured obligations and:
- will be subordinate to all existing and future senior debt of each
subsidiary guarantor, including the Nortel financing;
- will rank equally with all existing and future senior subordinated debt
of each subsidiary guarantor; and
- will be senior to all existing and future subordinated debt of each
subsidiary guarantor.
We may redeem some or all of the senior discount notes beginning in 2005,
and until 2003 we may redeem a portion of the senior discount notes with the net
proceeds of an equity offering.
The senior discount notes will be issued at a discount to their principal
amount and will accrete in value until 2005, at which time their accreted value
will equal their principal amount. Interest will begin to accrue at this time
and will be payable semi-annually. The senior discount notes will contain
covenants limiting our ability and the ability of our subsidiaries to:
- incur additional debt or issue preferred stock;
- pay dividends, redeem capital stock or make other restricted payments or
investments;
- create liens on assets;
- merge, consolidate or dispose of assets;
- enter into transactions with affiliates; and
- change lines of business.
Holders of the senior discount notes will have the right to require us to
repurchase all or any part of their senior discount notes, at 101% of the
accreted value, if before 2005, or 101% of the aggregate principal amount
thereafter, together with accrued and unpaid interest, upon a change of control
of Alamosa.
Events of default in respect of the senior discount notes include, among
others, failure to pay interest or principal on the senior discount notes when
due, failure to perform covenants, acceleration of the maturity of other debt,
events of bankruptcy, certain judgments against us and the occurrence of any
event of default pursuant to our affiliation agreements with Sprint PCS.
We anticipate that the proceeds from our proposed offering of senior
discount notes will not be needed to fund the required capital expenditures,
working capital requirements, operating losses and other cash needs of our
current business plan. We intend to use a portion of the proceeds of that
offering to prepay $75.0 million of indebtedness outstanding under the Nortel
facility. We may decide to use the remaining proceeds of that offering to:
- expand our existing territory;
- build-out additional areas or accelerate coverage within our existing
territory;
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- pursue additional wireless telecommunications business opportunities or
acquire other wireless telecommunications businesses or assets; or
- cover general corporate purposes.
However, if we do not use the remaining proceeds of our notes offering for
these purposes, we may decide to:
- prepay additional debt outstanding under the Nortel facility; or
- avoid drawing additional amounts under the Nortel facility.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table presents information with respect to our directors and
executive officers.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
David E. Sharbutt......................... 50 Chairman of the Board of Directors and
Chief Executive Officer
Jerry W. Brantley......................... 54 Chief Operating Officer
Kendall Cowan............................. 45 Chief Financial Officer
W. Don Stull.............................. 37 Chief Technology Officer
Michael R. Budagher....................... 41 Director
Ray M. Clapp, Jr.......................... 39 Director
Scotty Hart............................... 49 Director
Thomas Hyde............................... 54 Director
Schuyler B. Marshall...................... 54 Director
Tom M. Phelps............................. 50 Director
Reagan W. Silber.......................... 38 Director
Jimmy R. White............................ 60 Director
</TABLE>
David E. Sharbutt. Mr. Sharbutt has been our Chairman and a director since
Alamosa was founded in July 1998. Mr. Sharbutt was named our Chief Executive
Officer on October 1, 1999. Mr. Sharbutt was formerly the President and Chief
Executive Officer of Hicks & Ragland, now known as CHR Solutions, Inc. Mr.
Sharbutt is currently employed by CHR Solutions as a Senior Consultant. He has
been at CHR Solutions since 1977, where he has worked with independent telephone
companies in developing strategic, engineering and implementation plans for
various types of telecommunications services. Before he joined CHR Solutions,
Mr. Sharbutt was employed with Southwestern Bell. Mr. Sharbutt holds a Bachelor
of Science degree in Electrical Engineering from Texas Tech University. Mr.
Sharbutt will be Vice President of Alamo IV LLC until its proposed dissolution
in November 1999. He also serves as a director for, and is a shareholder of, CHR
Solutions and is a director for, and shareholder and President of US
Consultants, Inc. In addition, he is a director for TechTel Communications
Corporation, Accipiter Communications, and previously was a director of Alamo
Cellular, Inc., all non-public companies.
Jerry W. Brantley. Mr. Brantley has been our Chief Operating Officer since
October 1998. He is responsible for overseeing all aspects of operations
including market operations, network build-out, marketing and distribution. From
June 1996 to October 1998 he was General Manager of the H&R Strategic Group of
Hicks & Ragland. From December 1994 to June 1996 Mr. Brantley was Executive Vice
President and General Manager for Mainstreet Wireless, a national wireless
personal communications services consortium of independent telecommunications
companies and other companies. From May 1993 to November 1994 Mr. Brantley was
President and General Manager of the Business Crime Council of South Texas,
Inc., a crime prevention organization. From 1984 to 1993, Mr. Brantley held
various executive management positions in sales, marketing, public relations and
regulatory matters for Southwestern Bell Mobile Systems. Mr. Brantley holds a
Bachelor of Business Administration degree from the University of Oklahoma.
Kendall Cowan. Mr. Cowan became our Chief Financial Officer in December
1999. From October 1993 to December 1999, he was a partner in the public
accounting firm of Robinson Burdette Martin & Cowan, L.L.P. and from January
1986 to September 1993, he was a partner in the Lubbock and Dallas offices of
Coopers & Lybrand. He provided consulting and accounting services to a wide
range of clients at both firms including public companies. He is a Certified
Public Accountant and a member of both the American Institute of Certified
Public Accountants and the Texas Society of Certified Public Accountants. Mr.
Cowan is Chairman of the Board and a stockholder of ShaCo Xpress, Inc., a
director of Robert Heath Trucking, Inc., and a member of C.C. & Co., L.L.C., all
of which are non-public companies.
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W. Don Stull. Mr. Stull has been our Chief Technology Officer since October
1998. He was formerly Vice President of Hicks & Ragland. He has held various
management and engineering positions at Hicks & Ragland since 1988. From 1985 to
1988 he was an engineer at Turner Collie & Braden, Inc. From 1980 to 1984 he was
an engineering technician for different companies. Mr. Stull received his M.B.A.
from Texas Tech University and holds a Bachelor of Science degree in Civil
Engineering from Texas Tech University.
Michael R. Budagher. Mr. Budagher has served as a director of Alamosa since
December 21, 1998. Mr. Budagher was the founder of Specialty Constructors, a
wholly owned subsidiary of Specialty Teleconstructors, Inc., a wireless
infrastructure installation company. He served as the President, Chairman of the
Board, Chief Executive Officer and Chief Operating Officer of Specialty from
1990 to 1998. Mr. Budagher is also a founder, stockholder and the President of
Specialty Antenna Site Resources, Inc. and was a founder and served as the
President of Specialty Constructors Coatings, Inc. until March 1997. He also
serves as the managing member and President of the Budagher Family LLC as well
as a Manager of West Texas PCS, LLC, both non-public limited liability
companies.
Ray M. Clapp, Jr.. Mr. Clapp has served as a director since Alamosa was
founded in July 1998. Mr. Clapp has been Managing Director, Acquisitions and
Investments for The Rosewood Corporation, the primary holding company for the
Caroline Hunt Trust Estate, since 1995. From 1989 to 1995 he has held various
officer level positions with The Rosewood Corporation and its subsidiaries.
Prior to his employment with The Rosewood Corporation, Mr. Clapp was a
consultant with Booz, Allen & Hamilton, a management consulting firm.
Scotty Hart. Mr. Hart has served as a director since Alamosa was founded in
July 1998. He has also served as General Manager of South Plains
Telecommunications Cooperative, a wireline and wireless telecommunications
company, since April 10, 1995, and previously as Assistant Manager of South
Plains Telecommunications Cooperative. Mr. Hart is currently Vice President of
SPPL, Inc., Chairman of the General Partners Committee for Caprock Cellular
Limited Partnership and past Chairman for Texas RSA3 Limited Partnership, all
affiliates of South Plains Telecommunications Cooperative. He is also General
Manager of South Plains Advanced Communications & Electronics, Inc., a wholly
owned subsidiary of South Plains Telecommunications Cooperative, and Secretary
of Alamo Cellular, Inc., a non-public holding company with interests in a
wireless telecommunications service provider and an affiliate of South Plains
Advanced Communications & Electronics, Inc. In addition, he is the general
partner and a limited partner of Lubbock HLH, Ltd. He also will be President of
Alamo IV LLC until its proposed dissolution in November 1999. Mr. Hart also
serves as a director of Texas Statewide Telephone Cooperative, Inc., a
non-public company.
Thomas Hyde. Mr. Hyde has served as a director since Alamosa was founded in
July 1998. From 1996 to 1997, Mr. Hyde served as an Assistant Manager of Taylor
Telephone Cooperative, Inc., a landline telephone service provider, and has
served as Manager of that company since 1998. He has also served as Manager of
Taylor Telecommunications, Inc., a cellular services provider. Prior to 1996,
Mr. Hyde was self-employed in the farming and ranching business. Mr. Hyde also
will be Secretary of Alamo IV LLC until its proposed dissolution in November
1999. Mr. Hyde currently serves as a director of Alamo Cellular, Inc. and was a
director of Taylor Telephone Cooperative, Inc. and Taylor Telecommunications,
Inc. from 1979 to 1996.
Schuyler B. Marshall. Mr. Marshall has served as a director of Alamosa
since November 1999. He has served as President of The Rosewood Corporation, the
primary holding company for the Caroline Hunt Trust Estate, since January 1,
1999. From 1996 through 1998, he served as Senior Vice President and General
Counsel, and Executive Director of The Rosewood Corporation, and as director and
president of various of its subsidiaries. He currently serves as a member of the
advisory board of Rosewood Capital IV, L.P., a San Francisco based venture
capital fund that will focus on e-commerce, telecommunications and other
consumer oriented investments. Prior to his employment with The Rosewood
Corporation, Mr. Marshall was a senior shareholder with Thompson & Knight, P.C.,
in Dallas, where he practiced law since 1970.
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<PAGE> 74
Tom M. Phelps. Mr. Phelps has served as a director of Alamosa since
December 21, 1998. He has served as Executive Vice President and General Manager
of ENMR Telephone Cooperative, a telecommunications services provider, and of
Telecommunications Holdings East, since September 1997. Mr. Phelps is also
currently Executive Vice President of Plateau Telecommunications Incorporated, a
wireless and wireline telecommunications provider and wholly owned subsidiary of
Telecommunications Holdings East. Additionally, Mr. Phelps served as Assistant
Manager of ENMR Telephone Cooperative and its wholly owned subsidiaries from
1995 to 1997, and as Area Manager of GTE Corporation, a telephone service
provider, from 1994 to 1995. He is currently a director of Rocky Mountain
Telecommunications Association, a non-public company.
Reagan W. Silber. Mr. Silber has served as a director since Alamosa was
founded in July 1998. He has been the founder and managing shareholder of Silber
Pearlman, P.C., a law firm, since 1989. He is also a director and the President
of Tregan International Corp., a director and the President of BPS Realty, Inc.,
and a director of Independent Bank of Plano, all non-public companies.
Jimmy R. White. Mr. White has served as a director since Alamosa was
founded in July 1998. He has served as the General Manager of XIT Rural
Telephone Cooperative, Inc. and its subsidiaries, XIT Telecommunication &
Technology, Inc., XIT Cellular, and XIT Fiber, Inc., all wireline and wireless
telecommunications services providers, since 1975. He will be the Treasurer of
Alamo IV LLC until its proposed dissolution in November 1999. Mr. White
currently serves as the President of Alamo Cellular, Inc. He also currently
serves as a director of Texas Telephone Association, a non-public company, and
Forte of Colorado, a general partnership.
BOARD OF DIRECTORS
Under the terms of Alamosa PCS, LLC's Regulations the number of managers to
serve on the Alamosa's board of managers was fixed at nine managers. Alamo IV
had the right to appoint five of the managers and the financial members,
comprised of Rosewood Telecommunications, LLC, Tregan International Corp., West
Texas PCS LLC, Longmont PCS LLC and Yellow Rock PCS, L.P., had the right to
appoint a total of four of the managers. If Alamo IV's percentage interest in
Alamosa PCS, LLC fell below 45% then the number of managers it was able to
appoint also fell in a corresponding manner. Likewise, if the financial members
combined percentage interest in Alamosa PCS, LLC fell below 33% then the number
of managers they were able to appoint as a group also fell in a corresponding
manner. Neither Alamo IV's number of appointments nor the financial members'
number of appointments increased as a result of a decrease in the other group's
percentage interest. Any remaining manager position was to be filled by a
manager elected by a majority of the members of Alamosa PCS, LLC. As a result of
Alamo IV's dissolution in November 1999, Alamo IV will no longer hold any right
to appoint managers, but the former members of Alamo IV will still be able to
act together to appoint five of the managers. Prior to the closing of this
offering, Alamosa PCS, LLC will be reorganized and the current managers of
Alamosa PCS, LLC will become directors of Alamosa PCS Holdings, Inc. Upon this
reorganization, the former members of Alamo IV and the financial members will
lose their right to appoint any future directors. For further information on the
reorganization, see "The Reorganization."
After the reorganization, our board of directors will be fixed at nine
members. We will divide our board of directors into three classes. Ray M. Clapp,
Jr., Jimmy White and Thomas Hyde constitute Class I and will stand for election
at the annual meeting of stockholders to be held in 2001. Michael R. Budagher,
Schuyler B. Marshall and Reagan W. Silber constitute Class II and will stand for
election at the annual meeting of stockholders to be held in 2002. Tom M.
Phelps, David E. Sharbutt, and Scotty Hart constitute Class III and will stand
for election at the annual meeting of stockholders to be held in 2003. After the
initial term following the offering, directors in each class will serve for a
term of three years, or until his or her successor has been elected and
qualified and will be compensated at the discretion of the board of directors.
Executive officers are ordinarily elected annually and serve at the discretion
of the board of directors.
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<PAGE> 75
COMPENSATION OF DIRECTORS
Currently, we do not compensate our directors. No director who is an
employee of Alamosa receives separate compensation for services rendered as a
director. Starting in June 1999, we had an arrangement with Hicks & Ragland, now
known as CHR Solutions, to pay $175 per hour for David Sharbutt's services as
Chairman of our board of directors. This arrangement with Hicks & Ragland ended
on October 1, 1999, when Mr. Sharbutt became our Chief Executive Officer.
Following the closing of this offering, pursuant to the 1999 Long Term
Incentive Plan, each of our directors who is an independent director because he
or she is not an officer or employee of Alamosa will automatically receive an
initial option to purchase 28,000 shares of our common stock upon the closing of
this offering or on the date he or she becomes one of our directors. We granted
an option to purchase an additional 15,000 shares of our common stock to Mr.
Clapp for his performance of additional duties as director with respect to this
initial public offering and our debt offering. The initial option becomes
exercisable with respect to 100% of the shares covered thereby six months after
the date of grant and will expire on the tenth anniversary of the date of grant.
In addition to the initial option, each independent director will receive a
grant pursuant to our 1999 Long Term Incentive Plan of an annual option to
purchase that number of shares of our common stock equal to $60,000 divided by
the fair market value of our common stock on the date of grant. The annual
option will be automatically granted on the date of the first full meeting of
our board of directors following the end of each fiscal year. The annual option
will immediately vest on the date of grant and will expire on the tenth
anniversary of the date of grant. The exercise price of all options granted to
independent directors must be equal to the fair market value of our common stock
on the date of grant. Directors who are also our officers or employees receive
no additional compensation for serving as directors. All of our directors are
entitled to reimbursement of their reasonable out-of-pocket expenses in
connection with their travel to, and attendance at, meetings of the board of
directors or committees thereof.
BOARD COMMITTEES
Our board of directors has established three committees. They are the:
- audit committee;
- compensation committee; and
- finance committee.
The audit committee is responsible for recommending to the board of
directors the engagement of our independent auditors and reviewing with the
independent auditors the scope and results of the audits, our internal
accounting controls, audit practices and the professional services furnished by
the independent auditors. The current members of the audit committee are Messrs.
White, Phelps, Budagher and Clapp.
The compensation committee is responsible for reviewing and approving all
compensation arrangements for our officers, and is also responsible for
administering the 1999 Long Term Incentive Plan. The current members of the
compensation committee are Messrs. Silber, Marshall and Hyde.
The finance committee is responsible for providing budget oversight and
dealing with capital structure issues. The current members of the finance
committee are Messrs. Clapp, White, Sharbutt and Hart.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The compensation committee of our board of directors currently consists of
Messrs. Silber, Marshall and Hyde. None of these committee members are or have
been executive officers of us or our subsidiaries. From our inception on July
16, 1998 through December 9, 1999, our board of directors determined the
compensation of our executive officers. David Sharbutt, our Chief Executive
Officer, is Chairman of our board of directors. He is also employed as a Senior
Consultant and is a director and shareholder of CHR Solutions, an engineering
consulting firm that provides services to us. See "Certain Relationships and
Related Transactions" for more details on these transactions. Mr. Sharbutt has
also served on the board of
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directors of Alamo Cellular, Inc. Currently Scotty Hart is Secretary of Alamo
Cellular, Inc. and Jimmy White is President of Alamo Cellular, Inc. Both Mr.
Hart and Mr. White are also on our board of directors. In addition, Alamo IV
LLC, prior to its dissolution in November 1999, had been controlled by its
members. Mr. Sharbutt represents a company called Harlamo LLC that is a member
of Alamo IV LLC and Mr. Sharbutt also serves as Vice President of Alamo IV LLC.
Thomas Hyde, who is one of our directors, along with Scotty Hart and Jimmy
White, serve as executive officers of Alamo IV LLC. Prior to completion of this
offering, our board of directors will establish a compensation committee that
will be comprised solely of independent directors.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
All matters concerning executive compensation in 1998 were addressed by our
full board of directors.
Our executive compensation philosophy reflects our belief that the
compensation of executives should:
- be linked to achievement of our business and strategic goals;
- be aligned with the interests of stockholders through awards of stock
options and other stock-based compensation;
- recognize individual contributions, as well as overall business results;
and
- result in attracting, motivating and retaining highly-talented executives
to serve us.
To achieve these objectives, our current compensation program consists of the
following elements:
- Base salary;
- Annual incentive compensation, the receipt of which is based on (1) our
financial performance from year to year and/or (2) significant individual
contributions; and
- Long-term incentive compensation, primarily in the form of stock options.
Jerry Brantley, as Chief Operating Officer, acted in a capacity similar to
that of chief executive officer during the period from the inception of Alamosa,
July 16, 1998, to December 31, 1998. The structure of Mr. Brantley's fiscal 1998
compensation was based in part on comparisons to the compensation of executives
in similar positions with other companies in the industry, as well as Mr.
Brantley's level of responsibility, experience and contribution to our business
objectives and the board's ongoing assessment of our operations. In accordance
with such factors, we entered into an employment agreement with Mr. Brantley,
effective October 2, 1998. This agreement provides for a base salary of
$175,000, subject to increases at our board's discretion. In addition, the
agreement provides that Mr. Brantley is eligible for quarterly bonuses upon the
achievement of certain performance targets established by our board, and grants
Mr. Brantley stock options that vest over 3 years. See "-- Employment
Agreements -- Jerry Brantley." Pursuant to this employment agreement, Mr.
Brantley received compensation totaling $55,892.28 for fiscal 1998, representing
a salary of $40,384.62, a bonus of $13,843.14, and a car allowance of $1,661.52.
Our board believes that the structure of Mr. Brantley's compensation, with its
emphasis on our performance, is in the best interest of our stockholders because
it more closely aligns the interests of Mr. Brantley and our stockholders.
Other than Mr. Brantley as Chief Operating Officer, we had no other
executive officers receiving substantial salaries during fiscal 1998. Our
philosophy for the compensation of our executive officers focuses on each
individual's level of responsibility, experience and contribution to our
business objectives and the board's ongoing assessment of our operations. The
board places emphasis on compensation that closely aligns the executive's
interests with the stockholders' interests. Therefore, a significant percentage
of each executive officer's total compensation is tied to our performance
through (1) bonus eligibility, based on a combination of our performance and
individual achievement, and (2) stock option awards.
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<PAGE> 77
In August 1993, as part of the Omnibus Budget Reconciliation Act of 1993,
Section 162(m) of the Internal Revenue Code was enacted, which section provides
for an annual one million dollar limitation on the deduction that an employer
may claim for compensation of certain executives. Section 162(m) of the Internal
Revenue Code provides an exception to the deduction limitation for certain
performance-based compensation, and it is the intent of the board to qualify
executive compensation for such exception to the extent necessary, feasible and
in our best interests.
David E. Sharbutt (Chairman)
Michael R. Budagher
Ray M. Clapp, Jr.
Scotty Hart
Schuyler B. Marshall
Thomas Hyde
Tom M. Phelps
Reagan W. Silber
Jimmy R. White
EXECUTIVE COMPENSATION
The following table presents summary information with respect to the
compensation paid to David E. Sharbutt, Jerry W. Brantley, Kendall W. Cowan and
W. Don Stull during the period from the inception of Alamosa, July 16, 1998, to
December 31, 1998 and for the year ended December 31, 1999. We had no chief
executive officer during the period from inception, July 16, 1998, to December
31, 1998. Mr. Brantley, as Chief Operating Officer, acted in a capacity similar
to that of chief executive officer during that period. David E. Sharbutt became
our chief executive officer effective as of October 1, 1999, and has served as
our chief executive officer since that time.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
------------------------
ANNUAL COMPENSATION RESTRICTED SECURITIES
-------------------------- STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS AWARDS OPTIONS COMPENSATION
- --------------------------- ---- -------- -------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
David E. Sharbutt
Chief Executive
Officer(1).................. 1999 $ 43,750 $ 43,750 -- 1,697,500 $ 3,750(2)
Jerry W. Brantley
Chief Operating Officer... 1999 $175,000 $120,000 -- 1,455,000(3) $ 7,200(4)
1998 $ 40,385 $ 13,846 -- 242,500(3) $ 1,662(4)
Kendall W. Cowan
Chief Financial
Officer(5).................. 1999 $ 12,500 $ 12,500 -- 1,455,000 $ 600(4)
W. Don Stull
Chief Technology
Officer..................... 1999 $ 90,000 $ 60,000 -- -- $ 4,800(4)
1998 14,723 $ 0 -- 145,500(6) $ 554(4)
</TABLE>
- ---------------
(1) Mr. Sharbutt became Chief Executive Officer on October 1, 1999.
(2) Consists of a monthly car and club dues allowance.
(3) During 1998, we granted Mr. Brantley three series of options to purchase up
to an aggregate 1.5% membership interest in Alamosa PCS, LLC. The exercise
price per share is $1.08 for the first of these series, $1.15 for the second
series and $1.25 for the third series. As part of the reorganization, one of
these options will be converted into an immediately exercisable option to
purchase 242,500 shares of our common stock at an exercise price of $1.15
per share. The other series of the options to purchase membership interests
will be terminated and we will grant a new option, vesting over the next
four years, to purchase 1,455,000 shares of our common stock with an
exercise price per share equal to the initial public offering price.
(4) Consists of a monthly car allowance.
(5) Mr. Cowan became Chief Financial Officer on December 1, 1999.
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<PAGE> 78
(6) During 1998, we granted Mr. Stull three series of options to purchase up to
an aggregate 0.3% membership interest in Alamosa PCS, LLC that vest monthly
beginning on April 29, 2000 and expire on December 31, 2006. As part of the
reorganization, these options will be exchanged for three series of options
to purchase an aggregate of 145,500 shares of our common stock. The exercise
price per share is $1.1296 for the first series, $1.2477 for the second
series and $1.4238 for the third series of these common stock options. The
options to purchase common stock will retain the same vesting schedule as
the options to purchase membership interests.
STOCK OPTION GRANTS IN LAST FISCAL YEAR
The table below provides information regarding stock options granted to the
named executive officers from the inception of Alamosa, July 16, 1998, to
December 31, 1998. All option grants were initially grants of options to
purchase membership interests in Alamosa PCS, LLC. None of the named executive
officers received stock appreciation rights, or SARs.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------------------------------------------
% OF TOTAL OPTIONS
GRANTED TO EXERCISE VALUE AT DATE
NUMBER OF SECURITIES EMPLOYEES IN PRICE EXPIRATION OF
NAME UNDERLYING OPTIONS FISCAL YEAR (PER SHARE) DATE GRANT (1)
- ---- -------------------- ------------------ ----------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
Jerry W. Brantley....... 242,500(2) 62.5% (2) 1/5/2008 $3,116,125
W. Don Stull............ 145,500(3) 37.5% (3) 12/31/2006 $1,852,647
</TABLE>
- ---------------
(1) Value at date of grant is based on the product of the public offering price
of $14.00 per share, the midpoint of the range on the cover page of the
prospectus, minus the exercise price, multiplied by the number of securities
underlying the options granted.
(2) During 1998, we granted Mr. Brantley three series of options to purchase up
to an aggregate 1.5% membership interest in Alamosa PCS, LLC. The exercise
price per share is $1.08 for the first of these series, $1.15 for the second
series and $1.25 for the third series. We will record compensation expense
totaling $9,341,100 in connection with these options. As part of the
reorganization, one of these options will be converted into an immediately
exercisable option to purchase 242,500 shares of our common stock at an
exercise price of $1.15 per share. The other series of the options to
purchase membership interests will be terminated and we will grant a new
option, vesting over the next four years, to purchase 1,455,000 shares of
our common stock with an exercise price per share equal to the initial
public offering price.
(3) During 1998, we granted Mr. Stull three series of options to purchase up to
an aggregate 0.3% membership interest in Alamosa PCS, LLC that vest monthly
beginning on April 29, 2000 and expire on December 31, 2006. We will record
compensation expense totaling $1,852,647 in connection with these options.
As part of the reorganization, these options will be exchanged for three
series of options to purchase an aggregate of 145,500 shares of our common
stock. The exercise price per share is $1.1296 for the first series, $1.2477
for the second series and $1.4238 for the third series of these common stock
options. The options to purchase common stock will retain the same vesting
schedule as the options to purchase membership interests.
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<PAGE> 79
STOCK OPTION GRANTS IN FISCAL YEAR 1999
The table below provides information regarding stock options granted to the
named executive officers in fiscal year 1999. None of the named executive
officers received stock appreciation rights, or SARs.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------------------------------------------------
POTENTIAL REALIZABLE VALUE
% OF TOTAL AT ASSUMED ANNUAL RATES
NUMBER OF OPTIONS OF STOCK PRICE APPRECIATION
SECURITIES GRANTED TO EXERCISE FOR OPTION TERM
UNDERLYING EMPLOYEES IN PRICE EXPIRATION -----------------------------------
NAME OPTIONS FISCAL YEAR (PER SHARE) DATE 0%($) 5%($) 10%($)
- ---- ---------- ------------ -------------- ---------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
David E. Sharbutt.... 1,697,500(1) 36% initial public 12/9/2009 3,116,125 14,945,681 37,875,290
offering price
Jerry W. Brantley.... 1,455,000 32% initial public 12/9/2009 -- 12,810,584 32,464,534
offering price
Kendall W. Cowan..... 1,455,000 32% initial public 12/9/2009 -- 12,810,584 32,464,534
offering price
</TABLE>
- ---------------
(1) In connection with these options, we will record compensation expense
totaling $3,116,125
AGGREGATED FISCAL YEAR-END OPTION VALUES
The following table provides summary information regarding options held by
our named executive officers as of December 31, 1998 assuming conversion and
exchange of the options to purchase membership interests. There was no public
market for the common stock as of December 31, 1998. Accordingly, the value of
unexercised in-the-money options is based on an assumed initial public offering
price of $14.00, less the exercise price payable for such shares.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS/SARS AT FISCAL IN-THE-MONEY OPTIONS/
ACQUIRED VALUE YEAR-END(#) SARS AT FISCAL YEAR-END
NAME ON EXERCISE(#) REALIZED (EXERCISABLE/UNEXERCISABLE) (EXERCISABLE/UNEXERCISABLE)
- ---- -------------- -------- --------------------------- ---------------------------
<S> <C> <C> <C> <C>
Jerry W. Brantley....... -- -- 242,500/1,455,000 $3,116,125/$0
W. Don Stull............ -- -- --/145,500 --/$1,852,647
</TABLE>
AGGREGATED 1999 FISCAL YEAR-END OPTION VALUES
The following table provides summary information regarding options held by
our named executive officers as of December 31, 1999. There was no public market
for the common stock as of December 31, 1999. Accordingly, the value of
unexercised in-the-money options is based on an assumed initial public offering
price of $14.00, less the exercise price payable for such shares.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS/SARS AT FISCAL IN-THE-MONEY OPTIONS/
ACQUIRED VALUE YEAR-END(#) SARS AT FISCAL YEAR-END
NAME ON EXERCISE(#) REALIZED (EXERCISABLE/UNEXERCISABLE) (EXERCISABLE/UNEXERCISABLE)
- ---- -------------- -------- --------------------------- ---------------------------
<S> <C> <C> <C> <C>
David E. Sharbutt....... -- -- 242,500/1,455,000 $3,116,125/$0
Jerry W. Brantley....... -- -- 242,500/1,455,000 $3,116,125/$0
Kendall W. Cowan........ -- -- --/1,455,000 --/$0
Don Stull............... -- -- --/145,500 --/$1,852,647
</TABLE>
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BENEFIT PLANS
1999 LONG TERM INCENTIVE PLAN
The 1999 Long Term Incentive Plan has been adopted by our board of
directors and stockholders. The purpose of the plan is to attract and retain the
services of our key management employees, outside directors and consultants by
providing those persons with a proprietary interest in us. The plan allows us to
provide that proprietary interest through the grant of:
- incentive stock options;
- nonqualified stock options;
- tandem and independent stock appreciation rights;
- stock bonuses; and
- restricted stock;
The aggregate number of shares of common stock that may be issued under the plan
is 7,000,000. On December 9, 1999, we granted options effective as of the
closing of this offering to purchase 4,893,500 shares of common stock with an
exercise price equal to the initial public offering price per share to
directors, officers, employees and consultants.
The option plan will be administered by our board of directors or by a
compensation committee appointed by our board of directors, which will be
authorized, subject to the provisions of the option plan, to grant awards and
establish rules and regulations as it deems necessary for the proper
administration of the option plan and to make whatever determinations and
interpretations it deems necessary or advisable.
An incentive option may not have an exercise price less than the fair
market value of the common stock on the date of grant or an exercise period that
exceeds ten years from the date of grant and is subject to other limitations
which allow the option holder to qualify for favorable tax treatment.
Nonqualified options may have an exercise price of less than, equal to or
greater than the fair market value of the underlying common stock on the date of
grant but, like incentive options, are limited to an exercise period of no
longer than ten years.
The committee determines and designates those persons to whom awards are
granted and determines:
- the award period;
- the date of grant;
- the vesting period; and
- other terms, provisions, limitations and performance requirements
approved by the committee, but not inconsistent with the plan.
The committee also has the discretion to reprice stock option awards.
An option will not be not transferable except by will or by the laws of
descent or distribution or unless determined otherwise by our board of directors
or the committee.
Awards under the plan may contain provisions that, if a change in control
of Alamosa occurs, give the Compensation Committee discretion to offer to
purchase awards from plan participants and make adjustments or modifications to
outstanding awards to protect and maintain the rights and interests of the plan
participants or take any other action the award agreements may authorize. A
change in control of Alamosa is deemed to occur for purposes of the plan upon
any of the following events:
- a consolidation or merger in which we do not survive, unless our
stockholders retain the same proportionate common stock ownership in the
surviving company after the merger;
- a sale of substantially all of our assets;
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- the approval by our stockholders of a plan to dissolve or liquidate
Alamosa;
- a third party who owned less than 10% of our voting securities when the
plan was adopted acquires 20% or more of our voting securities;
- a third party who owned at least 10% of our voting securities when the
plan was adopted acquires an additional 15% of our voting securities;
- persons who constituted a majority of our board of directors when the
plan was adopted or who afterwards were elected to the board of directors
by two-thirds of the directors in office cease to constitute a majority
of the board of directors; or
- a Title 11 bankruptcy proceeding, the appointment of a trustee or the
conversion of a case involving us to a case under Chapter 7.
401(K) RETIREMENT PLAN
We have established a tax-qualified employee savings and retirement plan.
Employees may elect to contribute up to 20% of their annual compensation on a
pre-tax basis and up to an additional 10% of their annual compensation on an
after-tax basis to the retirement plan. "Highly Compensated Employees," as
defined in the retirement plan, are subject to certain other provisions
regarding the amount of eligible contributions. Employee contributions may begin
from the date of hire and are immediately vested. Currently, we do not make
matching or profit-sharing contributions to the retirement plan.
EMPLOYMENT AGREEMENTS
David E. Sharbutt. We are currently negotiating an employment agreement
with David E. Sharbutt, effective October 1, 1999. This employment agreement has
a three-year term and provides that Mr. Sharbutt receive a minimum base salary
of $175,000, payable no less often than semi-monthly, subject to increases at
our discretion. Additionally, Mr. Sharbutt is entitled to receive a bonus of up
to $43,750 for each calendar quarter in which we meet certain corporate
milestones. Mr. Sharbutt is also entitled to reimbursement for reasonable
expenses, $1,250 per month as a vehicle and club dues allowance, reimbursement
for business vehicle mileage at the rate set by the Internal Revenue Service,
and incentive, retirement, profit-sharing, life, medical, disability and other
benefit plans as may be available to our other executives with comparable
responsibilities, subject to the terms of those programs. If we terminate Mr.
Sharbutt's employment for other than cause, a change in control, as defined in
the employment agreement, or his death or disability, we would be required to
pay him severance pay equal to one year's base salary. Mr. Sharbutt is entitled
to the same severance pay should he terminate the employment agreement for
cause, as defined in the employment agreement. If Mr. Sharbutt is terminated
because of a change in control, he will be entitled to severance pay equal to
the unpaid balance of the base salary which would have been payable to him
through September 30, 2002. Pursuant to the employment agreement, Mr. Sharbutt
has agreed not to compete with us during his employment and not to compete with
us within a defined area for a period of two years following termination of his
employment. The employment by CHR Solutions and Mr. Sharbutt's investment in the
securities of any public company where such investment does not represent
greater than five percent of the outstanding stock of that company are
exceptions to the non-competition covenant. Further Mr. Sharbutt has agreed not
to disclose any of our confidential information at any time during or subsequent
to his employment with us without our written consent.
Jerry W. Brantley. We are a party to an employment agreement with Jerry W.
Brantley, dated October 2, 1998. This employment agreement has a three-year term
and provides that Mr. Brantley receive a minimum base salary of $175,000,
subject to increases at our discretion. Additionally, Mr. Brantley is entitled
to receive a bonus of up to $30,000 for each calendar quarter in which we meet
certain corporate milestones. The employment agreement also grants Mr. Brantley
options in three series, vesting monthly over three years and giving Mr.
Brantley the right to purchase up to a 1.5% interest in us at any time after
January 1, 2004 but before January 5, 2008. In connection with these options, we
will
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record compensation expense totaling $9,341,100. Mr. Brantley is also entitled
to reimbursement for reasonable expenses. Additionally, Mr. Brantley receives a
$600 per month vehicle allowance plus the standard mileage rate set by the
Internal Revenue Service, and incentive, retirement, profit-sharing, life,
medical, disability and other benefit plans as may be available to our other
executives with comparable responsibilities, subject to the terms of those
programs. If we terminate Mr. Brantley's employment for other than good cause or
his death or disability, we would be required to pay him severance pay equal to
six months' base salary. Pursuant to the employment agreement, Mr. Brantley has
agreed not to compete with us during employment and for a period of two years
following termination of employment and has agreed not to disclose any of our
confidential information or trade secrets. As part of the reorganization, Mr.
Brantley's options to purchase memberships interest in Alamosa PCS, LLC will be
exchanged for one option to purchase 242,500 shares of our common stock with an
exercise price of $1.15 per share, which option is exercisable immediately after
the exchange, and a second option to purchase 1,455,000 shares of our common
stock with an exercise price per share equal to the initial public offering
price, which option will vest over the next four years.
Kendall W. Cowan. We are currently negotiating an employment agreement with
Kendall Cowan, effective December 1, 1999. This employment agreement has a
five-year term and provides that Mr. Cowan receive a minimum base salary of
$150,000, subject to increases at our discretion. Additionally, Mr. Cowan is
entitled to receive a bonus of up to $37,500 for each calendar quarter in which
we meet certain corporate milestones. Mr. Cowan is also entitled to
reimbursement for reasonable expenses, a $600 per month vehicle allowance plus
the standard mileage rate set by the Internal Revenue Service, and incentive,
retirement, profit-sharing, life, medical, disability and other benefit plans as
may be available to our other executives with comparable responsibilities,
subject to the terms of those programs. Pursuant to the employment agreement, we
will pay the costs of all continuing professional education courses required for
Mr. Cowan to maintain his certified public accountant license, as well as all
professional dues and licenses attributable to his certified public accountant
license. If we terminate Mr. Cowan's employment for other than cause, as defined
in the employment agreement, or his death or disability, we would be required to
pay him severance pay equal to one year's base salary. Mr. Cowan is entitled to
the same severance pay should he terminate the employment agreement for cause,
as defined in the employment agreement. Mr. Cowan has agreed, pursuant to the
employment agreement, not to compete with us during employment and for a period
of two years following termination of his employment. Mr. Cowan's investment in
the securities of any publicly traded company where such investment does not
represent greater than five percent of the outstanding stock of that company,
and Mr. Cowan investment in any company or entity in which Mr. Cowan is an owner
or stockholder at the time of entering into the employment agreement are,
however, exceptions to the non-competition covenant. Further, Mr. Cowan has
agreed not to disclose any of our confidential information at any time during or
subsequent to his employment with us without our written consent.
W. Don Stull. We are a party to an employment agreement with W. Don Stull,
dated October 29, 1998. This agreement has a three year term and provides that
Mr. Stull receive a minimum base salary of $90,000, subject to increases at our
discretion. Additionally, Mr. Stull is entitled to receive a bonus of up to
$15,000 for each calendar quarter in which we meet certain corporate milestones.
The employment agreement also grants Mr. Stull stock options in three series
that begin vesting monthly on April 29, 2000, expire on December 31, 2006, and
give Mr. Stull the right to purchase up to 0.3% interest in us. These options
will be exchanged for three series of options to purchase an aggregate of
145,500 shares of our common stock with exercise prices of $1.1296, $1.2477 and
$1.4238 per share. Upon our sale, or the sale of substantially all of our
assets, all vested options shall be considered to be exercised. We will record
compensation expense totaling $1,852,647 in connection with Mr. Stull's options.
Mr. Stull is also entitled to reimbursement for reasonable expenses and a $400
per month vehicle allowance plus 18 cents per mile. If we terminate Mr. Stull's
employment for other than good cause or his death or disability, we would be
required to pay him severance pay equal to one months' base salary. Pursuant to
the employment agreement, Mr. Stull has agreed not to compete with us during
employment and for a period of two years following termination of employment and
has agreed not to disclose any of our confidential information or trade secrets.
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PRINCIPAL STOCKHOLDERS
The following table presents information regarding the beneficial ownership
of common stock, as of November 30, 1999 and assumes (1) that each member of
Alamosa PCS, LLC has contributed its membership interest to Alamosa in exchange
for its proportional number of shares of Alamosa common stock immediately prior
to completion of this offering and (2) the proposed dissolution of Alamo IV, LLC
has occurred, with respect to:
- each person who, to our knowledge, is the beneficial owner of 5% or more
of the outstanding common stock;
- each of the directors;
- each of the executive officers; and
- all executive officers and directors as a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF NUMBER OF PERCENTAGE OF
BENEFICIALLY OWNERSHIP PRIOR SHARES PURCHASED OWNERSHIP AFTER
NAME AND ADDRESS(1) OWNED(2) TO OFFERING IN THE OFFERING(3) OFFERINGS(4)
- ------------------- ---------------- --------------- ------------------ ---------------
<S> <C> <C> <C> <C>
5% STOCKHOLDERS:
Rosewood Telecommunications, L.L.C. ..... 9,725,000 20.1% 16.4%
500 Crescent Court, Suite 300
Dallas, TX 75201
South Plains Advanced Communications &
Electronics, Inc.(5)................... 8,652,085 17.8 14.6
Post Office Box 1379
Lubbock, TX 79408
West Texas PCS, LLC...................... 7,072,915 14.6 11.9
3702 Holland Avenue #2
Dallas, TX 75219
Taylor Telecommunications, Inc.(5)....... 5,100,000 10.5 8.6
9796 N. Interstate 20
Merkel, TX 79536
Tregan International Corp. .............. 3,000,000 6.2 5.1
2711 North Haskell Avenue
5th Floor LB 32
Dallas, TX 75204
Plateau Telecommunications,
Incorporated(5)........................ 3,000,000 6.2 5.1
7111 North Prince
Clovis, NM 88102-1947
XIT Telecommunication & Technology,
Inc.(5)................................ 2,750,000 5.7 4.6
Highway 87 North
Dalhart, TX 79022
LEC Development, Inc.(5)(6).............. 2,500,000 5.2 4.2
1807 Main Street
Tahoka, TX 79373
Wes-Tex Telecommunications, Inc.(5)(7)... 2,500,000 5.2 4.2
1500 West Business 20
Stanton, TX 79782
</TABLE>
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<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF NUMBER OF PERCENTAGE OF
BENEFICIALLY OWNERSHIP PRIOR SHARES PURCHASED OWNERSHIP AFTER
NAME AND ADDRESS(1) OWNED(2) TO OFFERING IN THE OFFERING(3) OFFERINGS(4)
- ------------------- ---------------- --------------- ------------------ ---------------
<S> <C> <C> <C> <C>
DIRECTORS AND EXECUTIVE OFFICERS:
David E. Sharbutt(8)..................... 1,177,461 2.4 2.0
Jerry W. Brantley(9)..................... 242,500 * *
Kendall Cowan............................ -- -- --
W. Don Stull(10)......................... 97,647 * *
Michael R. Budagher(11).................. 7,072,915 14.6 11.9
Ray M. Clapp............................. -- -- --
Schuyler B. Marshall..................... -- -- --
Scotty Hart(12).......................... 8,652,085 17.8 14.6
Thomas Hyde(13).......................... 5,100,000 10.5 8.6
Tom M. Phelps(14)........................ 3,000,000 6.2 5.1
Reagan W. Silber(15)..................... 3,000,000 6.2 5.1
Jimmy R. White(16)....................... 2,750,000 5.7 4.6
All Directors and Executive Officers as a
Group (12 persons)..................... 30,607,608 63.1 51.3
</TABLE>
- ---------------
* Less than one percent.
(1) Except as otherwise indicated below, the address for each executive officer
and director is 4403 Brownfield Hwy., Lubbock, Texas 79407.
(2) Beneficial ownership is determined in accordance with Rule 13d-3 of the
Securities Exchange Act. A person is deemed to be the beneficial owner of
any shares of common stock if that person has or shares voting power or
investment power with respect to that common stock, or has the right to
acquire beneficial ownership at any time within 60 days of the date of the
table. As used herein, "voting power" is the power to vote or direct the
voting of shares and "investment power" is the power to dispose or direct
the disposition of shares.
(3) As part of this sale of our common stock, the underwriters have agreed to
reserve a maximum of 10% of the shares of our common stock to be sold in
this offering for sale to our current stockholders at a price per share
equal to the public offering price less the underwriting discount.
(4) Assumes no exercise of the underwriters' over-allotment option.
(5) Previous member of Alamo IV, LLC. Prior to its dissolution, Alamo IV LLC
held 56.3% of Alamosa PCS, LLC, and was comprised of these previous members
and Harlamo, LLC.
(6) Wilton J. Payne is the general manager of LEC Development, Inc. and may be
considered the beneficial owner of these shares. Mr. Payne disclaims
beneficial ownership of these shares.
(7) J.R. Wilson is the general manager of Wes-Tex Telecommunications, Inc. and
may be considered the beneficial owner of these shares. Mr. Wilson
disclaims beneficial ownership of these shares.
(8) Consists of 48,823 shares held in Mr. Sharbutt's 401(k) plan, options to
purchase 242,500 shares exercisable within 60 days, 593,200 shares
beneficially owned by Five S, Ltd. and 292,938 shares beneficially owned by
Harness, Ltd. Mr. Sharbutt is a limited partner of Five S, Ltd. and
President of Sharbutt Inc., the general partner of Five S Ltd., and is the
beneficial owner of the shares owned by Five S, Ltd. Five S, Ltd. is a
limited partner of Harness, Ltd. and Mr. Sharbutt is a director,
shareholder and the President of US Consultants, Inc., the general partner
of Harness, Ltd., and is the beneficial owner of the shares owned by
Harness, Ltd. The address for Five S Ltd. is 4606 91st Street, Lubbock,
Texas 79424 and the address for Harness, Ltd. is P.O. Box 65700, 4747 S.
Loop 289, Lubbock, Texas 79464.
(9) Consists of options to purchase 242,500 shares exercisable within 60 days.
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(10) Consists of 73,235 shares held individually by Mr. Stull and 24,412 shares
held in Mr. Stull's 401(k) plan.
(11) Consists of shares beneficially owned by West Texas PCS, LLC. Mr. Budagher
is a Manager of West Texas PCS, LLC and is the beneficial owner of these
shares. Mr. Budagher's address is the same as the address for West Texas
PCS, LLC.
(12) Consists of shares beneficially owned by South Plains Advanced
Communications & Electronics, Inc. (SPACE). Mr. Hart is General Manager of
SPACE and may be considered the beneficial owner of these shares. Mr. Hart
disclaims beneficial ownership of these shares. Mr. Hart's address is the
same as the address for SPACE.
(13) Consists of shares beneficially owned by Taylor Telecommunications, Inc.
Mr. Hyde is a Manager of Taylor Telecommunications, Inc. and may be
considered the beneficial owner of these shares. Mr. Hyde disclaims
beneficial ownership of these shares. Mr. Hyde's address is the same as the
address for Taylor Telecommunications, Inc.
(14) Consists of shares beneficially owned by Plateau Telecommunications,
Incorporated. Mr. Phelps is the Executive Vice President of Plateau
Telecommunications, Incorporated and may be considered the beneficial owner
of these shares. Mr. Phelps disclaims beneficial ownership of these shares.
The address for Mr. Phelps is the same as the address for Plateau
Telecommunications, Incorporated.
(15) Consists of shares beneficially owned by Tregan International Corp. Mr.
Silber is a director and the President of Tregan International Corp. and is
the beneficial owner of these shares. Mr. Silber's address is the same as
the address for Tregan International Corp.
(16) Consists of shares beneficially owned by XIT Telecommunication &
Technology, Inc. Mr. White is the General Manager of XIT Telecommunication
& Technology, Inc. and may be considered the beneficial owner of these
shares. Mr. White disclaims beneficial ownership of these shares. Mr.
White's address is the same as the address for XIT Telecommunication &
Technology, Inc.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
FORMATION OF ALAMOSA PCS, LLC
On July 24, 1998, Alamo IV LLC, Rosewood Telecommunications, L.L.C., Tregan
International Corp., West Texas PCS, LLC and Longmont PCS, LLC formed Alamosa
PCS, LLC. Those investors received membership interests in exchange for their
capital commitments. The investors amended the formation documents on December
11, 1998 to allow for a new member Yellow Rock PCS, L.P., and to modify their
membership interests and capital commitments. The members of Alamo IV LLC plan
to dissolve Alamo IV LLC and distribute Alamo IV's membership interest in
Alamosa PCS, LLC to Alamo IV's members.
The obligations to commit capital and the other regulations under the
formation documents will be eliminated when we reorganize from a limited
liability company to a holding company structure prior to closing of this
offering.
NORTEL CREDIT AGREEMENT GUARANTIES
In connection with our credit agreement with Nortel, each of our
stockholders pledged its ownership interest in Alamosa to Nortel to guaranty our
obligations under the credit agreement. Our stockholders were required to secure
their unfunded contributions with either a letter of credit or a marketable
securities pledge agreement. Each guaranty, pledge, letter of credit and
marketable securities pledge agreement will be terminated prior to the closing
of this offering.
AGREEMENTS WITH CHR SOLUTIONS
We have entered into a number of arrangements with CHR Solutions as
described in more detail below. David Sharbutt, our Chairman and Chief Executive
Officer, was at the time the agreements were executed the President, Chief
Executive Officer, director and a shareholder of CHR Solutions. Mr. Sharbutt is
currently employed as a Senior Consultant by CHR Solutions.
- On July 27, 1998, we entered into an engineering service contract with
CHR Solutions that is to last through August 2001 for a maximum fee of
approximately $7.0 million, excluding taxes. We paid $902,243 for these
services during 1998.
- On November 20, 1998, we entered into a special service contract
effective as of September 20, 1998 with CHR Solutions, who provided us
with marketing and operations consulting services for a maximum amount of
$100,000, excluding taxes.
- As of April 6, 1999, we entered into a telecommunications service
agreement with Tech Telephone Company Limited Partnership, an affiliate
of CHR Solutions, to install and provide DS1 telecommunications lines
between Sprint PCS and our Lubbock operations and between our Lubbock
operations and our other markets. The original term of the agreement is
three years, with automatic renewal for successive 30-day terms until
terminated by either party. The total amount of fees paid through the end
of 1999 was approximately $395,000.
- As of April 9, 1999, we entered into a data communications services
contract with H&R Data Com, an affiliate of CHR Solutions, to perform
design and implementation services for us in connection with our wide
area network and local area networks for a maximum fee of $262,040,
excluding taxes. The agreement lasts until the project is completed,
unless either party terminates it earlier for cause.
- As of August 13, 1999, we entered into a distribution agreement with
TechTel Communications Corporation, an affiliate of CHR Solutions,
authorizing it to become a third party distributor of Sprint PCS products
and services for Alamosa in Lubbock. This is a standard agency agreement
identical with numerous other agreements between Alamosa and other third
party distributors,
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under which TechTel Communications Corporation is obligated to purchase ten
handsets from us every quarter for the term of one year.
- As of October 8, 1999, we entered into a special service contract with
CHR Solutions to perform marketing and operations consulting services in
selected areas in Wisconsin for a maximum fee of $100,000, excluding
taxes. This agreement lasts until the project is completed, unless either
party terminates it earlier.
- As of October 8, 1999, we entered into a special service contract with
CHR Solutions to perform business planning and consulting services and a
feasibility study in selected areas of Wisconsin for a fixed fee of
$81,000. This agreement lasts until the project is completed, unless
either party terminates it earlier.
- As of October 8, 1999, we entered into a special service contract with
CHR Solutions to perform business planning and consulting services and a
feasibility study in selected areas of our territory for an estimated
probable cost of $200,000, excluding taxes. This agreement lasts until
the project is completed, unless either party terminates it earlier.
- As of October 8, 1999, we entered into a special service contract with
CHR Solutions to provide us with radio frequency "drive testing" to
predict the propagation characteristics of given areas in our territory
for an estimated probable cost of $61,085, excluding taxes. This
agreement lasts until the project is completed, unless either party
terminates it earlier.
AGREEMENT WITH AMERICAN TOWER CORPORATION
In August 1998, we entered into a master site development and lease
agreement with Specialty, a subsidiary of Specialty Teleconstructors, Inc. that
has since merged with American Tower Corporation. Pursuant to the agreement,
Specialty arranges for collocation of our equipment, or constructs new
facilities, in areas we identify for build-out. The initial term of this lease
is for five years, with automatic renewal for three additional terms of five
years each. The agreement provides for monthly payments aggregating to
approximately $5 million a year, subject to an annual adjustment based on the
Consumer Price Index. Michael Budagher, who is one of our directors and a
manager of West Texas PCS, LLC, one of our stockholders, was, at the time the
agreement was entered into the Vice Chairman, Chief Operating Officer and a
director of Specialty Teleconstructors, Inc., and the Chief Executive Officer,
President and sole director of Specialty. Michael Budagher is also a member and
the General Manager of the Budagher Family LLC, at the time the agreement was
entered into, a stockholder of Specialty Teleconstructors, Inc. Mr. Budagher no
longer holds any of these positions at Specialty or Specialty Teleconstructors,
Inc. and the Budagher Family LLC is no longer a stockholder of Specialty
Teleconstructors, Inc. Additionally, Jeff Howard, who was one of our directors
at the time the agreement was entered into, is a manager of Longmont PCS, LLC,
one of our stockholders, is a stockholder of Specialty Teleconstructors, Inc.
and acts as a Vice President of American Tower Corporation though he has not
been designated as an officer by American Tower Corporation's board of directors
and has no management authority.
SALE OF COMMON STOCK IN THIS OFFERING TO CURRENT STOCKHOLDERS
As part of this sale of our common stock, the underwriters have agreed to
reserve a maximum of 10% of the shares of our common stock to be sold in this
offering for sale to our current stockholders at a price per share equal to the
public offering price less the underwriting discount. The underwriters will not
be entitled to any discount or commission on these shares and the proceeds to us
will be the same as if the shares were sold to the general public. However, the
number of shares of common stock available for sale to the general public will
be reduced to the extent of sales of shares to our current stockholders.
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OTHER RELATED PARTY TRANSACTIONS
In November 1998, we entered into a lease agreement to lease space for
telephone switching equipment in Albuquerque with SASR Limited Partnership, 50%
owned by Michael Budagher, one of our directors and a manager of West Texas PCS,
LLC, one of our stockholders. The lease has a term of five years with two
optional five year terms. The lease provides for monthly payments aggregating to
$18,720 a year, as well as a pro rata portion of real estate taxes on the
property, and subject to adjustment.
In connection with our distribution and sales of Sprint PCS wireless
communications equipment, on December 28, 1998, we entered into a build-to-suit
lease agreement for a retail store in Lubbock with Lubbock HLH, Ltd.,
principally owned by Scotty Hart, one of our directors and the General Manager
of South Plains Advanced Communications & Electronics, Inc. South Plains is one
of our stockholders. This lease, as amended, has a term of 15 years commencing
on July 1, 1999 and provides for monthly payments aggregating to approximately
$110,000 a year, subject to adjustment based on the Consumer Price Index on the
first day of the sixth lease year and on the first day of the eleventh lease
year.
On April 23, 1999, we entered into a note with our Chief Operating Officer,
Jerry W. Brantley, evidencing a loan to Mr. Brantley in the amount of $100,000.
This loan was made pursuant to Mr. Brantley's employment agreement, which
provides that Mr. Brantley is entitled to receive this loan upon his relocation
from the San Antonio, Texas vicinity. The loan matures in April 2014 and accrues
interest at an annual rate of 7.75%. Principal and interest is payable in
monthly installments of $1,052.91 each beginning April 23, 2000. As of September
30, 1999, the entire $100,000 was still outstanding on the loan.
We believe that the terms of each of the transactions described above,
taken as a whole, were no less favorable than we could have obtained from
unaffiliated third parties.
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THE REORGANIZATION
We are currently comprised of Alamosa PCS, LLC, a Texas limited liability
company, and its 99% owned subsidiary, Alamosa Wisconsin Limited Partnership, a
Wisconsin limited partnership. We expect that Chibardun Telephone Cooperative,
Inc., a rural telephone company in Wisconsin, or one of its affiliates, will own
the remaining 1% of Alamosa Wisconsin Limited Partnership. Immediately prior to
the closing of this offering, we will reorganize the business into the holding
company structure outlined below. In connection with the reorganization, the
members of Alamosa PCS, LLC will receive shares of common stock of Alamosa PCS
Holdings, Inc. in the same proportion to their membership interests in Alamosa
PCS, LLC. Unless otherwise indicated, information throughout this prospectus
assumes that the reorganization of our business from a limited liability company
into a holding company structure has already occurred.
STRUCTURE OF ALAMOSA AS OF THE CLOSING OF THIS OFFERING
[ALAMOSA CLOSING STRUCTURE GRAPH]
Alamosa PCS Holdings, Inc. is the legal entity that is selling its common
stock in this offering and that is proposing to sell the senior discount notes
in the notes offering. Alamosa PCS, Inc. is the legal entity that is the
borrower under the Nortel financing.
Alamosa PCS, Inc. will be a wholly-owned subsidiary of Alamosa PCS
Holdings, Inc. Alamosa PCS, Inc. will hold a 99% limited partnership interest in
Texas Telecommunications, LP and Alamosa Delaware GP, LLC, a wholly-owned
subsidiary of Alamosa PCS, Inc., will hold a 1% general partnership interest. We
expect that Alamosa PCS, Inc. will hold a 98% limited partnership interest in
Alamosa Wisconsin Limited Partnership, Chibardun will hold a 1% limited
partnership interest and Alamosa Wisconsin GP, LLC will hold a 1% general
partnership interest.
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REGULATION OF THE WIRELESS TELECOMMUNICATIONS INDUSTRY
The Federal Communications Commission can have a substantial impact upon
entities that manage wireless personal communications services systems and/or
provide wireless personal communications services because the Federal
Communications Commission regulates the licensing, construction, operation,
acquisition and interconnection arrangements of wireless telecommunications
systems in the United States.
The Federal Communications Commission has promulgated, and is in the
process of promulgating, a series of rules, regulations and policies to, among
other things:
- grant or deny licenses for wireless personal communications services
frequencies;
- grant or deny wireless personal communications services license renewals;
- rule on assignments and/or transfers of control of wireless personal
communications services licenses;
- govern the interconnection of wireless personal communications services
networks with other wireless and wireline service providers;
- establish access and universal service funding provisions;
- impose fines and forfeitures for violations of any of the Federal
Communications Commission's rules; and
- regulate the technical standards of wireless personal communications
services networks.
The Federal Communications Commission currently prohibits a single entity
from having a combined attributable interest, of 20% or greater interest in any
license, in broadband wireless personal communications services, cellular and
specialized mobile radio, commonly referred to as SMR, licenses totaling more
than 45 MHz in any geographic area.
TRANSFERS AND ASSIGNMENTS OF WIRELESS PERSONAL COMMUNICATIONS SERVICES LICENSES
The Federal Communications Commission must give prior approval to the
assignment of, or transfers involving, substantial changes in ownership or
control of a wireless personal communications services license. This means that
our stockholders and we will receive advance notice of any and all transactions
involved in transferring control of Sprint PCS or the assignment of some or all
of the wireless personal communications services licenses held by Sprint PCS.
The Federal Communications Commission proceedings afford our stockholders and us
an opportunity to evaluate proposed transactions well in advance of closing, and
to take actions necessary to protect our interests. Non-controlling interests in
an entity that holds a wireless personal communications services license or
operates wireless personal communications services networks generally may be
bought or sold without prior Federal Communications Commission approval. In
addition, a recent Federal Communications Commission order requires only post-
consummation notification of pro forma assignments or transfers of control.
CONDITIONS OF WIRELESS PERSONAL COMMUNICATIONS SERVICES LICENSES
All wireless personal communications services licenses are granted for ten
year terms conditioned upon timely compliance with the Federal Communications
Commission's build-out requirements. Pursuant to the Federal Communications
Commission's build-out requirements, all 30 MHz broadband wireless personal
communications services licensees must construct facilities that offer coverage
to one-third of the population within 5 years and to two-thirds of the
population within ten years, and all 10 MHz broadband wireless personal
communications services licensees must construct facilities that offer coverage
to at least one-quarter of the population within 5 years or make a showing of
"substantial service" within that 5 year period. If the build-out requirements
are not met, wireless personal communications services licenses could be
forfeited. The Federal Communications Commission also requires licensees to
maintain control over their licenses. Our affiliation agreements with Sprint PCS
reflect a management agreement that the parties believe meets the Federal
Communications Commission requirements for licensee control of licensed
spectrum. If the Federal Communications Commission were to determine that our
affiliation agreements
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with Sprint PCS need to be modified to increase the level of licensee control,
we have agreed with Sprint PCS to use our best efforts to modify the agreements
necessary to cause the agreements to comply with applicable law and to preserve
to the extent possible the economic arrangements set forth in the agreements. If
the agreements cannot be modified, the agreements may be terminated pursuant to
their terms. In addition to revoking the licenses, the Federal Communications
Commission could impose monetary penalties on us.
WIRELESS PERSONAL COMMUNICATIONS SERVICES LICENSE RENEWAL
Wireless personal communications services licensees can renew their
licenses for additional ten year terms. Wireless personal communications
services renewal applications are not subject to auctions. However, under the
Federal Communications Commission's rules, third parties may oppose renewal
applications and/or file competing applications. If one or more competing
applications are filed, a renewal application will be subject to a comparative
renewal hearing. The Federal Communications Commission's rules afford wireless
personal communications services renewal applicants involved in comparative
renewal hearings with a "renewal expectancy." The renewal expectancy is the most
important comparative factor in a comparative renewal hearing and is applicable
if the wireless personal communications services renewal applicant has: (1)
provided "substantial service" during its license term; and (2) substantially
complied with all applicable laws and Federal Communications Commission rules
and policies. The Federal Communications Commission's rules define "substantial
service" in this context as service that is sound, favorable and substantially
above the level of mediocre service that might minimally warrant renewal. The
Federal Communications Commission's renewal expectancy and procedures make it
very likely that Sprint PCS will retain the wireless personal communications
services licenses managed by us for the foreseeable future.
INTERCONNECTION
The Federal Communications Commission has the authority to order
interconnection between commercial mobile radio services, commonly referred to
as CMRS, providers and any other common carrier. The Federal Communications
Commission has ordered local exchange carriers to provide reciprocal
compensation to commercial mobile radio services, providers for the termination
of traffic. Using these new rules, we will negotiate interconnection agreements
for the Sprint PCS network in our market area with all of the major regional
Bell operating companies, GTE and several smaller independent local exchange
carriers. Interconnection agreements are negotiated on a state-wide basis. If an
agreement cannot be reached, parties to interconnection negotiations can submit
outstanding disputes to state authorities for arbitration. Negotiated
interconnection agreements are subject to state approval. The Federal
Communications Commission rules and rulings, as well as the state arbitration
proceedings, will directly impact the nature and cost of the facilities
necessary for interconnection of the Sprint PCS systems with local, national and
international telecommunications networks. They will also determine the nature
and amount of revenues we and Sprint PCS can receive for terminating calls
originating on the networks of local exchange and other telecommunications
carriers.
OTHER FEDERAL COMMUNICATIONS COMMISSION REQUIREMENTS
In June 1996, the Federal Communications Commission adopted rules that
prohibit broadband wireless personal communications services providers from
unreasonably restricting or disallowing resale of their services or unreasonably
discriminating against resellers. Resale obligations will automatically expire
on November 24, 2002. The Federal Communications Commission is also considering
whether wireless providers should be required to offer unbundled communications
capacity to resellers who intend to operate their own switching facilities.
These existing resale requirements and their expiration may somewhat affect the
number of resellers competing with us and Sprint PCS in various markets.
However, to date, wireless resellers have not significantly impacted wireless
service providers. Any losses in retail customers have been offset, in major
part, by increases in wireless customers, traffic and wholesale revenues.
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The Federal Communications Commission also adopted rules in June 1996 that
require local exchange and most commercial mobile radio services providers, to
program their networks to allow customers to change service providers without
changing telephone numbers, which is referred to as service provider number
portability. The Federal Communications Commission requires most commercial
mobile radio services providers to implement wireless service provider number
portability where requested in the 100 largest metropolitan areas in the United
States by November 24, 2002. Most commercial mobile radio services providers are
required to implement nationwide roaming by November 24, 2002 as well. The
Federal Communications Commission currently requires most commercial mobile
radio services providers to be able to deliver calls from their networks to
ported numbers anywhere in the country, and to contribute to the Local Number
Portability Fund. Implementation of wireless service provider number portability
will require wireless personal communications services providers like us and
Sprint PCS to purchase more expensive switches and switch upgrades. However, it
will also enable existing cellular customers to change to wireless personal
communications services without losing their existing wireless telephone
numbers, which should make it easier for wireless personal communications
services providers to market their services to existing cellular users.
The Federal Communications Commission has adopted rules permitting
broadband wireless personal communications services and other commercial mobile
radio services providers to provide wireless local loop and other fixed services
that would directly compete with the wireline services of local exchange
carriers. This creates new markets and revenue opportunities for us, Sprint PCS
and other wireless providers, and may do so increasingly in future years. In
June 1996, the Federal Communications Commission adopted rules requiring
broadband wireless personal communications services and other commercial mobile
radio services providers to implement enhanced emergency 911 capabilities within
18 months after the effective date of the Federal Communications Commission's
rules. In December 1997, the Federal Communications Commission revised these
rules to extend the compliance deadline for phase 1 until October 1, 1998 and
for phase II until October 1, 2001 for digital commercial mobile radio services
providers to ensure access for customers using devices for the hearing-impaired.
The Federal Communications Commission recently extended the phase 1 compliance
deadline to January 1, 1999. Further waivers of the enhanced emergency 911
capability requirements may be obtained by individual service providers by
filing a waiver request. The Federal Communications Commission's waivers and
extensions are enabling us, Sprint PCS and other commercial mobile radio
services industry members to delay emergency 911 implementation until the
required equipment becomes more functional and less expensive. However, at a
more reasonable future cost, emergency 911 services may afford wireless carriers
substantial and attractive new service and marketing opportunities.
On June 10, 1999, the Federal Communications Commission initiated a
regulatory proceeding seeking comment from the public on a number of issues
related to competitive access to multiple-tenant buildings, including the
following:
- the Federal Communications Commission's tentative conclusion that the
Communications Act of 1934, as amended, requires utilities to permit
telecommunications service providers access to rooftop and other
rights-of-way in multiple tenant buildings under just, reasonable and
nondiscriminatory rates, terms and conditions; and
- whether building owners that make access available to a
telecommunications service providers should be required to make access
available to all other telecommunications service providers on a
nondiscriminatory basis, and whether the Federal Communications
Commission has the authority to impose such a requirement.
This proceeding could affect the availability and pricing of sites for our
antennae and those of our competitors.
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COMMUNICATIONS ASSISTANCE FOR LAW ENFORCEMENT ACT
The Communications Assistance for Law Enforcement Act, or CALEA, enacted in
1994 requires wireless personal communications services and other
telecommunications service providers to meet capability and capacity
requirements needed by federal, state and local law enforcement to preserve
their electronic surveillance capabilities. Wireless personal communications
services providers must comply with the current industry CALEA capability
standard, known as J-STD-025, by June 30, 2000, and with recently adopted
additions by September 30, 2001. Wireless personal communications services
providers must comply with the CALEA capacity requirements by March 12, 2001. At
present, most wireless personal communications services providers are ineligible
for federal reimbursement for the software and hardware upgrades necessary to
comply with the CALEA capability and capacity requirements, but several bills
pending in Congress may expand reimbursement rights if they are enacted. In
addition, the Federal Bureau of Investigation has been discussing with the
industry options for reducing or waiving CALEA compliance requirements in
geographic areas with minimal or nonexistent electronic surveillance needs.
In addition, the Federal Communications Commission is considering petitions
from numerous parties to establish and implement technical compliance standards
pursuant to CALEA requirements. In sum, CALEA capability and capacity
requirements are likely to impose some additional switching and network costs
upon us, Sprint PCS and other wireless entities. However, it is possible that
some of these costs will be reduced or delayed if current law enforcement or
legislative initiatives are adopted and implemented during 2000 or thereafter.
OTHER FEDERAL REGULATIONS
We must bear the expense of compliance with Federal Communications
Commission and Federal Aviation Administration regulations regarding the siting,
lighting and construction of transmitter towers and antennas. In addition,
Federal Communications Commission environmental regulations may cause some of
our base station locations to become subject to the additional expense of
regulation under the National Environmental Policy Act. The Federal
Communications Commission is required to implement the Act by requiring service
providers to meet land use and radio frequency standards.
REVIEW OF UNIVERSAL SERVICE REQUIREMENTS
The Federal Communications Commission and the states are required to
establish a "universal service" program to ensure that affordable, quality
telecommunications services are available to all Americans. Sprint PCS is
required to contribute to the federal universal service program as well as
existing state programs. The Federal Communications Commission has determined
that the Sprint PCS's "contribution" to the federal universal service program is
a variable percentage of "end-user telecommunications revenues." Although many
states are likely to adopt a similar assessment methodology, the states are free
to calculate telecommunications service provider contributions in any manner
they choose as long as the process is not inconsistent with the Federal
Communications Commission's rules. At the present time it is not possible to
predict the extent of the Sprint PCS total federal and state universal service
assessments or its ability to recover from the universal service fund. However,
some wireless entities are seeking state commission designation as "eligible
telecommunications carriers," enabling them to receive federal and state
universal service support, and are preparing to compete aggressively with
wireline telephone companies for universal service revenue. Because we serve
substantial rural areas, we are likely to obtain revenues in the future from
federal and state universal service support funds that are much greater than the
contributions we will pay.
PARTITIONING; DISAGGREGATION
The Federal Communications Commission has modified its rules to allow
broadband wireless personal communications services licensees to partition their
market areas and/or to disaggregate their assigned spectrum and to transfer
partial market areas or spectrum assignments to eligible third parties. These
rules may enable us to purchase wireless personal communications services
spectrum from Sprint PCS and other
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wireless personal communications services licensees as a supplement or
alternative to the existing management arrangements.
WIRELESS FACILITIES SITING
States and localities are not permitted to regulate the placement of
wireless facilities so as to "prohibit" the provision of wireless services or to
"discriminate" among providers of those services. In addition, so long as a
wireless system complies with the Federal Communications Commission's rules,
states and localities are prohibited from using radio frequency health effects
as a basis to regulate the placement, construction or operation of wireless
facilities. These rules are designed to make it possible for us, Sprint PCS and
other wireless entities to acquire necessary tower sites in the face of local
zoning opposition and delays. The Federal Communications Commission is
considering numerous requests for preemption of local actions affecting wireless
facilities siting.
EQUAL ACCESS
Wireless providers are not required to provide equal access to common
service providers for toll services. This enables us and Sprint PCS to generate
additional revenues by reselling the toll services of Sprint PCS and other
interexchange carriers from whom we can obtain favorable volume discounts.
However, the FCC is authorized to require unblocked access to toll service
providers subject to certain conditions.
STATE REGULATION OF WIRELESS SERVICE
Section 332 of the Communications Act preempts states from regulating the
rates and entry of commercial mobile radio service providers. Section 332 does
not prohibit a state from regulating the other terms and conditions of
commercial mobile services, including consumer billing information and
practices, billing disputes and other consumer protection matters. However,
states may petition the Federal Communications Commission to regulate those
providers and the Federal Communications Commission may grant that petition if
the state demonstrates that (1) market conditions fail to protect subscribers
from unjust and unreasonable rates or rates that are unjustly or unreasonably
discriminatory, or (2) when commercial mobile radio service is a replacement for
landline telephone service within the state. To date, the Federal Communications
Commission has granted no such petition. To the extent we provide fixed wireless
service, we may be subject to additional state regulation. These standards and
rulings have prevented states from delaying the entry of wireless personal
communications services and other wireless carriers into their jurisdictions via
certification and similar requirements, and from delaying or inhibiting
aggressive or flexible wireless price competition after entry.
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DESCRIPTION OF CAPITAL STOCK
GENERAL
The following summarizes all of the material terms and provisions of our
capital stock as they are contemplated to be as of the closing of this offering.
We have 100,000,000 shares of authorized capital stock, including 95,000,000
shares of common stock, par value $0.01 per share and 5,000,000 shares of
preferred stock, par value $0.01 per share. As of December 10, 1999, assuming
the reorganization of our business form into a holding company structure, and
the simultaneous exchange of limited liability company membership interests into
shares of common stock, there were 48,500,000 shares of common stock and no
shares of preferred stock issued and outstanding. As of that date, there would
have been approximately 29 holders of record of the outstanding shares of common
stock.
COMMON STOCK
The holders of common stock are entitled to one vote for each share held of
record on all matters submitted to a vote of stockholders and do not have any
cumulative rights. Subject to the rights of the holders of any series of
preferred stock, holders of common stock are entitled to receive ratably those
dividends as may be declared by the board of directors out of legally available
funds. However, our credit agreement with Nortel prohibits the payment of
dividends of common stock. Holders of shares of common stock have no preemptive,
conversion, redemption, subscription or similar rights. All shares of common
stock, when validly issued and fully paid, will be non-assessable. If we
liquidate, dissolve or wind up, the holders of shares of common stock are
entitled to share ratably in the assets which are legally available for
distribution, if any, remaining after the payment or provision for the payment
of all debts and other liabilities and the payment and setting aside for payment
of any preferential amount due to the holders of shares of any series of
preferred stock.
PREFERRED STOCK
Under our certificate of incorporation, the board of directors is
authorized, subject to limitations prescribed by law, without further
stockholder approval, from time to time to issue up to an aggregate of
10,000,000 shares of preferred stock. The preferred stock may be issued in one
or more series. Each series may have different rights, preferences and
designations and qualifications, limitations and restrictions that may be
established by our board of directors without approval from the stockholders.
These rights, designations and preferences include:
- number of shares to be issued;
- dividend rights;
- dividend rates;
- conversion rights;
- voting rights;
- liquidation preferences; and
- terms of redemption.
If our board of directors decides to issue any preferred stock, it may
discourage or make more difficult a merger, tender offer, business combination
or proxy contest, assumption of control by a holder of a large block of our
securities or the removal of incumbent management, even if these events were
favorable to the interests of stockholders. The board of directors, without
stockholder approval, may issue preferred stock with voting and conversion
rights and dividend and liquidation preferences which may adversely affect the
holders of common stock.
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The Series A preferred stock described under "Stockholder Rights Plan"
below is a series of preferred stock that will be authorized by our board of
directors in connection with a stockholder rights plan.
WARRANTS
As additional consideration to Nortel for its financing commitment, we are
required to issue to Nortel warrants for 2% of our total equity as of the
closing date, on a fully-diluted basis. The warrants will be issued and will be
exercisable by Nortel on the second anniversary of the closing date, unless,
among other options, we contribute $75.0 million of equity to Alamosa PCS, Inc.
and prepay indebtedness outstanding under the Nortel facility. We intend to use
a portion of the proceeds from our offering of senior discount notes to prepay
enough of the Nortel financing to prevent the issuance of the warrants. However,
we cannot assure you that we will choose to complete our notes offering or that
we will prepay any portion of the Nortel financing. Other options to terminate
the warrants include (1) the assignment of a portion of the loans by Nortel to
unrelated lenders, (2) a minimum combination of loan prepayments and assignment
of the loans or (3) a maximum ratio of senior debt to total capitalization as of
the second anniversary of the closing date and for the two consecutive calendar
quarters immediately prior to the second anniversary of the closing date.
However, if we do not complete an additional offering of equity or debt, we do
not anticipate that the warrants will be terminated. The exercise price for the
warrants will be the price paid for our common stock in this offering. Nortel
may not transfer any of its rights with respect to the warrants before the first
anniversary of the closing date, and any warrants transferred before the second
anniversary of the closing date will be subject to the provisions preventing
exercise of the warrants. In no event may the warrants be exercised after the
eighth anniversary of the closing date.
Nortel is entitled to multiple demand registration rights and unlimited
piggyback registration rights of the common stock warrants.
DELAWARE LAW
The acquisition of Alamosa by means of a tender offer, a proxy contest or
otherwise and the removal of incumbent officers and directors may be more
difficult due to provisions of Delaware law. These provisions are expected to
discourage types of coercive takeover practices and inadequate takeover bids and
to encourage persons seeking to acquire control of Alamosa to first negotiate
with us. We believe the increased protection of our potential ability to
negotiate with the proponent of an unfriendly or unsolicited proposal to acquire
or restructure Alamosa outweighs the disadvantages of discouraging these
proposals because, among other things, negotiation of these proposals could
result in an improvement of the terms of any of these proposals.
We are subject to the provisions of Section 203 of the Delaware General
Corporation Law. In general, the statute prohibits us from engaging in a
"business combination" with an "interested stockholder" for a period of three
years after the date that the person became an interested stockholder, unless:
- prior to the date that the person became an interested stockholder, the
transaction or business combination that resulted in the person becoming
an interested stockholder is approved by the board of directors;
- upon consummation of the transaction that resulted in the stockholder
becoming an interested stockholder, the interested stockholder owns at
least 85% of our outstanding voting stock; or
- on or after that date, the business combination is approved by our board
of directors and by the affirmative vote of at least 66 2/3% of our
outstanding voting stock that is not owned by the interested stockholder.
Generally, a "business combination" includes a merger, asset or stock sale, or
other transaction resulting in a financial benefit to the stockholder. Subject
to certain exceptions, an "interested stockholder" is a person
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who, together with that person's affiliates and associates, owns or within the
previous three years, did own 15% or more of our voting stock.
PROVISIONS OF THE CERTIFICATE OF INCORPORATION THAT MAY PREVENT TAKEOVERS
Our certificate of incorporation contains provisions that may delay, defer
or prevent a change in control of Alamosa and make removal of our management
more difficult.
Our certificate of incorporation provides for the division of the board of
directors into three classes, as nearly equal in size as possible, with each
class beginning its three year term in a different year. Our certificate of
incorporation also provides that only the board of directors may fix the number
of directors and that a stockholder may nominate directors only if the
stockholder delivers written notice to us 60 days in advance of an annual
meeting, or within ten days after the date of notice or our public disclosure of
a special meeting, involving the election of directors. The certificate also
provides that any newly created directorship resulting from an increase in the
number of directors or a vacancy on the board of directors may be filled only by
vote of a majority of the remaining directors then in office, even if less than
a quorum. Directors elected to fill a vacancy or by reason of an increase in the
number of directors will hold office until the annual meeting of stockholders at
which the term of office of the class to which they have been elected expires.
Directors may be removed from office only for cause and only by the affirmative
vote of 80% of the then outstanding shares of stock entitled to vote on the
matter.
Our certificate of incorporation provides that any action required or
permitted to be taken by our stockholders may be taken only at a duly called
annual or special meeting of the stockholders, and may not be taken by written
consent of the stockholders. Special meetings may be called only by the Chairman
of the board of directors, if there is one, the President, the board of
directors or the holders of not less than a majority of the then outstanding
shares entitled to vote generally in an election of directors. These provisions
could have the effect of delaying until the next annual stockholders meeting
stockholder actions that are favored by the holders of a majority of the
outstanding voting securities. These provisions may also discourage another
person or entity from making an offer to stockholders for the common stock. This
is because the person or entity making the offer, even if it acquired a majority
of our outstanding voting securities, would be unable to call a special meeting
of the stockholders and would further be unable in most situations to obtain
unanimous written consent of the stockholders. As a result, any meeting as to
matters they endorse, including the election of new directors or the approval of
a merger, would have to wait for the next duly called stockholders meeting.
Our certificate of incorporation also contains fair price provisions
designed to provide safeguards for stockholders when a stockholder owning 20% or
more of our voting stock, referred to as an interested stockholder, or that
interested stockholder's affiliates or associates, attempts to effect a business
combination with Alamosa.
Events that are deemed business combinations include:
- any merger or consolidation of Alamosa involving an interested
stockholder;
- specified dispositions of assets, cash flow or earning power of Alamosa
to an interested stockholder, any issuance of our securities to an
interested stockholder or our entering into loans or other arrangements
involving an interested stockholder, in each case, meeting specified
threshold amounts;
- the adoption of any plan of liquidation or dissolution of Alamosa; and
- any issuance or reclassification of our securities having the effect of
increasing the proportionate share of ownership of an interested
stockholder.
In general, a business combination between Alamosa and an interested stockholder
must be approved by the affirmative vote of the holders of 80% of our
outstanding voting stock, excluding voting stock owned by such interested
stockholder, unless the transaction is approved by a majority of the members of
the board
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of directors who are not interested stockholders and who are not affiliated with
the interested stockholder. Minimum price and form consideration requirements
must also be satisfied. See also "-- Delaware Law."
Delaware Law provides that the affirmative vote of a majority of the shares
entitled to vote on any matter is required to amend a corporation's certificate
of incorporation or bylaws, unless the corporation's certificate of
incorporation or bylaws, as the case may be, requires a greater percentage. Our
certificate of incorporation requires the affirmative vote of the holders of at
least two-thirds of the outstanding voting stock to amend or repeal any of the
provisions of the certificate of incorporation described above. The bylaws may
be amended or repealed by the board of directors, except if the bylaw provisions
affect provisions of the certificate of incorporation described above, then the
affirmative vote of the holders of at least 80% of the outstanding voting stock
is required. The 80% stockholder vote would be in addition to any separate vote
that each class of preferred stock is entitled to that might in the future be
required in accordance with the terms of any preferred stock that might be
outstanding at the time any amendments are submitted to stockholders.
The foregoing provisions, together with the ability of the board of
directors to issue preferred stock without further stockholder action, may delay
or frustrate the removal of incumbent directors or the completion of
transactions that would be beneficial, in the short term, to our stockholders.
The provisions may also discourage or make more difficult a merger, tender
offer, other business combination or proxy contest, the assumption of control by
a holder of a large block of our securities or the removal of incumbent
management, even if these events would be favorable to the interests of our
stockholders.
The certificate of incorporation requires us to indemnify our directors and
officers to the fullest extent permitted by law. In addition, as permitted by
Delaware law, the certificate of incorporation provides that no director will be
liable to us or our stockholders for monetary damages for breach of certain
fiduciary duties as a director. The effect of this provision is to restrict our
rights and the rights of our stockholders in derivative suits to recover
monetary damages against a director for breach of certain fiduciary duties as a
director, except that a director will be personally liable for:
- acts or omissions not in good faith for which involve intentional
misconduct or a knowing violation of law;
- the payment of dividends or the redemption or purchase of stock in
violation of Delaware law;
- any breach of the duty of loyalty to Alamosa or our stockholders; or
- any transaction from which the director derived an improper personal
benefit.
CERTAIN PROVISIONS OF THE SPRINT PCS AGREEMENTS
Pursuant to our affiliation agreements with the Sprint PCS, under specific
circumstances and without further stockholder approval, Sprint PCS may purchase
our operating assets or capital stock for 72% or 80% of the "entire business
value" of Alamosa, which includes the value of the spectrum licenses, business
operations and other assets more fully described in "Our Affiliation Agreements
with Sprint PCS -- The Management Agreement -- Determination of Entire Business
Value." In addition, Sprint PCS must approve any change of control of our
ownership and consent to any assignment of our affiliation agreements with
Sprint PCS. Sprint PCS has a right of first refusal if we decide to sell our
operating assets to a third party. We are also subject to a number of
restrictions on the transfer of our business including a prohibition on the sale
of Alamosa or our operating assets to competitors of Sprint or Sprint PCS. These
restrictions and other restrictions in our affiliation agreements with Sprint
PCS may limit our ability to sell the business and may have a substantial
anti-takeover effect.
STOCKHOLDER RIGHTS PLAN
Rights and rights certificates
Our board of directors currently expects to adopt a stockholder rights plan
at or prior to the closing of this offering. On the date the stockholder rights
plan is adopted, we will declare a dividend of one right for
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each share of common stock outstanding. A right will also attach to each share
of common stock issued at the closing of the offering and each share of common
stock issued subsequent to the closing of the offering. Each right, when
exercisable, entitles the holder to purchase from us one one-thousandth of a
share of Series A Preferred Stock at a purchase price of $ per one
one-thousandth of a share, subject to adjustment. Each fractional share of the
Series A Preferred Stock will essentially be the economic equivalent of one
share of common stock.
A stockholder rights plan is designed to deter coercive takeover tactics
and to otherwise encourage third parties interested in acquiring us to negotiate
with our board of directors. The stockholder rights plan achieves these goals by
significantly diluting the ownership interest of a person who acquires a
specified percentage of common stock.
Initially, the rights will be attached to all certificates representing
outstanding shares of common stock and will be transferred with and only with
such certificates. The rights will separate from the common stock and become
exercisable upon the earlier to occur of:
- the close of business on the tenth business day after the public
announcement that a person or group of persons has acquired 20% or more
of our outstanding common stock, except in connection with an offer
approved by our board of directors; or
- the close of business on the tenth business day after the commencement
of, or announcement of an intention to commence a tender offer or
exchange offer that would result in a person or group of persons
acquiring 20% or more of our outstanding common stock.
A person or group of persons will be considered to have acquired beneficial
ownership of common stock if they have the power to vote or direct the voting of
the common stock.
Expiration of rights
The rights will expire at the close of business on the tenth anniversary of
the date of issuance, unless we redeem or exchange the rights before that date
or amend the stockholder rights plan to extend the term of the rights.
Flip-in right
If any person or group of persons acquires 20% or more of our outstanding
common stock, each holder of a right, other than the acquiring person, will have
the right to receive the number of shares of common stock, or in certain
circumstances, cash, property or other securities of Alamosa, having a value
equal to two times the purchase price of the right. The acquiring person's
rights will automatically become null and void in that event. In other words,
the stockholders other than the acquiring person will be able to buy common
stock at half price.
Flip-over right
If at any time after a person or group of persons acquires 20% or more of
our outstanding common stock and the following occurs:
- we effect a merger or other business combination in which we are not the
surviving corporation;
- we are the surviving corporation in a consolidation, merger or similar
transaction in which our shares of common stock are changed into or
exchanged for other securities; or
- we sell or otherwise transfer more than 50% of our assets, cash flow or
earning power,
then each holder of a right, except a person who has acquired beneficial
ownership of 20% or more of the outstanding common stock, may purchase, upon the
exercise of each right at the then-current purchase price, that number of shares
of common stock of the acquiring company with a market value equal to two
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times the purchase price of the right. In other words, the stockholders other
than the acquiring person will be able to buy common stock of the acquiring
company at half price.
Adjustments
The purchase price and the number of shares of Series A preferred stock or
other securities issuable upon exercise of the rights may be adjusted to prevent
dilution upon:
- stock dividends, subdivisions, combinations or reclassifications of the
Series A preferred stock;
- below market issuances of rights or warrants to subscribe for or convert
into Series A preferred stock; or
- distributions to holders of the Series A preferred stock of evidence of
indebtedness, cash, excluding regular quarterly cash dividends, assets,
excluding dividends payable in Series A preferred stock, or subscription
rights or warrants.
Exchange of rights
After a person or group of persons acquires 20% of our outstanding common
stock but before that person or group beneficially owns 50% or more of our
common stock, we may, at our option, exchange the rights at an exchange ratio of
one-half the number of shares of common stock, Series A preferred stock, or
other property for which a right is exercisable immediately prior to our
decision to exchange the rights, subject to adjustment. Rights held by an
acquiring person are not entitled to these exchange rights. In that event, the
stockholders other than the acquiring person would receive common stock in
exchange for their rights.
Redemption of rights
At any time before a person or group of persons acquires 20% or more of our
outstanding common stock, we may redeem the rights at a price of $0.001 per
right. Upon the effective date of the redemption of the rights, the rights will
terminate and the rights holders will only be entitled to receive the $0.001
redemption price.
Rights as a stockholder
Until a right is exercised, the rights will not entitle the holder to the
rights as an Alamosa stockholder, including, without limitation, the right to
vote or to receive dividends.
The preferred stock
The terms of the Series A preferred stock will be contained in a
Certificate of Designations, Rights and Preferences filed with the Delaware
Secretary of State and attached as an exhibit to the Stockholder Rights Plan,
which is filed as an exhibit to the registration statement.
Anti-takeover effects
The rights will have certain anti-takeover effects. The rights will cause
substantial dilution to any person or group that attempts to acquire us without
the approval of our board of directors. As a result, the overall effect of the
rights may be to make more difficult a merger, tender offer, other business
combination or proxy contest, even if such event would be favorable to the
interest of stockholders.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the common stock is ChaseMellon
Shareholder Services, Dallas, Texas.
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LISTING
Application will be made to list the shares of common stock on the Nasdaq
National Market under the symbol "APCS."
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no market for the common stock.
Future sales of substantial amounts of common stock in the public market could
adversely affect market prices of the common stock prevailing from time to time.
Furthermore, because only a limited number of shares will be available for sale
shortly after the consummation of this offering due to contractual and legal
restrictions on resale, as described below, sales of substantial amounts of
common stock in the public market after the restrictions lapse could adversely
affect the prevailing market price of the common stock and our ability to raise
equity capital in the future.
Upon completion of this offering, we will have outstanding an aggregate of
59,214,000 shares of common stock, assuming no exercise of the underwriters'
over-allotment option. Of these shares, all of the shares sold in this offering
will be freely tradeable without restriction or further registration under the
Securities Act, except that any shares purchased by our affiliates may generally
only be sold in compliance with the limitations of Rule 144 described below.
SALES OF RESTRICTED SHARES; OPTIONS
All of the shares of common stock sold in this offering will be freely
tradeable under the Securities Act, unless purchased by our "affiliates," as the
Securities Act defines that term. In general, under Rule 144 as currently in
effect, a person or persons whose shares are aggregated, including an affiliate,
who has beneficially owned restricted stock for at least one year is entitled to
sell, within any three-month period, a number of shares of stock that does not
exceed the greater of:
- one percent of the then outstanding shares of common stock, or
- the average weekly trading volume in the common stock during the four
calendar weeks preceding the date on which notice of that sale is filed.
In addition, under Rule 144(k), a person who is not an affiliate and has
not been an affiliate for at least three months prior to the sale and who has
beneficially owned shares of restricted stock for at least two years may resell
those shares without compliance with the foregoing requirements. In meeting the
one and two year holding periods described above, a holder of restricted stock
can include the holding periods of prior owners who were not an affiliate.
Additional shares of common stock are available for future grants under our
1999 Long Term Incentive Plan. See "Management -- Benefit Plans -- 1999 Long
Term Incentive Plan." We intend to file one or more registration statements on
Form S-8 under the Securities Act to register all shares of common stock subject
to outstanding stock options and common stock issuable pursuant to our benefit
plans that do not qualify for an exemption under Rule 701 from the registration
requirements of the Securities Act. We expect to file these registration
statements as soon as practicable following the closing of this offering, and
these registration statements are expected to become effective upon filing.
Shares covered by these registration statements will be eligible for sale in the
public markets subject to the lock-up agreements, to the extent applicable.
LOCK-UP AGREEMENTS
We and all of our current stockholders, members of senior management and
directors have agreed, pursuant to the lock-up agreements that, during the
period beginning from the date of this prospectus and continuing and including
the date 180 days after the date of this prospectus, they will not, directly or
indirectly offer, pledge, sell, contract to sell, grant any option, right or
warrant to purchase, or otherwise
98
<PAGE> 102
dispose of any shares of common stock, including but not limited to any common
stock or securities convertible into or exercisable or exchangeable for common
stock which may be deemed to be beneficially owned in accordance with the rules
and regulations of the Securities and Exchange Commission or enter into any swap
or other agreement that transfers, in whole or in part, the economic consequence
of ownership of common stock, or make any demand for, or exercise and right with
respect to, the registration of common stock or any securities convertible into
or exercisable or exchangeable for common stock, without the prior written
consent of Salomon Smith Barney Inc. Salomon Smith Barney Inc. has informed the
Company that it has no current intentions of releasing any shares subject to the
lock-up agreements. Any determination by Salomon Smith Barney Inc. to release
any shares subject to the lock-up agreements would be based on a number of
factors at the time of determination, including the market price of the common
stock, the liquidity of the trading market for the common stock, general market
conditions, the number of shares proposed to be sold, and the timing, purpose
and terms of the proposed sale. There are no exceptions to the lock-up, except
for shares disposed of as bona fide gifts approved by Salomon Smith Barney Inc.
Following the lock-up period, approximately 45,300,000 shares of common
stock will become eligible for sale, subject to compliance with Rule 144 of the
Securities Act as described above.
99
<PAGE> 103
IMPORTANT UNITED STATES FEDERAL TAX CONSEQUENCES
OF OUR COMMON STOCK TO NON-U.S. HOLDERS
This is a general discussion of United States federal tax consequences of
the acquisition, ownership, and disposition of our common stock by a holder
that, for U.S. federal income tax purposes, is not a U.S. person as we define
that term below. A holder of our common stock who is not a U.S. person is a
non-U.S. holder. We assume in the discussion that you will hold our common stock
issued pursuant to the offering as a capital asset, which generally, is property
held for investment. We do not discuss all aspects of U.S. federal taxation that
may be important to you in light of your individual investment circumstances,
such as special tax rules that would apply to you, for example, if you are a
dealer in securities, financial institution, bank, insurance company, tax-exempt
organization, partnership or owner of more than 5% of our common stock. Our
discussion is based on current provisions of the Internal Revenue Code of 1986,
as amended, Treasury regulations, judicial opinions, published positions of the
U.S. Internal Revenue Service and other applicable authorities, all as in effect
on the date of this prospectus and all of which are subject to differing
interpretations or change, possibly with retroactive effect. We have not sought,
and shall not seek, any ruling from the IRS with respect to the tax consequences
discussed in this prospectus, and there can be no assurance that the IRS will
not take a position contrary to the tax consequences discussed below or that any
position taken by the IRS would not be sustained. We urge you to consult your
tax advisor about the U.S. federal tax consequences of acquiring, holding, and
disposing of our common stock, as well as any tax consequences that may arise
under the laws of any foreign, state, local, or other taxing jurisdiction.
For purposes of this discussion, a U.S. person means any one of the
following:
- a citizen or resident of the U.S.
- a corporation, partnership, or other entity created or organized in the
U.S. or under the laws of the U.S. or of any political subdivision of the
U.S.
- an estate, the income of which is includable in gross income for U.S.
federal income tax purposes regardless of its source
- a trust, the administration of which is subject to the primary
supervision of a U.S. court and that has one or more U.S. persons who
have the authority to control all substantial decisions of the trust
DIVIDENDS
Dividends paid to a non-U.S., holder will generally be subject to
withholding of U.S. federal income tax at the rate of 30%. If, however, the
dividend is effectively connected with the conduct of a trade or business in the
U.S. by the non-U.S. holder, the dividend will be subject to U.S. federal income
tax imposed on net income on the same basis that applies to U.S. persons
generally, and, for corporate holders under certain circumstances, the branch
profits tax. Non-U.S. holders should consult any applicable income tax treaties
that may provide for a reduction of, or exemption from, withholding taxes. For
purposes of determining whether tax is to be withheld at a reduced rate as
specified by a treaty, we generally will presume that dividends we pay on or
before December 31, 2000, to an address in a foreign country are paid to a
resident of that country.
Under recently finalized Treasury regulations, which in general apply to
dividends that we pay after December 31, 2000, to obtain a reduced rate of
withholding under a treaty, a non-U.S. holder generally will be required to
provide certification as to that non-U.S. holder's entitlement to treaty
benefits. These regulations also provide special rules to determine whether, for
purposes of applying a treaty, dividends that we pay to a non-U.S. holder that
is an entity should be treated as paid to holders of interests in that entity.
100
<PAGE> 104
GAIN ON DISPOSITION
A non-U.S. holder will generally not be subject to United States federal
income tax, including by way of withholding, on gain recognized on a sale or
other disposition of our common stock unless any one of the following is true:
- the gain is effectively connected with the conduct of a trade or business
in the U.S. by the non-U.S. holder;
- the non-U.S. holder is a nonresident alien individual present in the U.S.
for 183 or more days in the taxable year of the disposition and other
requirements are met;
- the non-U.S. holder is subject to tax pursuant to provisions of the U.S.
federal income tax law applicable to certain U.S. expatriates; and
- we are or have been during certain periods a "United States real property
holding corporation" for U.S. federal income tax purposes.
If we are or have been a United States real property holding corporation, a
non-U.S. holder will generally not be subject to U.S. federal income tax on gain
recognized on a sale or other disposition of our common stock provided that:
- the non-U.S. holder does not hold, and has not held during certain
periods, directly or indirectly, more than 5% of our outstanding common
stock; and
- our common stock is and continues to be traded on an established
securities market for U.S. federal income tax purposes.
We believe that our common stock will be traded on an established securities
market for this purpose in any quarter during which it is included for quotation
on the Nasdaq National Market.
If we are or have been during certain periods a U.S. real property holding
corporation and the above exception does not apply, a non-U.S. holder will be
subject to U.S. federal income tax with respect to gain realized on any sale or
other disposition of our common stock as well as to a withholding tax, generally
at a rate of 10% of the proceeds. Any amount withheld pursuant to a withholding
tax will be creditable against a non-U.S. holder's federal income tax liability.
Gain that is effectively connected with the conduct of a trade or business
in the U.S. by the non-U.S. holder will be subject to the U.S. federal income
tax imposed on net income on the same basis that applies to U.S. persons
generally, and, for corporate holders under certain circumstances, the branch
profits tax, but will generally not be subject to withholding. Non-U.S. holders
should consult any applicable income tax treaties that may provide for different
rules.
UNITED STATES FEDERAL ESTATE TAXES
Our common stock that is owned or treated as owned by an individual who is
not a citizen or resident of the U.S., as specially defined for U.S. federal
estate tax purposes, on the date of that person's death will be included in his
or her estate for U.S. federal estate tax purposes, unless an applicable estate
tax treaty provides otherwise.
INFORMATION REPORTING AND BACKUP WITHHOLDING
Generally, we must report annually to the IRS and to each non-U.S. holder
the amount of dividends that we paid to a holder, and the amount of tax that we
withheld on those dividends. This information may also be made available to the
tax authorities of a country in which the non-U.S. holder resides.
Under current U.S. Treasury regulations, U.S. information reporting
requirements and backup withholding tax will generally not apply to dividends
that we pay on our common stock to a non-U.S. holder at an address outside the
U.S. Payments of the proceeds of a sale or other taxable disposition
101
<PAGE> 105
of our common stock by a U.S. office or a broker are subject to both backup
withholding at a rate of 31% and information reporting, unless the holder
certifies as to its non-reporting requirements. Information reporting, but not
backup withholding tax, will also apply to payments of the proceeds of a sale or
other taxable disposition of our common stock by foreign offices of U.S. brokers
or foreign brokers with certain types of relationships to the U.S., unless the
broker has documentary evidence in its records that the holder is a non-U.S.
holder and certain other conditions are met or the holder otherwise established
an exemption.
Backup withholding is not an additional tax. Any amounts that we withhold
under the backup withholding rules will be refunded or credited against the
non-U.S. holder's U.S. federal income tax liability if certain required
information is furnished to the IRS.
The U.S. Treasury Department has promulgated final regulations regarding
the withholding and information reporting rules discussed above. In general,
those regulations do not significantly alter the substantive withholding and
information reporting requirements but unify current certification procedures
and forms and clarify reliance standards. The final regulations are generally
effective for payments made after December 31, 2000, subject to transition
rules.
102
<PAGE> 106
UNDERWRITING
Subject to the terms and conditions stated in the underwriting agreement
dated the date hereof, each underwriter named below has severally agreed to
purchase, and Alamosa has agreed to sell to the underwriter, the number of
shares set forth opposite the name of such underwriter.
<TABLE>
<CAPTION>
NUMBER
NAME OF SHARES
- ---- ----------
<S> <C>
Salomon Smith Barney Inc....................................
Credit Suisse First Boston Corporation......................
Deutsche Bank Securities Inc................................
----------
Total............................................. 10,714,000
==========
</TABLE>
The underwriting agreement provides that the obligations of the several
underwriters to purchase the shares included in this offering are subject to
approval of certain legal matters by counsel and to certain other conditions.
The underwriters are obligated to purchase all the shares, other than those
covered by the over-allotment option described below, if they purchase any of
the shares.
The underwriters, for whom Salomon Smith Barney Inc., Credit Suisse First
Boston Corporation and Deutsche Bank Securities Inc. are acting as
representatives, propose to offer some of the shares directly to the public at
the public offering price set forth on the cover page of this prospectus and
some of the shares to selected dealers at the public offering price less a
concession not in excess of $ per share. The underwriters may allow, and
such dealers may reallow, a concession not in excess of $ per share on sales
to other dealers. If all of the shares are not sold at the initial offering
price, the representatives may change the public offering price and the other
selling terms. The representatives have advised Alamosa that the underwriters do
not intend to confirm any sales to any accounts over which they exercise
discretionary authority.
We have granted to the underwriters an option, exercisable for 30 days from
the date of this prospectus, to purchase up to 1,607,100 additional shares of
common stock at the public offering price less the underwriting discount. The
underwriters may exercise this option solely for the purpose of covering
over-allotments, if any, in connection with this offering. To the extent the
option is exercised, each underwriter will be obligated, subject to specified
conditions, to purchase a number of additional shares approximately
proportionate to that underwriter's initial purchase commitment.
We, our officers and directors, and some of our other stockholders have
agreed that, for a period of 180 days from the date of this prospectus, we and
they will not, without the prior written consent of Salomon Smith Barney Inc.,
offer, sell, contract to sell, pledge, assign or otherwise dispose of or hedge
any shares of common stock of Alamosa or any securities convertible into or
exchangeable for common stock. Salomon Smith Barney Inc. in its sole discretion
may release any of the securities subject to these lock-up agreements at any
time without notice.
As part of this sale of our common stock, the underwriters have agreed to
reserve a maximum of 10% of the shares of our common stock to be sold in this
offering for sale to our current stockholders at a price per share equal to the
public offering price less the underwriting discount. The underwriters will not
be entitled to any discount or commission on these shares and the proceeds to us
will be the same as if the shares were sold to the general public. However, the
number of shares of common stock available for sale to the general public will
be reduced to the extent of sales of shares to our current stockholders.
At our request, Salomon Smith Barney Inc. reserved up to approximately 5%
of the shares being offered as directed shares for sale at the initial public
offering price to persons who are directors, officers or our employees, or who
are otherwise associated with us and our affiliates or employees, and who have
advised us of their desire to purchase these shares. The number of shares of
common stock available for sale to the general public will be reduced to the
extent of sales of directed shares to any of the persons for whom they have been
reserved. Any shares not so purchased will be offered by the underwriters on the
same basis as all other shares of common stock offered hereby. We have agreed to
indemnify the
103
<PAGE> 107
underwriters against specified liabilities and expenses, including liabilities
under the Securities Act of 1933, in connection with the sales of the directed
shares.
Prior to this offering, there has been no public market for our common
stock. Consequently, the initial public offering price for the shares was
determined by negotiations among us and the representatives. Among the factors
considered in determining the initial public offering price were our record of
operations, our current financial condition, our future prospects, our markets,
the economic conditions in and future prospects for the industry in which we
compete, our management, and currently prevailing general conditions in the
equity securities markets, including current market valuations of publicly
traded companies considered comparable to us. There can be no assurance,
however, that the prices at which the shares will sell in the public market
after this offering will not be lower than the price at which they are sold by
the underwriters or that an active trading market in the common stock will
develop and continue after this offering.
We will apply to have the common stock included for quotation on the Nasdaq
National Market under the symbol "APCS."
The following table shows the underwriting discounts and commissions to be
paid to the underwriters by us in connection with this offering. These amounts
are shown assuming both no exercise and full exercise of the underwriters'
option to purchase additional shares of common stock.
<TABLE>
<CAPTION>
PAID BY ALAMOSA
---------------------------
NO EXERCISE FULL EXERCISE
----------- -------------
<S> <C> <C>
Per Share................................................... $ $
Total............................................. $ $
</TABLE>
In connection with the offering, Salomon Smith Barney Inc., on behalf of
the underwriters, may purchase and sell shares of common stock in the open
market. These transactions may include over-allotment, syndicate covering
transactions and stabilizing transactions. Over-allotment involves syndicate
sales of common stock in excess of the number of shares to be purchased by the
underwriters in the offering, which creates a syndicate short position.
Syndicate covering transactions involve purchases of the common stock in the
open market after the distribution has been completed in order to cover
syndicate short positions. Stabilizing transactions consist of certain bids or
purchases of common stock made for the purpose of preventing or retarding a
decline in the market price of the common stock while the offering is in
progress.
The underwriters also may impose a penalty bid. Penalty bids permit the
underwriters to reclaim a selling concession from a syndicate member when
Salomon Smith Barney Inc., in covering syndicate short positions or making
stabilizing purchases, repurchases shares originally sold by that syndicate
member.
Any of these activities may cause the price of the common stock to be
higher than the price that otherwise would exist in the open market in the
absence of such transactions. These transactions may be effected on the Nasdaq
National Market or in the over-the-counter market, or otherwise and, if
commenced, may be discontinued at any time.
We estimate that the total expenses of this offering will be $ .
The representatives may, from time to time, engage in transactions with and
perform services for us in the ordinary course of their business. In particular,
Salomon Smith Barney Inc. and Credit Suisse First Boston Corporation are acting
as lead underwriters in the offering of our senior discount notes.
We have agreed to indemnify the underwriters against specified liabilities,
including liabilities under the Securities Act of 1933, or to contribute to
payments the underwriters may be required to make in respect of any of those
liabilities.
104
<PAGE> 108
LEGAL MATTERS
Certain legal matters in connection with the sale of the shares of common
stock offered hereby will be passed upon for Alamosa by Haynes and Boone, LLP,
Dallas, Texas and for the underwriters by Cravath, Swaine & Moore.
EXPERTS
The financial statements of Alamosa PCS, LLC as of December 31, 1998 and
September 30, 1999, and for the period from inception, July 16, 1998 to December
31, 1998, the nine-month period ended September 30, 1999 and the period from
inception, July 16, 1998 to September 30, 1999, have been included herein and in
the registration statement in reliance upon the report of PricewaterhouseCoopers
LLP, independent accountants, appearing elsewhere herein, given on authority of
said firm as experts in accounting and auditing.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
The prospectus constitutes a part of the registration statement on Form
S-1, together with all amendments, supplements, schedules and exhibits to the
registration statement, referred to as the registration statement, which we have
filed with the Securities and Exchange Commission with respect to the common
stock offered in this prospectus. This prospectus does not contain all of the
information in the registration statement. For further information about us and
our securities, see the registration statement and its exhibits. This prospectus
contains a description of the material terms and features of some material
contracts, reports or exhibits to the registration statement required to be
disclosed. However, as the descriptions are summaries of the contracts, reports
or exhibits, we urge you to refer to the copy of each material contract, report
and exhibit attached to the registration statement. Copies of the registration
statement and the exhibits to the registration statement, as well as the
periodic reports, proxy statements and other information we will file with the
Securities and Exchange Commission, may be examined without charge in the Public
Reference Section of the Securities and Exchange Commission, 450 Fifth Street,
N.W. Room 1024, Washington, DC 20549, and the Securities and Exchange
Commission's regional offices located at 500 West Madison Street, Suite 1400,
Chicago, IL 60661, and 7 World Trade Center, 13th Floor, New York, NY 10048 or
on the Internet at http://www.sec.gov. You can get information about the
operation of the Public Reference Room by calling the Securities and Exchange
Commission at 1-800-SEC-0330. Copies of all or a portion of the registration
statement can be obtained from the Public Reference Section of the Securities
and Exchange Commission upon payment of prescribed fees. In addition, the
Securities and Exchange Commission maintains a Web site which provides online
access to periodic reports, proxy and information statements and other
information regarding registrants that file electronically with the Securities
and Exchange Commission at the address http://www.sec.gov.
As a result of this offering, we will become subject to the information and
reporting requirements of the Securities Exchange Act of 1934 and will be
required to file periodic reports, proxy statements and other information with
the Securities and Exchange Commission. We will send an annual report to
shareholders and any additional reports or statements required by the Securities
and Exchange Commission. The annual report to shareholders will contain
financial information that has been examined and reported on, with an opinion
expressed by an independent public accountant.
105
<PAGE> 109
ALAMOSA PCS LLC
(A DEVELOPMENT STAGE ENTERPRISE)
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Report of Independent Accountants........................... F-2
Balance Sheets as of December 31, 1998, September 30, 1999,
and as adjusted September 30, 1999 (unaudited)............ F-3
Statements of Operations for the period July 16, 1998,
(inception), through December 31, 1998, for the period
July 16, 1998, (inception), through September 30, 1998
(unaudited), for the nine-month period ended September 30,
1999, and for the period July 16, 1998, (inception),
through September 30, 1999................................ F-4
Statements of Members' Equity for the period July 16, 1998,
(inception), through December 31, 1998, and the nine-month
period ended September 30, 1999........................... F-5
Statements of Cash Flows for the period July 16, 1998,
(inception), through December 31, 1998, for the period
July 16, 1998, (inception), through September 30, 1998
(unaudited), for the nine-month period ended September 30,
1999, and for the period July 16, 1998, (inception),
through September 30, 1999................................ F-6
Notes to Financial Statements............................... F-7
</TABLE>
F-1
<PAGE> 110
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Managers and
Members of Alamosa PCS LLC:
In our opinion, the accompanying balance sheets and the related statements
of operations, members' equity and cash flows present fairly, in all material
respects, the financial position of Alamosa PCS LLC (a development stage
enterprise) at December 31, 1998 and September 30, 1999, and the results of its
operations and its cash flows for the period from July 16, 1998 (inception)
through December 31, 1998, the nine-month period ended September 30, 1999 and
the period from July 16, 1998 (inception) through September 30, 1999, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
PRICEWATERHOUSECOOPERS LLP
Dallas, Texas
December 5, 1999
F-2
<PAGE> 111
ALAMOSA PCS LLC
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
AS ADJUSTED
SEPTEMBER 30, 1999
DECEMBER 31, 1998 SEPTEMBER 30, 1999 (UNAUDITED)
----------------- ------------------ ------------------
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents................. $13,529,077 $ 7,454,309 $ 7,454,309
Accounts receivable, net of allowance for
doubtful accounts of $24,355 at
September 30, 1999..................... -- 832,827 832,827
Inventory................................. -- 4,989,500 4,989,500
Prepaid expenses and other assets......... 52,046 686,102 686,102
Interest receivable....................... -- 19,255 19,255
----------- ------------ ------------
Total current assets.............. 13,581,123 $ 13,981,993 $ 13,981,993
----------- ------------ ------------
Notes receivable from related party......... -- 100,000 100,000
Debt issuance costs......................... -- 3,892,678 3,892,678
Restricted cash............................. -- 1,000,000 1,000,000
Construction in progress.................... 1,978,770 28,940,359 28,940,359
Property and equipment, net................. 113,992 36,929,808 36,929,808
Microwave relocations, net.................. -- 3,333,189 3,333,189
Other non-current assets.................... -- 233,700 233,700
----------- ------------ ------------
Total assets...................... $15,673,885 $ 88,411,727 $ 88,411,727
=========== ============ ============
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued expenses..... $ 395,355 $ 9,656,578 $ 9,656,578
Payable to related parties................ 450,496 1,043,259 1,043,259
Current installments of capital leases.... 20,145 21,281 21,281
Notes payable............................. 23,637 143,690 143,690
Microwave relocation obligation........... -- 3,372,484 3,372,484
Other current liabilities................. -- 244,369 244,369
----------- ------------ ------------
Total current liabilities......... $ 889,633 $ 14,481,661 $ 14,481,661
Capital lease obligations, noncurrent....... 708,074 832,684 832,684
Long-term debt, excluding current
maturities................................ -- 59,887,586 59,887,586
----------- ------------ ------------
Total liabilities................. 1,597,707 75,201,931 75,201,931
Commitments and contingencies
Equity:
Contributed capital....................... $15,000,000 $ 25,000,000 $ --
Deficit accumulated during the development
stage.................................. (923,822) (18,612,241) (18,612,241)
Preferred stock, par value $.01 per share;
5,000,000 shares authorized; no shares
issued and outstanding.................
Common stock, $.01 par value; 95,000,000
shares authorized, 48,500,000 issued
and outstanding........................ -- -- 485,000
Additional paid-in capital................ -- 11,193,751 35,708,751
Unearned compensation..................... -- (4,371,714) (4,371,714)
----------- ------------ ------------
Total Equity...................... 14,076,178 13,209,796 13,209,796
Total liabilities and members'
equity.......................... $15,673,885 $ 88,411,727 $ 88,411,727
=========== ============ ============
</TABLE>
The accompanying notes are an integral part of the unaudited financial
statements.
F-3
<PAGE> 112
ALAMOSA PCS LLC
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD
JULY 16, 1998 JULY 16, 1998 FOR THE NINE-MONTH JULY 16, 1998
(INCEPTION) THROUGH (INCEPTION) THROUGH PERIOD ENDED (INCEPTION) THROUGH
DECEMBER 31, 1998 SEPTEMBER 30, 1998 SEPTEMBER 30, 1999 SEPTEMBER 30, 1999
------------------- ------------------- ------------------ -------------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenues:
Service revenues................ $ -- $ -- $ 1,187,008 1,187,008
Product sales................... -- -- 813,052 813,052
---------- --------- ------------ ------------
Total revenue........... -- -- 2,000,060 2,000,060
Cost of services.................. -- -- 818,678 818,678
Cost of products sold............. -- -- 794,963 794,963
---------- --------- ------------ ------------
Gross profit............ -- -- 386,419 386,419
Operating expenses:
Selling, general and
administrative expenses...... 949,445 400,631 9,194,937 10,144,382
Equity participation
compensation expense......... -- -- 6,822,037 6,822,037
General and administrative
expenses -- related
parties...................... 6,886 -- 680,006 686,892
Depreciation and amortization... 2,063 -- 936,736 938,799
---------- --------- ------------ ------------
Loss from operations.... (958,394) (400,631) (17,247,297) (18,205,691)
Interest and other income......... 34,589 170 444,746 479,335
Interest expense.................. (17) -- (885,868) (885,885)
---------- --------- ------------ ------------
Net loss................ (923,822) (400,461) (17,688,419) (18,612,241)
Pro forma basic and diluted
weighted average common shares
outstanding (unaudited)......... 48,500,000 48,500,000 48,500,000 48,500,000
Pro forma information (unaudited):
Net loss........................ (923,822) (400,461) 17,688,419 (18,612,241)
Pro forma income tax adjustment:
Income tax benefit........... 317,592 137,671 6,014,062 6,331,558
Deferred tax valuation
allowance.................. (317,592) (137,671) (6,014,062) (6,331,558)
---------- --------- ------------ ------------
Pro forma net loss........... (923,822) (400,461) (17,688,419) (18,612,241)
Basic and diluted pro forma net
loss per common share........ $ (0.02) $ (0.01) $ (0.36) $ (0.38)
========== ========= ============ ============
</TABLE>
The accompanying notes are an integral part of the unaudited financial
statements.
F-4
<PAGE> 113
ALAMOSA PCS LLC
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF MEMBERS' EQUITY
FOR THE PERIOD JULY 16, 1998 (INCEPTION) THROUGH
DECEMBER 31, 1998 AND THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
YELLOW
ALAMO IV ROSEWOOD WEST TX TREGAN LONGMONT ROCK TOTAL
----------- ----------- ----------- ----------- --------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, July 16, 1998
(inception).................... $ -- $ -- $ -- $ -- $ -- $ -- $ --
Members' contributions....... 8,443,944 3,007,732 2,187,500 927,835 309,278 123,711 15,000,000
Net loss..................... (520,047) (185,240) (134,724) (57,144) (19,048) (7,619) (923,822)
----------- ----------- ----------- ----------- --------- --------- ------------
Balance, December 31, 1998..... $ 7,923,897 $ 2,822,492 $ 2,052,776 $ 870,691 $ 290,230 $ 116,092 $ 14,076,178
----------- ----------- ----------- ----------- --------- --------- ------------
Members' contributions....... 5,629,300 2,005,150 1,458,330 618,560 206,190 82,470 10,000,000
Net loss..................... (9,957,342) (3,546,793) (2,579,555) (1,094,135) (364,718) (145,876) (17,688,419)
Additional paid in capital... 11,193,751
Unearned compensation........ (4,371,714)
----------- ----------- ----------- ----------- --------- --------- ------------
Balance, September 30, 1999.... $ 3,595,855 $ 1,280,849 $ 931,551 $ 395,116 $ 131,702 $ 52,686 $ 13,209,796
=========== =========== =========== =========== ========= ========= ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE> 114
ALAMOSA PCS LLC
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE PERIOD FOR THE PERIOD
JULY 16, 1998 JULY 16, 1998 FOR THE FOR THE PERIOD
(INCEPTION) (INCEPTION) THROUGH NINE-MONTH JULY 16, 1998
THROUGH SEPTEMBER 30, 1998 PERIOD ENDED (INCEPTION) THROUGH
DECEMBER 31, 1998 (UNAUDITED) SEPTEMBER 30, 1999 SEPTEMBER 30, 1999
----------------- ------------------- ------------------ -------------------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss..................................... $ (923,822) $(400,461) $(17,688,419) $(18,612,241)
Adjustments to reconcile net loss to net cash
used in operating activities:
Equity participation compensation
expense.................................. -- -- 6,822,037 6,822,037
Depreciation and amortization.............. 2,063 -- 936,736 938,799
Amortization of debt issuance costs........ 178,264 178,264
Deferred interest expense.................. -- -- 544,055 544,055
(Increase) decrease in:
Accounts receivable...................... -- -- (832,827) (832,827)
Inventory................................ -- -- (4,989,500) (4,989,500)
Prepaid expenses and other assets........ (52,046) -- (634,056) (686,102)
Interest receivable...................... -- -- (19,255) (19,255)
Increase (decrease) in:
Accounts payable and accrued expenses.... 845,851 403,744 6,344,077 7,189,928
----------- --------- ------------ ------------
Net cash provided (used) by
operating activities.............. (127,954) 3,283 (9,338,888) (9,466,842)
----------- --------- ------------ ------------
Cash flows from investing activities:
Issuance of notes receivable............... -- -- (100,000) (100,000)
Increase in restricted cash................ -- -- (1,000,000) (1,000,000)
Additions to construction in progress...... (1,250,551) (396,812) (8,225,571) (9,476,122)
Additions to property and equipment........ (92,418) -- (9,459,029) (9,551,447)
----------- --------- ------------ ------------
Net cash used investing
activities........................ (1,342,969) (396,812) (18,784,600) (20,127,569)
----------- --------- ------------ ------------
Cash flows from financing activities:
Debt issuance cost......................... -- -- (230,942) (230,942)
Capital contribution....................... 15,000,000 500,000 10,000,000 25,000,000
Increase in notes payable.................. 12,289,626 12,289,626
Payments on capital leases................. -- -- (20,633) (20,633)
Interest rate cap premiums................. -- -- (233,700) (233,700)
Increase in other current liabilities...... -- -- 244,369 244,369
----------- --------- ------------ ------------
Net cash provided by financing
activities........................ 15,000,000 500,000 22,048,720 37,048,720
----------- --------- ------------ ------------
Net increase (decrease) in cash and
cash equivalents.................. 13,529,077 106,471 (6,074,768) 7,454,309
Cash and cash equivalents at beginning of
period..................................... -- -- 13,529,077 --
----------- --------- ------------ ------------
Cash and cash equivalents at end of period... $13,529,077 $ 106,471 $ 7,454,309 $ 7,454,309
=========== ========= ============ ============
Supplemental disclosure -- cash paid for
interest................................... $ -- $ -- $ 60,093 $ 60,093
=========== ========= ============ ============
Supplemental disclosure of noncash
activities:
Capitalized lease obligations incurred..... $ 728,219 $ -- $ 146,379 $ 874,598
Liabilities assumed in connection with
acquisition of construction in progress
and property and equipment............... 23,637 -- 46,843,867 46,867,504
Liabilities assumed in connection with debt
issuance cost............................ -- -- 3,840,000 3,840,000
Liabilities assumed in connection with
microwave relocations.................... -- -- 3,372,484 3,372,484
----------- --------- ------------ ------------
$ 751,856 $ -- $ 54,202,730 $ 54,954,586
=========== ========= ============ ============
</TABLE>
The accompanying notes are integral part of the unaudited financial statements.
F-6
<PAGE> 115
ALAMOSA PCS LLC
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND BUSINESS OPERATIONS
Alamosa PCS LLC, referred to in these financial statements as the Company
or Alamosa, was formed in July 1998 as a Texas limited liability company. In
July, 1998, Alamosa entered into affiliation agreements with Sprint PCS, the PCS
Group of Sprint Corporation. These affiliation agreements provide Alamosa with
the exclusive right to build, own and manage a wireless voice and data services
network in markets with over 5.2 million residents located in Texas, New Mexico,
Arizona, and Colorado under the Sprint PCS brand. As described in Note 11,
Alamosa has signed a letter of intent to amend its affiliation agreements with
Sprint PCS to expand its services network so that it will include 8.4 million
residents. Alamosa is required to build out the wireless network according to
Sprint PCS specifications. The affiliation agreements are in effect for a term
of 20 years with three 10-year renewal options unless terminated by either party
under provisions outlined in the affiliation agreements. The affiliation
agreements include indemnification clauses between Alamosa and Sprint PCS to
indemnify each other against claims arising from violations of laws or the
affiliation agreements, other than liabilities resulting from negligence or
willful misconduct of the party seeking to be indemnified.
As described in Note 11, Alamosa PCS Holdings Inc. was formed in October
1999 in anticipation of an initial public offering. Immediately prior to the
offering, shares of Alamosa PCS Holdings Inc., the registrant, will be exchanged
for the Company's membership interests. The Company will be wholly owned by
Alamosa PCS Holdings Inc.
Alamosa is currently in the development stage. This stage is characterized
by significant expenditures for the design and construction of the wireless
network. Management estimates total network build-out expenditures related to
the markets included in the affiliation agreements with Sprint PCS, of
approximately $272 million, including site acquisition, design, construction and
equipment through 2002. These expenditures will be funded through member
contributions of $37 million, a financing agreement with Nortel Networks Inc. of
$250 million and proceeds of the initial public offering described in Note 11.
From inception through September 30, 1999, the Company has commenced operations
in seven markets. Since inception, the Company has incurred revenues and
expenses of $2,000,060 and $20,612,301 resulting in a deficit accumulated during
the development stage of $18,612,241 at September 30, 1999. Alamosa has signed
an agreement with a related party for the provision of engineering services
related to the network build-out. Once the initial build-out is completed within
a market, the Company's focus will be the development of the Sprint PCS
subscriber base within that market.
The Regulations of the Company, as amended, provide for the governance and
administration of the Company's business, allocation of profits and losses, tax
allocations, transactions with partners, disposition of ownership interest and
other matters. The Regulations establish two classes of membership interests.
Class I members have full voting rights and are entitled to full benefits of
ownership of their share of the Company. Class II members consist of additional
non-voting share interests of the Company which the Board of Managers may
authorize to be distributed to employees of the Company under an incentive bonus
plan.
The Regulations generally provide for the allocation of profits and losses
pro-rata based on the proportion that a percentage interest of a member bears to
the aggregate percentage interests of all members, as defined in the
Regulations.
F-7
<PAGE> 116
ALAMOSA PCS LLC
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
The members of the Company have the following class I ownership interests
as of December 31, 1998 and September 30, 1999:
<TABLE>
<S> <C>
Alamo IV, LLC............................................. 56.2930%
Rosewood Telecommunications, L.L.C........................ 20.0515%
West Texas PCS, LLC....................................... 14.5833%
Tregan International Corp................................. 6.1856%
Longmont PCS, LLC......................................... 2.0619%
Yellow Rock PCS, L.P...................................... 0.8247%
</TABLE>
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies:
Cash and cash equivalents
Cash and cash equivalents include cash, money market funds, and commercial
paper with minimal interest rate risk and original maturities of three months or
less at the date of acquisition. The carrying amount approximates fair value.
As of September 30, 1999, other liabilities consist of a bank overdraft of
$244,369. This overdraft was mainly due to the timing of transfers between
Alamosa's operating and investment accounts.
Inventory
Inventory consists of handsets and related accessories. Inventories
purchased for resale will be carried at the lower of cost, determined using
weighted average, or market. Market will be determined using replacement cost in
accordance with industry standards.
Microwave relocation
Microwave relocation includes costs and the related obligation incurred to
relocate incumbent microwave frequencies in Alamosa's service area. Microwave
relocation costs are amortized on a straight-line basis over 20 years beginning
upon commencement of services in respective markets. The amortization of
microwave relocation costs was insignificant in 1998 and totaled $39,295 for the
nine-month period ended September 30, 1999.
Property, equipment, and construction in progress
Property and equipment are reported at cost less accumulated depreciation.
Cost incurred to design and construct the wireless network in a market are
classified as construction in progress. When the wireless network for a
particular market is completed and placed into service, the related costs are
transferred from construction in progress to property and equipment. Repair and
maintenance costs are charged to expense as incurred; significant renewals and
betterments are capitalized.
When depreciable assets are retired or otherwise disposed of, the related
costs and accumulated depreciation are removed from the respective accounts, and
any gains or losses on disposition are recognized in income. If facts or
circumstances support the possibility of impairment, the Company will prepare a
projection of future operating cash flows, undiscounted and without interest. If
based on this projection, the Company does not expect to recover its carrying
cost, an impairment loss equal to the difference between the fair value of the
asset and its carrying value will be recognized in operating income. No such
losses have been recognized to date.
Property and equipment are depreciated using the straight-line method based
on estimated useful lives of the assets.
F-8
<PAGE> 117
ALAMOSA PCS LLC
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Asset lives are as follows:
<TABLE>
<S> <C>
Buildings............................................... 20 years
Network equipment....................................... 5-10 years
Vehicles................................................ 5 years
Furniture and office equipment.......................... 5-7 years
</TABLE>
Leasehold improvements are depreciated over the shorter of the remaining
term of the lease or the estimated useful life of the improvement.
Interest will be capitalized in connection with the construction of the
wireless network. The capitalized interest will be recorded as part of the asset
to which it relates and will be amortized over the asset's estimated useful
life. No interest was capitalized in 1998. Total interest capitalized is
$656,800 as of September 30, 1999.
Software costs
Initial operating systems software is capitalized and amortized using the
straight-line method, generally over a period of five years. Capitalized
software of approximately $11,500 and $323,000 at December 31, 1998 and
September 30, 1999 are recorded in property and equipment. The Company amortized
computer software costs of approximately $800 and $54,000 during 1998 and for
the nine month period ended September 30, 1999.
Start-up costs
In April 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-5, "Reporting on the Costs of Start-Up
Activities." This statement is effective January 1, 1999 and requires that costs
of start up activities and organization costs be expensed as incurred.
The Company has expensed start-up and organization costs as incurred. The
adoption of this statement will have no effect on the Company's financial
position or results of operations.
Advertising costs
Advertising costs are expensed as incurred. Advertising expenses totaled
approximately $2,100 and $2,282,000 during 1998 and for the nine-month period
ended September 30, 1999 respectively. Advertising costs include handset subsidy
expenses representing the excess of the cost of handsets over the retail sales
price. There was no handset subsidy expense during 1998. Handset subsidy expense
was approximately $1,194,000 for the nine-month period ended September 30, 1999.
Income taxes
At December 31, 1998 and September 30, 1999, Alamosa is organized as a
Texas limited liability company. Therefore, the results of operations of the
Company are included in the income tax returns of its members. Accordingly, no
provision for income taxes is recorded in the accompanying financial statements.
Revenue recognition
The Company will recognize revenue as services are performed. Sprint PCS
will handle Alamosa's billings and collections and will retain 8% of collected
service revenues from Sprint PCS subscribers based in Alamosa's territory and
from non-Sprint PCS subscribers who roam onto Alamosa's network. The amount
retained by Sprint PCS will be recorded as an operating expense. Revenues
generated from the sale of handsets and accessories and from roaming services
provided to Sprint PCS customers who are not based in Alamosa's territory are
not subject to the 8% retainage.
F-9
<PAGE> 118
ALAMOSA PCS LLC
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Sprint PCS will pay Alamosa a Sprint PCS roaming fee for each minute that a
Sprint PCS subscriber based outside of Alamosa's territory roams on Alamosa's
portion of the Sprint PCS network. Revenue from these services will be
recognized as the services are performed. Similarly, Alamosa will pay Sprint PCS
roaming fees to Sprint PCS, when a Sprint PCS subscriber based in Alamosa's
territory roams on the Sprint PCS network outside of Alamosa's territory. These
costs will be included as cost of sales when incurred.
Product revenues consisting of proceeds from sales of handsets and
accessories will be recorded net of an allowance for sales returns. The
allowance will be estimated based on Sprint PCS's handset return policy which
allows customers to return handsets for a full refund within 30 days of
purchase. When handsets are returned to the Company, the Company may be able to
reissue the handsets to customers at little additional cost. However, when
handsets are returned to Sprint PCS for refurbishing, the Company will receive a
credit from Sprint PCS, which will be less than the amount the Company
originally paid for the handset.
Stock based compensation
The Company has elected to follow Accounting Principles Board No. 25,
"Accounting for Stock Issued to Employees" and related interpretations in
accounting for its employee stock options. Under APB 25, the Company recorded no
compensation expense related to stock options at December 31, 1998. At September
30, 1999, the Company recorded compensation expense of $6,822,037 which is
presented as equity participation compensation expense in the Company's
Statement of Operations. The Company has implemented the disclosure-only
provisions of SFAS No. 123, "Accounting for Stock Based Compensation."
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 on the date of the financial
statements and the reported amounts of expenses during the reporting period.
Actual results could differ from those estimates.
Risks and uncertainties
Emergence from the development stage is dependent upon successful
implementation of the Company's business strategy and development of a
sufficient subscriber base. The Company will continue to incur significant
expenditures in connection with expanding and improving its operations.
Concentration of risk
The Company maintains cash and cash equivalents in accounts with a
financial institution in excess of the amount insured by the Federal Deposit
Insurance Corporation. The Company monitors the financial stability of this
institution regularly and management does not believe there is significant
credit risk associated with deposits in excess of federally insured amounts.
Effects of recent accounting pronouncements
In June 1998 and June 1999, the Financial Accounting Standards Board,
commonly referred to as FASB, issued Statement of Financial Accounting
Standards, or SFAS, No. 133, "Accounting for Derivative Instruments and Hedging
Activities" and SFAS No. 137, "Accounting for Derivative Instruments and Hedging
Activities-Deferral of the Effective Date of FASB Statement No. 133." These
statements require companies to record derivatives on the balance sheet as
assets or liabilities, measured at
F-10
<PAGE> 119
ALAMOSA PCS LLC
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
fair value. Gains or losses resulting from changes in the values of those
derivatives would be accounted for depending on the use of the derivative and
whether it qualifies for hedging accounting. SFAS No. 133 will be effective for
Alamosa's fiscal year ending December 31, 2001. Management believes that the
adoption of these statements will not have a significant impact on the Company's
financial results.
The American Institute of Certified Public Accountants issued Statement of
Position 98-5, "Reporting on the Costs of Start-Up Activities," in April 1998.
Effective for financial statements for fiscal years beginning after December 15,
1998, this statement requires costs of start-up activities and organization
costs to be expensed as incurred. Start-up activities are defined as those
one-time activities related to opening a new facility, introducing a new product
or service, conducting business in a new territory, conducting business with a
new class of customer or beneficiary, initiating a new process in an existing
facility, or commencing some new operation. The Company has not capitalized any
expenses with such characteristics for financial reporting purposes. Therefore,
the Company believes adoption of this statement will not materially impact the
financial statements.
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income." This
statement requires that all items required to be recognized under accounting
standards as components of comprehensive income, be reported in a financial
statement that is displayed with the same prominence as other financial
statements. SFAS No. 130 is effective for financial statement periods beginning
after December 31, 1997. However, in the current year, no items represent
comprehensive income as defined in SFAS No. 130.
3. UNAUDITED PRO FORMA AND AS ADJUSTED INFORMATION
The unaudited pro forma and as adjusted information reflects certain
assumptions regarding transactions and their effects that would occur as a
result of the initial public offering described in Note 11.
Unaudited pro forma income information
The unaudited pro forma information as shown on the statement of operations
is presented to show the effects of income taxes related to the Company's
anticipated termination of its limited liability company status. The unaudited
pro forma income tax adjustment is presented as if the Company had been a C
Corporation subject to federal and state income taxes at an effective tax rate
of 34% for the period from inception through December 31, 1998 and the
nine-month period ended September 30, 1999. Application of the provisions of
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" would have resulted in a deferred tax asset primarily from temporary
differences related to the treatment of start-up costs and from net operating
loss carryforwards. The deferred tax asset would have been offset by a full
valuation allowance as there is not currently sufficient positive evidence as
required by SFAS No. 109 to substantiate recognition of the asset.
The pro forma information is presented for informational purposes only and
is not necessarily indicative of operating results that would have occurred had
the Company elected to terminate its limited liability company status as of the
beginning of each of the periods presented, nor are they necessarily indicative
of future operating results.
Unaudited pro forma net loss per share
Pro forma net loss per share is calculated by dividing pro forma net loss
by the weighted average number of shares of common stock which would have been
outstanding before the initial public offering after giving effect to the
reorganization of the Company described in Note 11.
F-11
<PAGE> 120
ALAMOSA PCS LLC
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Unaudited pro forma weighted average shares outstanding
Unaudited pro forma weighted average shares outstanding is computed after
giving effect to the reorganization of the Company described in Note 11. The
calculation was made in accordance with Statement of Financial Accounting
Standards No. 128, "Earnings Per Share." Diluted weighted average shares
outstanding at September 30, 1999 exclude 487,288 incremental potential common
shares from stock options because inclusion would have been antidilutive.
4. PROPERTY, EQUIPMENT AND CONSTRUCTION IN PROGRESS
Property and equipment consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1998 1999
------------ -------------
<S> <C> <C>
Vehicles.................................. $ 23,637 $ 430,753
Furniture and office equipment............ 92,418 1,679,017
Network equipment......................... -- 33,635,587
Land and building......................... -- 2,080,526
---------- -----------
116,055 37,825,883
Accumulated depreciation.................. (2,063) (896,075)
---------- -----------
Total........................... $ 113,992 $36,929,808
========== ===========
</TABLE>
Construction in progress consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1998 1999
------------ -------------
<S> <C> <C>
Network equipment......................... $1,628,271 $23,009,205
Leasehold improvements.................... 350,499 5,931,154
---------- -----------
Total........................... $1,978,770 $28,940,359
========== ===========
</TABLE>
5. LEASES
Operating leases
The Company has various operating leases, primarily related to rentals of
towers sites and offices. Rental expense was $15,208 and $664,622 for the period
ended December 31, 1998 and for the nine-month period ended September 30, 1999
respectively. At September 30, 1999, the aggregate minimum rental commitments
under noncancelable operating leases for the periods shown are as follows:
<TABLE>
<S> <C>
YEARS:
1999.................................................. $ 684,167
2000.................................................. 2,965,083
2001.................................................. 2,978,702
2002.................................................. 2,997,820
2003.................................................. 3,030,731
2004.................................................. 3,086,337
Thereafter............................................ 15,633,791
-----------
Total......................................... $31,376,631
===========
</TABLE>
Included in total minimum rental commitments is $16,049,515 which will be
paid to related parties.
F-12
<PAGE> 121
ALAMOSA PCS LLC
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Capital leases
Capital leases consist of leases for rental of retail space and switch
usage. The net present value of the leases was $728,219 and $853,965 at December
31, 1998 and September 30, 1999, respectively, and was included in construction
in progress and property and equipment. Amortization recorded under these leases
was minimal during 1998 and was $20,661 for the nine-month period ended
September 30, 1999.
At September 30, 1999, the future payments under capital lease obligations,
less imputed interest, are as follows:
<TABLE>
<S> <C>
YEARS:
1999................................................... $ 26,430
2000................................................... 105,720
2001................................................... 105,720
2002................................................... 105,720
2003................................................... 105,720
2004................................................... 113,970
Thereafter............................................. 1,085,480
----------
Total minimum lease payments............................. 1,648,760
Less: imputed interest................................... 794,795
----------
Present value of minimum lease payments.................. 853,965
Less: current installments............................... 21,281
----------
Long-term capital lease obligations at September 30,
1999................................................... $ 832,684
==========
</TABLE>
6. COMMITMENTS AND CONTINGENCIES
Alamosa has a $500,000 revolving line of credit with Norwest Bank that
expires December 9, 1999. The line of credit has a variable interest rate, 9.0%
at September 30, 1999. Proceeds from this line of credit are used to purchase
vehicles for service representatives. As of September 30, 1999, $147,012
remained available on the line of credit. The vehicles purchased under this line
of credit and all of Alamosa's cash and cash equivalents held at Norwest Bank
are pledged as collateral under the terms of the Agreement. No interest amounts
were paid during the period ended December 31, 1998. A total of $8,686 was paid
during the nine-month period ended September 30, 1999.
On December 21, 1998, Alamosa entered into a three-year agreement with
Nortel for network equipment and infrastructure. Pursuant to the agreement,
Nortel will also provide installation and optimization services, such as network
engineering and radio frequency engineering, for the equipment and grant Alamosa
a nonexclusive license to use the software associated with the Nortel equipment.
As described in Note 10, Alamosa has committed to purchase $82.0 million worth
of equipment and services from Nortel. Nortel will finance these purchases
pursuant to the Nortel credit facility. Under the agreement, Alamosa will
receive a discount on the network equipment and services because of the
Company's affiliation with Sprint PCS, but must pay a premium on any equipment
and services financed by Nortel. If Alamosa's affiliation with Sprint PCS ends,
Nortel has the right to either terminate the agreement or, with Alamosa's
consent modify the agreement to establish new prices, terms and conditions.
7. RELATED PARTY TRANSACTIONS
Note receivable
On April 23, 1999, the Company entered into a $100,000 loan agreement with
an officer of the Company. The loan matures on April 2014 and accrues interest
at an annual rate of 7.75%.
F-13
<PAGE> 122
ALAMOSA PCS LLC
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Agreements with CHR Solutions, Inc.
Alamosa has entered into a number of agreements with CHR Solutions as
described in more detail below. CHR Solutions resulted from a merger between
Hicks & Ragland Engineering Co., Inc., and Cathey, Hutton & Associates, Inc.
effective as of November 1, 1999. David Sharbutt, Alamosa's Chairman and Chief
Executive Officer, was at the time the agreements were executed the President
and Chief Executive Officer of Hicks & Ragland. Mr. Sharbutt is currently
employed as a senior consultant by CHR Solutions. Hicks & Ragland is also
affiliated with a membership interest holder of Alamosa.
On July 27, 1998, Alamosa entered into an engineering services contract
with Hicks & Ragland for design and construction inspection services in
connection with the network deployment. The term of the contract covers three
periods through August 2001, though either party may terminate the agreement for
cause before August 2001. A guaranteed maximum fee amount has been set for each
period of the contract, and those fees aggregate to approximately $7.0 million,
excluding taxes. If the total billing for the project is less than the
guaranteed maximum fee, Alamosa will pay an incentive bonus equal to 50% of the
difference. Alamosa paid $902,243 and $1,834,853 for these services during 1998
and for the nine-month period ended September 30, 1999 respectively. Engineering
fees under this agreement are recorded in construction in progress and property
and equipment and comprise approximately 72% and 3% of fixed asset purchases
during 1998 and 1999 respectively. At December 31, 1998 and September 30, 1999,
amounts payable under these agreements amounted to $443,610 and $737,753.
Effective September 20, 1998, Alamosa entered into a special services
contract with Hicks & Ragland, to provide marketing and operations consulting
services for a maximum amount of $100,000. Subsequent contracts for marketing,
consulting, business planning and radio frequency "drive testing" were approved
in October 1999, in an aggregate amount of approximately $500,000. Alamosa paid
$235,550 for these services for the nine-month period ended September 30, 1999.
The amounts payable under these agreements was $189,444 at September 30, 1999.
On April 9, 1999, Alamosa entered into a data communications services
contract with H&R Data Com, an affiliate of Hicks & Ragland, to perform design
and implementation services in connection with corporate enterprise wide area
network and local area networks for a maximum fee of $262,040. Alamosa paid
$88,486 for these services for the nine-month period ended September 30, 1999.
As of April 6, 1999, Alamosa entered into a telecommunications service
agreement with Tech Telephone Company Limited Partnership, an affiliate of Hicks
& Ragland, to install and provide DS1 telecommunications lines between Sprint
PCS and Alamosa's Lubbock-based operations and between Alamosa's Lubbock based
operations and other markets for an estimated annual cost of $567,000. The
original term of the agreement is three years, but the agreement automatically
renews upon expiration for additional successive 30-day terms by either party.
As of August 13, 1999, Alamosa entered into a distribution agreement with
TechTel Communications Corporation, an affiliate of Hicks & Ragland, authorizing
it to become a third party distributor of Sprint PCS products and services for
Alamosa in Lubbock.
Agreement with American Tower Corporation
In August 1998, Alamosa entered into a master site development and lease
agreement with Specialty, now a subsidiary of American Tower Corporation.
Pursuant to the agreement, Specialty arranges for collocation of equipment or
constructs new facilities in areas identified for build-out. Specialty provides
site acquisitions, leasing and construction services, and secures zoning,
permitting and surveying approvals and licenses for each base station. This
initial term master agreement expires in August 2003, with automatic renewal for
three additional terms of five years each. The agreement provides for monthly
payments subject to an annual adjustment based on the Consumer Price Index.
Prior to becoming a subsidiary of
F-14
<PAGE> 123
ALAMOSA PCS LLC
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
American Tower Corporation, Specialty was related to Alamosa through one of
Alamosa's directors who owned interests in both Alamosa and Specialty and was an
employee and officer of Specialty and Specialty's then parent company. In
addition, another individual who was one of Alamosa's directors at the time the
agreement was entered into, is a manager of Longmont PCS, LLC, one of Alamosa's
members, is a stockholder of Specialty Teleconstructors, Inc. and acts as a vice
president of American Tower Corporation. No amounts were paid or outstanding
under this agreement during 1998. As of September 30, 1999, $165,300 had been
paid under this agreement.
Other related party transactions
In November 1998, the Company entered into an agreement to lease space for
telephone switching equipment in Albuquerque with SASR Limited Partnership, 50%
owned by one of Alamosa's directors and a manager of West Texas PCS, LLC, one of
Alamosa's interest holders. The lease has a term of five years with two optional
five year terms. The lease provides for monthly payments aggregating to $18,720
a year, as well as a pro rata portion of real estate taxes on the property, and
subject to adjustment.
In connection with Alamosa's distribution and sales of Sprint PCS wireless
communications equipment, on December 28, 1998, Alamosa entered into a long-term
agreement to lease space for a retail store in Lubbock, Texas with Lubbock HLH,
Ltd., principally owned by one of Alamosa's directors and the general manager of
South Plains Advance Communications & Electronics, Inc. South Plains holds an
ownership interest in Alamosa. This lease has a term of 15 years and provides
for monthly payments aggregating to approximately $110,000 a year, subject to
adjustment based on the Consumer Price Index on the first day of the sixth lease
year and on the first day of the eleventh lease year. No amounts were paid or
outstanding under this lease at December 31, 1998. As of September 30, 1999,
$27,501 had been paid under this lease.
During 1998, certain members paid costs on behalf of the Company, which
were subsequently reimbursed. Such payments amounted to approximately $101,000
during 1998 and were minimal during 1999. No amounts payable to members were
outstanding at December 31, 1998 and September 30, 1999.
8. EMPLOYEE BENEFITS
Effective November 13, 1998, the Company elected to participate in the NTCA
Savings Plan, a defined contribution employee savings plan sponsored by the
National Telephone Cooperative Association under Section 401(k) of the Internal
Revenue Code. No employer contributions were made to this plan for the period
ended December 31, 1998 and the nine-month period ended September 30, 1999.
On October 2, 1998, the Company entered into an employee agreement with its
Chief Operating Officer. The agreement provides for the granting of stock
options in three series. The initial exercise price will be determined based on
the following formula: $48,500,000, committed capital at September 30, 1998,
multiplied by the percentage interest represented by the option exercised. The
exercise price for each series will increase by an annual rate of 8%, 15% or 25%
compounded monthly beginning at the date of grant as specified by the agreement.
Options may be exercised any time from January 1, 2004 to January 5, 2008. The
options vest over a three year period. During 1998, one option from each series
was granted under this agreement. The options to acquire membership interests
described above will be exchanged for options to acquire an equivalent number of
common shares: 242,500 at $1.08 per share, 242,500 at $1.15 per share and
242,500 at $1.25 per share.
On October 14, 1998, the Board of Members approved an Incentive Ownership
Plan. The plan consists of 3,500 units comprised of 1200 Series 8, 1150 Series
15 and 1150 Series 25 units. The exercise price for each series is based on a
pre-defined strike price which increases by an annual rate 8%, 15% or 25%
compounded monthly beginning July 1, 2000. The initial exercise prices are
$564.79, $623.84 and
F-15
<PAGE> 124
ALAMOSA PCS LLC
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
$711.88 for the Series 8, Series 15 and Series 25 options, respectively. Each
unit provides the holder an option to purchase an interest in the Company.
Vested units may be exercised any time from July 1, 2000 to December 31, 2006.
On October 29, 1998, under an employment agreement with the company's Chief
Technology Officer, 300 units were granted under this plan. The options to
acquire membership interests described above will be exchanged for options to
acquire an equivalent number of common shares: 48,500 at $1.13 per share, 48,500
at $1.25 per share and 48,500 at $1.42 per share.
The Company applies Accounting Principals Board Opinion No. 25, "Accounting
for Stock Issued to Employees" and related interpretations, in accounting for
its plans. Under opinion no. 25, no compensation expense or deferred
compensation was recorded as of December 31, 1998. As of September 30, 1999, the
Company has recorded unearned compensation of $11,193,751. This amount is being
amortized in accordance with FASB Interpretation No. 28 over the vesting periods
of the individual options. For the nine-month period ended September 30, 1999,
equity participation compensation expense of $6,822,037 has been recognized.
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" provides the Company the option of recognizing the cost of options
granted based on fair values of the options at the time of the grant. Due to the
floating exercise price of the options granted through September 30, 1999, the
accounting provisions of opinion no. 25 for variable plans have been followed.
The Company has subsequently amended the options outstanding at September 30,
1999 to establish a fixed exercise price creating a new measurement date.
Following this amendment, the provisions of opinion no. 25 for fixed plans will
be followed. The Company has decided not to elect the cost-recognition
provisions of SFAS No. 123.
The fair value of each stock option is estimated at December 31, 1998 using
the Black-Scholes option pricing model: dividend yield of 0%; risk free interest
of 5.5%; expected lives of the options equal to 8.5 years; and a volatility rate
of 70%.
Had the compensation expense for the options granted during 1998 been based
on the fair value pricing model described above, additional compensation expense
of $73,709 and $14,779 would have been recognized at December 31, 1998 and
September 30, 1999, respectively. This additional compensation expense would
have resulted in net loss of $997,531 and $17,703,198 and net loss per share of
$.02 and $.37 at December 31, 1998 and September 30, 1999, respectively. There
would have been no additional compensation expense for the nine-month period
ended September 30, 1999. The effects of applying SFAS No. 123 in this proforma
disclosure are not indicative of future amounts. The company anticipates making
awards in the future under its Incentive Ownership Plan.
9. FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of cash, accounts payable, and accrued expenses
approximate fair value because of the short maturity of these items.
The carrying amount of the debt issued pursuant to the Company's credit
agreement with Nortel is expected to approximate fair value because the interest
rate changes with market interest rates.
Alamosa utilizes interest rate cap agreements to limit the impact of
increases in interest rates on its floating rate debt. The interest rate cap
agreements require premium payments to counterparties based upon a notional
principal amount. Interest rate cap agreements entitle the Company to receive
from the counterparties the amounts, if any, by which the selected market
interest rates exceed the strike rates stated in the agreements. The fair value
of the interest rate cap agreements is estimated by obtaining quotes from
brokers and represents the cash requirement if the existing contracts had been
settled at the balance sheet dates.
F-16
<PAGE> 125
ALAMOSA PCS LLC
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Selected information related to the Company's interest rate cap agreements
is as follows:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1998 1999
------------ -------------
<S> <C> <C>
Notional amount........................................... $-- $ 28,750,000
Fair value................................................ -- 71,094
Carrying amount........................................... -- 233,700
--- ------------
Net unrecognized gain (loss).............................. $-- $ (162,606)
=== ============
</TABLE>
These fair value estimates are subjective in nature and involve
uncertainties and matters of considerable judgement and therefore, cannot be
determined with precision. Changes in assumptions could significantly affect
these estimates.
10. FINANCING AGREEMENTS
On February 3, 1999, the Company issued a letter of credit for $7,500,000
in favor of Nortel. The letter of credit expired in June 1999.
On June 10, 1999, the Company entered into a credit agreement with Nortel.
The proceeds are used to purchase equipment and to fund the construction of the
Company's portion of the Sprint PCS network. The financing terms permit Alamosa
to borrow $123 million through three commitment tranches through February 18,
2002, and will require minimum equipment purchases.
The credit facility is collateralized by all of the Company's assets and
capital stock including future issues under the terms of the agreement. The
Company is required to maintain certain financial ratios and other financial
conditions including minimum levels of revenue and wireless subscribers. In
addition, the Company is required to maintain a $1,000,000 cash balance as
security against the facility. This balance is recorded as a noncurrent asset.
In connection with the credit agreement with Nortel, each of the members
pledged its ownership interest in Alamosa to Nortel to collateralize the
Company's obligations under the credit agreement. The members were required to
secure their unfunded contributions with either a letter of credit or a
marketable securities pledge agreement. Each letter of credit or marketable
securities pledge agreement will be terminated prior to the closing of the
initial public offering described in Note 11. In addition, Nortel required the
members to execute capital contribution agreements to confirm their collective
obligations to make capital contributions of at least $48.5 million.
Alamosa may borrow money as either a base rate loan with an interest rate
of prime plus 2.5%, or a Eurodollar loan with an interest rate of the London
interbank offered rate, commonly referred to as LIBOR, plus 3.5%. This interest
rate was 9.4% at September 30, 1999. In addition, an annual unused facility fee
of 0.75% will be charged beginning six months after the closing date. Interest
accrued through the two year anniversary from the closing date is added to the
principal amount of the loan. Thereafter, interest is payable monthly in the
case of base rate loans and at end of the interest period, not to exceed three
months, in the case of Eurodollar loans. Interest expense for the period ended
September 30, 1999 totaled $544,055. Principal is payable in 20 quarterly
installments beginning February 18, 2002. Alamosa may voluntarily prepay any of
the loans at any time, but any amount repaid may not be reborrowed since there
are no revolving credit features. Alamosa must make mandatory prepayments under
certain circumstances, equal to 50% of the excess cash flow as computed under
the credit agreement, after March 31, 2002; and any amount in excess of $250,000
received for asset sales outside the ordinary course of business or insurance
proceeds, to the extent not reinvested in property or assets within a stated
period of time. All prepayments are applied to the outstanding loan balances pro
rata in the inverse order of
F-17
<PAGE> 126
ALAMOSA PCS LLC
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
maturity, except where there is a borrowing base shortage, in which case
prepayments are first applied there, and then pro rata among all three
commitment tranches.
At September 30, 1999, the Company borrowed $59,678,288 against this
facility.
As a condition of the financing, Sprint PCS has entered into a consent and
agreement with Nortel that modifies Sprint PCS's rights and remedies under its
affiliation agreements with Alamosa. Among other things Sprint PCS consented to
the pledge substantially all of Alamosa's assets, including the affiliation
agreements to Nortel. In addition, Sprint PCS may not terminate the affiliation
agreements with Alamosa and must maintain 10 MHz of PCS spectrum in Alamosa's
markets until the Nortel financing is satisfied or Alamosa's assets are sold
pursuant to the terms of the consent and assignment with Nortel.
The Company incurred approximately $4,074,000 of costs associated with
obtaining the Nortel financing. These costs consist of a loan origination fee
and debt issue costs which have been capitalized and are being amortized to
interest expense using the effective interest method over the term of the credit
facility.
11. OTHER SUBSEQUENT EVENTS
In October 1999, the Company entered into a letter of intent to amend the
affiliation agreement with Sprint PCS to expand its service networks to include
markets located in Wisconsin. As a result, Alamosa formed its 99% owned
subsidiary, Alamosa Wisconsin LP, to perform Alamosa's obligations under the
affiliation agreements with Sprint PCS.
The Company intends to file a registration statement for equity financing
through an initial public offering. Immediately prior to the closing of initial
public offering, the Company will reorganize the business into a holding company
structure. In connection with the reorganization, the members of Alamosa PCS,
LLC will receive 48,500,000 shares of common stock of Alamosa PCS Holdings, Inc.
in exchange for their membership interests in the limited liability company. The
ownership percentages among the Company's shareholders following the
reorganization will remain consistent with the ownership percentages described
in Note 1. The Company plans to utilize the proceeds from the aforementioned
offerings to fund the build-out of its expanded network.
In addition to the initial public offering described above, the Company
expects to offer senior discount notes through a public offering. The senior
discount notes will be unsecured obligations and will rank equally with all
future senior debt and senior to all future subordinated debt. The senior
discount notes will be fully and unconditionally, jointly and severally
guaranteed on a senior subordinated, unsecured basis, by all the existing and
any future restricted subsidiaries of Alamosa PCS Holdings, Inc. Therefore,
financial statements of guarantor subsidiaries have been omitted.
Alamosa may redeem some or all of the senior discount notes beginning in
2005, and until 2003 may redeem a portion of the senior discount notes with the
net proceeds of an equity offering.
The senior discount notes will be issued at a discount to their principal
amount and will accrete in value until 2005, at which time their accreted value
will equal their principal amount. Interest will begin to accrue at this time
and will be payable semi-annually. The senior discount notes will contain
covenants limiting Alamosa PCS Holding, Inc.'s ability and the ability of its
subsidiaries to:
- incur additional debt or issue preferred stock;
- pay dividends, redeem capital stock or make other restricted payments or
investments;
- create liens on assets;
- merge, consolidate or dispose of assets;
F-18
<PAGE> 127
ALAMOSA PCS LLC
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
- enter into transactions with affiliates; and
- change lines of business.
Holders of the senior discount notes will have the right to require Alamosa
PCS Holdings, Inc. to repurchase all or any part of their senior discount notes,
at 101% of the accreted value, if before 2005, or 101% of the aggregate
principal amount thereafter, together with accrued and unpaid interest, upon a
change of control of Alamosa.
Events of default in respect of the senior discount notes include, among
others, failure to pay interest or principal on the senior discount notes when
due, failure to perform covenants, acceleration of the maturity of other debt,
events of bankruptcy, certain judgments against Alamosa and the occurrence of
any event of default pursuant to the affiliation agreements with Sprint PCS.
In October 1999, the Company entered into a commitment letter to amend its
Nortel financing to increase the facility from $123 million to $250 million. As
consideration for the amendment, the Company is required to issue to Nortel
warrants for 2% of the total equity as of the closing of the initial public
offering, on a fully diluted basis. The warrants will be issued and will be
exercisable by Nortel on the second anniversary of the closing date, unless
among other options, Alamosa raises an additional $75.0 million of capital and
uses the proceeds to prepay any loans under the Nortel facility prior to that
date. The exercise price for the warrants will be the price paid for the common
stock in the initial public offering. Subsequent to the closing of the amended
Nortel agreement, the interest rates charged by Nortel will increase on the base
rate loans from prime plus 2.5% to prime plus 2.75% and on the Eurodollar loans
from LIBOR plus 3.5% to LIBOR plus 3.75%. In addition, subsequent to the closing
of the amended Nortel agreement, Alamosa will no longer be required to pay a
premium on any equipment and services financed by Nortel.
Effective October 1, 1999, Alamosa entered into a three-year employment
agreement with David Sharbutt, Alamosa's chairman, who was named Chief Executive
Officer. In addition, Alamosa granted options to Mr. Sharbutt to acquire 242,500
common shares at an exercise price of $1.15 per share and 1,455,000 shares at an
exercise price equal to the initial public offering price. Based on the expected
offering price, the Company will recognize compensation expense of $3,358,625
related to the 242,500 options issued with an exercise price below the initial
public offering price over the options vesting period.
F-19
<PAGE> 128
ALAMOSA PCS LLC
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
In conjunction with the reorganization described above, the Chief Operating
Officer's options to purchase membership interests in Alamosa PCS, LLC will be
exchanged for one option to purchase 242,500 shares of common stock with an
exercise price of $1.15 per share, which option is exercisable immediately after
the exchange, and a second option to purchase 1,455,000 shares of common stock
with an exercise price per share equal to the initial public offering price,
which option will vest over the next four years. In addition, the Company
amended the Chief Technology Officer's options to establish a fixed exercise
price for each option series equal to the current formula driven exercise prices
of $1.13, $1.25 and $1.42 per share. These amendments will result in a new
measurement date.
Effective December 1, 1999, the Company entered into an employment
agreement with its Chief Financial Officer, Kendall Cowan, which has a five-year
term and includes options to purchase 1,455,000 shares at the initial public
offering price. There is no compensation cost related to these options.
F-20
<PAGE> 129
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
10,714,000 SHARES
ALAMOSA PCS HOLDINGS, INC.
COMMON STOCK
[ALAMOSA PCS LOGO]
------------
PROSPECTUS
, 1999
------------
SALOMON SMITH BARNEY
CREDIT SUISSE FIRST BOSTON
DEUTSCHE BANC ALEX. BROWN
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Until , 1999, all dealers that buy, sell or trade the common
stock, whether or not participating in this offering, may be required to deliver
a prospectus. This is in addition to the dealers' obligation to deliver a
prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
<PAGE> 130
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the various expenses and costs (other than
underwriting discounts and commissions) expected to be incurred in connection
with the issuance and distribution of the securities to be registered. All of
the amounts shown are estimated except for the Securities and Exchange
Commission registration fee, the NASD filing fee and the Nasdaq National Market
listing fee.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $ 51,430
NASD filing fee............................................. 19,000
Nasdaq National Market listing fees......................... 95,000
Printing and engraving expenses............................. 125,000
Legal fees and expenses..................................... 425,000
Accounting fees and expenses................................ 292,000
Transfer agent and registrar fees........................... 10,000
Miscellaneous expenses...................................... 2,570
----------
Total.................................................. $1,020,000
==========
</TABLE>
ITEM 14. INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Certificate of Incorporation of Alamosa PCS Holdings, Inc. ("Alamosa")
provides that the liability of the directors of Alamosa to Alamosa or any of its
stockholders for monetary damages arising from acts or omissions occurring in
their capacity as directors shall be limited to the fullest extent permitted by
the laws of Delaware or any other applicable law. This limitation does not apply
with respect to any action in which a director would be liable under Section 174
of the General Corporation Law of the State of Delaware nor does it apply with
respect to any liability in which a director:
- breached his duty of loyalty to Alamosa or its stockholders;
- did not act in good faith or, in failing to act, did not act in good
faith;
- acted in a manner involving intentional misconduct or a knowing violation
of law or, in failing to act, shall have acted in a manner involving
intentional misconduct or a knowing violation of law; or
- derived an improper personal benefit.
Alamosa's Certificate of Incorporation provides that Alamosa shall
indemnify its directors, officers and employees and former directors, officers
and employees to the fullest extent permitted by the laws of Delaware or any
other applicable law. Pursuant to the provisions of Section 145 of the General
Corporation Law of the State of Delaware, Alamosa has the power to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending, or completed action, suit, or proceeding (other than an
action by or in the right of Alamosa) by reason of the fact that he is or was a
director, officer, employee, or agent of Alamosa, against any and all expenses,
judgments, fines and amounts paid in settlement actually and reasonably incurred
in connection with such action, suit, or proceeding. The power to indemnify
applies only if such person acted in good faith and in a manner he reasonably
believed to be in the best interest, or not opposed to the best interest, of
Alamosa and with respect to any criminal action or proceeding, had no reasonable
cause to believe his conduct was unlawful.
The power to indemnify applies to actions brought by or in the right of
Alamosa as well, but only to the extent of defense and settlement expenses and
not to any satisfaction of a judgment or settlement of the claim itself and with
the further limitation that in such actions no indemnification shall be made in
the event of any adjudication of negligence or misconduct unless the court, in
its discretion, believes that in light of all the circumstances indemnification
should apply.
II-1
<PAGE> 131
The statute further specifically provides that the indemnification
authorized thereby shall not be deemed exclusive of any other rights to which
any such officer or director may be entitled under any bylaws, agreements, vote
of stockholders or disinterested directors, or otherwise.
Reference is made to the Form of Underwriting Agreement, to be filed as
Exhibit 1.1 to this registration statement, which provides for indemnification
by the Underwriters under certain circumstances of the directors and officers of
Alamosa signing the registration statement and certain controlling persons of
Alamosa against certain liabilities, including those arising under the
Securities Act.
Alamosa has directors' and officers' liability insurance covering its
directors and officers.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling Alamosa pursuant
to the foregoing provisions, Alamosa has been advised that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act and is therefore unenforceable.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
We have not sold any securities since October 19, 1999, the date of our
inception. We will, however, issue 48,500,000 shares of our common stock and
options to purchase 5,281,500 shares of our common stock to the members of
Alamosa PCS, LLC immediately prior to the completion of the offering covered by
this prospectus. These members will contribute their membership interests, or
options to purchase membership interests, in Alamosa PCS, LLC in exchange for
the shares of our common stock. The following table sets forth information
regarding these transactions.
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE OF
SHARES OF OUR MEMBERSHIP INTEREST
TYPE OF COMMON STOCK RECEIVED IN EXCHANGE
MEMBER SECURITIES TO BE ISSUED FOR OUR COMMON STOCK(1)
- ------ ---------- ------------- -----------------------
<S> <C> <C> <C>
Rosewood Telecommunications, L.L.C. ...... Membership 9,725,000 20.05%
Interest
South Plains Advanced Communications &
Electronics, Inc. ...................... Membership 8,652,085 17.84
Interest
West Texas PCS, LLC....................... Membership 7,072,915 14.58
Interest
Taylor Telecommunications, Inc. .......... Membership 5,100,000 10.52
Interest
Plateau Telecommunications,
Incorporated............................ Membership 3,000,000 6.19
Interest
Tregan International Corp. ............... Membership 3,000,000 6.19
Interest
XIT Telecommunication & Technology,
Inc. ................................... Membership 2,750,000 5.67
Interest
LEC Development, Inc. .................... Membership 2,500,000 5.15
Interest
Wes-Tex Telecommunications, Inc. ......... Membership 2,500,000 5.15
Interest
Longmont PCS, LLC......................... Membership 1,000,000 2.06
Interest
J&M Family Partnership Ltd................ Membership 666,435 1.37
Interest
</TABLE>
II-2
<PAGE> 132
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE OF
SHARES OF OUR MEMBERSHIP INTEREST
TYPE OF COMMON STOCK RECEIVED IN EXCHANGE
MEMBER SECURITIES TO BE ISSUED FOR OUR COMMON STOCK(1)
- ------ ---------- ------------- -----------------------
<S> <C> <C> <C>
Five S, Ltd. ............................. Membership 593,200 1.22
Interest
Yellow Rock PCS, L.P. .................... Membership 400,000 0.82
Interest
John St. Clair............................ Membership 292,938 0.60
Interest
Harness, Ltd.............................. Membership 292,938 0.60
Interest
Tony Bliss................................ Membership 288,056 0.59
Interest
Rick Overman.............................. Membership 178,205 0.37
Interest
W. Don Stull.............................. Membership 97,647 0.20
Interest
Frank Eldridge............................ Membership 73,235 0.15
Interest
David E. Sharbutt......................... Membership 48,823 0.10
Interest
Barry Moore............................... Membership 48,823 0.10
Interest
Randy Yeisley............................. Membership 48,824 0.10
Interest
Addie Lee Hicks........................... Membership 24,412 0.05
Interest
Steven Steele............................. Membership 24,412 0.05
Interest
Paula Sexton.............................. Membership 24,412 0.05
Interest
Will Payne................................ Membership 24,412 0.05
Interest
Gail McVicker............................. Membership 24,412 0.05
Interest
Gaylord Ellerman.......................... Membership 24,412 0.05
Interest
Jim McDuff................................ Membership 24,412 0.05
Interest
David E. Sharbutt......................... Options 1,697,500(2) (3)
Jerry W. Brantley......................... Options 1,697,500(2) (4)
Kendall Cowan............................. Options 1,455,000(2) (3)
W. Don Stull.............................. Options 145,500(2) (5)
Michael R. Budagher....................... Options 28,000(2) (6)
Ray M. Clapp, Jr.......................... Options 43,000(2) (6)
Scotty Hart............................... Options 28,000(2) (6)
</TABLE>
II-3
<PAGE> 133
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE OF
SHARES OF OUR MEMBERSHIP INTEREST
TYPE OF COMMON STOCK RECEIVED IN EXCHANGE
MEMBER SECURITIES TO BE ISSUED FOR OUR COMMON STOCK(1)
- ------ ---------- ------------- -----------------------
<S> <C> <C> <C>
Thomas Hyde............................... Options 28,000(2) (6)
Schuyler B. Marshall...................... Options 28,000(2) (6)
Tom M. Phelps............................. Options 28,000(2) (6)
Reagan W. Silber.......................... Options 28,000(2) (6)
Jimmy R. White............................ Options 28,000(2) (6)
Adam Lampert.............................. Options 15,000(2) (7)
Jeff Howard............................... Options 12,000(2) (7)
Wilton J. Payne........................... Options 10,000(2) (7)
J.R. Wilson............................... Options 10,000(2) (7)
</TABLE>
- ---------------
(1) All percentages of membership interests, except options, are calculated on a
non-fully diluted basis. Percentages for options to purchase membership
interests are calculated on a fully diluted basis.
(2) Represents options to acquire securities, not issued securities.
(3) The consideration for these stock options is his employment with us.
(4) The consideration for these stock options is an option to purchase a 1.5%
membership interest in Alamosa PCS, LLC as well as his employment with us.
(5) The consideration for these stock options is an option to purchase a 0.3%
membership interest in Alamosa PCS, LLC as well as his employment with us.
(6) The consideration for these stock options is his position as one of our
directors.
(7) The consideration for these stock options is his performance of consulting
services for us.
None of the foregoing transactions involved any public offering. All sales
were made in reliance on Section 4(2) of the Securities Act, Section 3(a)(9) of
the Securities Act, Rule 701 promulgated under the Securities Act and/or
Regulation D promulgated under the Securities Act. These sales were made without
general solicitation or advertising. The recipients in each such transaction
represented their intention to acquire the securities for investment only and
not with a view to sell or for sale in connection with any distribution thereof.
All recipients had adequate access, through their relationship with us, to
information about us.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits:
The exhibits are as set forth in the Exhibit Index.
(b) Financial Statement Schedules:
No financial statement schedules are filed because the required
information is not applicable or is included in the consolidated financial
statements or related notes.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in
a form of prospectus filed by Alamosa pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
II-4
<PAGE> 134
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new Registration Statement relating to
the securities offered therein and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of Alamosa
pursuant to the foregoing provisions, or otherwise, Alamosa has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by Alamosa of expenses incurred
or paid by a director, officer or controlling person of Alamosa in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, Alamosa will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The undersigned registrant hereby undertakes to provide to the Underwriters
at the closing specified in the underwriting agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
II-5
<PAGE> 135
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Alamosa has
duly caused this first amendment to the registration statement to be signed on
its behalf by the undersigned, hereunto duly authorized, in the City of Dallas,
State of Texas, on the 22nd day of December, 1999.
ALAMOSA PCS HOLDINGS, INC.
By: /s/ DAVID E. SHARBUTT
----------------------------------
David E. Sharbutt
Chairman of the Board of Directors
and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this first
amendment to the registration statement has been signed by the following persons
in the capacities indicated on the 22nd day of December, 1999.
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<C> <C> <S>
/s/ DAVID E. SHARBUTT Chairman of the Board of December 22, 1999
- ----------------------------------------------------- Directors and Chief Executive
David E. Sharbutt Officer
/s/ KENDALL COWAN Chief Financial Officer December 22, 1999
- -----------------------------------------------------
Kendall Cowan
MICHAEL R. BUDAGHER* Director December 22, 1999
- -----------------------------------------------------
Michael R. Budagher
RAY M. CLAPP, JR.* Director December 22, 1999
- -----------------------------------------------------
Ray M. Clapp, Jr.
SCOTTY HART* Director December 22, 1999
- -----------------------------------------------------
Scotty Hart
THOMAS HYDE* Director December 22, 1999
- -----------------------------------------------------
Thomas Hyde
/s/ SCHUYLER B. MARSHALL Director December 22, 1999
- -----------------------------------------------------
Schuyler B. Marshall
TOM M. PHELPS* Director December 22, 1999
- -----------------------------------------------------
Tom M. Phelps
REAGAN W. SILBER* Director December 22, 1999
- -----------------------------------------------------
Reagan W. Silber
JIMMY R. WHITE* Director December 22, 1999
- -----------------------------------------------------
Jimmy R. White
</TABLE>
David E. Sharbutt, by signing his name hereto, does sign and execute this
first amendment to the registration statement on behalf of each of the
above-named officers and directors of the registrant on this 22nd day of
December, 1999, pursuant to powers of attorneys executed on behalf of each of
such officers and directors and previously filed with the Securities and
Exchange Commission.
*By: /s/ DAVID E. SHARBUTT
-------------------------------
David E. Sharbutt
Attorney-in-Fact
II-6
<PAGE> 136
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE
------- -------------
<C> <S>
1.1 -- Form of Underwriting Agreement.
2.1** -- Form of Reorganization Agreement to be entered into by
and among the Stockholders, as defined therein, and
Alamosa.
3.1 -- Form of Amended and Restated Certificate of Incorporation
of Alamosa.
3.2 -- Form of Amended and Restated Bylaws of Alamosa.
4.1** -- Specimen Common Stock Certificate.
4.2 -- Form of Rights Agreement between Alamosa PCS Holdings,
Inc. and , as rights agent.
5.1 -- Form of opinion of Haynes and Boone, LLP, regarding
legality of the Common Stock being issued.
10.1+ -- CDMA 1900 SprintCom Additional Affiliate Agreement dated
as of December 21, 1998 by and between Alamosa PCS, LLC
and Northern Telecom, Inc.
10.2+ -- Amendment No. 1 to DMS-MTX Cellular Supply Agreement
dated as of January 12, 1999 by and between Alamosa PCS,
LLC and Nortel Networks, Inc. and being an amendment to
10.1 described above.
10.3+ -- Amendment No. 2 to DMS-MTX Cellular Supply Agreement
dated as of March 1, 1999 by and between Alamosa PCS, LLC
and Nortel Networks, Inc. and being an amendment to 10.1
and 10.2 described above.
10.4 -- Amendment No. 3 to DMS-MTX Cellular Supply Agreement
dated as of August 11, 1999 by and between Alamosa PCS,
LLC and Nortel Networks, Inc. and being an amendment to
10.1, 10.2 and 10.3 described above.
10.5 -- Sprint PCS Management Agreement, as amended, dated as of
July 17, 1998 by and between Sprint Spectrum, LP,
SprintCom, Inc., WirelessCo, LP and Alamosa PCS, LLC.
10.6 -- Sprint PCS Services Agreement dated as of July 17, 1998
by and between Sprint Spectrum, LP and Alamosa PCS, LLC.
10.7 -- Sprint Trademark and Service Mark License Agreement dated
as of July 17, 1998 by and between Sprint Communications
Company, LP and Alamosa PCS, LLP.
10.8 -- Sprint Spectrum Trademark and Service Mark License
Agreement dated as of July 17, 1998 by and between Sprint
Spectrum, LP and Alamosa PCS, LLP.
10.9 -- Consent and Agreement dated as of June 10, 1999 by and
between Nortel Networks, Inc., Sprint Spectrum, LP,
Sprint Communications Company, LP, WirelessCo, LP, and
SprintCom, Inc.
10.10+ -- Sprint PCS Management Agreement (Wisconsin), as amended,
dated as of December 6, 1999 by and between Sprint
Spectrum, LP, WirelessCo, LP and Alamosa Wisconsin
Limited Partnership.
10.11 -- Sprint PCS Services Agreement (Wisconsin) dated as of
December 6, 1999 by and between Sprint Spectrum, LP and
Alamosa Wisconsin Limited Partnership.
10.12 -- Sprint Trademark and Service Mark License Agreement
(Wisconsin) dated as of December 6, 1999 by and between
Sprint Communications Company, LP and Alamosa Wisconsin
Limited Partnership.
10.13 -- Sprint Spectrum Trademark and Service Mark License
Agreement (Wisconsin) dated as of December 6, 1999 by and
between Sprint Spectrum, LP and Alamosa Wisconsin Limited
Partnership.
</TABLE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE
------- -------------
<C> <S>
10.14 -- Engineering Service Contract, System Design and
Construction Inspection, dated as of July 27, 1998, as
amended, by and between Alamosa PCS, LLC and Hicks &
Ragland Engineering Co., Inc.
</TABLE>
<PAGE> 137
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE
------- -------------
<C> <S>
10.15 -- Master Site Development and Lease Agreement, as amended,
dated as of August 1998 by and between Alamosa PCS, LLC
and Specialty Capital Services, Inc.
10.16** -- Credit Agreement dated as of June 10, 1999 by and between
Alamosa PCS, LLC and Nortel Networks, Inc. for a
$123,000,000 credit facility.
10.17** -- Form of 1999 Long Term Incentive Plan.
10.18 -- Employment Agreement dated as of October 2, 1998 by and
between Alamosa PCS, LLC and Jerry Brantley.
10.19 -- Employment Agreement dated as of October 29, 1998 by and
between Alamosa PCS, LLC and Don Stull.
10.20** -- Employment Agreement effective as of October 1, 1999 by
and between Alamosa PCS Holdings, Inc. and David
Sharbutt.
10.21** -- Employment Agreement effective as of December 1, 1999 by
and between Alamosa PCS Holdings, Inc. and Kendall Cowan.
21.1 -- Subsidiaries of Alamosa.
23.1 -- Consent of PricewaterhouseCoopers LLP.
23.2 -- Consent of Haynes and Boone, LLP (contained in legal
opinion filed as Exhibit 5.1).
24.1* -- Powers of Attorney.
27.1 -- Financial Data Schedule.
</TABLE>
- ---------------
* Previously filed.
** To be filed by amendment.
+ Confidential treatment requested.
<PAGE> 1
EXHIBIT 1.1
[Draft--11/4/99]
Alamosa PCS Holdings, Inc.
10,714,000 Shares
Common Stock
($.01 par value)
Underwriting Agreement
New York, New York
, 19
Salomon Smith Barney Inc.
Credit Suisse First Boston Corporation
Deutsche Bank Securities Inc.
As Representatives of the several Underwriters,
c/o Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Ladies and Gentlemen:
Alamosa PCS Holdings, Inc., a corporation organized under the
laws of Delaware (the "Company"), proposes to sell to the several underwriters
named in Schedule I hereto (the "Underwriters"), for whom you (the
"Representatives") are acting as representatives, 10,714,000 shares of Common
Stock, $.01 par value ("Common Stock") of the Company (said shares to be issued
and sold by the Company being hereinafter called the "Underwritten Securities").
The Company also proposes to grant to the Underwriters an option to purchase up
to 1,607,100 additional shares of Common Stock to cover over-allotments (the
"Option Securities"; the Option Securities, together with the Underwritten
Securities, being hereinafter called the "Securities"). To the extent there are
no additional Underwriters listed on Schedule I other than you, the term
Representatives as used herein shall mean you, as Underwriters, and the terms
Representatives and Underwriters shall mean either the singular or plural as the
context requires. Certain terms used herein are defined in Section 17 hereof.
1. Representations and Warranties. The Company represents and
warrants to, and agrees with, each Underwriter as set forth below in this
Section 1.
(a) The Company has prepared and filed with the Commission a
registration statement (file number 333-89995) on Form S-1, including a
related preliminary prospectus, for registration under the Act of the
offering and sale of the Securities. The Company may have filed one or
more amendments thereto, including a related preliminary prospectus,
each of which has previously been furnished to you. The Company will
next file with the Commission either (1) prior to the Effective Date of
such registration statement, a further amendment to such registration
statement (including the form of final prospectus) or (2) after the
Effective Date of such registration statement, a final prospectus in
accordance with Rules 430A and 424(b). In the case of clause (2), the
Company has included in such registration statement, as amended at the
Effective Date, all information (other than Rule 430A Information)
[Form 01]
<PAGE> 2
2
required by the Act and the rules thereunder to be included in such
registration statement and the Prospectus. As filed, such amendment and
form of final prospectus, or such final prospectus, shall contain all
Rule 430A Information, together with all other such required
information, and, except to the extent the Representatives shall agree
in writing to a modification, shall be in all substantive respects in
the form furnished to you prior to the Execution Time or, to the extent
not completed at the Execution Time, shall contain only such specific
additional information and other changes (beyond that contained in the
latest Preliminary Prospectus) as the Company has advised you, prior to
the Execution Time, will be included or made therein.
(b) On the Effective Date, the Registration Statement did or
will, and when the Prospectus is first filed (if required) in
accordance with Rule 424(b) and on the Closing Date (as defined herein)
and on any date on which Option Securities are purchased, if such date
is not the Closing Date (a "settlement date"), the Prospectus (and any
supplements thereto) will, comply in all material respects with the
applicable requirements of the Act and the rules thereunder; on the
Effective Date and at the Execution Time, the Registration Statement
did not or will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading; and,
on the Effective Date, the Prospectus, if not filed pursuant to Rule
424(b), will not, and on the date of any filing pursuant to Rule 424(b)
and on the Closing Date and any settlement date, the Prospectus
(together with any supplement thereto) will not, include any untrue
statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that the Company makes no representations or warranties as to
the information contained in or omitted from the Registration
Statement, or the Prospectus (or any supplement thereto) in reliance
upon and in conformity with information furnished in writing to the
Company by or on behalf of any Underwriter through the Representatives
specifically for inclusion in the Registration Statement or the
Prospectus (or any supplement thereto).
(c) Each of the Company and its subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction in which it is chartered or
organized with full corporate power and authority to own or lease, as
the case may be, and to operate its properties and conduct its business
as described in the Prospectus, and is duly qualified to do business as
a foreign corporation and is in good standing under the laws of each
jurisdiction which requires such qualification;
(d) All the outstanding shares of capital stock of each
subsidiary have been duly and validly authorized and issued and are
fully paid and nonassessable, and, except as otherwise set forth in the
Prospectus, all outstanding shares of capital stock of the subsidiaries
are owned by the Company either directly or through wholly owned
subsidiaries free and clear of any perfected security interest or any
other security interests, claims, liens or encumbrances;
(e) The Company's authorized equity capitalization is as set
forth in the Prospectus; the capital stock of the Company conforms in
all material respects to the description thereof contained in the
Prospectus; the outstanding shares of Common
[Form 01]
<PAGE> 3
3
Stock have been duly and validly authorized and issued and are fully
paid and nonassessable; the Securities have been duly and validly
authorized, and, when issued and delivered to and paid for by the
Underwriters pursuant to this Agreement, will be fully paid and
nonassessable; the Securities are duly included for quotation, and
admitted and authorized for trading, subject to official notice of
issuance, on the Nasdaq National Market; the certificates for the
Securities are in valid and sufficient form; the holders of outstanding
shares of capital stock of the Company are not entitled to preemptive
or other rights to subscribe for the Securities; and, except as set
forth in the Prospectus, no options, warrants or other rights to
purchase, agreements or other obligations to issue, or rights to
convert any obligations into or exchange any securities for, shares of
capital stock of or ownership interests in the Company are outstanding.
(f) There is no franchise, contract or other document of a
character required to be described in the Registration Statement or
Prospectus, or to be filed as an exhibit thereto, which is not
described or filed as required; and the statements in the Prospectus
under the heading "Important United States Federal Tax Consequences of
Our Common Stock to Non-U.S. Holders" and "Regulation of the Wireless
Telecommunications Industry" fairly summarize the matters therein
described.
(g) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding obligation
of the Company enforceable in accordance with its terms.
(h) The Company is not and, after giving effect to the
offering and sale of the Securities and the application of the proceeds
thereof as described in the Prospectus, will not be an "investment
company" as defined in the Investment Company Act of 1940, as amended.
(i) No consent, approval, authorization, filing with or order
of any court or governmental agency or body is required in connection
with the transactions contemplated herein, except such as have been
obtained under the Act and such as may be required under the blue sky
laws of any jurisdiction in connection with the purchase and
distribution of the Securities by the Underwriters in the manner
contemplated herein and in the Prospectus.
(j) Neither the issue and sale of the Securities nor the
consummation of any other of the transactions herein contemplated nor
the fulfillment of the terms hereof will conflict with, result in a
breach or violation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or any of its subsidiaries
pursuant to, (i) the charter or by-laws of the Company or any of its
subsidiaries, (ii) the terms of any indenture, contract, lease,
mortgage, deed of trust, note agreement, loan agreement or other
agreement, obligation, condition, covenant or instrument to which the
Company or any of its subsidiaries is a party or bound or to which its
or their property is subject, or (iii) any statute, law, rule,
regulation, judgment, order or decree applicable to the Company or any
of its subsidiaries of any court, regulatory body, administrative
agency, governmental body, arbitrator or other authority having
jurisdiction over the Company or any of its subsidiaries or any of its
or their properties.
[Form 01]
<PAGE> 4
4
(k) No holders of securities of the Company have rights to the
registration of such securities under the Registration Statement.
(l) The consolidated historical financial statements and
schedules of the Company and its consolidated subsidiaries included in
the Prospectus and the Registration Statement present fairly in all
material respects the financial condition, results of operations and
cash flows of the Company as of the dates and for the periods
indicated, comply as to form with the applicable accounting
requirements of the Act and have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as otherwise noted therein).
The selected financial data set forth under the caption "Selected
Financial Data" in the Prospectus and Registration Statement fairly
present, on the basis stated in the Prospectus and the Registration
Statement, the information included therein.
(m) No action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the
Company or any of its subsidiaries or its or their property is pending
or, to the best knowledge of the Company, threatened that (i) could
reasonably be expected to have a material adverse effect on the
performance of this Agreement or the consummation of any of the
transactions contemplated hereby or (ii) could reasonably be expected
to have a material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the Company
and its subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in
or contemplated in the Prospectus (exclusive of any supplement
thereto).
(n) Each of the Company and each of its subsidiaries owns or
leases all such properties as are necessary to the conduct of its
operations as presently conducted.
(o) Neither the Company nor any subsidiary is in violation or
default of (i) any provision of its charter or bylaws, (ii) the terms
of any indenture, contract, lease, mortgage, deed of trust, note
agreement, loan agreement or other agreement, obligation, condition,
covenant or instrument to which it is a party or bound or to which its
property is subject, or (iii) any statute, law, rule, regulation,
judgment, order or decree of any court, regulatory body, administrative
agency, governmental body, arbitrator or other authority having
jurisdiction over the Company or such subsidiary or any of its
properties, as applicable.
(p) PricewaterhouseCoopers LLP, who have certified certain
financial statements of the Company and its consolidated subsidiaries
and delivered their report with respect to the audited consolidated
financial statements and schedules included in the Prospectus, are
independent public accountants with respect to the Company within the
meaning of the Act and the applicable published rules and regulations
thereunder.
(q) There are no transfer taxes or other similar fees or
charges under Federal law or the laws of any state, or any political
subdivision thereof, required to be paid in connection with the
execution and delivery of this Agreement or the issuance by the Company
or sale by the Company of the Securities.
[Form 01]
<PAGE> 5
5
(r) The Company has filed all foreign, federal, state and
local tax returns that are required to be filed or has requested
extensions thereof (except in any case in which the failure so to file
would not have a material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the Company
and its subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in
or contemplated in the Prospectus (exclusive of any supplement
thereto)) and has paid all taxes required to be paid by it and any
other assessment, fine or penalty levied against it, to the extent that
any of the foregoing is due and payable, except for any such
assessment, fine or penalty that is currently being contested in good
faith or as would not have a material adverse effect on the condition
(financial or otherwise), prospects, earnings, business or properties
of the Company and its subsidiaries, taken as a whole, whether or not
arising from transactions in the ordinary course of business, except as
set forth in or contemplated in the Prospectus (exclusive of any
supplement thereto).
(s) No labor problem or dispute with the employees of the
Company or any of its subsidiaries exists or is threatened or imminent,
and the Company is not aware of any existing or imminent labor
disturbance by the employees of any of its or its subsidiaries'
principal suppliers, contractors or customers, that could have a
material adverse effect on the condition (financial or otherwise),
prospects, earnings, business or properties of the Company and its
subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in
or contemplated in the Prospectus (exclusive of any supplement
thereto).
(t) The Company and each of its subsidiaries are insured by
insurers of recognized financial responsibility against such losses and
risks and in such amounts as are prudent and customary in the
businesses in which they are engaged; all policies of insurance
insuring the Company or any of its subsidiaries or their respective
businesses, assets, employees, officers and directors are in full force
and effect; the Company and its subsidiaries are in compliance with the
terms of such policies and instruments in all material respects; and
there are no claims by the Company or any of its subsidiaries under any
such policy or instrument as to which any insurance company is denying
liability or defending under a reservation of rights clause; neither
the Company nor any such subsidiary has been refused any insurance
coverage sought or applied for; and neither the Company nor any such
subsidiary has any reason to believe that it will not be able to renew
its existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to
continue its business at a cost that would not have a material adverse
effect on the condition (financial or otherwise), prospects, earnings,
business or properties of the Company and its subsidiaries, taken as a
whole, whether or not arising from transactions in the ordinary course
of business, except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto).
(u) No subsidiary of the Company is currently prohibited,
directly or indirectly, from paying any dividends to the Company, from
making any other distribution on such subsidiary's capital stock, from
repaying to the Company any loans or advances to such subsidiary from
the Company or from transferring any of such subsidiary's property or
assets to the Company or any other subsidiary of the Company, except as
described in or contemplated by the Prospectus.
[Form 01]
<PAGE> 6
6
(v) The Company and its subsidiaries possess all licenses (or
in the case of the PCS spectrum licenses issued by the Federal
Communications Commission ("FCC"), have the right to use the spectrum
licensed to Sprint Corporation or the PCS Group of Sprint Corporation),
certificates, permits and other authorizations issued by the
appropriate federal, state or foreign regulatory authorities necessary
to conduct their respective businesses, and neither the Company nor any
such subsidiary has received (or in the case of the PCS spectrum
licenses, to the Company's knowledge, neither Sprint nor the PCS Group
of Sprint has received) any notice of proceedings relating to the
revocation or modification of any such certificate, authorization or
permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a material adverse
effect on the condition (financial or otherwise), prospects, earnings,
business or properties of the Company and its subsidiaries, taken as a
whole, whether or not arising from transactions in the ordinary course
of business, except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto).
(w) The Company and each of its subsidiaries maintain a system
of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain asset accountability; (iii) access to assets is permitted only
in accordance with management's general or specific authorization; and
(iv) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(x) The Company has not taken, directly or indirectly, any
action designed to or which has constituted or which might reasonably
be expected to cause or result, under the Exchange Act or otherwise, in
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities.
(y) The Company and its subsidiaries are (i) in compliance
with any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) have received and are in
compliance with all permits, licenses or other approvals required of
them under applicable Environmental Laws to conduct their respective
businesses and (iii) have not received notice of any actual or
potential liability for the investigation or remediation of any
disposal or release of hazardous or toxic substances or wastes,
pollutants or contaminants, except where such non-compliance with
Environmental Laws, failure to receive required permits, licenses or
other approvals, or liability would not, individually or in the
aggregate, have a material adverse change in the condition (financial
or otherwise), prospects, earnings, business or properties of the
Company and its subsidiaries, taken as a whole, whether or not arising
from transactions in the ordinary course of business, except as set
forth in or contemplated in the Prospectus (exclusive of any supplement
thereto) . Except as set forth in the Prospectus, neither the Company
nor any of the subsidiaries has been named as a "potentially
responsible party" under the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended.
[Form 01]
<PAGE> 7
7
(z) In the ordinary course of its business, the Company
periodically reviews the effect of Environmental Laws on the business,
operations and properties of the Company and its subsidiaries, in the
course of which it identifies and evaluates associated costs and
liabilities (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance
with Environmental Laws, or any permit, license or approval, any
related constraints on operating activities and any potential
liabilities to third parties). On the basis of such review, the Company
has reasonably concluded that such associated costs and liabilities
would not, singly or in the aggregate, have a material adverse effect
on the condition (financial or otherwise), prospects, earnings,
business or properties of the Company and its subsidiaries, taken as a
whole, whether or not arising from transactions in the ordinary course
of business, except as set forth in or contemplated in the Prospectus
(exclusive of any supplement thereto).
(aa) Each of the Company and its subsidiaries has fulfilled
its obligations, if any, under the minimum funding standards of Section
302 of the United States Employee Retirement Income Security Act of
1974 ("ERISA") and the regulations and published interpretations
thereunder with respect to each "plan" (as defined in Section 3(3) of
ERISA and such regulations and published interpretations) in which
employees of the Company and its subsidiaries are eligible to
participate and each such plan is in compliance in all material
respects with the presently applicable provisions of ERISA and such
regulations and published interpretations. The Company and its
subsidiaries have not incurred any unpaid liability to the Pension
Benefit Guaranty Corporation (other than for the payment of premiums in
the ordinary course) or to any such plan under Title IV of ERISA.
(ab) The subsidiaries listed on Annex A attached hereto are
the only significant subsidiaries of the Company as defined by Rule
1-02 of Regulation S-X (the "Subsidiaries").
(ac) The Company and its subsidiaries own, possess, license or
have other rights to use, on reasonable terms, all patents, patent
applications, trade and service marks, trade and service mark
registrations, trade names, copyrights, licenses, inventions, trade
secrets, technology, know-how and other intellectual property
(collectively, the "Intellectual Property") necessary for the conduct
of the Company's business as now conducted or as proposed in the
Prospectus to be conducted. Except as set forth in the Prospectus under
the caption "Business--Intellectual Property," (a) to the Company's
knowledge, there are no rights of third parties to any such
Intellectual Property; (b) to the Company's best knowledge, there is no
material infringement by third parties of any such Intellectual
Property; (c) there is no pending or, to the Company's best knowledge,
threatened action, suit, proceeding or claim by others challenging the
Company's rights in or to any such Intellectual Property, and the
Company is unaware of any facts which would form a reasonable basis for
any such claim; (d) to the Company's best knowledge, there is no
pending or threatened action, suit, proceeding or claim by others
challenging the validity or scope of any such Intellectual Property,
and the Company is unaware of any facts which would form a reasonable
basis for any such claim; (e) there is no pending or, to the Company's
knowledge, threatened action, suit, proceeding or claim by others that
the Company infringes or otherwise violates any patent, trademark,
copyright, trade secret or other proprietary rights of others, and the
Company is unaware of any other fact which would form a reasonable
basis for any such claim; (f) to the Company's
[Form 01]
<PAGE> 8
8
knowledge, there is no U.S. patent or published U.S. patent application
which contains claims that dominate or may dominate any Intellectual
Property described in the Prospectus as being owned by or licensed to
the Company or that interferes with the issued or pending claims of any
such Intellectual Property; and (g) there is no prior art of which the
Company is aware that may render any U.S. patent held by the Company
invalid or any U.S. patent application held by the Company unpatentable
which has not been disclosed to the U.S. Patent and Trademark Office.
(ad) The statements contained in the Prospectus under the
caption "Business--Intellectual Property," insofar as such statements
summarize legal matters, agreements, documents, or proceedings
discussed therein, are accurate and fair summaries of such legal
matters, agreements, documents or proceedings.
(ae) Except as disclosed in the Registration Statement and the
Prospectus, the Company (i) does not have any material lending or other
relationship with any bank or lending affiliate of Salomon Smith Barney
Holdings Inc. and (ii) does not intend to use any of the proceeds from
the sale of the Securities hereunder to repay any outstanding debt owed
to any affiliate of Salomon Smith Barney Holding Inc.
(af) The Company and its subsidiaries have implemented a
comprehensive, detailed program to analyze and address the risk that
their computer hardware and software may be unable to recognize and
properly execute date-sensitive functions involving certain dates prior
to and any dates after December 31, 1999 (the "Year 2000 Problem") and
has determined that their computer hardware and software are and will
be able to process all date information prior to and after December 31,
1999 without any errors, aborts, delays or other interruptions in
operations associated with the Year 2000 Problem; and the Company
believes, after due inquiry, that each supplier, vendor, customer or
financial service organization used or serviced by the Company and its
subsidiaries has remedied or will remedy on a timely basis the Year
2000 Problem, except to the extent that a failure to remedy by any such
supplier, vendor, customer or financial service organization would not
have a material adverse effect on the Company and its subsidiaries,
taken as a whole. The Company is in compliance with the Commission's
Release No. 33-7558 related to Year 2000 compliance.
Any certificate signed by any officer of the Company and
delivered to the Representatives or counsel for the Underwriters in connection
with the offering of the Securities shall be deemed a representation and
warranty by the Company, as to matters covered thereby, to each Underwriter.
2. Purchase and Sale. (a) Subject to the terms and conditions
and in reliance upon the representations and warranties herein set forth, the
Company agrees to sell to each Underwriter, and each Underwriter agrees,
severally and not jointly, to purchase from the Company, at a purchase price of
$ per share, the amount of the Underwritten Securities set forth opposite
such Underwriter's name in Schedule I hereto.
(b) Subject to the terms and conditions and in reliance upon
the representations and warranties herein set forth, the Company hereby grants
an option to the several Underwriters to purchase, severally and not jointly, up
to 1,607,100 Option Securities at the same purchase price per share as the
Underwriters shall pay for the Underwritten Securities. Said option may be
exercised only to cover over-allotments in the sale of the
[Form 01]
<PAGE> 9
9
Underwritten Securities by the Underwriters. Said option may be exercised in
whole or in part at any time (but not more than once) on or before the 30th day
after the date of the Prospectus upon written or telegraphic notice by the
Representatives to the Company setting forth the number of shares of the Option
Securities as to which the several Underwriters are exercising the option and
the settlement date. The number of Option Securities to be purchased by each
Underwriter shall be the same percentage of the total number of shares of the
Option Securities to be purchased by the several Underwriters as such
Underwriter is purchasing of the Underwritten Securities, subject to such
adjustments as you in your absolute discretion shall make to eliminate any
fractional shares.
3. Delivery and Payment. Delivery of and payment for the
Underwritten Securities and the Option Securities (if the option provided for in
Section 2(b) hereof shall have been exercised on or before the third Business
Day prior to the Closing Date) shall be made at 10:00 AM, New York City time,
on , 19 , or at such time on such later date not more than three Business
Days after the foregoing date as the Representatives shall designate, which date
and time may be postponed by agreement between the Representatives and the
Company or as provided in Section 9 hereof (such date and time of delivery and
payment for the Securities being herein called the "Closing Date"). Delivery of
the Securities shall be made to the Representatives for the respective accounts
of the several Underwriters against payment by the several Underwriters through
the Representatives of the purchase price thereof to or upon the order of the
Company by wire transfer payable in same-day funds to an account specified by
the Company. Delivery of the Underwritten Securities and the Option Securities
shall be made through the facilities of The Depository Trust Company unless the
Representatives shall otherwise instruct.
If the option provided for in Section 2(b) hereof is exercised
after the third Business Day prior to the Closing Date, the Company will deliver
the Option Securities (at the expense of the Company) to the Representatives, at
388 Greenwich Street, New York, New York, on the date specified by the
Representatives (which shall be within three Business Days after exercise of
said option) for the respective accounts of the several Underwriters, against
payment by the several Underwriters through the Representatives of the purchase
price thereof to or upon the order of the Company by wire transfer payable in
same-day funds to an account specified by the Company. If settlement for the
Option Securities occurs after the Closing Date, the Company will deliver to the
Representatives on the settlement date for the Option Securities, and the
obligation of the Underwriters to purchase the Option Securities shall be
conditioned upon receipt of, supplemental opinions, certificates and letters
confirming as of such date the opinions, certificates and letters delivered on
the Closing Date pursuant to Section 6 hereof.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Securities for sale to the public as set forth
in the Prospectus.
5. Agreements. The Company agrees with the several
Underwriters that:
(a) The Company will use its best efforts to cause the
Registration Statement, if not effective at the Execution Time, and any
amendment thereof, to become effective. Prior to the termination of the
offering of the Securities, the Company will not file any amendment of
the Registration Statement or supplement to the Prospectus or any Rule
462(b) Registration Statement unless the Company has furnished you a
copy for your review prior to filing and will not file any such
[Form 01]
<PAGE> 10
10
proposed amendment or supplement to which you reasonably object.
Subject to the foregoing sentence, if the Registration Statement has
become or becomes effective pursuant to Rule 430A, or filing of the
Prospectus is otherwise required under Rule 424(b), the Company will
cause the Prospectus, properly completed, and any supplement thereto to
be filed with the Commission pursuant to the applicable paragraph of
Rule 424(b) within the time period prescribed and will provide evidence
satisfactory to the Representatives of such timely filing. The Company
will promptly advise the Representatives (1) when the Registration
Statement, if not effective at the Execution Time, shall have become
effective, (2) when the Prospectus, and any supplement thereto, shall
have been filed (if required) with the Commission pursuant to Rule
424(b) or when any Rule 462(b) Registration Statement shall have been
filed with the Commission, (3) when, prior to termination of the
offering of the Securities, any amendment to the Registration Statement
shall have been filed or become effective, (4) of any request by the
Commission or its staff for any amendment of the Registration
Statement, or any Rule 462(b) Registration Statement, or for any
supplement to the Prospectus or for any additional information, (5) of
the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the institution or
threatening of any proceeding for that purpose and (6) of the receipt
by the Company of any notification with respect to the suspension of
the qualification of the Securities for sale in any jurisdiction or the
institution or threatening of any proceeding for such purpose. The
Company will use its best efforts to prevent the issuance of any such
stop order or the suspension of any such qualification and, if issued,
to obtain as soon as possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the
Securities is required to be delivered under the Act, any event occurs
as a result of which the Prospectus as then supplemented would include
any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein in the light of the
circumstances under which they were made not misleading, or if it shall
be necessary to amend the Registration Statement or supplement the
Prospectus to comply with the Act or the rules thereunder, the Company
promptly will (1) notify the Representatives of any such event, (2)
prepare and file with the Commission, subject to the second sentence of
paragraph (a) of this Section 5, an amendment or supplement which will
correct such statement or omission or effect such compliance; and (3)
supply any supplemented Prospectus to you in such quantities as you may
reasonably request.
(c) As soon as practicable, the Company will make generally
available to its security holders and to the Representatives an
earnings statement or statements of the Company and its subsidiaries
which will satisfy the provisions of Section 11(a) of the Act and Rule
158 under the Act.
(d) The Company will furnish to the Representatives and
counsel for the Underwriters signed copies of the Registration
Statement (including exhibits thereto) and to each other Underwriter a
copy of the Registration Statement (without exhibits thereto) and, so
long as delivery of a prospectus by an Underwriter or dealer may be
required by the Act, as many copies of each Preliminary Prospectus and
the Prospectus and any supplement thereto as the Representatives may
reasonably request.
(e) The Company will arrange, if necessary, for the
qualification of the Securities for sale under the laws of such
jurisdictions as the Representatives may
[Form 01]
<PAGE> 11
11
designate and will maintain such qualifications in effect so long as
required for the distribution of the Securities; provided that in no
event shall the Company be obligated to qualify to do business in any
jurisdiction where it is not now so qualified or to take any action
that would subject it to service of process in suits, other than those
arising out of the offering or sale of the Securities, in any
jurisdiction where it is not now so subject.
(f) The Company will not, without the prior written consent of
Salomon Smith Barney Inc., offer, sell, contract to sell, pledge, or
otherwise dispose of, (or enter into any transaction which is designed
to, or might reasonably be expected to, result in the disposition
(whether by actual disposition or effective economic disposition due to
cash settlement or otherwise) by the Company or any affiliate of the
Company or any person in privity with the Company or any affiliate of
the Company) directly or indirectly, including the filing (or
participation in the filing) of a registration statement with the
Commission in respect of, or establish or increase a put equivalent
position or liquidate or decrease a call equivalent position within the
meaning of Section 16 of the Exchange Act, any other shares of Common
Stock or any securities convertible into, or exercisable, or
exchangeable for, shares of Common Stock; or publicly announce an
intention to effect any such transaction, for a period of 180 days
after the date of the Underwriting Agreement, provided, however, that
the Company may issue and sell Common Stock pursuant to any employee
stock option plan, stock ownership plan or dividend reinvestment plan
of the Company in effect at the Execution Time and the Company may
issue Common Stock issuable upon the conversion of securities or the
exercise of warrants outstanding at the Execution Time.
(g) The Company will not take, directly or indirectly, any
action designed to or which has constituted or which might reasonably
be expected to cause or result, under the Exchange Act or otherwise, in
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities.
(h) The Company agrees to pay the costs and expenses relating
to the following matters: (i) the preparation, printing or reproduction
and filing with the Commission of the Registration Statement (including
financial statements and exhibits thereto), each Preliminary
Prospectus, the Prospectus, and each amendment or supplement to any of
them; (ii) the printing (or reproduction) and delivery (including
postage, air freight charges and charges for counting and packaging) of
such copies of the Registration Statement, each Preliminary Prospectus,
the Prospectus, and all amendments or supplements to any of them, as
may, in each case, be reasonably requested for use in connection with
the offering and sale of the Securities; (iii) the preparation,
printing, authentication, issuance and delivery of certificates for the
Securities, including any stamp or transfer taxes in connection with
the original issuance and sale of the Securities; (iv) the printing (or
reproduction) and delivery of this Agreement, any blue sky memorandum
and all other agreements or documents printed (or reproduced) and
delivered in connection with the offering of the Securities; (v) the
registration of the Securities under the Exchange Act and the quotation
of the Securities on the Nasdaq National Market; (vi) any registration
or qualification of the Securities for offer and sale under the
securities or blue sky laws of the several states (including filing
fees and the reasonable fees and expenses of counsel for the
Underwriters relating to such registration and qualification); (vii)
any filings required to be made with the National
[Form 01]
<PAGE> 12
12
Association of Securities Dealers, Inc. (including filing fees and the
reasonable fees and expenses of counsel for the Underwriters relating
to such filings); (viii) the transportation and other expenses incurred
by or on behalf of Company representatives in connection with
presentations to prospective purchasers of the Securities; (ix) the
fees and expenses of the Company's accountants and the fees and
expenses of counsel (including local and special counsel) for the
Company; and (x) all other costs and expenses incident to the
performance by the Company of its obligations hereunder.
6. Conditions to the Obligations of the Underwriters. The
obligations of the Underwriters to purchase the Underwritten Securities and the
Option Securities, as the case may be, shall be subject to the accuracy of the
representations and warranties on the part of the Company contained herein as of
the Execution Time, the Closing Date and any settlement date pursuant to Section
3 hereof, to the accuracy of the statements of the Company made in any
certificates pursuant to the provisions hereof, to the performance by the
Company of its obligations hereunder and to the following additional conditions:
(a) If the Registration Statement has not become effective
prior to the Execution Time, unless the Representatives agree in
writing to a later time, the Registration Statement will become
effective not later than (i) 6:00 PM New York City time on the date of
determination of the public offering price, if such determination
occurred at or prior to 3:00 PM New York City time on such date or (ii)
9:30 AM on the Business Day following the day on which the public
offering price was determined, if such determination occurred after
3:00 PM New York City time on such date; if filing of the Prospectus,
or any supplement thereto, is required pursuant to Rule 424(b), the
Prospectus, and any such supplement, will be filed in the manner and
within the time period required by Rule 424(b); and no stop order
suspending the effectiveness of the Registration Statement shall have
been issued and no proceedings for that purpose shall have been
instituted or threatened.
(b) The Company shall have requested and caused Haynes and
Boone, LLP, counsel for the Company, to have furnished to the
Representatives their opinion, dated the Closing Date and addressed to
the Representatives, to the effect that:
(i) each of the Company and Alamosa PCS, Inc.,
Alamosa Texas, LP, Alamosa Wisconsin, LP and [Alamosa
Partners, Inc.] individually a "Subsidiary" and collectively
the "Subsidiaries" has been duly incorporated and is validly
existing as a corporation in good standing under the laws of
the jurisdiction in which it is chartered or organized, with
full corporate power and authority to own or lease, as the
case may be, and to operate its properties and conduct its
business as described in the Prospectus, and is duly qualified
to do business as a foreign corporation and is in good
standing under the laws of each jurisdiction which requires
such qualification;
(ii) all the outstanding shares of capital stock of
each Subsidiary have been duly and validly authorized and
issued and are fully paid and nonassessable, and, except as
otherwise set forth in the Prospectus, all outstanding shares
of capital stock of the Subsidiaries are owned by the Company
either directly or through wholly owned subsidiaries free and
clear of any perfected security interest and, to the knowledge
of such counsel, after due inquiry, any other security
interest, claim, lien or encumbrance;
[Form 01]
<PAGE> 13
13
(iii) the Company's authorized equity capitalization
is as set forth in the Prospectus; the capital stock of the
Company conforms in all material respects to the description
thereof contained in the Prospectus; the outstanding shares of
Common Stock have been duly and validly authorized and issued
and are fully paid and nonassessable; the Securities have been
duly and validly authorized, and, when issued and delivered to
and paid for by the Underwriters pursuant to this Agreement,
will be fully paid and nonassessable; the Securities are duly
included for quotation, and admitted and authorized for
trading, subject to official notice of issuance, on the Nasdaq
National Market; the certificates for the Securities are in
valid and sufficient form; the holders of outstanding shares
of capital stock of the Company are not entitled to preemptive
or other rights to subscribe for the Securities; and, except
as set forth in the Prospectus, no options, warrants or other
rights to purchase, agreements or other obligations to issue,
or rights to convert any obligations into or exchange any
securities for, shares of capital stock of or ownership
interests in the Company are outstanding;
(iv) to the knowledge of such counsel, there is no
pending or threatened action, suit or proceeding by or before
any court or governmental agency, authority or body or any
arbitrator involving the Company or any of its subsidiaries or
its or their property of a character required to be disclosed
in the Registration Statement which is not adequately
disclosed in the Prospectus, and there is no franchise,
contract or other document of a character required to be
described in the Registration Statement or Prospectus, or to
be filed as an exhibit thereto, which is not described or
filed as required; and the statements included in the
Prospectus under the headings "Regulation of the Wireless
Telecommunications Industry" and "Important United States
Federal Tax Consequences of Our Common Stock to Non-U.S.
Holders" fairly summarize the matters therein described;
(v) the Registration Statement has become effective
under the Act; any required filing of the Prospectus, and any
supplements thereto, pursuant to Rule 424(b) has been made in
the manner and within the time period required by Rule 424(b);
to the knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued,
no proceedings for that purpose have been instituted or
threatened and the Registration Statement and the Prospectus
(other than the financial statements and other financial
information contained therein, as to which such counsel need
express no opinion) comply as to form in all material respects
with the applicable requirements of the Act and the rules
thereunder; and such counsel has no reason to believe that on
the Effective Date or the date the Registration Statement was
last deemed amended the Registration Statement contained any
untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to
make the statements therein not misleading or that the
Prospectus as of its date and on the Closing Date included or
includes any untrue statement of a material fact or omitted or
omits to state a material fact necessary to make the
statements therein, in the light of the circumstances under
which they were made, not misleading (in each case, other than
the financial statements and other financial information
contained therein, as to which such counsel need express no
opinion);
[Form 01]
<PAGE> 14
14
(vi) this Agreement has been duly authorized,
executed and delivered by the Company;
(vii) the Company is not and, after giving effect to
the offering and sale of the Securities and the application of
the proceeds thereof as described in the Prospectus, will not
be, an "investment company" as defined in the Investment
Company Act of 1940, as amended;
(viii) no consent, approval, authorization, filing
with or order of any court or governmental agency or body is
required in connection with the transactions contemplated
herein, except such as have been obtained under the Act and
such as may be required under the blue sky laws of any
jurisdiction in connection with the purchase and distribution
of the Securities by the Underwriters in the manner
contemplated in this Agreement and in the Prospectus and such
other approvals (specified in such opinion) as have been
obtained;
(ix) neither the issue and sale of the Securities,
nor the consummation of any other of the transactions herein
contemplated nor the fulfillment of the terms hereof will
conflict with, result in a breach or violation of or
imposition of any lien, charge or encumbrance upon any
property or assets of the Company or its subsidiaries pursuant
to, (i) the charter or by-laws of the Company or its
subsidiaries, (ii) the terms of any indenture, contract,
lease, mortgage, deed of trust, note agreement, loan agreement
or other agreement, obligation, condition, covenant or
instrument to which the Company or its subsidiaries is a party
or bound or to which its or their property is subject, or
(iii) any statute, law, rule, regulation, judgment, order or
decree applicable to the Company or its subsidiaries of any
court, regulatory body, administrative agency, governmental
body, arbitrator or other authority having jurisdiction over
the Company or its subsidiaries or any of its or their
properties; and
(x) no holders of securities of the Company have
rights to the registration of such securities under the
Registration Statement.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the
State of Texas, the Federal laws of the United States (except with
respect to regulatory matters) or the Delaware General Corporation Law,
to the extent they deem proper and specified in such opinion, upon the
opinion of other counsel of good standing whom they believe to be
reliable and who are satisfactory to counsel for the Underwriters and
(B) as to matters of fact, to the extent they deem proper, on
certificates of responsible officers of the Company and public
officials. References to the Prospectus in this paragraph (b) include
any supplements thereto at the Closing Date.
(c) The Company shall have requested and caused Blooston,
Mordkofsky, Jackson & Dickens, special regulatory counsel to the
Company, to have furnished to the Representatives their opinion dated
the Closing Date and addressed to the Representatives, to the effect
that:
(i) statements regarding telecommunications
regulatory matters included in the Prospectus under the
headings "Regulation of the Wireless
[Form 01]
<PAGE> 15
15
Telecommunications Industry," "Risk Factors--Risks Related to
our Relationship with Sprint PCS--If Sprint PCS does not
maintain control over its licensed spectrum, the Sprint PCS
Agreements may be terminated" and "-- Non-renewal or
revocation by the FCC of the Sprint PCS licenses would
significantly harm our business" are accurate in all material
respects and fairly summarize the matters therein described;
(ii) no filing with, or authorization, approval,
consent, license, permit, order, registration, qualification
or decree of, the FCC or of any other federal or state
regulatory agency, is necessary or required for the due
authorization, execution or delivery by the Company of this
Agreement or for the performance by the Company of the
transactions contemplated under the Prospectus or this
Agreement; specifically, that the Company and its Subsidiaries
have the right to operate a wireless PCS network utilizing the
spectrum licenses issued by the FCC and held by Sprint
Corporation or the PCS Group of Sprint without the need to
acquire any further order, license, permit or other
authorization from the FCC or any other federal or state
regulatory agency;
(iii) to the best of such counsel's knowledge,
neither the Company nor any of its Subsidiaries is in
violation of, or in default under, any federal or state
telecommunications laws or regulations, the effect of which,
singly or in the aggregate, would have a material adverse
effect on the condition (financial or otherwise), prospects,
earnings, business or properties of the Company; specifically,
that the arrangement contained in the Management Agreement (as
defined in the Prospectus) between the Company and the PCS
Group of Sprint Corporation permitting the Company to
construct and operate a wireless PCS network utilizing the
spectrum licenses issued by the FCC and held by Sprint
Corporation or the PCS Group of Sprint, is in compliance with
all applicable federal and state telecommunications rules and
regulations, including federal rules and regulations regarding
licensee control of the licensed spectrum; and
(iv) to the best of such counsel's knowledge, (A) no
unsatisfied decree or order of the FCC or of any state
regulatory agency is outstanding against the Company or its
Subsidiaries and (B) with regard to the Company's and its
Subsidiaries' construction and operation of a wireless PCS
network, no litigation, proceeding, inquiry or investigation
has been commenced or threatened, no complaints filed, no
notice of violation or order to show cause has been issued,
against the Company or its Subsidiaries or against Sprint
Corporation or the PCS Group of Sprint Corporation before or
by the FCC or any other federal or state regulatory agency
which would have a material adverse effect on the condition
(financial or otherwise), prospects, earnings, business or
properties of the Company.
(d) The Representatives shall have received from Cravath,
Swaine & Moore, counsel for the Underwriters, such opinion or opinions,
dated the Closing Date and addressed to the Representatives, with
respect to the issuance and sale of the Securities, the Registration
Statement, the Prospectus (together with any supplement thereto) and
other related matters as the Representatives may reasonably require,
and
[Form 01]
<PAGE> 16
16
the Company shall have furnished to such counsel such documents as they
request for the purpose of enabling them to pass upon such matters.
(e) The Company shall have furnished to the Representatives a
certificate of the Company, signed by the Chairman of the Board or the
President and the principal financial or accounting officer of the
Company, dated the Closing Date, to the effect that the signers of such
certificate have carefully examined the Registration Statement, the
Prospectus, any supplements to the Prospectus and this Agreement and
that:
(i) the representations and warranties of the Company
in this Agreement are true and correct in all material
respects on and as of the Closing Date with the same effect as
if made on the Closing Date and the Company has complied with
all the agreements and satisfied all the conditions on its
part to be performed or satisfied at or prior to the Closing
Date;
(ii) no stop order suspending the effectiveness of
the Registration Statement has been issued and no proceedings
for that purpose have been instituted or, to the Company's
knowledge, threatened; and
(iii) since the date of the most recent financial
statements included in the Prospectus (exclusive of any
supplement thereto), there has been no material adverse effect
on the condition (financial or otherwise), prospects,
earnings, business or properties of the Company and its
subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set
forth in or contemplated in the Prospectus (exclusive of any
supplement thereto).
(f) The Company shall have requested and caused
PricewaterhouseCoopers LLP to have furnished to the Representatives, at
the Execution Time and at the Closing Date, letters, dated respectively
as of the Execution Time and as of the Closing Date, in form and
substance satisfactory to the Representatives, confirming that they are
independent accountants within the meaning of the Act and the
applicable rules and regulations adopted by the Commission thereunder
and that they have performed an examination of the financial
information of the Company for the nine-month period ended September
30, 1999, and as at September 30, 1999, and further stating in effect
that:
(i) in their opinion the audited financial statements
and financial statement schedules and pro forma financial
statements included in the Registration Statement and the
Prospectus and reported on by them comply as to form in all
material respects with the applicable accounting requirements
of the Act and the related rules and regulations adopted by
the Commission;
(ii) on the basis of a reading of the latest
unaudited financial statements made available by the Company
and its Subsidiaries; carrying out certain specified
procedures (but not an examination in accordance with
generally accepted auditing standards) which would not
necessarily reveal matters of significance with respect to the
comments set forth in such letter; a reading
[Form 01]
<PAGE> 17
17
of the minutes of the meetings of the members and managers of
Alamosa PCS, LLC and of the stockholders, directors and
executive, audit and compensation committees of the Company
and its Subsidiaries; and inquiries of certain officials of
the Company who have responsibility for financial and
accounting matters of the Company and its subsidiaries as to
transactions and events subsequent to September 30, 1999,
nothing came to their attention which caused them to believe
that:
[(1) any unaudited financial statements
included in the Registration Statement and the
Prospectus do not comply as to form in all material
respects with applicable accounting requirements of
the Act and with the related rules and regulations
adopted by the Commission with respect to
registration statements on Form S-1; and said
unaudited financial statements are not in conformity
with generally accepted accounting principles
applied on a basis substantially consistent with that
of the audited financial statements included in the
Registration Statement and the Prospectus;]
(2) with respect to the period subsequent to
September 30, 1999, there were any changes, at a
specified date not more than five days prior to the
date of the letter, in the long-term debt or capital
lease obligations of the Company and its subsidiaries
or capital stock of the Company or decreases in the
stockholders' equity of the Company as compared with
the amounts shown on the September 30, 1999
consolidated balance sheet included in the
Registration Statement and the Prospectus, or for the
period from October 1, 1999 to such specified date
there were any decreases, as compared with [THE
COMPARABLE PERIOD IN THE PREVIOUS QUARTER] in total
revenue or any increases in loss from operations, net
loss or per share amounts of net loss of the Company
and its subsidiaries, except in all instances for
changes or decreases set forth in such letter, in
which case the letter shall be accompanied by an
explanation by the Company as to the significance
thereof unless said explanation is not deemed
necessary by the Representatives;
(3) the information included in the
Registration Statement and Prospectus in response to
Regulation S-K, Item 301 (Selected Financial Data),
Item 302 (Supplementary Financial Information) and
Item 402 (Executive Compensation) is not in
conformity with the applicable disclosure
requirements of Regulation S-K; and
(4) the unaudited amounts of [DESCRIBE THE
CAPSULE INFORMATION AND ITS LOCATION] do not agree
with the amounts set forth in the unaudited financial
statements for the same periods or were not
determined on a basis substantially consistent with
that of the corresponding amounts in the audited
financial statements included in the Registration
Statement and the Prospectus; and
(iii) they have performed certain other specified
procedures as a result of which they determined that certain
information of an accounting, financial or statistical nature
(which is limited to accounting, financial or statistical
[Form 01]
<PAGE> 18
18
information derived from the general accounting records of the
Company and its subsidiaries) set forth in the Registration
Statement and the Prospectus, agrees with the accounting
records of the Company and its subsidiaries, excluding any
questions of legal interpretation.
(iv) on the basis of a reading of the unaudited pro
forma financial statements included in the Registration
Statement and the Prospectus (the "pro forma financial
statements"); carrying out certain specified procedures;
inquiries of certain officials of the Company who have
responsibility for financial and accounting matters; and
proving the arithmetic accuracy of the application of the pro
forma adjustments to the historical amounts in the pro forma
financial statements, nothing came to their attention which
caused them to believe that the pro forma financial statements
do not comply as to form in all material respects with the
applicable accounting requirements of Rule 11-02 of Regulation
S-X or that the pro forma adjustments have not been properly
applied to the historical amounts in the compilation of such
statements.
References to the Prospectus in this paragraph (f) include any
supplement thereto at the date of the letter.
(g) Subsequent to the Execution Time or, if earlier, the dates
as of which information is given in the Registration Statement
(exclusive of any amendment thereof) and the Prospectus (exclusive of
any supplement thereto), there shall not have been (i) any change or
decrease specified in the letter or letters referred to in paragraph
(f) of this Section 6 or (ii) any change, or any development involving
a prospective change, in or affecting the condition (financial or
otherwise), earnings, business or properties of the Company and its
subsidiaries taken as a whole, whether or not arising from transactions
in the ordinary course of business, except as set forth in or
contemplated in the Prospectus (exclusive of any supplement thereto)
the effect of which, in any case referred to in clause (i) or (ii)
above, is, in the sole judgment of the Representatives, so material and
adverse as to make it impractical or inadvisable to proceed with the
offering or delivery of the Securities as contemplated by the
Registration Statement (exclusive of any amendment thereof) and the
Prospectus (exclusive of any supplement thereto).
(h) Prior to the Closing Date, the Company shall have
furnished to the Representatives such further information, certificates
and documents as the Representatives may reasonably request.
(i) Subsequent to the Execution Time, there shall not have
been any decrease in the rating of any of the Company's debt securities
by any "nationally recognized statistical rating organization" (as
defined for purposes of Rule 436(g) under the Act) or any notice given
of any intended or potential decrease in any such rating or of a
possible change in any such rating that does not indicate the direction
of the possible change.
(j) The Securities shall have been included for quotation and
admitted and authorized for trading on the Nasdaq National Market, and
satisfactory evidence of such actions shall have been provided to the
Representatives.
[Form 01]
<PAGE> 19
19
(k) At the Execution Time, the Company shall have furnished to
the Representatives a letter substantially in the form of Exhibit A
hereto from each officer and director of the Company and from Rosewood
Telecommunications, L.L.C., South Plains Advanced Communications &
Electronics, Inc., West Texas PCS, LLC, Taylor Telecommunications,
Inc., Tregan International Corp., Plateau Telecommunications,
Incorporated, XIT Telecommunications & Technology, Inc., LEC
Development, Inc. and Wes-Tex Telecommunications, Inc. addressed to the
Representatives.
[INSERT ADDITIONAL CLOSING CONDITIONS, IF ANY, SUCH AS ANY CONCURRENT OFFERING
CLOSING, REPAYMENT OF DEBT, RECAPITALIZATION, REORGANIZATION, CREDIT FACILITY
CLOSING, ADDITIONAL BORROWING, ACQUISITION CLOSING AND STOCK SPLIT.]
[(l) Prior to the Execution Time, Sprint Corporation or the
PCS Group of Sprint Corporation and the Company shall have entered into
an amended Management Agreement that contains the terms described in
the Prospectus in "The Sprint PCS Agreements--The Management
Agreement," and which provides for the expansion of the territory in
which the Company is responsible for constructing and operating a
wireless PCS network, to include all of the markets listed in the
Prospectus in "Business--Markets and Network Build-Out Plan."
(m) As of the Execution Time, the closing of the amended
credit agreement between the Company and Nortel Networks, Inc. shall
occur, and such amended credit agreement shall provide for total
available credit of $250,000,000 and other terms as described in the
Prospectus in "Description of the Nortel Financing."
(n) As of the Execution Time, the Company shall have committed
equity financing of at least $148,000,000 and shall have received funds
in that amount, including previously contributed equity capital of
$37,500,000 from the shareholders of the Company who were members of
Alamosa PCS, LLC, as described in the Prospectus in "Description of the
Nortel Financing--The Nortel Credit Facility--Minimum Equity
Requirements."]
If any of the conditions specified in this Section 6 shall not
have been fulfilled in all material respects when and as provided in this
Agreement, or if any of the opinions and certificates mentioned above or
elsewhere in this Agreement shall not be in all material respects reasonably
satisfactory in form and substance to the Representatives and counsel for the
Underwriters, this Agreement and all obligations of the Underwriters hereunder
may be canceled at, or at any time prior to, the Closing Date by the
Representatives. Notice of such cancelation shall be given to the Company in
writing or by telephone or facsimile confirmed in writing.
The documents required to be delivered by this Section 6 shall
be delivered at the office of Cravath, Swaine & Moore, counsel for the
Underwriters, at 825 Eighth Avenue, New York, New York 10019, on the Closing
Date.
7. Reimbursement of Underwriters' Expenses. If the sale of the
Securities provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth in Section 6 hereof is not satisfied,
because of any termination pursuant to Section 10 hereof or because of any
refusal, inability or failure on the part of the Company to perform any
agreement herein or comply with any provision hereof other than
[Form 01]
<PAGE> 20
20
by reason of a default by any of the Underwriters, the Company will reimburse
the Underwriters severally through Salomon Smith Barney Inc. on demand for all
out-of-pocket expenses (including reasonable fees and disbursements of counsel)
that shall have been incurred by them in connection with the proposed purchase
and sale of the Securities.
8. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Underwriter, the directors, officers, employees
and agents of each Underwriter and each person who controls any Underwriter
within the meaning of either the Act or the Exchange Act against any and all
losses, claims, damages or liabilities, joint or several, to which they or any
of them may become subject under the Act, the Exchange Act or other Federal or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the registration statement for the registration of
the Securities as originally filed or in any amendment thereof, or in any
Preliminary Prospectus or the Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and agrees to reimburse
each such indemnified party, as incurred, for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information furnished to
the Company by or on behalf of any Underwriter through the Representatives
specifically for inclusion therein. This indemnity agreement will be in addition
to any liability which the Company may otherwise have.
(b) Each Underwriter severally and not jointly agrees to
indemnify and hold harmless the Company, each of its directors, each of its
officers who signs the Registration Statement, and each person who controls the
Company within the meaning of either the Act or the Exchange Act, to the same
extent as the foregoing indemnity from the Company to each Underwriter, but only
with reference to written information relating to such Underwriter furnished to
the Company by or on behalf of such Underwriter through the Representatives
specifically for inclusion in the documents referred to in the foregoing
indemnity. This indemnity agreement will be in addition to any liability which
any Underwriter may otherwise have. The Company acknowledges that the statements
set forth in the last paragraph of the cover page regarding delivery of the
Securities and, under the heading "Underwriting" or "Plan of Distribution", (i)
the list of Underwriters and their respective participation in the sale of the
Securities, (ii) the sentences related to concessions and reallowances and (iii)
the paragraph related to stabilization, syndicate covering transactions and
penalty bids in any Preliminary Prospectus and the Prospectus constitute the
only information furnished in writing by or on behalf of the several
Underwriters for inclusion in any Preliminary Prospectus or the Prospectus.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve it from liability under paragraph (a) or (b) above unless and
to the extent it did not otherwise learn of such action and such failure results
in the forfeiture by the indemnifying party of substantial rights and defenses
and (ii) will not,
[Form 01]
<PAGE> 21
21
in any event, relieve the indemnifying party from any obligations to any
indemnified party other than the indemnification obligation provided in
paragraph (a) or (b) above. The indemnifying party shall be entitled to appoint
counsel of the indemnifying party's choice at the indemnifying party's expense
to represent the indemnified party in any action for which indemnification is
sought (in which case the indemnifying party shall not thereafter be responsible
for the fees and expenses of any separate counsel retained by the indemnified
party or parties except as set forth below); provided, however, that such
counsel shall be satisfactory to the indemnified party. Notwithstanding the
indemnifying party's election to appoint counsel to represent the indemnified
party in an action, the indemnified party shall have the right to employ
separate counsel (including local counsel), and the indemnifying party shall
bear the reasonable fees, costs and expenses of such separate counsel if (i) the
use of counsel chosen by the indemnifying party to represent the indemnified
party would present such counsel with a conflict of interest, (ii) the actual or
potential defendants in, or targets of, any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional to those
available to the indemnifying party, (iii) the indemnifying party shall not have
employed counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of the institution of
such action or (iv) the indemnifying party shall authorize the indemnified party
to employ separate counsel at the expense of the indemnifying party. An
indemnifying party will not, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a)
or (b) of this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company and the Underwriters severally
agree to contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection with
investigating or defending same) (collectively "Losses") to which the Company
and one or more of the Underwriters may be subject in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and by the Underwriters on the other from the offering of the Securities;
provided, however, that in no case shall any Underwriter (except as may be
provided in any agreement among underwriters relating to the offering of the
Securities) be responsible for any amount in excess of the underwriting discount
or commission applicable to the Securities purchased by such Underwriter
hereunder. If the allocation provided by the immediately preceding sentence is
unavailable for any reason, the Company and the Underwriters severally shall
contribute in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company on the one hand and
of the Underwriters on the other in connection with the statements or omissions
which resulted in such Losses as well as any other relevant equitable
considerations. Benefits received by the Company shall be deemed to be equal to
the total net proceeds from the offering (before deducting expenses) received by
it, and benefits received by the Underwriters shall be deemed to be equal to the
total underwriting discounts and commissions, in each case as set forth on the
cover page of the Prospectus. Relative fault shall be determined by reference
to, among other things, whether any untrue or any alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information provided by the Company on the one hand or the
[Form 01]
<PAGE> 22
22
Underwriters on the other, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The Company and the Underwriters agree that it
would not be just and equitable if contribution were determined by pro rata
allocation or any other method of allocation which does not take account of the
equitable considerations referred to above. Notwithstanding the provisions of
this paragraph (d), no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 8, each person who controls an Underwriter within the meaning of
either the Act or the Exchange Act and each director, officer, employee and
agent of an Underwriter shall have the same rights to contribution as such
Underwriter, and each person who controls the Company within the meaning of
either the Act or the Exchange Act, each officer of the Company who shall have
signed the Registration Statement and each director of the Company shall have
the same rights to contribution as the Company, subject in each case to the
applicable terms and conditions of this paragraph (d).
9. Default by an Underwriter. If any one or more Underwriters
shall fail to purchase and pay for any of the Securities agreed to be purchased
by such Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the amount of Securities set
forth opposite their names in Schedule I hereto bears to the aggregate amount of
Securities set forth opposite the names of all the remaining Underwriters) the
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase; provided, however, that in the event that the aggregate amount of
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase shall exceed 10% of the aggregate amount of Securities set forth in
Schedule I hereto, the remaining Underwriters shall have the right to purchase
all, but shall not be under any obligation to purchase any, of the Securities,
and if such nondefaulting Underwriters do not purchase all the Securities, this
Agreement will terminate without liability to any nondefaulting Underwriter or
the Company. In the event of a default by any Underwriter as set forth in this
Section 9, the Closing Date shall be postponed for such period, not exceeding
five Business Days, as the Representatives shall determine in order that the
required changes in the Registration Statement and the Prospectus or in any
other documents or arrangements may be effected. Nothing contained in this
Agreement shall relieve any defaulting Underwriter of its liability, if any, to
the Company and any nondefaulting Underwriter for damages occasioned by its
default hereunder.
10. Termination. This Agreement shall be subject to
termination in the absolute discretion of the Representatives, by notice given
to the Company prior to delivery of and payment for the Securities, if at any
time prior to such time (i) trading in the Company's Common Stock shall have
been suspended by the Commission or the Nasdaq National Market or trading in
securities generally on the New York Stock Exchange or the Nasdaq National
Market shall have been suspended or limited or minimum prices shall have been
established on such Exchange or the Nasdaq National Market, (ii) a banking
moratorium shall have been declared either by Federal or New York State
authorities or (iii) there shall have occurred any outbreak or escalation of
hostilities, declaration by the United States of a national emergency or war, or
other calamity or crisis the effect of which on financial markets is such as to
make it, in the sole judgment of the Representatives, impractical or inadvisable
to proceed with the offering or delivery of the Securities as contemplated by
the Prospectus (exclusive of any supplement thereto).
[Form 01]
<PAGE> 23
23
11. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers and of the Underwriters set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or the Company or any of
the officers, directors, employees, agents or controlling persons referred to in
Section 8 hereof, and will survive delivery of and payment for the Securities.
The provisions of Sections 7 and 8 hereof shall survive the termination or
cancelation of this Agreement.
12. Notices. All communications hereunder will be in writing
and effective only on receipt, and, if sent to the Representatives, will be
mailed, delivered or telefaxed to the Salomon Smith Barney Inc. General Counsel
(fax no.: (212) 816-7912) and confirmed to the General Counsel, Salomon Smith
Barney Inc., at 388 Greenwich Street, New York, New York 10013, Attention:
General Counsel; or, if sent to the Company, will be mailed, delivered or
telefaxed to (806) 722-1157 and confirmed to it at 4403 Brownfield Highway,
Lubbock, Texas 79407, attention of the Legal Department.
13. Successors. This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective successors and the
officers, directors, employees, agents and controlling persons referred to in
Section 8 hereof, and no other person will have any right or obligation
hereunder.
14. Applicable Law. This Agreement will be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed within the State of New York.
15. Counterparts. This Agreement may be signed in one or more
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same agreement.
16. Headings. The section headings used herein are for
convenience only and shall not affect the construction hereof.
17. Definitions. The terms which follow, when used in this
Agreement, shall have the meanings indicated.
"Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"Business Day" shall mean any day other than a Saturday, a
Sunday or a legal holiday or a day on which banking institutions or
trust companies are authorized or obligated by law to close in New York
City.
"Commission" shall mean the Securities and Exchange
Commission.
"Effective Date" shall mean each date and time that the
Registration Statement, any post-effective amendment or amendments
thereto and any Rule 462(b) Registration Statement became or become
effective.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Commission promulgated
thereunder.
[Form 01]
<PAGE> 24
24
"Execution Time" shall mean the date and time that this
Agreement is executed and delivered by the parties hereto.
"Preliminary Prospectus" shall mean any preliminary prospectus
referred to in paragraph 1(a) above and any preliminary prospectus
included in the Registration Statement at the Effective Date that omits
Rule 430A Information.
"Prospectus" shall mean the prospectus relating to the
Securities that is first filed pursuant to Rule 424(b) after the
Execution Time or, if no filing pursuant to Rule 424(b) is required,
shall mean the form of final prospectus relating to the Securities
included in the Registration Statement at the Effective Date.
"Registration Statement" shall mean the registration statement
referred to in paragraph 1(a) above, including exhibits and financial
statements, as amended at the Execution Time (or, if not effective at
the Execution Time, in the form in which it shall become effective)
and, in the event any post-effective amendment thereto or any Rule
462(b) Registration Statement becomes effective prior to the Closing
Date, shall also mean such registration statement as so amended or such
Rule 462(b) Registration Statement, as the case may be. Such term shall
include any Rule 430A Information deemed to be included therein at the
Effective Date as provided by Rule 430A.
"Rule 424", "Rule 430A" and "Rule 462" refer to such rules
under the Act.
"Rule 430A Information" shall mean information with respect to
the Securities and the offering thereof permitted to be omitted from
the Registration Statement when it becomes effective pursuant to Rule
430A.
"Rule 462(b) Registration Statement" shall mean a registration
statement and any amendments thereto filed pursuant to Rule 462(b)
relating to the offering covered by the registration statement referred
to in Section 1(a) hereof.
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your
[Form 01]
<PAGE> 25
25
acceptance shall represent a binding agreement among the Company and the several
Underwriters.
Very truly yours,
Alamosa PCS Holdings, Inc.
By:
-------------------------------------
Name:
Title:
[Form 01]
<PAGE> 26
26
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
Salomon Smith Barney Inc.
Credit Suisse First Boston Corporation
Deutsche Bank Securities Inc.
By: Salomon Smith Barney Inc.
By:
----------------------------------------
Name:
Title:
By: Credit Suisse First Boston Corporation
By:
----------------------------------------
Name:
Title:
By: Deutsche Bank Securities Inc.
By:
----------------------------------------
Name:
Title:
For themselves and the other
several Underwriters named in
Schedule I to the foregoing
Agreement.
[Form 01]
<PAGE> 1
EXHIBIT 3.1
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
ALAMOSA PCS HOLDINGS, INC.
The undersigned certify that they are the Chairman of the Board and
Secretary of Alamosa PCS Holdings, Inc., a corporation organized and existing
under the laws of the State of Delaware (the "Corporation"), and do hereby
further certify as follows:
(1) The name of the corporation is Alamosa PCS Holdings, Inc.
(2) The Corporation was originally incorporated under the same
name. The original Certificate of Incorporation of the Corporation was filed
with the Secretary of State of the State of Delaware on October 19, 1999.
(3) As of the date hereof, the Corporation has not received
any payment for any of its stock.
(4) This Amended and Restated Certificate of Incorporation was
duly adopted in accordance with the provisions of Sections 241 and 245 of the
General Corporation Law of the State of Delaware (the "DGCL").
(5) Pursuant to Sections 241 and 245 of the DGCL, this Amended
and Restated Certificate of Incorporation restates and integrates previous
provisions and also amends certain provisions of the Corporation's Certificate
of Incorporation.
(6) This Amended and Restated Certificate of Incorporation of
the Corporation shall become effective immediately upon the filing thereof with
the Secretary of State of the State of Delaware (the "Effective Time").
(7) The text of the Certificate of Incorporation of the
Corporation, as amended hereby, is restated to read in its entirety as follows:
ARTICLE 1. Name. The name of the Corporation is Alamosa PCS Holdings,
Inc.
ARTICLE 2. Address. The address of its registered office in the state
of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, Delaware 19801. The name of the registered agent of the Corporation
at such address is The Corporation Trust Company.
ARTICLE 3. Purpose. The purpose for which the Corporation is organized
is to engage in any lawful act or activity for which a corporation may be
organized under the DGCL.
1
<PAGE> 2
ARTICLE 4. Description and Authorization of Stock.
(a) Stock Authorization. The aggregate number of shares of
capital stock that the Corporation shall have the authority to issue is
100,000,000 shares, which shall consist of (i) 95,000,000 shares of Common
Stock, par value $0.01 per share (the "Common Stock") and (ii) 5,000,000 shares
of Preferred Stock, $0.01 par value per share (the "Preferred Stock").
(b) Common Stock.
(i) Voting Rights. The holders of Common Stock will
be entitled to one vote per share on all matters to be voted on by the
stockholders of the Corporation, including the election of directors. The
holders of Common Stock shall not have cumulative voting rights.
(ii) Dividends. Subject to the prior rights of any
Preferred Stock issued by the Corporation, as and if dividends are declared
thereon by the Board of Directors of the Corporation out of funds legally
available therefor, whether payable in cash, property or securities of the
Corporation, the holders of Common Stock will be entitled to share equally, on a
share-for-share basis, in all such dividends.
(iii) Liquidation. Upon any liquidation, dissolution
or winding up of the Corporation, after all amounts due and owing to the holders
of any Preferred Stock of the Corporation have been paid or the payment has been
fully provided for, the holders of Common Stock shall be entitled to receive all
of the remaining assets of the Corporation available for distribution to holders
of Common Stock and will be entitled to share equally, on a share-for-share
basis, in such distribution. Neither the merger or consolidation of the
Corporation with or into another corporation or corporations, nor the sale or
transfer by the Corporation of all or part of its assets, nor the reduction of
its capital stock, will be deemed to be a liquidation, dissolution or winding up
of the Corporation within the meaning of this paragraph.
(c) Preferred Stock.
(i) Issuance. The Preferred Stock may be issued from
time to time in one or more series, the shares of each series to have such
voting powers, full or limited, or no voting powers, and such designations,
preferences and relative, participating, optional, dividend or other special
rights, and qualifications, limitations, restrictions or other characteristics
thereof as are stated and expressed herein and in the resolution or resolutions
providing for the issuance of such series adopted by the Board of Directors of
the Corporation as hereafter prescribed. The shares of each series of the
Preferred Stock may vary from the shares of any other class or series in any
respect.
The resolution or resolutions providing for the issuance of any such
series may provide, without limitation:
2
<PAGE> 3
(A) whether or not shares of a series shall
have voting rights, full, special or limited, or shall have no voting rights,
and whether or not the holders of such shares are to be entitled to vote as a
separate class either alone or together with the holders of one or more other
classes or series of stock; provided, however, that if the resolutions authorize
the holders of Preferred Stock to elect directors upon certain events, those
directors elected by the holders of Preferred Stock shall be in addition to
those directors authorized from time to time pursuant to ARTICLE 9 (Board of
Directors) of this Amended and Restated Certificate of Incorporation;
(B) the number of shares to constitute the
series and the designations thereof;
(C) the preferences and relative,
participating, optional or other special rights, if any, and the qualifications,
limitations or restrictions thereof, if any, with respect to any series;
(D) whether or not the shares of any series
shall be redeemable at the option of the Corporation or the holders thereof or
upon the happening of any specified event, and, if redeemable, the redemption
price or prices (which may be payable in the form of cash, notes, securities, or
other property), and the time or times at which, and the terms and conditions
upon which, such shares shall be redeemable and the manner of redemption;
(E) whether or not the shares of a series
shall be subject to the operation of retirement or sinking funds to be applied
to the purchase or redemption of such shares for retirement, and, if such
retirement or sinking fund or funds are to be established, the annual amount
thereof, and the terms and provisions relative to the operation thereof;
(F) the dividend rate, if any, whether
dividend rates are payable in cash, stock of the Corporation, or other property,
the conditions upon which and the times when such dividends are payable, the
preference to or the relation to the payment of dividends payable on any other
class or classes or series of stock, whether or not such dividends shall be
cumulative or noncumulative, and the date or dates from which such dividends
shall accumulate;
(G) the preferences, if any, and the amounts
thereof which the holders of shares of any series shall be entitled to receive
upon the voluntary or involuntary dissolution of, or upon any distribution of
the assets of, the Corporation;
(H) whether or not the shares of any series
shall be entitled to the benefit of conditions and restrictions upon the
creation of indebtedness of the Corporation or any subsidiary of the
Corporation, upon the issue of any additional stock (including, without
limitation, additional shares of such series or of any other class or series)
and upon the payment of dividends or the making of other distributions on, and
the purchase, redemption or other acquisition by the Corporation or any
subsidiary of the Corporation of, any outstanding stock of the Corporation;
3
<PAGE> 4
(I) whether or not the shares of any series,
at the option of the Corporation or the holders thereof or upon the happening of
any specified event, shall be convertible into or exchangeable for the shares of
any other class or classes or of any other series of the same or any other class
or classes of stock, securities, or other property of the Corporation and the
conversion price or prices or ratio or ratios or the rate or rates at which such
exchange may be made, with such adjustments, if any, as shall be stated and
expressed or provided for in such resolution or resolutions; and
(J) such other voting powers, designations,
preferences, rights, qualifications, limitations or restrictions with respect to
any series as the Board of Directors of the Corporation may deem advisable.
(ii) Increases and Decreases in Series. The Board of
Directors of the Corporation may increase the number of shares (but not above
the total number of authorized shares of the class) of the Preferred Stock
designated for any existing series by a resolution adding to such series
authorized and unissued shares of the Preferred Stock not designated for any
other series. The Board of Directors of the Corporation may decrease the number
of shares of the Preferred Stock (but not below the number of shares thereof
then outstanding) designated for any existing series by a resolution,
subtracting from such series unissued shares of the Preferred Stock designated
for such series, and the shares so subtracted shall become authorized, unissued,
and undesignated shares of the Preferred Stock.
ARTICLE 5. Rights of Stockholders. No holder of shares of stock of the
Corporation shall have any preemptive or other similar right, except as such
rights are expressly provided by contract, or by resolution creating a series of
Preferred Stock, to purchase or subscribe for or receive any shares of any
class, or series thereof, of stock of the Corporation, whether now or hereafter
authorized, or any warrants, options, bonds, debentures or other securities
convertible into, exchangeable for or carrying any right to purchase any shares
of any class of stock, or series thereof; but such additional shares of stock
and such warrants, options, bonds, debentures or other securities convertible
into, exchangeable for or carrying any right to purchase any shares of any class
of stock, or series thereof, may be issued or disposed of by the Board of
Directors to such persons, and on such terms and for such lawful consideration,
as in its discretion it shall deem advisable or as to which the Corporation
shall have by binding contract agreed.
ARTICLE 6. Meetings of Stockholders.
(a) Actions at Meetings; Annual and Special Meetings.
Effective immediately following the consummation of the initial public offering
of the Corporation's Common Stock pursuant to a registration statement declared
effective under the Securities Act of 1933, as amended and including any
successor provisions thereto (the "1933 Act"), any action required or permitted
to be taken by the stockholders of the Corporation must be effected at a duly
called annual or special meeting of stockholders of the Corporation and may not
be effected by any consent in writing by such stockholders. Special meetings of
stockholders of the Corporation may be called only by the Chairman of the Board,
if there is one, by the President, by the Board
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of Directors pursuant to a resolution adopted by a majority of the total number
of authorized directors (whether or not there exist any vacancies in previously
authorized directorships at the time such resolution is presented to the Board
of Directors for adoption), or by holders of not less than a majority of the
voting power of the Voting Stock (as defined in ARTICLE 13 (Fair Price)) that
would be entitled to vote at such meeting.
(b) Proposed Business at Meetings. No business may be
transacted at any meeting of stockholders, other than business that is either
(x) specified in the notice of meeting (or any supplement thereto) given by or
at the direction of the Board of Directors (or any duly authorized committee
thereof), (y) otherwise properly brought before the meeting by or at the
direction of the Board of Directors (or any duly authorized committee thereof)
or (z) otherwise properly brought before the meeting by any stockholder of the
Corporation who is a stockholder of record on the date of such meeting, on the
date of the giving of the notice provided for in this Section (b) of this
ARTICLE 6 (Meetings of Stockholders -- Proposed Business at Meetings), and on
the record date for the determination of stockholders entitled to vote at such
meeting and who complies with the procedures set forth in this Section (b) of
this ARTICLE 6 (Meetings of Stockholders -- Proposed Business at Meetings).
In addition to any other applicable requirements, for business to be
properly brought before a meeting by a stockholder, such stockholder must have
given timely written notice of such business to the Secretary of the
Corporation. To be timely, a stockholder's notice must be delivered to or mailed
and received at the principal executive offices of the Corporation not less than
60 days prior to the meeting, irrespective of any deferrals, postponements or
adjournments thereof to a later meeting date; provided, however, that in the
event that less than 70 days notice or prior public disclosure of the date of
the meeting is given or made to stockholders, to be timely, notice by the
stockholder must be so received not later than the close of business on the
tenth day following the day on which such notice of the date of the meeting was
mailed or such public disclosure of the date of the meeting was made, whichever
first occurs. Each such notice to the Secretary shall set forth:
(i) the name, business address and residence address
of the stockholder who intends to propose the new business;
(ii) a representation that the stockholder is a
holder of record of shares of the Corporation entitled to vote at such meeting
and intends to appear in person or by proxy at the meeting to propose the
business specified in the notice;
(iii) a brief and complete description of the
business desired to be brought before the meeting and the reasons for conducting
such business at the meeting;
(iv) a description of all arrangements or
understandings between the stockholder and any other person or persons
(including their names and other information with respect to such person or
persons similar to that provided by such stockholder) in connection
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<PAGE> 6
with the proposal of such business by such stockholder and any material interest
of such stockholder in such business;
(v) any other information relating to such person or
proposal that is or would be required to be included in a proxy statement filed
with the Securities and Exchange Commission pursuant to Regulation 14A under the
Securities and Exchange Act of 1934, as amended and including any successor
provisions thereto (the "1934 Act"); and
(vi) any other information that is or would be
required to be disclosed in a Schedule 13D under the 1934 Act, regardless of
whether such person would otherwise be required to file a Schedule 13D.
In addition, a person providing notice under Section (b) of this
ARTICLE 6 (Meetings of Stockholders -- Proposed Business at Meetings) shall
supplementally and promptly provide such other information as the Corporation
otherwise reasonably requests.
A majority of the Board of Directors may reject any business proposed
by a stockholder that is not timely made or otherwise not made in accordance
with the terms of Section (b) of this ARTICLE 6 (Meetings of Stockholders --
Proposed Business at Meetings). If a majority of the Board of Directors
reasonably determines that the information provided in a stockholder's notice
does not satisfy the informational requirements of Section (b) of this ARTICLE 6
(Meetings of Stockholders -- Proposed Business at Meetings) in any material
respect, then the Secretary of the Corporation shall promptly notify such
stockholder of the deficiency in writing. The stockholder shall have an
opportunity to cure the deficiency by providing additional information to the
Secretary within such period of time as a majority of the Board of Directors
shall reasonably determine, which period shall not exceed 10 days from the date
such deficiency notice is given to the stockholder. If the deficiency is not
cured within such period, or if a majority of the Board of Directors reasonably
determines that the additional information provided by the stockholder, together
with the information previously provided, does not satisfy the requirements of
this paragraph in any material respect, then a majority of the Board of
Directors may reject such stockholder's proposed business. The Secretary of the
Corporation shall notify a stockholder in writing whether his or her proposal of
new business has been made in accordance with the time and information
requirements of Section (b) of this ARTICLE 6 (Meetings of Stockholders
- --Proposed Business at Meetings).
Once business has been properly brought before the meeting in
accordance with this Section (b) of this ARTICLE 6 (Meetings of Stockholders --
Proposed Business at Meetings), nothing herein shall be deemed to preclude
discussion by any stockholder of any such business; provided further, however,
that if the stockholder bringing such matter before the meeting withdraws such
matter, such matter shall no longer be properly before the meeting.
The chairman of a meeting of stockholders may, if the facts warrant,
determine and declare to the meeting that business was not properly brought
before the meeting in accordance with the procedure prescribed by Section (b) of
this ARTICLE 6 (Meetings of Stockholders --
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Proposed Business at Meetings) and if the chairman should so determine, he or
she shall so declare to the meeting and such business shall not be transacted.
ARTICLE 7. Duration of Existence. The Corporation is to have perpetual
existence.
ARTICLE 8. Amendments to the Bylaws. In furtherance of, and not in
limitation of, the powers conferred by statute, the Board of Directors is
expressly authorized to adopt, amend or repeal the Bylaws of the Corporation or
adopt new Bylaws, without any action on the part of the stockholders; provided,
however, adoption, amendment or repeal of the Bylaws in a manner that would make
them inconsistent with ARTICLE 4(c) (Description and Authorization of Stock
- --Preferred Stock), ARTICLE 6 (Meetings of Stockholders), this ARTICLE 8
(Amendments to the Bylaws), ARTICLE 9 (Board of Directors), ARTICLE 10
(Amendments to the Certificate) or ARTICLE 13 (Fair Price), shall be made only
by the affirmative vote of the holders of at least 80% of the voting power of
the Voting Stock, voting together as a single class. In the event that any term
or provision of the Bylaws is inconsistent, or conflicts, with the terms or
provisions of this Amended and Restated Certificate of Incorporation, this
Amended and Restated Certificate of Incorporation shall control.
ARTICLE 9. Board of Directors.
(a) Number. Except as otherwise fixed by the provisions of a
resolution adopted pursuant to ARTICLE 4(c) (Description and Authorization of
Stock -- Preferred Stock) relating to the rights of the holders of the Preferred
Stock to elect additional directors under specified circumstances, the number of
directors which shall constitute the whole Board of Directors shall be not less
than three and shall be fixed from time to time exclusively by the Board of
Directors pursuant to a resolution adopted by a majority of the total number of
authorized directors (whether or not there exist any vacancies in the previously
authorized directorships at the time any such resolution is presented to the
Board of Directors for adoption).
(b) Staggered Board of Directors. At the Meeting of
Stockholders at which this Amended and Restated Certificate of Incorporation is
adopted, the directors shall be divided into three classes, designated Class I,
Class II and Class III (which at all times shall be as nearly equal in number as
possible), with the term of office of Class I directors to expire at the 2001
Annual Meeting of Stockholders, the term of office of Class II directors to
expire at the 2002 Annual Meeting of Stockholders, and the term of office of
Class III directors to expire at the 2003 Annual Meeting of Stockholders, upon
election and qualification of their successors. At each annual meeting of
stockholders following such initial classification and election, directors
elected to succeed those directors whose terms expire shall be elected for a
term of office to expire at the third succeeding annual meeting of stockholders
after their election, upon election and qualification of their successors.
(c) Director Nominations. Nominations, other than those made
by, or at the direction of, a majority of the Board of Directors or a committee
thereof shall be made only if timely written notice of such nomination or
nominations has been given to the Secretary of the
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<PAGE> 8
Corporation. To be timely, such notice must be delivered to or mailed and
received at the principal executive offices of the Corporation not less than 60
days prior to the meeting, irrespective of any deferrals, postponements or
adjournments thereof to a later meeting date; provided, however, that in the
event that less than 70 days notice or prior public disclosure of the date of
the meeting is given or made to stockholders, notice by the stockholder to be
timely must be so received not later than the close of business on the tenth day
following the day on which such notice of the date of the meeting was mailed or
such public disclosure of the date of the meeting was made, whichever first
occurs. Each such notice to the Secretary shall set forth:
(i) the name, business address and residence address
of the stockholder who intends to make the nomination;
(ii) a representation that the stockholder is a
holder of record of shares of the Corporation entitled to vote at such meeting
and intends to appear in person or by proxy at the meeting to nominate the
person or persons specified in the notice;
(iii) the name, age, business and residence
addresses, and principal occupation or employment of each nominee;
(iv) a description of all arrangements or
understandings between the stockholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by the stockholder;
(v) any other information relating to such
stockholder and each nominee proposed by such stockholder that is or would be
required to be included in a proxy statement filed with the Securities and
Exchange Commission pursuant to Regulation 14A under the 1934 Act;
(vi) any other information that is or would be
required to be disclosed in a Schedule 13D under the 1934 Act, regardless of
whether such person would otherwise be required to file a Schedule 13D; and
(vii) the consent of each nominee to serve as a
director of the Corporation if so elected.
In addition, a person providing notice under Section (c) of this
ARTICLE 9 (Board of Directors -- Director Nominations) shall supplementally and
promptly provide such other information as the Corporation otherwise reasonably
requests.
A majority of the Board of Directors may reject any nomination by a
stockholder that is not timely made or otherwise not made in accordance with the
terms of Section (c) of this ARTICLE 9 (Board of Directors -- Director
Nominations). If a majority of the Board of Directors reasonably determines that
the information provided in a stockholder's notice does not satisfy the
informational requirements of Section (c) of this ARTICLE 9 (Board of
Directors --
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<PAGE> 9
Director Nominations) in any material respect, the Secretary of the Corporation
shall promptly notify such stockholder of the deficiency in writing. The
stockholder shall have an opportunity to cure the deficiency by providing
additional information to the Secretary within such period of time as a majority
of the Board of Directors shall reasonably determine, which period shall not
exceed 10 days from the date such deficiency notice is given to the stockholder.
If the deficiency is not cured within such period, or if a majority of the Board
of Directors reasonably determines that the additional information provided by
the stockholder, together with the information previously provided, does not
satisfy the requirements of this paragraph in any material respect, then a
majority of the Board of Directors may reject such stockholder's nomination. The
Secretary of the Corporation shall notify a stockholder in writing whether his
or her nomination has been made in accordance with the time and information
requirements of Section (c) of this ARTICLE 9 (Board of Directors -- Director
Nominations).
The chairman of a meeting of stockholders may, if the facts warrant,
determine and declare to the meeting that a nomination was not made in
accordance with the procedure prescribed by Section (c) of this ARTICLE 9 (Board
of Directors -- Director Nominations), and if the chairman should so determine,
he or she shall so declare to the meeting and such nomination shall be
disregarded.
(d) Removal of Directors. Subject to the right of the holders
of any class or series of Preferred Stock then outstanding, any director, or the
entire Board of Directors, may be removed from office at any time, but only for
cause and only by the affirmative vote of the holders of at least 80% of the
voting power of the Voting Stock, voting together as a single class. Except as
may otherwise be provided by law, cause for removal shall exist only if the
director whose removal is proposed:
(i) has been convicted of a felony by a court of
competent jurisdiction and such conviction is no longer subject to direct
appeal;
(ii) has been adjudged by a court of competent
jurisdiction to be liable for gross negligence or misconduct in the performance
of such director's duties to the Corporation in a matter of substantial
importance to the Corporation, and such adjudication has become final and
non-appealable; or
(iii) has missed six consecutive meetings of the
Board of Directors.
(e) Vacancies. Subject to the rights of the holders of any
class or series of Preferred Stock then outstanding, newly created directorships
resulting from any increase in the authorized number of directors or any
vacancies of the Board of Directors resulting from death, resignation,
retirement, disqualification, removal from office or other reason shall be
solely filled by a majority vote of the directors then in office, though less
than a quorum, or by a sole remaining director. Directors so chosen shall hold
office for a term expiring at the annual meeting of stockholders at which the
term of office of the class to which they have been elected expires, upon
election and qualification of their successors. No decrease in the number of
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<PAGE> 10
authorized directors constituting the entire Board of Directors shall shorten
the term of any incumbent director.
(f) Ballots, Cumulative Voting. Election of directors need not
be by written ballot unless the Bylaws shall so provide. No holders of shares of
capital stock of the Corporation shall have any rights to cumulate votes in the
election of directors.
(g) Preferred Stock, Directors. Notwithstanding the foregoing,
whenever the holders of Preferred Stock shall have the right to elect directors
at an annual or special meeting of stockholders, the election, term of office,
filling of vacancies, and other features of such directorships shall be governed
by the terms of any resolution adopted pursuant to ARTICLE 4 (Description and
Authorization of Stock) of this Amended and Restated Certificate of
Incorporation applicable thereto, and such directors so elected shall not be
divided into classes pursuant to this ARTICLE 9 (Board of Directors) unless
expressly provided by such terms.
ARTICLE 10. Amendments to the Certificate. The Corporation shall have
the right, subject to any express provisions or restrictions contained in this
Amended and Restated Certificate of Incorporation of the Corporation, from time
to time, to amend this Amended and Restated Certificate of Incorporation or any
provision thereof in any manner now or hereafter provided by law.
Notwithstanding the foregoing or any other provisions of this Amended and
Restated Certificate of Incorporation or any provision of law which might
otherwise permit a lesser vote or no vote, but in addition to any vote required
by law or this Amended and Restated Certificate of Incorporation, the
affirmative vote of the holders of at least 80% of the voting power of the
Voting Stock, voting together as a single class, shall be required to adopt any
provision inconsistent with, or to amend or repeal ARTICLE 4(c) (Description and
Authorization of Stock -- Preferred Stock), ARTICLE 6 (Meetings of
Stockholders), ARTICLE 8 (Amendments to the Bylaws), ARTICLE 9 (Board of
Directors), this ARTICLE 10 (Amendments to the Certificate) or ARTICLE 13 (Fair
Price). The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Amended and Restated Certificate of Incorporation,
and all rights conferred upon stockholders herein are granted subject to this
reservation.
ARTICLE 11. Indemnification.
(a) The Corporation shall indemnify any person who was, is or
is threatened to be made a party to a proceeding (as hereinafter defined) by
reason of the fact that he or she (i) is or was a director or officer of the
Corporation or (ii) while a director or officer of the Corporation, is or was
serving at the request of the Corporation as a director, officer, partner,
venturer, proprietor, trustee, employee, agent or similar functionary of any
foreign or domestic corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan, or other enterprise, to the
fullest extent permitted under the DGCL, as the same exists or may hereafter be
amended.
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(b) Such rights shall be contract rights and as such shall run
to the benefit of any director or officer who is elected and accepts the
position of the director or officer of the Corporation or elects to continue to
serve as a director or officer of the Corporation while this ARTICLE 11
(Indemnification) is in effect. Any repeal or amendment of this ARTICLE 11
(Indemnification) shall be prospective only and shall not limit the rights of
any such director or officer or the obligations of the Corporation with respect
to any claim arising from or related to the services of such director or officer
in any of the foregoing capacities prior to any such repeal or amendment to this
ARTICLE 11 (Indemnification). Such right shall include the right to be paid by
the Corporation expenses incurred in defending any such proceeding in advance of
its final disposition to the maximum extent permitted under the DGCL.
(c) If a claim for indemnification or advancement of expenses
hereunder is not paid in full by the Corporation within 60 days after a written
claim has been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim, and if successful in whole or in part, the claimant shall also be
entitled to be paid the expenses of prosecuting such claim. It shall be a
defense to any such action that such indemnification or advancement of costs of
defense are not permitted under the DGCL, but the burden of proving such defense
shall be on the Corporation. Neither the failure of the Corporation (including
the Board of Directors or any Committee thereof, independent legal counsel, or
stockholders) to have made its determination prior to the commencement of such
action that indemnification of, or advancement of costs of defense to, the
claimant, is permissible in the circumstances nor an actual determination by the
Corporation (including the Board of Directors or any Committee thereof,
independent legal counsel, or stockholders) that such indemnification or
advancement is not permissible shall be a defense to the action or create a
presumption that such indemnification by the Corporation is not permissible.
(d) In the event of the death of any person having rights of
indemnification under the foregoing provisions, such rights shall inure to the
benefit of his or her heirs, executors, administrators, and personal
representatives. The rights conferred above shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute, bylaw,
resolution of stockholders or directors, agreement or otherwise. The Corporation
may additionally indemnify any employee or agent of the Corporation to the
fullest extent permitted by law.
(e) As used herein, the term "proceeding" means any threatened
pending, or completed action, suit, or proceeding, whether civil, criminal,
administrative, arbitrative, or investigative, any appeal in such an action,
suit, or proceeding, and any inquiry or investigation that could lead to such an
action, suit, or proceeding.
ARTICLE 12. Limitation on Liability. No director of the Corporation
shall be liable to the Corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director, except for liability (i) for any breach
of the director's duty of loyalty to the Corporation or its stockholders, (ii)
for acts or omissions not in good faith or that involve intentional misconduct
or a knowing violation of law, (iii) under Section 174 of the DGCL, or (iv) for
any
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transaction from which the director derived an improper personal benefit. If the
DGCL hereafter is amended to authorize the further elimination or limitation of
the liability of directors, then the liability of a director of the Corporation,
in addition to the limitation on personal liability provided herein, shall be
limited to the fullest extent permitted by the amended DGCL. Any repeal or
modification of this ARTICLE 12 (Limitation on Liability) by the stockholders of
the Corporation shall be prospective only and shall not adversely affect any
limitation of the personal liability of a director of the Corporation existing
at the time of such repeal or modification.
ARTICLE 13. Fair Price.
(a) Special Vote Required For Certain Business Combinations.
In addition to any affirmative vote required by law or this Amended and Restated
Certificate of Incorporation or the Bylaws of the Corporation, and except as
otherwise expressly provided in Section (b) of this ARTICLE 13 (Fair Price --
When Special Vote Not Required), a Business Combination (as hereinafter defined)
with, or proposed by or on behalf of any Interested Stockholder (as hereinafter
defined) or any Affiliate or Associate (as hereinafter defined) of any
Interested Stockholder or any person who after such Business Combination would
be an Affiliate or Associate of such Interested Stockholder shall require the
affirmative vote of the holders of not less than 80% of the voting power of the
Voting Stock, voting together as a single class. Such affirmative vote shall be
required notwithstanding the fact that no vote may be required, or that a lesser
percentage or separate class vote may be specified, by law, by any other
provision of this Amended and Restated Certificate of Incorporation or the
Bylaws of the Corporation, by any agreement with any national securities
exchange or otherwise.
(b) When Special Vote Not Required. The provisions of Section
(a) of this ARTICLE 13 (Fair Price -- Special Vote Required for Certain Business
Combinations) shall not be applicable to any particular Business Combination,
and such Business Combination shall require only such affirmative vote, if any,
as is required by law, by any other provision of this Amended and Restated
Certificate of Incorporation or the Bylaws of the Corporation, by any agreement
with any national securities exchange or otherwise if, in the case of a Business
Combination involving the receipt of consideration by the holders of the
Corporation's outstanding Capital Stock (as hereinafter defined), the condition
specified in paragraph (i) below is met or all of the conditions specified in
paragraph (ii) below are met or if, in the case of a Business Combination not
involving the receipt of consideration by the holders of the Corporation's
outstanding Capital Stock, the condition specified in paragraph (i) below is
met:
(i) Approval by Disinterested Directors. The Business
Combination (either specifically or as a transaction which is within an approved
category of transactions) shall have been approved by a majority of the
Disinterested Directors (as hereinafter defined), it being understood that this
condition shall not be capable of satisfaction unless there is at least one
Disinterested Director.
(ii) Minimum Price, Form of Consideration and Other
Requirements. All of the following conditions shall have been met:
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(A) Minimum Price Requirements. With respect
to every class or series of outstanding Capital Stock of the Corporation,
whether or not the Interested Stockholder has previously acquired beneficial
ownership of any shares of such class or series of Capital Stock:
(1) The aggregate amount of cash
plus the Fair Market Value (as hereinafter defined), as of the date of the
consummation of the Business Combination, of consideration other than cash to be
received per share by holders of Common Stock in such Business Combination shall
be at least equal to the higher of the amounts determined pursuant to clauses
(aa) and (bb) below:
(aa) the highest per-share
price (including any brokerage commissions, transfer taxes and soliciting
dealers' fees) paid by or on behalf of the Interested Stockholder for any share
of Common Stock in connection with the acquisition by the Interested Stockholder
of beneficial ownership of shares of Common Stock (x) within the two-year period
immediately prior to the Announcement Date (as hereinafter defined) or (y) in
the transaction or series of related transactions in which it became an
Interested Stockholder, whichever is higher, in either case as adjusted for any
subsequent stock split, stock dividend, subdivision or reclassification with
respect to Common Stock; and
(bb) the Fair Market Value
per share of Common Stock (x) on the Announcement Date or (y) on the
Determination Date (as hereinafter defined), whichever is higher, as adjusted
for any subsequent stock split, stock dividend, subdivision or reclassification
with respect to Common Stock.
(2) The aggregate amount of cash
plus the Fair Market Value, as of the date of the consummation of the Business
Combination, of consideration other than cash to be received per share by
holders of shares of any class or series of outstanding Capital Stock, other
than Common, shall be at least equal to the highest of the amounts determined
pursuant to clauses (aa), (bb) and (cc) below:
(aa) the highest per-share
price (including any brokerage commissions, transfer taxes and soliciting
dealers' fees) paid by or on behalf of the Interested Stockholder for any share
of such class or series of Capital Stock in connection with the acquisition by
the Interested Stockholder of beneficial ownership of shares of such class or
series of Capital Stock (x) within the two-year period immediately prior to the
Announcement Date or (y) in the transaction or series of related transactions in
which it became an Interested Stockholder, whichever is higher, in either case
as adjusted for any subsequent stock split, stock dividend, subdivision or
reclassification with respect to such class or series of Capital Stock;
(bb) the Fair Market Value
per share of such class or series of Capital Stock (x) on the Announcement Date
or (y) on the Determination Date, whichever is higher, as adjusted for any
subsequent stock split, stock dividend, subdivision or reclassification with
respect to such class or series of Capital Stock; and
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(cc) the highest
preferential amount per share, if any, to which the holders of shares of such
class or series of Capital Stock would be entitled to in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the affairs
of the Corporation regardless of whether the Business Combination to be
consummated constitutes such an event.
(B) Form of Consideration and Other
Requirements.
(1) The consideration to be
received by holders of a particular class or series of outstanding Capital Stock
shall be in cash or in the same form as previously has been paid by or on behalf
of the Interested Stockholder in connection with its direct or indirect
acquisition of beneficial ownership of shares of such class or series of Capital
Stock. If the consideration so paid for shares of any class or series of Capital
Stock varies as to form, the form of consideration of such class or series of
Capital Stock shall be in cash or the form paid by or on behalf of the
Interested Stockholder in connection with its direct or indirect acquisition of
beneficial ownership of the largest number of shares of such class or series of
Capital Stock.
(2) After the Determination Date
and prior to the consummation of such Business Combination:
(aa) there shall have been
no failure to declare and pay at the regular date therefor any full regular
dividends (whether or not cumulative) payable in accordance with the terms of
any outstanding Capital Stock, other than the Common Stock, except as approved
by a majority of the Disinterested Directors;
(bb) there shall have been
no reduction in the amount, or change in the frequency of payment, of any
dividends regularly paid on the Common Stock (except as necessary to reflect any
stock split, stock dividend, subdivision or reclassification of the Common
Stock), except as approved by a majority of the Disinterested Directors; and
(cc) there shall have been
an increase in the amount of any dividends regularly paid on the Common Stock as
necessary to reflect any reverse stock split or reclassification of the Common
Stock, or any split, recapitalization, reorganization or any similar transaction
that has the effect of reducing the number of outstanding shares of Common
Stock, unless the failure so to increase the amount of such dividends is
approved by a majority of the Disinterested Directors.
(3) such Interested Stockholder
shall not have become the beneficial owner of any additional shares of Capital
Stock except as part of or otherwise in connection with the transaction or
series of related transactions that resulted in such Interested Stockholder
becoming an Interested Stockholder.
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(4) After the Determination Date
and prior to the consummation of such Business Combination, such Interested
Stockholder shall not have received the benefit, directly or indirectly (except
proportionately as a stockholder of the Corporation), of any loans, advances,
guarantees, pledges or other financial assistance or any tax credits or other
tax advantages provided by the Corporation, whether in anticipation of or in
connection with such Business Combinations or otherwise.
(5) After the Determination Date
and prior to the consummation of such Business Combination, such Interested
Stockholder shall not have made any major change in the Corporation's business
or capital structure without the approval of a majority of the Disinterested
Directors.
(6) A proxy or information
statement describing the proposed Business Combination and complying with the
requirements of the 1934 Act shall be mailed to all stockholders of the
Corporation at least 30 days prior to the consummation of such Business
Combination (whether or not such proxy or information statement is required to
be mailed pursuant to the 1934 Act). Such proxy or information statement shall
contain, in a prominent place, any statement as to the advisability (or
inadvisability) of the Business Combination that the Disinterested Directors, or
any of them, may choose to make and, if deemed advisable by a majority of the
Disinterested Directors, the opinion of an investment banking firm selected by a
majority of the Disinterested Directors as to the fairness (or not) of the terms
of the Business Combination from a financial point of view to the holders of the
outstanding shares of Capital Stock other than the Interested stockholder and
its Affiliates or Associates, such investment banking firm to be paid a
reasonable fee for its services by the Corporation.
(c) Certain Definitions. The following definitions shall apply
with respect to this ARTICLE 13 (Fair Price):
(i) The term "Business Combination" shall mean:
(A) any merger or consolidation of the
Corporation or any Subsidiary (as hereinafter defined) with (1) any Interested
Stockholder or (2) any other company (whether or not itself an Interested
Stockholder) that is or after such merger or consolidation would be an Affiliate
or Associate of an Interested Stockholder; or
(B) any sale, lease, exchange, mortgage,
pledge, transfer or other disposition, or any security arrangement, investment,
loan, advance, guarantee, agreement to purchase, agreement to pay, extension of
credit, joint venture participation or other arrangement, in one transaction or
in a series of transactions, with or for the benefit of any Interested
Stockholder or any Affiliate or Associate of any Interested Stockholder
involving any assets, cash flow, earning power, securities or commitments of the
Corporation, any Subsidiary, any Interested Stockholder or any Affiliate or
Associate of any Interested Stockholder that, together with all other such
arrangements, has an aggregate Fair Market Value or involves
15
<PAGE> 16
aggregate commitments equal to 10% or more of the assets, cash flow or earning
power (in the case of transactions involving assets or commitments other than
capital stock) or 10% or more of the stockholders' equity (in the case of
transactions in capital stock) of the entity in question (the "Substantial
Part"), as reflected in the most recent fiscal year-end consolidated balance
sheet of such entity existing at the time the stockholders of the Corporation
would be required to approve or authorize the Business Combination involving the
assets, cash flow, earning power, securities or commitments constituting any
Substantial Part; or
(C) the adoption of any plan or proposal for
the liquidation or dissolution of the Corporation; or
(D) any issuance or reclassification of
securities (including any stock dividend, split or reverse split or any other
distribution of securities in respect of stock), any recapitalization of the
Corporation, any merger or consolidation of the Corporation with any of its
Subsidiaries or any other transaction (whether or not with or otherwise
involving an Interested Stockholder) that has the effect, directly or
indirectly, of increasing the proportionate share of any class or series of
Capital Stock, or any securities convertible into or rights, options or warrants
to acquire Capital Stock, or equity securities of any Subsidiary, that is
beneficially owned by any Interested Stockholder or any Affiliate or Associate
of any Interested Stockholder; or
(E) any agreement, arrangement or other
understanding providing for any one or more of the actions specified in the
foregoing clauses (A) to (D).
(ii) The term "Capital Stock" shall mean the capital
stock of the Corporation authorized to be issued from time to time under ARTICLE
4 (Description and Authorization of Stock), and the term "Voting Stock" shall
mean all issued and outstanding shares of Capital Stock entitled to vote
generally in the election of directors or that otherwise are entitled to vote
with such stock on the specific matter in question.
(iii) The term "person" shall mean any individual,
firm, company or other entity and shall include any group composed of any person
and any other person with whom such person or any Affiliate or Associate of such
person has any agreement, arrangement or understanding, directly or indirectly,
for the purpose of acquiring, holding, voting or disposing of Capital Stock.
(iv) The term "Interested Stockholder" shall mean any
person (other than the Corporation or any Subsidiary and other than any
profit-sharing, employee stock ownership or other employee benefit plan of the
Corporation or any Subsidiary or any trustee of or fiduciary with respect to any
such plan when acting in such capacity) who or which:
(A) is the beneficial owner, directly or
indirectly, of Voting Stock representing __% or more of the voting power of all
Voting Stock; or
16
<PAGE> 17
(B) is an Affiliate or Associate of the
Corporation and at any time within the two-year period immediately prior to the
date in question was the beneficialowner, directly or indirectly, of Voting
Stock representing __% or more of the voting power of all Voting Stock; or
(C) is an assignee of or has otherwise
succeeded to any shares of Voting Stock which were at any time within the
two-year period immediately prior to the date in question beneficially owned by
an Interested Stockholder, if such assignment or succession shall have occurred
in the course of a transaction or series of transactions not involving a public
offering within the meaning of the 1933 Act.
(v) A person shall be a "beneficial owner" of, shall
"beneficially own" and shall have "beneficial ownership" of any Capital Stock
(1) that such person or any of its Affiliates or Associates owns, directly or
indirectly; (2) that such person or any of its Affiliates or Associates has,
directly or indirectly, (x) the right to acquire (whether such right is
exercisable immediately or subject only to the passage of time), pursuant to any
agreement, arrangement or understanding or upon the exercise of conversion
rights, exchange rights, warrants or options, or otherwise, or (y) the right to
vote pursuant to any agreement, arrangement or understanding; or (3) which is
beneficially owned, directly or indirectly, by any other person with which such
person or any of its Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of any
shares of Capital Stock. For the purposes of determining whether a person is an
Interested Stockholder pursuant to paragraph (iv) above, the number of shares of
Capital Stock deemed to be outstanding shall include shares deemed beneficially
owned by such person through application of this paragraph (v), but shall not
include any other shares of Capital Stock that may be issuable pursuant to any
agreement, arrangement or understanding, or upon exercise of conversion rights,
warrants or options, or otherwise.
(vi) The terms "Affiliate" and "Associate" shall have
the respective meanings ascribed to such terms in Rule 12b-2 of the General
Rules and Regulations under the 1934 Act in effect on the date that this ARTICLE
13 (Fair Price) is approved by the Board of Directors of the Corporation (the
term "registrant" in Rule 12b-2 meaning in this case the Corporation).
(vii) The term "Subsidiary" means with reference to
any person, any corporation or other entity of which a majority of the voting
power of equity securities or majority of the equity interest is beneficially
owned, directly or indirectly, by such person, or otherwise controlled by such
person; provided, however, that for the purposes of the definition of Interested
Stockholder set forth in paragraph (iv) above, the term "Subsidiary" shall mean
only a corporation or other entity of which a majority of each class of equity
securities is beneficially owned by the Corporation.
(viii) "Common Stock" shall mean the common stock,
par value $0.01 per share, of the Corporation, except that "Common Stock" when
used with reference to any
17
<PAGE> 18
person other than the Corporation shall mean the capital stock of such person
with the greatest voting power, or the equity securities or other equity
interest having power to control or direct the management, of such person.
(ix) The term "Disinterested Director," with respect
to any particular Business Combination with, or proposed by or on behalf of, any
Interested Stockholder or any Affiliate or Associate of any Interested
Stockholder or any person who thereafter would be an Affiliate or Associate of
any Interested Stockholder, means (1) any member of the Board of Directors of
the Corporation, while such person is a member of the Board of Directors, who is
not an Interested Stockholder, an Affiliate or Associate of an Interested
Stockholder, or a representative of an Interested Stockholder or of any such
Affiliate or Associate, and was a member of the Board of Directors prior to the
Effective Time, or (2) any person who subsequently becomes a member of the Board
of Directors, while such person is a member of the Board of Directors, who is
not an Interested Stockholder, an Affiliate or Associate of an Interested
Stockholder, or a representative of an Interested Stockholder or of any such
Affiliate or Associate, if such person's nomination for election or election to
the Board of Directors is recommended or approved by a majority of the
Disinterested Directors then in office.
(x) The term "Fair Market Value" means (1) in the
case of cash, the amount of such cash; (2) in the case of stock, the highest
closing sale price during the 30-day period immediately preceding the date in
question of a share of such stock on the Composite Tape for New York Stock
Exchange-listed stocks, or, if such stock is not quoted on the Composite Tape,
on the New York Stock Exchange, or, if such stock is not listed on such
exchange, on the principal United States securities exchange registered under
the 1934 Act on which such stock is listed, or, if such stock is not listed on
any such exchange, the highest closing sale price with respect to a share of
such stock during the 30-day period immediately preceding the date in question
as reported by the National Association of Securities Dealers, Inc. Automated
Quotation System or any similar system then in use, or if no such sale prices
are available, the highest of the means between the last reported bid and asked
price with respect to a share of such stock on each day during the 30-day period
immediately preceding the date in question as reported by the National
Association of Securities Dealers, Inc. Automated Quotation System, or if not so
reported, as determined by a member firm of the National Association of
Securities Dealers, Inc. selected by a majority of the Disinterested Directors,
or if no such bid and asked prices are available, the fair market value you on
the date in question of a share of such stock as determined in good faith by a
majority of the Disinterested Directors; and (3) in the case of property other
than cash or stock, the fair market value of such property on the date in
question as determined in good faith by a majority of the Disinterested
Directors.
(xi) In the event of any Business Combination in
which the Corporation survives, the phrase "consideration other than cash to be
received" as used in paragraphs (1) and (2) of Section (b)(ii)(A) of this
ARTICLE 13 (Fair Price -- Minimum Price Requirements) shall include the shares
of Common Stock and/or the shares of any other class or series of Capital Stock
retained by the holders of such shares.
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<PAGE> 19
(xii) The term "Announcement Date" means the date on
which the proposed Business Combination is first publicly announced, disclosed
or reported.
(xiii) The term "Determination Date" means with
respect to any Interested Stockholder, the date on which such Interested
Stockholder became an Interested Stockholder.
(xiv) "Business Day" shall mean any day other than a
Saturday, Sunday or a day on which banking institutions in the State of Texas
are authorized or obligated by law or executive order to close.
(d) Powers of Directors. For the purpose of this ARTICLE 13
(Fair Price), a majority of the Disinterested Directors (whether or not any
vacancies then exist on the Board of Directors) shall exercise the powers of the
Disinterested Directors hereunder, and shall have the power and duty to
determine in good faith, on the basis of information known to them after
reasonable inquiry, all questions arising under this ARTICLE 13 (Fair Price),
including, without limitation, (1) whether a person is an Interested
Stockholder, (2) the number of shares of Capital Stock beneficially owned by any
person, (3) whether a person is an Affiliate or Associate of another, (4)
whether a Business Combination is with, or proposed by or on behalf of, an
Interested Stockholder or an Affiliate or Associate of an Interested Stockholder
or a person who thereafter would be an Interested Stockholder or an Affiliate or
Associate of an Interested Stockholder, and (5) whether any transaction
specified in paragraph (i)(B) of Section (c) of this ARTICLE 13 (Fair Price --
Certain Definitions) meets the Substantial Part test set forth therein. Any such
determination made in good faith shall be binding and conclusive on all parties.
(e) No Effect On Fiduciary Obligations.
(i) Nothing contained in this ARTICLE 13 (Fair Price)
shall be construed to relieve any Interested Stockholder from any fiduciary
obligation imposed by law.
(ii) The fact that any Business Combination complies
with the provisions of Section (b) of this ARTICLE 13 (Fair Price -- When
Special Vote Not Required) shall not be construed to impose any fiduciary duty,
obligation or responsibility on the Board of Directors, or any member thereof,
to approve such Business Combination or recommend its adoption or approval to
the stockholders of the Corporation, nor shall such compliance limit, prohibit
or otherwise restrict in any manner the Board of Directors, or any member
thereof, with respect to evaluations of or actions and responses taken with
respect to such Business Combination.
* * * * *
19
<PAGE> 20
IN WITNESS WHEREOF, Alamosa PCS Holdings, Inc. has caused its corporate
seal to be hereunto affixed and this Amended and Restated Certificate of
Incorporation to be signed by David E. Sharbutt, its Chairman of the Board and
Chief Executive Officer, and attested by Ray M. Clapp, its Secretary, as of
_________________, 1999.
ALAMOSA PCS HOLDINGS, INC.
By:
---------------------------------------------
David E. Sharbutt
Chairman of the Board and Chief Executive
Officer
[SEAL]
ATTEST:
- ------------------------------
Ray M. Clapp, Secretary
20
<PAGE> 1
EXHIBIT 3.2
AMENDED AND RESTATED BYLAWS
OF
ALAMOSA PCS HOLDINGS, INC.
A DELAWARE CORPORATION
____________________, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE ONE: OFFICES..............................................................................................1
1.1 Registered Office and Agent.....................................................................1
1.2 Other Offices...................................................................................1
ARTICLE TWO: MEETINGS OF STOCKHOLDERS.............................................................................1
2.1 Annual Meeting..................................................................................1
2.2 Special Meeting.................................................................................1
2.3 Place of Meetings...............................................................................1
2.4 Notice..........................................................................................2
2.5 Conduct of Business.............................................................................2
2.6 Voting List.....................................................................................2
2.7 Quorum..........................................................................................2
2.8 Required Vote; Withdrawal of Quorum.............................................................3
2.9 Method of Voting; Proxies.......................................................................3
2.10 Record Date.....................................................................................3
2.11 Conduct of Meeting..............................................................................4
2.12 Inspectors......................................................................................4
ARTICLE THREE: DIRECTORS..........................................................................................4
3.1 Management......................................................................................4
3.2 Number; Qualification; Election; Term...........................................................4
3.3 Meetings of Directors...........................................................................4
3.4 First Meeting...................................................................................5
3.5 Election of Officers............................................................................5
3.6 Regular Meetings................................................................................5
3.7 Special Meetings................................................................................5
3.8 Notice..........................................................................................5
3.9 Quorum; Majority Vote...........................................................................5
3.10 Procedure.......................................................................................5
3.11 Presumption of Assent...........................................................................6
3.12 Compensation....................................................................................6
ARTICLE FOUR: COMMITTEES..........................................................................................6
4.1 Designation.....................................................................................6
4.2 Number; Qualification; Term.....................................................................6
4.3 Authority.......................................................................................6
4.4 Committee Changes...............................................................................6
4.5 Alternate Members of Committees.................................................................6
4.6 Regular Meetings................................................................................6
4.7 Special Meetings................................................................................7
4.8 Quorum; Majority Vote...........................................................................7
4.9 Minutes.........................................................................................7
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C> <C>
4.10 Compensation....................................................................................7
4.11 Responsibility..................................................................................7
ARTICLE FIVE: NOTICE..............................................................................................7
5.1 Method..........................................................................................7
5.2 Waiver..........................................................................................8
ARTICLE SIX: OFFICERS.............................................................................................8
6.1 Number; Titles; Term of Office..................................................................8
6.2 Removal.........................................................................................8
6.3 Vacancies.......................................................................................8
6.4 Authority.......................................................................................8
6.5 Compensation....................................................................................8
6.6 Chairman of the Board and Chief Executive Officer...............................................9
6.7 President.......................................................................................9
6.8 Vice Presidents.................................................................................9
6.9 Treasurer.......................................................................................9
6.10 Assistant Treasurers............................................................................9
6.11 Secretary......................................................................................10
6.12 Assistant Secretaries..........................................................................10
6.13 Vice Chairman of the Board.....................................................................10
ARTICLE SEVEN: CERTIFICATES AND STOCKHOLDERS.....................................................................10
7.1 Certificates for Shares........................................................................10
7.2 Replacement of Lost or Destroyed Certificates..................................................10
7.3 Transfer of Shares.............................................................................11
7.4 Registered Stockholders........................................................................11
7.5 Regulations....................................................................................11
7.6 Legends........................................................................................11
ARTICLE EIGHT: MISCELLANEOUS PROVISIONS..........................................................................11
8.1 Dividends......................................................................................11
8.2 Reserves.......................................................................................11
8.3 Books and Records..............................................................................11
8.4 Fiscal Year....................................................................................12
8.5 Seal...........................................................................................12
8.6 Resignations...................................................................................12
8.7 Securities of Other Corporations...............................................................12
8.8 Telephone Meetings.............................................................................12
8.9 Action Without a Meeting.......................................................................12
8.10 Invalid Provisions.............................................................................13
8.11 Mortgages, etc.................................................................................13
8.12 Headings.......................................................................................13
8.13 References.....................................................................................13
8.14 Amendments.....................................................................................13
8.15 Ratification...................................................................................13
8.16 Contracts......................................................................................14
</TABLE>
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<PAGE> 4
AMENDED AND RESTATED BYLAWS
OF
ALAMOSA PCS HOLDINGS, INC.
A DELAWARE CORPORATION
PREAMBLE
These amended and restated bylaws (the "BYLAWS") are subject to, and
governed by, the General Corporation Law of the State of Delaware (the "DELAWARE
CORPORATION LAW") and the amended and restated certificate of incorporation
("CERTIFICATE OF INCORPORATION") of Alamosa PCS Holdings, Inc., a Delaware
corporation (the "CORPORATION"). In the event of a direct conflict between the
provisions of these Bylaws and the mandatory provisions of the Delaware
Corporation Law or the provisions of the Certificate of Incorporation, such
provisions of the Delaware Corporation Law or the Certificate of Incorporation,
as the case may be, will be controlling.
ARTICLE ONE: OFFICES
1.1 Registered Office and Agent. The registered office and registered
agent of the Corporation shall be as designated from time to time by the
appropriate filing by the Corporation in the office of the Secretary of State of
the State of Delaware.
1.2 Other Offices. The Corporation may also have offices at such other
places, both within and without the State of Delaware, as the Board of Directors
of the Corporation (the "BOARD OF DIRECTORS") may from time to time determine or
as the business of the Corporation may require.
ARTICLE TWO: MEETINGS OF STOCKHOLDERS
2.1 Annual Meeting. An annual meeting of stockholders of the
Corporation shall be held each calendar year on such date and at such time as
shall be designated from time to time by the Board of Directors and stated in
the notice of the meeting or in a duly executed waiver of notice of such
meeting. At such meeting, the stockholders shall elect directors and transact
such other business as may be properly brought before the meeting.
2.2 Special Meeting. A special meeting of the stockholders may be
called and held as provided in the Certificate of Incorporation.
2.3 Place of Meetings. An annual meeting of stockholders may be held at
any place within or without the State of Delaware designated by the Board of
Directors. A special meeting of stockholders may be held at any place within or
without the State of Delaware designated in the notice of the meeting or a duly
executed waiver of notice of such meeting. Meetings of stockholders shall be
held at the principal office of the Corporation unless another place is
designated for meetings in the manner provided herein.
<PAGE> 5
2.4 Notice. Written or printed notice stating the place, day, and time
of each meeting of the stockholders and, in case of a special meeting, the
purpose or purposes for which the meeting is called, shall be delivered not less
than 10 nor more than 60 days before the date of the meeting, either personally
or by mail, by or at the direction of the Chairman of the Board and Chief
Executive Officer, the Secretary, or the officer or person(s) calling the
meeting, to each stockholder of record entitled to vote at such meeting. If such
notice is to be sent by mail, it shall be directed to such stockholder at his
address as it appears on the records of the Corporation, unless he shall have
filed with the Secretary of the Corporation a written request that notices to
him be mailed to some other address, in which case it shall be directed to him
at such other address. Notice of any meeting of stockholders shall not be
required to be given to any stockholder who shall attend such meeting in person
or by proxy and shall not, at the beginning of such meeting, object to the
transaction of any business because the meeting is not lawfully called or
convened, or who shall, either before or after the meeting, submit a signed
waiver of notice, in person or by proxy.
Such notice shall also comply with relevant provisions contained in the
Certificate of Incorporation filed on behalf of the Corporation.
2.5 Conduct of Business. Notwithstanding anything in these Bylaws to
the contrary, no business shall be conducted, and no person shall be nominated
to serve as a director, at an annual or special meeting of stockholders, except
in accordance with the procedures set forth in the Certificate of Incorporation.
2.6 Voting List. At least 10 days before each meeting of stockholders,
the Secretary or other officer of the Corporation who has charge of the
Corporation's stock ledger, either directly or through another officer appointed
by him or through a transfer agent appointed by the Board of Directors, shall
prepare a complete list of stockholders entitled to vote thereat, arranged in
alphabetical order and showing the address of each stockholder and number of
shares of capital stock registered in the name of each stockholder. For a period
of 10 days prior to such meeting, such list shall be kept on file at a place
within the city where the meeting is to be held, which place shall be specified
in the notice of meeting or a duly executed waiver of notice of such meeting or,
if not so specified, at the place where the meeting is to be held and shall be
open to examination by any stockholder, for any purpose germane to the meeting,
during ordinary business hours. Such list shall be produced at such meeting and
kept at the meeting at all times during such meeting and may be inspected by any
stockholder who is present.
2.7 Quorum. The holders of a majority of the outstanding shares of
capital stock entitled to vote on a matter, present in person or by proxy, shall
constitute a quorum at any meeting of stockholders, except as otherwise provided
by law, the Certificate of Incorporation, or these Bylaws. If a quorum shall not
be present, in person or by proxy, at any meeting of stockholders, the
stockholders entitled to vote thereat who are present, in person or by proxy
(or, if no stockholder entitled to vote is present, any officer of the
Corporation), may adjourn the meeting from time to time without notice other
than announcement at the meeting (unless the Board of Directors, after such
adjournment, fixes a new record date for the adjourned meeting), until a quorum
shall be present, in person or by proxy. At any adjourned meeting at which a
quorum shall be present, in person or
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<PAGE> 6
by proxy, any business may be transacted which may have been transacted at the
original meeting had a quorum been present; provided that, if the adjournment is
for more than 30 days or if after the adjournment a new record date is fixed for
the adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the adjourned meeting.
2.8 Required Vote; Withdrawal of Quorum. When a quorum is present at
any meeting, the vote of the holders of at least a majority of the outstanding
shares of capital stock entitled to vote thereat who are present, in person or
by proxy, shall decide any question brought before such meeting, unless the
question is one on which, by express provision of law, the Certificate of
Incorporation, or these Bylaws, a different vote is required, in which case such
express provision shall govern and control the decision of such question;
provided, however, that the vote of the holders of a plurality of the
outstanding shares of capital stock entitled to vote in the election of
directors who are present, in person or by proxy, shall be required to effect
elections of directors. The stockholders present at a duly constituted meeting
may continue to transact business until adjournment, notwithstanding the
withdrawal of enough stockholders to leave less than a quorum.
2.9 Method of Voting; Proxies. Except as otherwise provided in the
Certificate of Incorporation or by law, each outstanding share of capital stock,
regardless of class, shall be entitled to one vote on each matter submitted to a
vote at a meeting of stockholders. Elections of directors need not be by written
ballot. At any meeting of stockholders, every stockholder having the right to
vote may vote either in person or by a proxy executed in writing by the
stockholder or by his duly authorized attorney-in-fact. Each such proxy shall be
filed with the Secretary of the Corporation before or at the time of the
meeting. No proxy shall be valid after three years from the date of its
execution, unless otherwise provided in the proxy. If no date is stated in a
proxy, such proxy shall be presumed to have been executed on the date of the
meeting at which it is to be voted. Each proxy shall be revocable unless
expressly provided therein to be irrevocable and coupled with an interest
sufficient in law to support an irrevocable power or unless otherwise made
irrevocable by law.
2.10 Record Date. For the purpose of determining stockholders entitled
(a) to notice of or to vote at any meeting of stockholders or any adjournment
thereof, (b) to receive payment of any dividend or other distribution or
allotment of any rights, or (c) to exercise any rights in respect of any change,
conversion, or exchange of stock or for the purpose of any other lawful action,
the Board of Directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted by
the Board of Directors, for any such determination of stockholders, such date in
any case to be not more than 60 days and not less than 10 days prior to such
meeting nor more than 60 days prior to any other action. If no record date is
fixed:
(i) The record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the close
of business on the day next preceding the day on which notice is given
or, if notice is waived, at the close of business on the day next
preceding the day on which the meeting is held.
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<PAGE> 7
(ii) The record date for determining stockholders for any
other purpose shall be at the close of business on the day on which the
Board of Directors adopts the resolution relating thereto.
A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
2.11 Conduct of Meeting. The Chairman of the Board and Chief Executive
Officer, if such office has been filled, and, if such office has not been filled
or if the Chairman of the Board and Chief Executive Officer is absent or
otherwise unable to act, the President shall preside at all meetings of
stockholders. The Secretary shall keep the records of each meeting of
stockholders. In the absence or inability to act of any such officer, such
officer's duties shall be performed by the officer given the authority to act
for such absent or non-acting officer under these Bylaws or by resolution
adopted by the Board of Directors, or if no officer has been given such
authority, by some person appointed at the meeting.
2.12 Inspectors. The Board of Directors may, in advance of any meeting
of stockholders, appoint one or more inspectors to act at such meeting or any
adjournment thereof. If any of the inspectors so appointed shall fail to appear
or act, the chairman of the meeting shall, or if inspectors shall not have been
appointed, the chairman of the meeting may, appoint one or more inspectors. Each
inspector, before entering upon the discharge of his duties, shall take and sign
an oath to execute faithfully the duties of inspector at such meeting with
strict impartiality and according to the best of his ability. The inspectors
shall determine the number of shares of capital stock of the Corporation
outstanding and the voting power of each, the number of shares represented at
the meeting, the existence of a quorum, and the validity and effect of proxies
and shall receive votes, ballots, or consents, hear and determine all challenges
and questions arising in connection with the right to vote, count, and tabulate
all votes, ballots, or consents, determine the results, and do such acts as are
proper to conduct the election or vote with fairness to all stockholders. On
request of the chairman of the meeting, the inspectors shall make a report in
writing of any challenge, request, or matter determined by them and shall
execute a certificate of any fact found by them. No director or candidate for
the office of director shall act as an inspector of an election of directors.
Inspectors need not be stockholders.
ARTICLE THREE: DIRECTORS
3.1 Management. The business and affairs of the Corporation shall be
managed by or under the direction of the Board of Directors.
3.2 Number; Qualification; Election; Term. The Board of Directors shall
be constituted as set forth in the Certificate of Incorporation.
3.3 Meetings of Directors. The directors may hold their meetings and
may have an office and keep the records of the Corporation, except as otherwise
provided by law, in such place or places
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<PAGE> 8
within or without the State of Delaware as the Board of Directors may from time
to time determine or as shall be specified in the notice of such meeting or duly
executed waiver of notice of such meeting.
3.4 First Meeting. Each newly elected Board of Directors may hold its
first meeting for the purpose of organization and the transaction of business,
if a quorum is present, immediately after and at the same place as the annual
meeting of stockholders, and no notice of such meeting shall be necessary.
3.5 Election of Officers. At the first meeting of the Board of
Directors after each annual meeting of stockholders at which a quorum shall be
present, the Board of Directors shall elect the officers of the Corporation.
3.6 Regular Meetings. Regular meetings of the Board of Directors shall
be held at such times and places as shall be designated from time to time by
resolution of the Board of Directors. Notice of such regular meetings shall not
be required.
3.7 Special Meetings. Special meetings of the board of directors shall
be held whenever called by the Chairman of the Board and Chief Executive
Officer, or any director.
3.8 Notice. The Secretary shall give notice of each special meeting to
each director at least 24 hours before the meeting. Notice of any such meeting
need not be given to any director who, either before or after the meeting,
submits a signed waiver of notice or who shall attend such meeting without
protesting, prior to or at its commencement, the lack of notice to him. The
purpose of any special meeting shall be specified in the notice or waiver of
notice of such meeting.
3.9 Quorum; Majority Vote. At all meetings of the Board of Directors, a
majority of the directors fixed in the manner provided in these Bylaws shall
constitute a quorum for the transaction of business. If at any meeting of the
Board of Directors there is less than a quorum present, a majority of those
present or any director solely present may adjourn the meeting from time to time
without further notice. Unless the act of a greater number is required by law,
the Certificate of Incorporation, or these Bylaws, the act of a majority of the
directors present at a meeting at which a quorum is in attendance shall be the
act of the Board of Directors. At any time that the Certificate of Incorporation
provides that directors elected by the holders of a class or series of stock
shall have more or less than one vote per director on any matter, every
reference in these Bylaws to a majority or other proportion of directors shall
refer to a majority or other proportion of the votes of such directors.
3.10 Procedure. At meetings of the Board of Directors, business shall
be transacted in such order as from time to time the Board of Directors may
determine. The Chairman of the Board and Chief Executive Officer, if such office
has been filled, and, if such office has not been filled or if the Chairman of
the Board and Chief Executive Officer is absent or otherwise unable to act, the
President shall preside at all meetings of the Board of Directors. In the
absence or inability to act of such officers, a chairman shall be chosen by the
Board of Directors from among the directors
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<PAGE> 9
present. The Secretary of the Corporation shall act as the secretary of each
meeting of the Board of Directors unless the Board of Directors appoints another
person to act as secretary of the meeting. The Board of Directors shall keep
regular minutes of its proceedings which shall be placed in the minute book of
the Corporation.
3.11 Presumption of Assent. A director of the Corporation who is
present at the meeting of the Board of Directors at which action on any
corporate matter is taken shall be presumed to have assented to the action
unless his dissent shall be entered in the minutes of the meeting or unless he
shall file his written dissent to such action with the person acting as
secretary of the meeting before the adjournment thereof or shall forward any
dissent by certified or registered mail to the Secretary of the Corporation
immediately after the adjournment of the meeting. Such right to dissent shall
not apply to a director who voted in favor of such action.
3.12 Compensation. The Board of Directors shall have the authority to
fix the compensation, including fees and reimbursement of expenses, paid to
directors for attendance at regular or special meetings of the Board of
Directors or any committee thereof; provided, that nothing contained herein
shall be construed to preclude any director from serving the Corporation in any
other capacity or receiving compensation therefor.
ARTICLE FOUR: COMMITTEES
4.1 Designation. The Board of Directors may designate one or more
committees.
4.2 Number; Qualification; Term. Each committee shall consist of one or
more directors appointed by resolution adopted by a majority of the entire Board
of Directors. The number of committee members may be increased or decreased from
time to time by resolution adopted by a majority of the entire Board of
Directors. Each committee member shall serve as such until the earliest of (i)
the expiration of his term as director, (ii) his resignation as a committee
member or as a director, or (iii) his removal as a committee member or as a
director.
4.3 Authority. Each committee, to the extent expressly provided in the
resolution establishing such committee, shall have and may exercise all of the
powers and authority of the Board of Directors in the management of the business
and affairs of the Corporation except to the extent expressly restricted by law,
the Certificate of Incorporation, or these Bylaws.
4.4 Committee Changes. The Board of Directors shall have the power at
any time to fill vacancies in, to change the membership of, and to discharge any
committee.
4.5 Alternate Members of Committees. The Board of Directors may
designate one or more directors as alternate members of any committee. Any such
alternate member may replace any absent or disqualified member at any meeting of
the committee. If no alternate committee members have been so appointed to a
committee or each such alternate committee member is absent or disqualified, the
member or members of such committee present at any meeting and not disqualified
from voting, whether or not he or they constitute a quorum, may unanimously
appoint another
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<PAGE> 10
member of the Board of Directors to act at the meeting in the place of any such
absent or disqualified member.
4.6 Regular Meetings. Regular meetings of any committee may be held
without notice at such time and place as may be designated from time to time by
the committee and communicated to all members thereof.
4.7 Special Meetings. Special meetings of any committee may be held
whenever called by any committee member. The committee member calling any
special meeting shall cause notice of such special meeting, including therein
the time and place of such special meeting, to be given to each committee member
at least two days before such special meeting. Neither the business to be
transacted at, nor the purpose of, any special meeting of any committee need be
specified in the notice or waiver of notice of any special meeting.
4.8 Quorum; Majority Vote. At meetings of any committee, a majority of
the number of members designated by the Board of Directors shall constitute a
quorum for the transaction of business. If a quorum is not present at a meeting
of any committee, a majority of the members present may adjourn the meeting from
time to time, without notice other than an announcement at the meeting, until a
quorum is present. The act of a majority of the members present at any meeting
at which a quorum is in attendance shall be the act of a committee, unless the
act of a greater number is required by law, the Certificate of Incorporation, or
these Bylaws.
4.9 Minutes. Each committee shall cause minutes of its proceedings to
be prepared and shall report the same to the Board of Directors upon the request
of the Board of Directors. The minutes of the proceedings of each committee
shall be delivered to the Secretary of the Corporation for placement in the
minute books of the Corporation.
4.10 Compensation. Committee members may, by resolution of the Board of
Directors, be allowed a fixed sum and expenses of attendance, if any, for
attending any committee meetings or a stated salary.
4.11 Responsibility. The designation of any committee and the
delegation of authority to it shall not operate to relieve the Board of
Directors or any director of any responsibility imposed upon it or such director
by law.
ARTICLE FIVE: NOTICE
5.1 Method. Whenever by statute, the Certificate of Incorporation, or
these Bylaws, notice is required to be given to any committee member, director,
or stockholder and no provision is made as to how such notice shall be given,
personal notice shall not be required and any such notice may be given (a) in
writing, by mail, postage prepaid, addressed to such committee member, director,
or stockholder at his address as it appears on the books or (in the case of a
stockholder) the stock transfer records of the Corporation, or (b) by any other
method permitted by law (including but not limited to overnight courier service,
telegram, telex, or telefax). Any notice required or
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<PAGE> 11
permitted to be given by mail shall be deemed to be delivered and given at the
time when the same is deposited in the United States mail as aforesaid. Any
notice required or permitted to be given by overnight courier service shall be
deemed to be delivered and given at the time delivered to such service with all
charges prepaid and addressed as aforesaid. Any notice required or permitted to
be given by telegram, telex, or telefax shall be deemed to be delivered and
given at the time transmitted with all charges prepaid and addressed as
aforesaid.
5.2 Waiver. Whenever any notice is required to be given to any
stockholder, director, or committee member of the Corporation by statute, the
Certificate of Incorporation, or these Bylaws, a waiver thereof in writing
signed by the person or persons entitled to such notice, whether before or after
the time stated therein, shall be equivalent to the giving of such notice.
Attendance of a stockholder, director, or committee member at a meeting shall
constitute a waiver of notice of such meeting, except where such person attends
for the express purpose of objecting to the transaction of any business on the
ground that the meeting is not lawfully called or convened.
ARTICLE SIX: OFFICERS
6.1 Number; Titles; Term of Office. The officers of the Corporation
shall be a Chairman of the Board and Chief Executive Officer, a President, a
Secretary, and such other officers as the Board of Directors may from time to
time elect or appoint, including one or more Vice Presidents (with each Vice
President to have such descriptive title, if any, as the Board of Directors
shall determine) and a Treasurer. Each officer shall hold office until his
successor shall have been duly elected and shall have qualified, until his
death, or until he shall resign or shall have been removed in the manner
hereinafter provided. Any two or more offices may be held by the same person.
None of the officers need be a stockholder or a director of the Corporation or a
resident of the State of Delaware.
6.2 Removal. Any officer or agent elected or appointed by the Board of
Directors may be removed by the Board of Directors whenever in its judgment the
best interest of the Corporation will be served thereby, but such removal shall
be without prejudice to the contract rights, if any, of the person so removed.
Election or appointment of an officer or agent shall not of itself create
contract rights.
6.3 Vacancies. Any vacancy occurring in any office of the Corporation
(by death, resignation, removal, or otherwise) may be filled by the Board of
Directors.
6.4 Authority. Officers shall have such authority and perform such
duties in the management of the Corporation as are provided in these Bylaws or
as may be determined by resolution of the Board of Directors not inconsistent
with these Bylaws.
6.5 Compensation. The compensation, if any, of officers and agents
shall be fixed from time to time by the Board of Directors; provided, however,
that the Board of Directors may delegate the power to determine the compensation
of any officer and agent (other than the officer to whom such power is
delegated) to the Chairman of the Board and Chief Executive Officer or the
President.
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<PAGE> 12
6.6 Chairman of the Board and Chief Executive Officer. The Chairman of
the Board and Chief Executive Officer shall be the chief executive officer of
the Corporation and, subject to the supervision of the Board of Directors of the
Corporation, shall have the general management and control of the Corporation
and its subsidiaries (including the right to vote the voting securities of the
subsidiaries of the Corporation on behalf of the Corporation), shall preside at
all meetings of the stockholders and of the Board of Directors and may sign all
certificates for shares of capital stock of the Corporation.
6.7 President. The President shall be the chief operating officer of
the Corporation and, subject to the supervision of the Chairman of the Board and
Chief Executive Officer, he shall have general executive charge, management, and
control of the properties and operations of the Corporation in the ordinary
course of its business, with all such powers with respect to such properties and
operations as may be reasonably incident to such responsibilities. In the
absence or inability to act of the Chairman of the Board and Chief Executive
Officer, the President shall exercise all of the powers and discharge all of the
duties of the Chairman of the Board and Chief Executive Officer. As between the
Corporation and third parties, any action taken by the President in the
performance of the duties of the Chairman of the Board and Chief Executive
Officer shall be conclusive evidence that the Chairman of the Board and Chief
Executive Officer is absent or unable to act. The President may sign all
certificates for shares of stock of the Corporation.
6.8 Vice Presidents. Each Vice President shall have such powers and
duties as may be assigned to him by the Board of Directors, the Chairman of the
Board and Chief Executive Officer, or the President, and (in order of their
seniority as determined by the Board of Directors or, in the absence of such
determination, as determined by the length of time they have held the office of
Vice President) shall exercise the powers of the President during that officer's
absence or inability to act. As between the Corporation and third parties, any
action taken by a Vice President in the performance of the duties of the
President shall be conclusive evidence of the absence or inability to act of the
President at the time such action was taken.
6.9 Treasurer. The Treasurer shall have custody of the Corporation's
funds and securities, shall keep full and accurate account of receipts and
disbursements, shall deposit all monies and valuable effects in the name and to
the credit of the Corporation in such depository or depositories as may be
designated by the Board of Directors, and shall perform such other duties as may
be prescribed by the Board of Directors, the Chairman of the Board and Chief
Executive Officer, or the President.
6.10 Assistant Treasurers. Each Assistant Treasurer shall have such
powers and duties as may be assigned to him by the Board of Directors, the
Chairman of the Board and Chief Executive Officer, or the President. The
Assistant Treasurers (in the order of their seniority as determined by the Board
of Directors or, in the absence of such a determination, as determined by the
length of time they have held the office of Assistant Treasurer) shall exercise
the powers of the Treasurer during that officer's absence or inability to act.
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6.11 Secretary. Except as otherwise provided in these Bylaws, the
Secretary shall keep the minutes of all meetings of the Board of Directors and
of the stockholders in books provided for that purpose, and he shall attend to
the giving and service of all notices. He may sign with the Chairman of the
Board and Chief Executive Officer or the President, in the name of the
Corporation, all contracts of the Corporation and affix the seal, if any, of the
Corporation thereto. He may sign with the Chairman of the Board and Chief
Executive Officer or the President all certificates for shares of stock of the
Corporation, and he shall have charge of the certificate books, transfer books,
and stock papers as the Board of Directors may direct, all of which shall at all
reasonable times be open to inspection by any director upon application at the
office of the Corporation during business hours. He shall in general perform all
duties incident to the office of the Secretary, subject to the control of the
Board of Directors, the Chairman of the Board and Chief Executive Officer, and
the President.
6.12 Assistant Secretaries. Each Assistant Secretary shall have such
powers and duties as may be assigned to him by the Board of Directors, the
Chairman of the Board and Chief Executive Officer, or the President. The
Assistant Secretaries (in the order of their seniority as determined by the
Board of Directors or, in the absence of such a determination, as determined by
the length of time they have held the office of Assistant Secretary) shall
exercise the powers of the Secretary during that officer's absence or inability
to act.
6.13 Vice Chairman of the Board. The Vice Chairman of the Board, if one
shall be appointed, shall have such powers and duties as may be provided herein
or assigned to him by the Board of Directors or the Chairman of the Board and
Chief Executive Officer.
ARTICLE SEVEN: CERTIFICATES AND STOCKHOLDERS
7.1 Certificates for Shares. Certificates for shares of stock of the
Corporation shall be in such form as shall be approved by the Board of
Directors. The certificates shall be signed by the Chairman of the Board and
Chief Executive Officer or the President or a Vice President and also by the
Secretary or an Assistant Secretary or by the Treasurer or an Assistant
Treasurer. Any and all signatures on the certificate may be a facsimile and may
be sealed with the seal of the Corporation or a facsimile thereof. If any
officer, transfer agent, or registrar who has signed, or whose facsimile
signature has been placed upon, a certificate has ceased to be such officer,
transfer agent, or registrar before such certificate is issued, such certificate
may be issued by the Corporation with the same effect as if he were such
officer, transfer agent, or registrar at the date of issue. The certificates
shall be consecutively numbered and shall be entered in the books of the
Corporation as they are issued and shall exhibit the holder's name and the
number of shares.
7.2 Replacement of Lost or Destroyed Certificates. The Corporation may
direct a new certificate or certificates to be issued in place of a certificate
or certificates theretofore issued by the Corporation and alleged to have been
lost or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate or certificates representing shares to be lost or
destroyed. When authorizing such issue of a new certificate or certificates the
Board of Directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
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<PAGE> 14
as it shall require and/or to give the Corporation a bond with a surety or
sureties satisfactory to the Corporation in such sum as it may direct as
indemnity against any claim, or expense resulting from a claim, that may be made
against the Corporation with respect to the certificate or certificates alleged
to have been lost or destroyed.
7.3 Transfer of Shares. Shares of stock of the Corporation shall be
transferable only on the books of the Corporation by the holders thereof in
person or by their duly authorized attorneys or legal representatives. Upon
surrender to the Corporation or the transfer agent of the Corporation of a
certificate representing shares duly endorsed or accompanied by proper evidence
of succession, assignment, or authority to transfer, the Corporation or its
transfer agent shall issue a new certificate to the person entitled thereto,
cancel the old certificate, and record the transaction upon its books.
7.4 Registered Stockholders. The Corporation shall be entitled to treat
the holder of record of any share or shares of stock as the holder in fact
thereof and, accordingly, shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise provided by law.
7.5 Regulations. The Board of Directors shall have the power and
authority to make all such rules and regulations as they may deem expedient
concerning the issue, transfer, and registration or the replacement of
certificates for shares of stock of the Corporation.
7.6 Legends. The Board of Directors shall have the power and authority
to provide that certificates representing shares of stock bear such legends as
the Board of Directors deems appropriate to assure that the Corporation does not
become liable for violations of federal or state securities laws or other
applicable law.
ARTICLE EIGHT: MISCELLANEOUS PROVISIONS
8.1 Dividends. Subject to provisions of law and the Certificate of
Incorporation, dividends may be declared by the Board of Directors at any
regular or special meeting and may be paid in cash, in property, or in shares of
stock of the Corporation. Such declaration and payment shall be at the
discretion of the Board of Directors.
8.2 Reserves. There may be created by the Board of Directors out of
funds of the Corporation legally available therefor such reserve or reserves as
the directors from time to time, in their discretion, consider proper to provide
for contingencies, to equalize dividends, or to repair or maintain any property
of the Corporation, or for such other purpose as the Board of Directors shall
consider beneficial to the Corporation, and the Board of Directors may modify or
abolish any such reserve in the manner in which it was created.
8.3 Books and Records. The Corporation shall keep correct and complete
books and records of account, shall keep minutes of the proceedings of its
stockholders and Board of Directors and shall keep at its registered office or
principal place of business, or at the office of its transfer
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<PAGE> 15
agent or registrar, a record of its stockholders, giving the names and addresses
of all stockholders and the number and class of the shares held by each.
8.4 Fiscal Year. The fiscal year of the Corporation shall be fixed by
the Board of Directors; provided, that if such fiscal year is not fixed by the
Board of Directors and the selection of the fiscal year is not expressly
deferred by the Board of Directors, the fiscal year shall be the calendar year.
8.5 Seal. The seal of the Corporation shall be such as from time to
time may be approved by the Board of Directors.
8.6 Resignations. Any director, committee member, or officer may resign
by so stating at any meeting of the Board of Directors or by giving written
notice to the Board of Directors, the Chairman of the Board and Chief Executive
Officer, the President, or the Secretary. Such resignation shall take effect at
the time specified therein or, if no time is specified therein, immediately upon
its receipt. Unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
8.7 Securities of Other Corporations. The Chairman of the Board and
Chief Executive Officer or the President shall have the power and authority to
transfer, endorse for transfer, vote, consent, or take any other action with
respect to any securities of another issuer which may be held or owned by the
Corporation and to make, execute, and deliver any waiver, proxy, or consent with
respect to any such securities.
8.8 Telephone Meetings. Members of the Board of Directors and members
of a committee of the Board of Directors may participate in and hold a meeting
of such Board of Directors or committee by means of a conference telephone or
similar communications equipment by means of which persons participating in the
meeting can hear each other, and participation in a meeting pursuant to this
Section shall constitute presence in person at such meeting, except where a
person participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
8.9 Action Without a Meeting. Unless otherwise restricted by the
Certificate of Incorporation or by these Bylaws, any action required or
permitted to be taken at a meeting of the Board of Directors, or of any
committee of the Board of Directors, may be taken without a meeting if a consent
or consents in writing, setting forth the action so taken, shall be signed by
all the directors or all the committee members, as the case may be, entitled to
vote with respect to the subject matter thereof, and such consent shall have the
same force and effect as a vote of such directors or committee members, as the
case may be, and may be stated as such in any certificate or document filed with
the Secretary of State of the State of Delaware or in any certificate delivered
to any person. Such consent or consents shall be filed with the minutes of
proceedings of the Board or committee, as the case may be.
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Effective immediately following the consummation of the initial public
offering of the Corporation's Common Stock pursuant to a registration statement
declared effective under the Securities Act of 1933, as amended and including
any successor provisions thereto (the "1933 ACT") any action required or
permitted to be taken by the stockholders of the Corporation must be effected at
a duly called annual or special meeting of stockholders of the Corporation and
may not be effected by any consent in writing by such stockholders.
8.10 Invalid Provisions. If any part of these Bylaws shall be held
invalid or inoperative for any reason, the remaining parts, so far as it is
possible and reasonable, shall remain valid and operative.
8.11 Mortgages, etc. With respect to any deed, deed of trust, mortgage,
or other instrument executed by the Corporation through its duly authorized
officer or officers, the attestation to such execution by the Secretary of the
Corporation shall not be necessary to constitute such deed, deed of trust,
mortgage, or other instrument a valid and binding obligation against the
Corporation unless the resolutions, if any, of the Board of Directors
authorizing such execution expressly state that such attestation is necessary.
8.12 Headings. The headings used in these Bylaws have been inserted for
administrative convenience only and do not constitute matter to be construed in
interpretation.
8.13 References. Whenever herein the singular number is used, the same
shall include the plural where appropriate, and words of any gender should
include each other gender where appropriate.
8.14 Amendments. The Board of Directors may, upon the affirmative vote
of at least two-thirds of the Directors then serving, make, adopt, alter, amend,
and repeal from time to time these Bylaws and make from time to time new Bylaws
of the Corporation (subject to the right of the stockholders entitled to vote
thereon to adopt, alter, amend, and repeal Bylaws made by the Board of Directors
or to make new Bylaws); provided, however, that the stockholders of the
Corporation may adopt, alter, amend, or repeal Bylaws made by the Board of
Directors or make new Bylaws solely upon the affirmative vote of the holders of
at least 80% of the outstanding shares of capital stock then entitled to vote
thereon.
8.15 Ratification. Any transaction questioned in any lawsuit on the
grounds of, among other things, lack of authority, defective or irregular
execution, adverse interest of a director, officer or stockholder,
non-disclosure, miscomputation, or the application of improper principles or
practices of accounting, may be ratified, before or after judgment, by the Board
of Directors or by the stockholders, and if so ratified shall have the same
force and effect as if the questioned transaction had been originally duly
authorized. Such ratification shall be binding upon the Corporation and its
stockholders and shall constitute a bar to any claim or execution of any
judgment in respect of such questioned transaction.
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8.16 Contracts. The Board of Directors may authorize any person or
persons, in the name and on behalf of the Corporation, to enter into or execute
and deliver any and all deeds, bonds, mortgages, contracts and other obligations
or instruments, and such authority may be general or confined in specific
instances.
* * * * *
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The undersigned Secretary of the Corporation hereby certifies that the
foregoing Bylaws were adopted by consent of the sole director of the Corporation
as of __________________, 1999.
-----------------------------------
Ray M. Clapp, Secretary
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EXHIBIT 4.2
ALAMOSA PCS HOLDINGS, INC.
AND
----------------
RIGHTS AGENT
RIGHTS AGREEMENT
DATED AS OF _________, _____
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
<S> <C> <C> <C>
Section 1. Certain Definitions.............................................................................1
Section 2. Appointment of Rights Agent.....................................................................6
Section 3. Issuance of Rights Certificates.................................................................6
(a) Distribution Date; Rights Certificates..........................................................6
(b) Common Stock Certificates; Summary of Rights....................................................7
(c) Legend..........................................................................................7
Section 4. Form of Rights Certificates.....................................................................8
(a) Form; Date......................................................................................8
(b) Acquiring Person Legend.........................................................................8
Section 5. Countersignature and Registration...............................................................9
(a) Signatures......................................................................................9
(b) Registration and Transfer......................................................................10
Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates.......................................10
(a) Procedure......................................................................................10
(b) Issuance of New Rights Certificates............................................................10
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights..................................11
(a) Exercise.......................................................................................11
(b) Purchase Price.................................................................................11
(c) Rights Agent Actions...........................................................................11
(d) Partial Exercise...............................................................................12
(e) Termination of Acquiring Person's Rights.......................................................12
(f) Surrender of Rights Certificates; Identity of Beneficial Owner.................................13
Section 8. Cancellation and Destruction of Rights Certificates............................................13
Section 9. Reservation and Availability of Capital Stock..................................................13
(a) Reservation of Capital Stock...................................................................13
(b) Listing........................................................................................13
(c) Registration under the Act.....................................................................13
(d) Covenant Regarding Capital Stock...............................................................14
(e) Transfer Taxes and Charges.....................................................................14
</TABLE>
(i)
<PAGE> 3
<TABLE>
<S> <C> <C> <C>
Section 10. Preferred Stock Record Date.....................................................................15
Section 11. Adjustment of Purchase Price; Number and Kind of Shares or
Number of Rights...............................................................................15
(a) Certain Adjustments............................................................................15
(b) Purchase Price Adjustment -- Capital Stock.....................................................19
(c) Purchase Price Adjustment -- Cash, Assets, etc.................................................19
(d) Current Market Price...........................................................................20
(e) Purchase Price Adjustment Threshold............................................................21
(f) Equivalent Adjustments.........................................................................21
(g) Post-Adjustment Rights Issuances...............................................................22
(h) Preferred Stock Anti-Dilution..................................................................22
(i) Adjustment of Number of Rights.................................................................22
(j) Rights Certificates............................................................................23
(k) Adjustment Below Par Value.....................................................................23
(l) Adjustment Effective as of Future Date; Exercise...............................................23
(m) Tax Adjustments................................................................................23
(n) Restriction on Certain Transactions............................................................23
(o) Restriction Against Diminishing Benefits of the Rights.........................................24
(p) Common Stock Adjustments.......................................................................24
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.....................................24
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power...........................25
(a) Flip-over Event................................................................................25
(b) Principal Party................................................................................26
(c) Supplemental Agreement.........................................................................26
(d) Exceptions.....................................................................................27
Section 14. Fractional Rights and Fractional Shares........................................................28
(a) Fractional Rights..............................................................................28
(b) Fractional Shares of Preferred Stock...........................................................28
(c) Fractional Shares of Common Stock..............................................................29
(d) Waiver of Fractional Rights and Shares.........................................................29
Section 15. Rights of Action...............................................................................29
Section 16. Agreement of Rights Holders....................................................................29
Section 17. Rights Certificate Holder Not Deemed a Stockholder.............................................30
Section 18. Concerning the Rights Agent....................................................................30
(a) Compensation...................................................................................30
(b) Reliance.......................................................................................31
</TABLE>
(ii)
<PAGE> 4
<TABLE>
<S> <C> <C> <C>
Section 19. Merger or Consolidation or Change of Name of Rights Agent......................................31
(a) Successor......................................................................................31
(b) Prior Countersignatures........................................................................31
Section 20. Duties of Rights Agent.........................................................................31
(a) Legal Counsel..................................................................................31
(b) Certification by the Company...................................................................32
(c) Liability for Negligence, etc..................................................................32
(d) Statements of Fact or Recitals.................................................................32
(e) Agreement; Adjustments.........................................................................32
(f) Further Assurances.............................................................................32
(g) Instructions...................................................................................33
(h) Dealing in Rights..............................................................................33
(i) Agents; Reasonable Care........................................................................33
(j) Expenses; Repayment Assurances.................................................................33
(k) Exercise of Rights; Consultation with Company..................................................33
Section 21. Change of Rights Agent.........................................................................33
Section 22. Issuance of New Rights Certificates............................................................34
Section 23. Redemption and Termination.....................................................................35
(a) Redemption.....................................................................................35
(b) Effect of Redemption; Procedure................................................................35
Section 24. Exchange.......................................................................................35
(a) Right to Exchange..............................................................................35
(b) Effect of Exchange; Procedure..................................................................36
(c) Common Stock Equivalents.......................................................................36
(d) Insufficient Common Stock......................................................................36
(e) Fractional Shares..............................................................................36
Section 25. Notice of Certain Events.......................................................................37
(a) Preferred Stock Transactions, etc. ...........................................................37
(b) Other Transactions.............................................................................37
Section 26. Notices........................................................................................38
Section 27. Supplements and Amendments.....................................................................38
Section 28. Successors.....................................................................................39
Section 29. Determinations and Actions by the Board of Directors, etc......................................39
</TABLE>
(iii)
<PAGE> 5
<TABLE>
<S> <C> <C> <C>
Section 30. Benefits of this Agreement.....................................................................39
Section 31. Severability...................................................................................40
Section 32. Governing Law..................................................................................40
Section 33. Counterparts...................................................................................40
Section 34. Descriptive Headings...........................................................................40
Exhibit 1 Certificate of Designation, Preferences and Rights of
Series a Preferred Stock.......................................................................42
Exhibit 2 Form of Rights Certificate.....................................................................50
Exhibit 3 Letter to Stockholders.........................................................................57
</TABLE>
(iv)
<PAGE> 6
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of __________, _____ between Alamosa PCS
Holdings, Inc., a Delaware corporation (the "Company"), and
____________________, a __________ (the "Rights Agent").
RECITAL
On __________, _____ (the "Rights Dividend Declaration Date"), the
Board of Directors of the Company authorized and declared a dividend
distribution of one Right for each share of Common Stock (as hereinafter
defined) of the Company outstanding at the close of business on __________,
_____ (the "Record Date"), and has authorized the issuance of one Right (as such
number may hereafter be adjusted as provided herein) for each share of Common
Stock of the Company issued between the Record Date (whether originally issued
or delivered from the Company's treasury) and the Distribution Date, each Right
initially representing the right to purchase one one-thousandth of a share of
Series A Preferred Stock of the Company having the rights, powers and
preferences set forth in the form of Certificate of Designation, Preferences and
Rights attached hereto as Exhibit 1, upon the terms and subject to the
conditions hereinafter set forth (the "Rights");
AGREEMENT
In consideration of the premises and the mutual agreements herein set
forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner (as such term is hereinafter defined) of ____% or more of the
shares of Common Stock then outstanding, but shall not include (i) the Company,
(ii) any Subsidiary of the Company, (iii) any employee benefit plan of the
Company or of any Subsidiary of the Company, or any Person or entity organized,
appointed or established by the Company for or pursuant to the terms of any such
plan, or (iv) any Person who becomes an Acquiring Person solely as a result of a
reduction in the number of shares of Common Stock outstanding due to the
repurchase of shares of Common Stock by the Company, unless and until such
Person shall purchase or otherwise become (as a result of actions taken by such
Person or its Affiliates or Associates) the Beneficial Owner of additional
shares of Common Stock constituting 1% or more of the then outstanding shares of
Common Stock. Notwithstanding the foregoing, if the Board of Directors of the
Company determines in good faith that a Person who would otherwise be an
Acquiring Person, as defined pursuant to the foregoing provisions of this
paragraph, has become such inadvertently (including, without limitation, because
(i) such Person was unaware that it beneficially owned a percentage of Common
Stock that would otherwise cause such Person to be an Acquiring Person, or (ii)
such Person was aware of the extent of its Beneficial Ownership of Common Stock
but had no actual knowledge of the consequences of such Beneficial Ownership
<PAGE> 7
under this Agreement) and without any present intention of changing or
influencing control of the Company, and such Person divests as promptly as
practicable a sufficient number of shares of Common Stock so that such Person
would no longer be an Acquiring Person as defined pursuant to the foregoing
provisions of this paragraph, then such Person shall not be deemed to be or to
have become an Acquiring Person for any purposes of this Agreement.
(b) "Act" shall mean the Securities Act of 1933, as amended
and in effect from time to time.
(c) "Adjustment Shares" shall have the meaning set forth in
Section 11(a)(ii) (Adjustment of Purchase Price; Number and Kind of Shares or
Number of Rights -- Certain Adjustments)
(d) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act.
(e) "Agreement" shall mean this Rights Agreement as originally
executed or as it may from time to time be supplemented or amended pursuant to
the applicable provisions hereof.
(f) A Person shall be deemed the "Beneficial Owner" of, and
shall be deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the right to acquire
(whether such right is exercisable immediately or only after the passage of
time) pursuant to any agreement, arrangement or understanding (whether or not in
writing) or upon the exercise of conversion rights, exchange rights, rights,
warrants or options, or otherwise; provided, however, that a Person shall not,
for purposes of this paragraph (i), be deemed the "Beneficial Owner" of or to
"beneficially own," (A) securities tendered pursuant to a tender or exchange
offer made by such Person or any of such Person's Affiliates or Associates until
such tendered securities are accepted for purchase or exchange, or (B)
securities issuable upon exercise of Rights at any time prior to the occurrence
of a Triggering Event, or (C) securities issuable upon exercise of Rights from
and after the occurrence of a Triggering Event, which Rights were acquired by
such Person or any of such Person's Affiliates or Associates prior to the
Distribution Date or pursuant to Section 3(a) (Issuance of Rights Certificates
- -- Distribution Date; Rights Certificates) or Section 22 (Issuance of New Rights
Certificates) (the "Original Rights") or pursuant to Section 11(i) (Adjustment
of Purchase Price; Number and Kind of Shares or Number of Rights -- Adjustment
of Number of Rights) in connection with an adjustment made with respect to any
Original Rights;
(ii) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the right to vote or
dispose of or has "beneficial ownership" of (as determined pursuant to Rule
13d-3 of the General Rules and Regulations under the Exchange Act), including
pursuant to any agreement, arrangement or understanding, whether or not in
writing; provided, however, that a Person shall not be deemed the "Beneficial
Owner" of, or to "beneficially
2
<PAGE> 8
own," any security under this subparagraph (ii) as a result of an agreement,
arrangement or understanding to vote such security if such agreement,
arrangement or understanding: (A) arises solely from a revocable proxy given in
response to a public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable provisions of the General Rules and Regulations
under the Exchange Act, and (B) is not also then reportable by such Person on a
Schedule 13D under the Exchange Act (or any comparable or successor report); or
(iii) which are "beneficially owned," directly or
indirectly, by any other Person (or any Affiliate or Associate thereof) with
which such Person (or any of such Person's Affiliates or Associates) has any
agreement, arrangement or understanding (whether or not in writing), for the
purpose of acquiring, holding, voting (except pursuant to a revocable proxy as
described in the proviso to subparagraph (ii) of this paragraph (f)) or
disposing of any voting securities of the Company;
provided, however, that nothing in this paragraph (f) shall cause a Person
engaged in business as an underwriter of securities to be the "Beneficial Owner"
of or to "beneficially own," any securities acquired through such Person's
participation in good faith in a firm commitment underwriting until the
expiration of forty (40) calendar days after the date of such acquisition.
(g) "Board" means the Board of Directors of the Company.
(h) "Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in the State of Texas or
__________ are authorized or obligated by law or executive order to close.
(i) "Close of Business" on any given date shall mean 5:00
P.M., Lubbock, Texas time, on such date; provided, however, that if such date is
not a Business Day it shall mean 5:00 P.M., Dallas, Texas time, on the next
succeeding Business Day.
(j) "Common Stock" shall mean the common stock, par value
$0.01 per share, of the Company, or if such Common Stock shall have been
converted into or exchanged for other securities, such securities, except that
"Common Stock" when used with reference to any Person other than the Company
shall mean the capital stock of such Person with the greatest voting power, or
the equity securities or other equity interest having power to control or direct
the management, of such Person.
(k) "Common Stock Equivalents" shall have the meaning set
forth in Section 11(a)(iii) (Adjustment of Purchase Price; Number and Kind of
Shares or Number of Rights -- Certain Adjustments).
(l) "Company" shall mean the Person named as the "Company" in
the first paragraph of this Agreement until a successor corporation shall have
become such, or until a Principal Party shall assume, and thereafter be liable
for, all obligations and duties of the Company
3
<PAGE> 9
hereunder, pursuant to the applicable provisions of this Agreement, and
thereafter "Company" shall mean such successor corporation or Principal Party.
(m) "Current Market Price" shall have the meaning set forth in
Section 11(d) (Adjustment of Purchase Price; Number and Kind of Shares or Number
of Rights -- Current Market Price).
(n) "Current Value" shall have the meaning set forth in
Section 11(a)(iii) (Adjustment of Purchase Price; Number and Kind of Shares or
Number of Rights -- Certain Adjustments).
(o) "Distribution Date" shall have the meaning set forth in
Section 3(a) (Issuance of Rights Certificates -- Distribution Date; Rights
Certificates).
(p) "Equivalent Preferred Stock" shall have the meaning set
forth in Section 11(b) (Adjustment of Purchase Price; Number and Kind of Shares
or Number of Rights -- Purchase Price Adjustment -- Capital Stock).
(q) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended and in effect on the date of this Agreement.
(r) "Exchange Number" shall mean one-half of the number of
shares of Common Stock, one-thousandths of a share of Preferred Stock, or shares
or other units of other property for which a Right is exercisable immediately
prior to the time of the action of the Board to exchange the Rights.
(s) "Expiration Date" shall have the meaning set forth in
Section 7(a) (Exercise of Rights; Purchase Price; Expiration Date of Rights --
Exercise).
(t) "Final Expiration Date" shall mean the Close of Business
on __________,_____.
(u) "Flip-in Event" shall mean any event described in Section
11(a)(ii) (A) or (B) (Adjustment of Purchase Price; Number and Kind of Shares or
Number of Rights -- Certain Adjustments).
(v) "Flip-in Trigger Date" shall have the meaning set forth in
Section 11(a)(iii) (Adjustment of Purchase Price; Number and Kind of Shares or
Number of Rights -- Certain Adjustments).
(w) "Flip-over Event" shall mean any event described in
clauses (x), (y) or (z) of Section 13(a) (Consolidation, Merger or Sale or
Transfer of Assets or Earning Power -- Flip-over Event).
4
<PAGE> 10
(x) "Original Rights" shall have the meaning set forth in
Section 1(f)(i) (Certain Definitions).
(y) "Person" shall mean any individual, firm, corporation,
limited liability company, trust or partnership or other entity.
(z) "Preferred Stock" shall mean shares of Preferred Stock,
Series A, par value $0.01, of the Company, and, to the extent that there is not
a sufficient number of shares of Series A Preferred Stock authorized to permit
the full exercise of the Rights, any other series of Preferred Stock, par value
$0.01, of the Company designated for such purpose containing terms substantially
similar to the terms of the Series A Preferred Stock.
(aa) "Principal Party" shall have the meaning set forth in
Section 13(b) (Consolidation, Merger or Sale or Transfer of Assets or Earning
Power -- Principal Party).
(bb) "Purchase Price" shall have the meaning set forth in
Section 4(a) (Form of Rights Certificates -- Form; Date).
(cc) "Record Date" shall have the meaning set forth in the
Recitals at the beginning of the Agreement.
(dd) "Redemption Date" shall have the meaning set forth in
Section 23(a) (Redemption and Termination -- Redemption).
(ee) "Redemption Price" shall have the meaning set forth in
Section 23(a) (Redemption and Termination -- Redemption).
(ff) "Rights" shall have the meaning set forth in the Recitals
at the beginning of the Agreement.
(gg) "Rights Agent" shall mean the Person named as the "Rights
Agent" in the first paragraph of this Agreement until a successor Rights Agent
shall have become such pursuant to the applicable provisions hereof and
thereafter "Rights Agent" shall mean such successor Rights Agent. If at any time
there is more than one Person appointed by the Company as Rights Agent pursuant
to the applicable provisions of this Agreement, "Rights Agent" shall mean and
include each such Person.
(hh) "Rights Certificates" shall have the meaning set forth in
Section 3(a) (Issuance of Rights Certificates -- Distribution Date; Rights
Certificates).
(ii) "Rights Dividend Declaration Date" shall have the meaning
set forth in the Recital at the beginning of the Agreement.
5
<PAGE> 11
(jj) "Spread" shall have the meaning set forth in Section
11(a)(iii) (Adjustment of Purchase Price; Number and Kind of Shares or Number of
Rights -- Certain Adjustments).
(kk) "Stock Acquisition Date" shall mean the first date of
public announcement (which, for purposes of this definition, shall include,
without limitation, a report filed or amended pursuant to Section 13(d) under
the Exchange Act) by the Company or an Acquiring Person that an Acquiring Person
has become such.
(ll) "Subsidiary" shall mean, with reference to any Person,
any corporation or other entity of which a majority of the voting power of
equity securities or majority of the equity interest is beneficially owned,
directly or indirectly, by such Person, or otherwise controlled by such Person.
(mm) "Substitution Period" shall have the meaning set forth in
Section 11(a)(iii) (Adjustment of Purchase Price; Number and Kind of Shares or
Number of Rights -- Certain Adjustments).
(nn) "Trading Day" shall have the meaning set forth in Section
11(d)(i) (Adjustment of Purchase Price; Number and Kind of Shares or Number of
Rights -- Current Market Price).
(oo) "Triggering Event" shall mean any Flip-in Event or any
Flip-over Event.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such Co-Rights Agents as it may deem
necessary or desirable.
Section 3. Issuance of Rights Certificates.
(a) Distribution Date; Rights Certificates. Until the earlier
of (i) the Close of Business on the tenth Business Day after the Stock
Acquisition Date (or, if the tenth Business Day after the Stock Acquisition Date
occurs before the Record Date, the Close of Business on the Record Date), or
(ii) the Close of Business on the tenth Business Day (or such later date as the
Board shall determine prior to such time as any Person becomes an Acquiring
Person) after the date that a tender or exchange offer by any Person (other than
the Company, any Subsidiary of the Company, any employee benefit plan of the
Company or of any Subsidiary of the Company, or any Person or entity organized,
appointed or established by the Company for or pursuant to the terms of any such
plan) is first published or sent or given within the meaning of Rule 14d-2(a) of
the General Rules and Regulations under the Exchange Act, if upon consummation
thereof such Person would be the Beneficial Owner of _____% or more of the
shares of Common Stock then outstanding (the earlier of (i) and (ii) being
herein referred to as the "Distribution Date"), (x) the Rights will be evidenced
(subject to the provisions of paragraph (b) of this Section 3) by the
certificates for the Common Stock registered in the names of the holders of the
Common Stock (which certificates for Common
6
<PAGE> 12
Stock shall be deemed also to be certificates for Rights) and not by separate
certificates, and (y) the Rights will be transferable only in connection with
the transfer of the underlying shares of Common Stock (including a transfer to
the Company, except pursuant to the provision of Section 23 (Redemption and
Termination)). As soon as practicable after the Distribution Date, the Rights
Agent will send by first-class, insured, postage prepaid mail, to each record
holder of the Common Stock as of the Close of Business on the Distribution Date,
at the address of such holder shown on the records of the Company, one or more
rights certificates, in substantially the form of Exhibit 2 hereto (the "Rights
Certificates"), evidencing one Right for each share of Common Stock so held,
subject to adjustment as provided herein. In the event that an adjustment in the
number of Rights per share of Common Stock has been made pursuant to Section
11(p) (Adjustment of Purchase Price; Number and Kind of Shares or Number of
Rights -- Common Stock Adjustments) at the time of distribution of the Rights
Certificates, the Company shall make the necessary and appropriate rounding
adjustments (in accordance with Section 14(a) (Fractional Rights and Fractional
Shares -- Fractional Rights)) so that Rights Certificates representing only
whole numbers of Rights are distributed and cash is paid in lieu of any
fractional Rights. As of and after the Distribution Date, the Rights will be
evidenced solely by such Rights Certificates.
(b) Common Stock Certificates; Summary of Rights. With respect
to certificates for the Common Stock outstanding as of the Record Date, until
the Distribution Date, the Rights associated with the Common Stock represented
by such certificates will be evidenced by such certificates alone and the
registered holders of such Common Stock shall also be the registered holders of
the associated Rights. Until the earlier of the Distribution Date or the
Expiration Date, the transfer of any certificates representing shares of Common
Stock in respect of which Rights have been issued shall also constitute the
transfer of the Rights associated with such shares of Common Stock. On the
Record Date, or as soon as practicable thereafter, the Company will send a copy
of a Summary of Rights to Purchase Preferred Stock, in substantially the form of
Exhibit 3 hereto (the "Summary of Rights"), by first-class, postage-prepaid
mail, to each record holder of shares of Common Stock as of the close of
business of the Record Date, at the address of such holder shown on the records
of the Company.
(c) Legend. Rights shall be issued in respect of all
certificates for shares of Common Stock which are issued (whether originally
issued or from the Company's treasury) after the Record Date but prior to the
earliest of the (i) Distribution Date, (ii) the Expiration Date, or (iii) the
Redemption Date, or, in certain circumstances provided in Section 22 (Issuance
of New Rights Certificates) after the Distribution Date. Certificates
representing such shares of Common Stock shall also be deemed to be certificates
for Rights, and shall bear the following legend:
This certificate also evidences and entitles the holder hereof
to certain Rights as set forth in the Rights Agreement dated
as of __________, _____, by and between Alamosa PCS Holdings,
Inc. (the "Company") and ____________________, as Rights Agent
(the "Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is on
file at the principal offices of the Company. Under certain
circumstances, as set forth in
7
<PAGE> 13
the Rights Agreement, such Rights will be evidenced by
separate certificates and will no longer be evidenced by this
certificate. The Company will mail to the holder of this
certificate a copy of the Rights Agreement, as in effect on
the date of mailing, without charge promptly after receipt of
a written request therefor. Under certain circumstances set
forth in the Rights Agreement, Rights issued to, or held by,
any Person who is, was or becomes an Acquiring Person or any
Affiliate or Associate thereof (as such terms are defined in
the Rights Agreement), whether currently held by or on behalf
of such Person or by any subsequent holder, may become null
and void.
With respect to such certificates containing the foregoing legend, until the
earliest of (i) the Distribution Date, (ii) the Expiration Date, and (iii) the
Redemption Date, (x) the Rights associated with the Common Stock represented by
such certificates shall be evidenced by such certificates alone, (y) the
registered holders of such Common Stock shall also be the registered holders of
the associated Rights, and (z) the transfer of any of such certificates shall
also constitute the transfer of the Rights associated with such shares of Common
Stock. In the event that the Company purchases, or acquires any shares of Common
Stock after the Record Date but prior to the Distribution Date, any rights
associated with such shares of Common Stock shall be deemed canceled and retired
so that the Company shall not be entitled to exercise any Rights associated with
shares of Common Stock which are no longer outstanding.
Section 4. Form of Rights Certificates.
(a) Form; Date. The Rights Certificates (and the forms of
election to purchase and of assignment to be printed on the reverse thereof)
shall each be substantially in the form set forth in Exhibit 2 hereto and may
have such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the Rights
may from time to time be listed or any securities association on whose
interdealer quotation system the Rights may be from time to time authorized for
quotation, or to conform to usage. Subject to the provisions of Section 11
(Adjustment of Purchase Price; Number and Kind of Shares or Number of Rights)
and Section 22 (Issuance of New Rights Certificates), the Rights Certificates,
whenever distributed, shall be dated as of the Record Date and on their face
shall entitle the holders thereof to purchase such number of one one-
thousandths of a share of Preferred Stock as shall be set forth therein at the
price set forth therein (such exercise price per one one-thousandth of a share
is referred to herein as the "Purchase Price"), but the amount and type of
securities purchasable upon the exercise of each Right and the Purchase Price
thereof shall be subject to adjustment as provided herein.
(b) Acquiring Person Legend. Any Rights Certificate issued
pursuant to Section 3(a) (Issuance of Rights Certificates -- Distribution Date;
Rights Certificates) or Section 22 (Issuance of New Rights Certificates) that
represents Rights beneficially owned by (i) an Acquiring
8
<PAGE> 14
Person or any Associate or Affiliate of an Acquiring Person, (ii) a transferee
of an Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom such Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which is part of a plan, arrangement or understanding
which has as a primary purpose or effect avoidance of Section 7(e) (Exercise of
Rights; Purchase Price; Expiration Date of Rights -- Termination of Acquiring
Person's Rights) and any Rights Certificate issued pursuant to Section 6
(Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated,
Destroyed, Lost or Stolen Rights Certificates), Section 11 (Adjustment of
Purchase Price; Number and Kind of Shares or Number of Rights) or Section 22
(Issuance of New Rights Certificates) upon transfer, exchange, replacement or
adjustment of any other Rights Certificate referred to in this sentence, shall
contain (to the extent feasible) the following legend:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person or
an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement dated as of __________, _____, by and
between Alamosa PCS Holdings, Inc. and ____________________, as Rights
Agent). Accordingly, this Rights Certificate and the Rights represented
hereby may become null and void in the circumstances specified in
Section 7(e) (Exercise of Rights; Purchase Price; Expiration Date of
Rights -- Termination of Acquiring Person's Rights) of such Agreement.
Section 5. Countersignature and Registration.
(a) Signatures. The Rights Certificates shall be executed on
behalf of the Company by its Chairman of the Board, its President or any Vice
President, either manually or by facsimile signature, and shall have affixed
thereto the Company's seal or a facsimile thereof which shall be attested to by
the Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Rights Certificates shall be countersigned by the
Rights Agent, either manually or by facsimile signature, and shall not be valid
for any purpose unless so countersigned. In case any officer of the Company who
shall have signed any of the Rights Certificates shall cease to be such officer
of the Company before countersignature by the Rights Agent and issuance and
delivery by the Company, such Rights Certificates, nevertheless, may be
countersigned by the Rights Agent and issued and delivered by the Company with
the same force and effect as though the person who signed such Rights
Certificates had not ceased to be such officer of the Company; and any Rights
Certificates may be signed on behalf of the Company by any person who, at the
actual date of the execution of such Rights Certificate, shall be a proper
officer of the Company to sign such Rights Certificate, although at the date of
the execution of this Rights Agreement any such person was not such an officer.
9
<PAGE> 15
(b) Registration and Transfer. Following the Distribution
Date, the Rights Agent will keep or cause to be kept, at its office designated
as the appropriate place for surrender of Rights Certificates upon exercise or
transfer, books for registration and transfer of the Rights Certificates issued
hereunder. Such books shall show the names and addresses of the respective
holders of the Rights Certificates, the number of Rights evidenced on its face
by each of the Rights Certificates and the date of each of the Rights
Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Procedure. Subject to the provisions of Section 4(b) (Form
of Rights Certificates -- Acquiring Person Legend), Section 7(e) (Exercise of
Rights; Purchase Price; Expiration Date of Rights -- Termination of Acquiring
Person's Rights) and Section 14 (Fractional Rights and Fractional Shares), at
any time after the Close of Business on the Distribution Date, and at or prior
to the Close of Business on the Expiration Date, any Rights Certificate or
Certificates may be transferred, split up, combined or exchanged for another
Rights Certificate or Certificates, entitling the registered holder to purchase
a like number of one one-thousandths of a share of Preferred Stock (or,
following a Triggering Event, Common Stock, other securities, cash or other
assets, as the case may be) as the Rights Certificate or Certificates
surrendered then entitle such holder (or former holder in the case of a
transfer) to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Rights Certificate or Certificates shall make such
request in writing delivered to the Rights Agent, and shall surrender the Rights
Certificate or Certificates to be transferred, split up, combined or exchanged
at the principal office or offices of the Rights Agent designated for such
purpose. Neither the Rights Agent nor the Company shall be obligated to take any
action whatsoever with respect to the transfer of any such surrendered Rights
Certificate until the registered holder shall have completed and signed the
certificate contained in the form of assignment on the reverse side of such
Rights Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request. Thereupon, the
Rights Agent shall, subject to Section 4(b), Section 7(e) and Section 14,
countersign and deliver to the Person entitled thereto a Rights Certificate or
Rights Certificates, as the case may be, as so requested. The Company may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer, split up, combination or
exchange of Rights Certificates.
(b) Issuance of New Rights Certificates. Upon receipt by the
Company and the Rights Agent of evidence reasonably satisfactory to them of the
loss, theft, destruction or mutilation of a Rights Certificate, and, in case of
loss, theft or destruction, of indemnity or security satisfactory to them, and
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Rights Certificate if mutilated, the Company will execute and deliver a new
Rights Certificate of like tenor to the Rights Agent for countersignature and
delivery to the registered owner in lieu of the Rights Certificate so lost,
stolen, destroyed or mutilated.
10
<PAGE> 16
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.
(a) Exercise. Subject to Section 7(e) (Exercise of Rights;
Purchase Price; Expiration Date of Rights -- Termination of Acquiring Person's
Rights), the registered holder of any Rights Certificate may exercise the Rights
evidenced thereby (except as otherwise provided herein, including, without
limitation, the restrictions on exercisability set forth in Section 9(c)
(Reservation and Availability of Capital Stock -- Registration under the Act),
Section 11(a)(iii) (Adjustment of Purchase Price; Number and Kind of Shares or
Number of Rights -- Certain Adjustments), Section 23(a) (Redemption and
Termination -- Redemption), and Section 24(b) (Exchange -- Effect of Exchange;
Procedure)) in whole or in part at any time after the Distribution Date upon
surrender of the Rights Certificate, with the form of election to purchase and
the certificate on the reverse side thereof duly executed, to the Rights Agent
at the principal office or offices of the Rights Agent designated for such
purpose, together with payment of the aggregate Purchase Price with respect to
the total number of one one-thousandths of a share of Preferred Stock (or other
securities, cash or other assets, as the case may be) as to which such
surrendered Rights are then exercisable and an amount equal to any applicable
transfer tax, at or prior to the earliest of (i) the Final Expiration Date, (ii)
the Redemption Date, or (iii) the expiration of the Rights pursuant to Section
13(d) (Consolidation, Merger or Sale or Transfer of Assets or Earning Power --
Exceptions) (the earliest of (i), (ii) and (iii) being herein referred to as the
"Expiration Date"). The payment of the Purchase Price and the applicable
transfer tax, if any (as such amount may be reduced pursuant to Section
11(a)(iii) (Adjustment of Purchase Price; Number and Kind of Shares or Number of
Rights -- Certain Adjustments)), may be made (x) in cash, (y) by certified
check, cashier's check or money order payable to the order of the Company, or
(z) by delivery of a certificate or certificates (with appropriate stock powers
executed in blank attached thereto) evidencing a number of shares of Common
Stock equal to the then Purchase Price divided by the closing price (as
determined pursuant to Section 11(d) (Adjustment of Purchase Price; Number and
Kind of Shares or Number of Rights -- Current Market Price)) per share of Common
Stock on the Trading Day immediately preceding the date of such exercise. In the
event that the Company is obligated to issue other securities (including Common
Stock) of the Company, pay cash and/or distribute other property pursuant to
Section 11(a) the Company will make all arrangements necessary so that such
other securities, cash and/or other property are available for distribution by
the Rights Agent, if and when appropriate. The Company reserves the right to
require prior to the occurrence of a Triggering Event that upon any exercise of
Rights, a number of Rights be exercised so that only whole shares of Preferred
Stock would be issued.
(b) Purchase Price. The Purchase Price for each one
one-thousandth of a share of Preferred Stock pursuant to the exercise of a Right
shall initially be $__________, and shall be subject to adjustment from time to
time as provided in Section 11 (Adjustment of Purchase Price; Number and Kind of
Shares or Number of Rights) and Section 13(a) (Consolidation, Merger or Sale or
Transfer of Assets or Earning Power -- Flip-over Event) and shall be payable in
accordance with paragraph (a) of this Section 7.
(c) Rights Agent Actions. Upon receipt of a Rights Certificate
representing exercisable Rights and the compliance by the holder of such Rights
Certificate with paragraph (a) of
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this Section 7, the Rights Agent shall, subject to Section 20(k) (Duties of
Rights Agent -- Exercise of Rights; Consultation with Company), thereupon
promptly (i) (A) requisition from any transfer agent of the shares of Preferred
Stock (or make available, if the Rights Agent is the transfer agent for such
shares) certificates for the total number of one one-thousandths of a share of
Preferred Stock to be purchased and the Company hereby irrevocably authorizes
its transfer agent to comply with all such requests, or (B) if the Company shall
have elected to deposit the total number of shares of Preferred Stock issuable
upon exercise of the Rights hereunder with a depositary agent, requisition from
the depositary agent depositary receipts representing such number of one
one-thousandths of a share of Preferred Stock as are to be purchased (in which
case certificates for the shares of Preferred Stock represented by such receipts
shall be deposited by the transfer agent with the depositary agent) and the
Company will direct the depositary agent to comply with such request, (ii)
requisition from the Company the amount of cash, if any, to be paid in lieu of
fractional shares in accordance with Section 14 (Fractional Rights and
Fractional Shares), (iii) after receipt thereof, deliver such certificates or
depositary receipts to or upon the order of the registered holder of such Rights
Certificate, registered in such name or names as may be designated by such
holder, and (iv) after receipt thereof, deliver such cash, if any, to or upon
the order of the registered holder of such Rights Certificate.
(d) Partial Exercise. In case the registered holder of any
Rights Certificate shall exercise less than all the Rights evidenced thereby, a
new Rights Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent and delivered to, or upon the
order of the registered holder of such Rights Certificate, registered in such
name or names as may be designated by such holder, subject to the provisions of
Section 6 (Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates) and Section 14
(Fractional Rights and Fractional Shares).
(e) Termination of Acquiring Person's Rights. Notwithstanding
anything in this Agreement to the contrary, from and after the first occurrence
of a Flip-in Event, any Rights beneficially owned by (i) an Acquiring Person, or
an Associate or Affiliate of an Acquiring Person, (ii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after such Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which is part of a plan, arrangement or understanding
which has as a primary purpose or effect the avoidance of this Section 7(e),
shall become null and void without any further action and no holder of such
Rights shall have any rights whatsoever with respect to such Rights, whether
under any provision of this Agreement or otherwise. The Company shall use all
reasonable efforts to ensure that the provisions of this Section 7(e) and
Section 4(b) (Form of Rights Certificates -- Acquiring Person Legend) are
complied with, but the Company shall have no liability to any holder of Rights
Certificates or other Person as a result of its failure to make any
determinations with respect to an Acquiring Person or any of its respective
Affiliates, Associates or transferees hereunder.
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(f) Surrender of Rights Certificates; Identity of Beneficial
Owner. Notwithstanding anything in this Agreement to the contrary, neither the
Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder upon the occurrence of any purported exercise as
set forth in this Section 7 unless such registered holder shall have (i)
completed and signed the certificate contained in the form of election to
purchase set forth on the reverse side of the Rights Certificate surrendered for
such exercise, and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights Certificates. All
Rights Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
canceled Rights Certificates to the Company, or shall, at the written request of
the Company, destroy such canceled Rights Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Capital Stock.
(a) Reservation of Capital Stock. The Company will use its best
efforts to reserve and keep available out of its authorized and unissued shares
of Preferred Stock (and, following the occurrence of a Triggering Event, out of
its authorized and unissued shares of Common Stock and/or other securities or
out of its authorized and issued shares of Common Stock held in its treasury),
the number of shares of Preferred Stock (and, following the occurrence of a
Triggering Event, Common Stock and/or other securities) that, as provided in
this Agreement, including the rights of the Company under Section 11(a)(iii)
(Adjustment of Purchase Price; Number and Kind of Shares or Number of Rights --
Certain Adjustments) to otherwise fulfill its obligations, will be sufficient to
permit the exercise in full of all outstanding Rights.
(b) Listing. So long as the shares of Preferred Stock (and,
following the occurrence of a Triggering Event, Common Stock and/or other
securities) issuable and deliverable upon the exercise of the Rights may be
listed on any stock exchange or authorized for quotation on any interdealer
quotation system of any securities association, the Company shall use its best
efforts to cause, from and after such time as the Rights become exercisable, all
shares reserved for such issuance to be listed on such exchange or quoted on
such system upon official notice of issuance upon such exercise.
(c) Registration under the Act. The Company will use its best
efforts to (i) file, as soon as practicable following the earliest date after
the first occurrence of a Flip-in Event on which the consideration to be
delivered by the Company upon exercise of the Rights has been
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<PAGE> 19
determined in accordance with Section 11(a)(iii) (Adjustment of Purchase Price;
Number and Kind of Shares or Number of Rights -- Certain Adjustments), or as
soon as is required by law following the Distribution Date, as the case may be,
a registration statement on an appropriate form under the Act with respect to
the securities purchasable upon exercise of the Rights, (ii) cause such
registration statement to become effective as soon as practicable after such
filing, and (iii) cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Act) until the earlier
of (A) the date as of which the Rights are no longer exercisable for such
securities, and (B) the Expiration Date. The Company will also take such action
as may be appropriate under, or to ensure compliance with, the securities or
"blue sky" laws of the various states in connection with the exercisability of
the Rights. The Company may temporarily suspend, for a period of time not to
exceed ninety (90) calendar days after the date set forth in clause (i) of the
first sentence of this Section 9(c), the exercisability of the Rights in order
to prepare and file such registration statement and permit it to become
effective. Upon any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is no
longer in effect. In addition, if the Company shall determine that a
registration statement is required following the Distribution Date, the Company
may temporarily suspend the exercisability of the Rights until such time as a
registration statement has been declared effective. Notwithstanding any
provision of this Agreement to the contrary, the Rights shall not be exercisable
in any jurisdiction if the requisite qualification in such jurisdiction shall
not have been obtained, the exercise thereof shall not be permitted under
applicable law or a registration statement shall not have been declared
effective.
(d) Covenant Regarding Capital Stock. The Company will take all
such action as may be necessary to ensure that all one one-thousandths of a
share of Preferred Stock (and, following the occurrence of a Triggering Event,
Common Stock and/or other securities) delivered upon exercise of Rights shall,
at the time of delivery of the certificates for such shares (subject to payment
of the Purchase Price), be duly and validly authorized and issued and fully paid
and nonassessable.
(e) Transfer Taxes and Charges. The Company will pay when due
and payable any and all federal and state transfer taxes and charges which may
be payable in respect of the issuance or delivery of the Rights Certificates and
of any certificates for a number of one one- thousandths of a share of Preferred
Stock (or Common Stock and/or other securities, as the case may be) upon the
exercise of Rights. The Company shall not, however, be required to pay any
transfer tax which may be payable in respect of any transfer or delivery of
Rights Certificates to a Person other than, or the issuance or delivery of a
number of one one-thousandths of a share of Preferred Stock (or Common Stock
and/or other securities, as the case may be) in respect of a name other than,
that of the registered holder of the Rights Certificates evidencing Rights
surrendered for exercise or to issue or deliver any certificates for a number of
one one-thousandths of a share of Preferred Stock (or Common Stock and/or other
securities, as the case may be) in a name other than that of the registered
holder upon the exercise of any Rights until such tax shall have been paid (any
such tax being payable by the holder of such Rights Certificate at the time of
surrender) or until it has been established to the Company's satisfaction that
no such tax is due.
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Section 10. Preferred Stock Record Date. Each Person in whose name any
certificate for a number of one one-thousandths of a share of Preferred Stock
(or Common Stock and/or other securities, as the case may be) is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder of
record of such fractional shares of Preferred Stock (or Common Stock and/or
other securities, as the case may be) represented thereby on, and such
certificate shall be dated as of, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and all applicable transfer taxes and other governmental charges) was made;
provided, however, that if the date of such surrender and payment is a date upon
which the Preferred Stock (or Common Stock and/or other securities, as the case
may be) transfer books of the Company are closed, such Person shall be deemed to
have become the record holder of such shares (fractional or otherwise) on, and
such certificate shall be dated, the next succeeding Business Day on which the
Preferred Stock (or Common Stock and/or other securities, as the case may be)
transfer books of the Company are open. Prior to the exercise of the Rights
evidenced thereby, the holder of a Rights Certificate shall not be entitled to
any rights of a stockholder of the Company with respect to shares for which the
Rights shall be exercisable, including, without limitation, the right to vote,
to receive dividends or other distributions or to exercise any preemptive
rights, and shall not be entitled to receive any notice of any proceedings of
the Company, except as provided herein.
Section 11. Adjustment of Purchase Price; Number and Kind of Shares or
Number of Rights. The Purchase Price, the number and kind of shares covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
(a) Certain Adjustments.
(i) In the event the Company shall at any time after
the date of this Agreement (A) declare a dividend on the Preferred
Stock payable in shares of Preferred Stock, (B) subdivide or split the
outstanding Preferred Stock, (C) combine the outstanding Preferred
Stock into a smaller number of shares, or (D) issue any shares of its
capital stock in a reclassification of the Preferred Stock (including
any such reclassification in connection with a consolidation or merger
in which the Company is the continuing or surviving corporation),
except as otherwise provided in this Section 11(a) and Section 7(e)
(Exercise of Rights; Purchase Price; Expiration Date of Rights --
Termination of Acquiring Person's Rights), the Purchase Price in effect
at the time of the record date for such dividend or of the effective
date of such subdivision, split, combination or reclassification, and
the number and kind of shares of Preferred Stock or capital stock, as
the case may be, issuable on such date, shall be proportionately
adjusted so that the holder of any Right exercised after such time
shall be entitled to receive, upon payment of the aggregate adjusted
Purchase Price then in effect necessary to exercise a Right in full,
the aggregate number and kind of shares of Preferred Stock or capital
stock, as the case may be, which, if such Right had been exercised
immediately prior to such date and at a time when the Preferred Stock
(or other capital stock, as the case may be) transfer books of the
Company were open, such holder would have owned upon such exercise and
been entitled to receive by virtue of such dividend, subdivision,
split, combination or reclassification. If an event occurs which would
require an adjustment under both this Section 11(a)(i) and Section
11(a)(ii) the adjustment provided
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<PAGE> 21
for in this Section 11(a)(i) shall be in addition to, and shall be made
prior to, any adjustment required pursuant to Section 11(a)(ii).
(ii) In the event:
(A) (1) any Acquiring Person or any
Associate or Affiliate of any Acquiring Person, at any time
after the date of this Agreement, directly or indirectly,
shall merge into the Company or otherwise combine with the
Company and the Company shall be the continuing or surviving
corporation of such merger or combination and the Common Stock
of the Company shall remain outstanding and unchanged, or (2)
subject to Section 23 (Redemption and Termination), any Person
(other than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or of any Subsidiary of
the Company, or any Person or entity organized, appointed or
established by the Company for or pursuant to the terms of any
such plan), alone or together with its Affiliates and
Associates, shall, at any time after the Rights Dividend
Declaration Date, become an Acquiring Person, unless the event
causing such Person to become an Acquiring Person is a
Flip-over Event, or is an acquisition of shares of Common
Stock pursuant to a tender offer or an exchange offer for all
outstanding shares of Common Stock at a price and on terms
determined by the Board, prior to the public announcement of
such tender offer or exchange offer, after receiving advice
from one or more investment banking firms selected by the
Board, to be (a) at a price which is fair to the stockholders
of the Company (taking into account all factors which the
Board deems relevant including, without limitation, prices
which could reasonably be achieved if the Company or its
assets were sold on an orderly basis designed to realize
maximum value) and (b) otherwise in the best interests of the
Company and its stockholders, other than such Acquiring
Person, its Affiliates and its Associates; or
(B) during such time as there is an
Acquiring Person, there shall be any reclassification of
securities (including any reverse stock split), or
recapitalization of the Company, or any merger or
consolidation of the Company with any of its Subsidiaries or
any other transaction or series of transactions involving the
Company or any of its Subsidiaries, other than a transaction
or transactions to which the provisions of Section 13(a)
(Consolidation, Merger or Sale or Transfer of Assets or
Earning Power -- Flip-over Event) apply (whether or not with
or into or otherwise involving an Acquiring Person) which has
the effect, directly or indirectly, of increasing by more than
1% the proportionate share of the outstanding shares of any
class of equity securities of the Company or any of its
subsidiaries which is directly or indirectly beneficially
owned by any Acquiring Person or any Associate or Affiliate of
any Acquiring Person,
then, promptly following the occurrence of any such Flip-in Event
(whether described in Section 11(a)(ii)(A) or (B)), proper provision
shall be made so that each holder of a Right (except as provided below
and in Section 7(e) (Exercise of Rights; Purchase Price;
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<PAGE> 22
Expiration Date of Rights -- Termination of Acquiring Person's Rights))
shall thereafter have the right to receive, upon exercise thereof at
the then current Purchase Price in accordance with the terms of this
Agreement, in lieu of the number of one one-thousandths of a share of
Preferred Stock, such number of shares of Common Stock of the Company
as shall equal the result obtained by (x) multiplying the then current
Purchase Price by the then number of one one-thousandths of a share of
Preferred Stock for which a Right was exercisable immediately prior to
the first occurrence of a Flip-in Event, and (y) dividing that product
(which, following such first occurrence, shall thereafter be referred
to as the "Purchase Price" for each Right and for all purposes of this
Agreement) by 50% of the Current Market Price per share of Common Stock
on the date of such first occurrence (such number of shares being
referred to as the "Adjustment Shares").
(iii) In the event that the number of shares of
Common Stock that are authorized by the Company's Certificate of
Incorporation but not outstanding or reserved for issuance for purposes
other than upon exercise of the Rights is not sufficient to permit the
exercise in full of the Rights in accordance with the foregoing
subparagraph (ii) of this Section 11(a), the Company shall: (A)
determine the excess of (1) the value of the Adjustment Shares issuable
upon the exercise of a Right (the "Current Value") over (2) the
Purchase Price (such excess, the "Spread"), and (B) with respect to
each Right, subject to Section 7(e)(Exercise of Rights; Purchase Price;
Expiration Date of Rights -- Termination of Acquiring Person's Rights),
make adequate provision to substitute for the Adjustment Shares, upon
payment of the applicable Purchase Price, (1) cash, (2) a reduction in
the Purchase Price, (3) Common Stock or other equity securities of the
Company (including, without limitation, shares, or units of shares, of
preferred stock which the Board has deemed to have essentially the same
value or economic rights as shares of Common Stock (such shares of
preferred stock being referred to as "Common Stock Equivalents")), (4)
debt securities of the Company, (5) other assets, or (6) any
combination of the foregoing, having an aggregate value equal to the
Current Value (less the amount of any reduction in the Purchase Price),
where such aggregate value has been determined by the Board based upon
the advice of a nationally recognized investment banking firm selected
by the Board; provided, however, that if the Company shall not have
made adequate provision to deliver value pursuant to clause (B) above
within thirty (30) calendar days following the first occurrence of a
Flip-in Event (the date of such Flip-in Event being referred to herein
as the "Flip-in Trigger Date"), then the Company shall be obligated to
deliver, upon the surrender for exercise of a Right and without
requiring payment of the Purchase Price, shares of Common Stock (to the
extent available) and then, if necessary, cash, which shares and/or
cash have an aggregate value equal to the Spread. If the Board shall
determine in good faith that it is likely that sufficient additional
shares of Common Stock or other equity securities could be authorized
for issuance upon exercise in full of the Rights, the thirty (30)
calendar day period set forth above may be extended to the extent
necessary, but not more than ninety (90) calendar days after the
Flip-in Trigger Date, in order that the Company may seek stockholder
approval for the authorization of such additional shares (such period,
the "Substitution Period"). To the extent that the Company determines
that some action need be taken pursuant to the first and/or second
sentences of this Section 11(a)(iii), the Company
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(x) shall provide, subject to Section 7(e), that such action shall
apply uniformly to all outstanding Rights, and (y) may suspend the
exercisability of the Rights until the expiration of the Substitution
Period in order to seek any authorization of additional shares and/or
to decide the appropriate form of distribution to be made pursuant to
such first sentence and to determine the value thereof. In the event of
any such suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the
suspension is no longer in effect. For purposes of this Section
11(a)(iii), the value of the Common Stock shall be the Current Market
Price per share of the Common Stock on the Flip-in Trigger Date and the
value of any Common Stock Equivalent shall be deemed to have the same
value as the Common Stock on such date.
(iv) If the rules of the national securities
exchange, registered as such pursuant to Section 6 of the Exchange Act,
or of the national securities association, registered as such pursuant
to Section 15A of the Exchange Act, on which the Common Stock is
principally traded or quoted would prohibit such exchange or
association from listing or continuing to list, or from authorizing for
or continuing quotation and/or transaction reporting through an
inter-dealer quotation system, the Common Stock or other equity
securities of the Company if the Rights were to be exercised for shares
of Common Stock in accordance with subparagraph (ii) of this Section
11(a) because such issuance would nullify, restrict or disparately
reduce the per share voting rights of holders of Common Stock, the
Company shall: (A) determine the Spread, and (B) with respect to each
Right, make adequate provision to substitute for the Adjustment Shares,
upon payment of the applicable Purchase Price, (1) cash, (2) a
reduction in the Purchase Price, (3) equity securities of the Company,
including, without limitation, Common Stock Equivalents, other than
securities which would have the effect of nullifying, restricting or
disparately reducing the per share voting rights of holders of Common
Stock, (4) debt securities of the Company, (5) other assets, or (6) any
combination of the foregoing, having an aggregate value equal to the
Current Value, where such aggregate value has been determined by the
Board based upon the advice of a recognized investment banking firm
selected by the Board; provided, however, if the Company shall not have
made adequate provision to deliver value pursuant to clause (B) above
within thirty (30) calendar days following the Flip-in Trigger Date,
then the Company shall be obligated to deliver, upon the surrender for
exercise of a Right and without requiring payment of the Purchase
Price, cash having an aggregate value equal to the Spread. To the
extent that the Company determines that some action need be taken
pursuant to the first sentence of this Section 11(a)(iv), the Company
(x) shall provide, subject to Section 7(e) (Exercise of Rights;
Purchase Price; Expiration Date of Rights -- Termination of Acquiring
Person's Rights), that such action shall apply uniformly to all
outstanding Rights and (y) may suspend the exercisability of the
Rights, but not longer than ninety (90) calendar days after the Flip-in
Trigger Date, in order to decide the appropriate form of distribution
to be made pursuant to such first sentence and to determine the value
thereof. In the event of any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights has
been temporarily suspended, as well as a public announcement at such
time as the suspension is no longer in effect. For purposes of this
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<PAGE> 24
Section 11(a)(iv), the value of the Common Stock shall be the Current
Market Price per share of the Common Stock on the Flip-in Trigger Date
and the value of any Common Stock Equivalent shall be deemed to have
the same value as the Common Stock on such date.
(b) Purchase Price Adjustment -- Capital Stock. In case the
Company shall fix a record date for the issuance of rights, options or warrants
to all holders of Preferred Stock entitling them to subscribe for or purchase
(for a period expiring within forty-five (45) calendar days after such record
date) Preferred Stock (or shares having the same rights, privileges and
preferences as the shares of Preferred Stock ("Equivalent Preferred Stock")) or
securities convertible into Preferred Stock or Equivalent Preferred Stock at a
price per share of Preferred Stock or per share of Equivalent Preferred Stock
(or having a conversion price per share, if a security convertible into
Preferred Stock or Equivalent Preferred Stock) less than the Current Market
Price per share of Preferred Stock on such record date, the Purchase Price to be
in effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the number of shares of Preferred Stock outstanding
on such record date, plus the number of shares of Preferred Stock which the
aggregate offering price of the total number of shares of Preferred Stock and/or
Equivalent Preferred Stock so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such Current Market Price, and the denominator of which shall be the number
of shares of Preferred Stock outstanding on such record date, plus the number of
additional shares of Preferred Stock and/or Equivalent Preferred Stock to be
offered for subscription or purchase (or into which the convertible securities
so to be offered are initially convertible). In case such subscription price may
be paid by delivery of consideration part or all of which may be in a form other
than cash, the value of such consideration shall be as determined in good faith
by the Board, whose determination shall be described in a statement filed with
the Rights Agent and shall be binding on the Rights Agent and the holders of the
Rights. Shares of Preferred Stock owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of any such computation.
Such adjustment shall be made successively whenever such a record date is fixed,
and in the event that such rights or warrants are not so issued, the Purchase
Price shall be adjusted to be the Purchase Price which would then be in effect
if such record date had not been fixed.
(c) Purchase Price Adjustment -- Cash, Assets, etc. In case the
Company shall fix a record date for a distribution to all holders of Preferred
Stock (including any such distribution made in connection with a consolidation
or merger in which the Company is the continuing corporation) of evidences of
indebtedness, cash (other than a regular quarterly cash dividend out of the
earnings or retained earnings of the Company), assets (other than a dividend
payable in Preferred Stock, but including any dividend payable in stock other
than Preferred Stock) or subscription rights or warrants (excluding those
referred to in Section 11(b) (Adjustment of Purchase Price; Number and Kind of
Shares or Number of Rights Purchase Price Adjustment -- Capital Stock)), the
Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the Current Market Price per
share of Preferred Stock on such record date, less the fair market value (as
determined in good faith by the Board, whose determination shall be described in
a statement filed with the Rights Agent) of the portion of the cash, assets or
evidences of indebtedness so to be
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<PAGE> 25
distributed or of such subscription rights or warrants applicable to a share of
Preferred Stock and the denominator of which shall be such Current Market Price
per share of Preferred Stock. Such adjustments shall be made successively
whenever such a record date is fixed, and in the event that such distribution is
not so made, the Purchase Price shall be adjusted to be the Purchase Price which
would have been in effect if such record date had not been fixed.
(d) Current Market Price.
(i) For the purpose of any computation
hereunder, other than computations made pursuant to Section 11(a)(iii)
(Adjustment of Purchase Price; Number and Kind of Shares or Number of Rights --
Certain Adjustments) the Current Market Price per share of Common Stock on any
date shall be deemed to be the average of the daily closing prices per share of
such Common Stock for the thirty (30) consecutive Trading Days immediately prior
to and not including such date, and for purposes of computations made pursuant
to Section 11(a)(iii) the Current Market Price per share of Common Stock on any
date shall be deemed to be the average of the daily closing prices per share of
such Common Stock for the ten (10) consecutive Trading Days immediately
following such date; provided, however, that in the event that the Current
Market Price per share of the Common Stock is determined during a period
following the announcement by the issuer of such Common Stock of (A) a dividend
or distribution on such Common Stock payable in shares of such Common Stock or
securities convertible into shares of such Common Stock (other than the Rights),
or (B) any subdivision, combination or reclassification of such Common Stock and
the ex-dividend date for such dividend or distribution, or the record date for
such subdivision, combination or reclassification shall not have occurred prior
to the commencement of the requisite thirty (30) Trading Day or ten (10) Trading
Day period, as set forth above, then, and in each such case, the Current Market
Price shall be properly adjusted to take into account ex-dividend trading. The
closing price for each Trading Day shall be the last sale price, regular way,
or, in case no such sale takes place on such Trading Day, the average of the
closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the shares
of Common Stock are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the shares of Common Stock are listed or admitted to trading or, if the
shares of Common Stock are not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted, the average of
the high bid and low asked prices in the over-the-counter market, as reported by
the National Association of Securities Dealers, Inc. Automated Quotation System
or such other system then in use, or, if on any such date the shares of Common
Stock are not quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker making a market in
the Common Stock selected by the Board. If on any such date no market maker is
making a market in the Common Stock, the fair value of such shares on such date
as determined in good faith by the Board shall be used. The term "Trading Day"
shall mean a day on which the principal national securities exchange on which
the shares of Common Stock are listed or admitted to trading is open for the
transaction of business or, if the shares of Common Stock are not listed or
admitted to trading on any national securities exchange, a Business Day. If the
Common Stock is not publicly held or not so listed or traded,
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<PAGE> 26
Current Market Price per share shall mean the fair value per share as determined
in good faith by the Board, whose determination shall be described in a
statement filed with the Rights Agent and shall be conclusive for all purposes.
(ii) For the purpose of any computation
hereunder, the Current Market Price per share of Preferred Stock shall be
determined in the same manner as set forth above for the Common Stock in clause
(i) of this Section 11(d) (other than the last sentence thereof). If the Current
Market Price per share of Preferred Stock cannot be determined in the manner
provided above or if the Preferred Stock is not publicly held or listed or
traded in a manner described in clause (i) of this Section 11(d), the Current
Market Price per share of Preferred Stock shall be conclusively deemed to be an
amount equal to 1,000 (as such number may be appropriately adjusted for such
events as stock splits, stock dividends and recapitalizations with respect to
the Common Stock occurring after the date of this Agreement) multiplied by the
Current Market Price per share of the Common Stock. If neither the Common Stock
nor the Preferred Stock is publicly held or so listed or traded, Current Market
Price per share of the Preferred Stock shall mean the fair value per share as
determined in good faith by the Board, whose determination shall be described in
a statement filed with the Rights Agent and shall be conclusive for all
purposes. For all purposes of this Agreement, the Current Market Price of one
one-thousandth of a share of Preferred Stock shall be equal to the Current
Market Price of one share of Preferred Stock divided by 1,000.
(e) Purchase Price Adjustment Threshold. Anything herein to the
contrary notwithstanding, no adjustment in the Purchase Price shall be required
unless such adjustment would require an increase or decrease of at least one
percent (1%) in the Purchase Price; provided however, that any adjustments which
by reason of this Section 11(e) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Section 11 (Adjustment of Purchase Price; Number and Kind of Shares
or Number of Rights) shall be made to the nearest cent or to the nearest
thousandth of a share of Common Stock or other share or one-millionth of a share
of Preferred Stock, as the case may be. Notwithstanding the first sentence of
this Section 11(e), any adjustment required by this Section 11 shall be made no
later than the earlier of (i) three (3) years from the date of the transaction
which mandates such adjustment, or (ii) the Expiration Date.
(f) Equivalent Adjustments. If as a result of an adjustment
made pursuant to Section 11(a)(ii) (Adjustment of Purchase Price; Number and
Kind of Shares or Number of Rights -- Certain Adjustments) or Section 13(a)
(Consolidation Merger or Sale or Transfer of Assets or Earning Power --
Flip-over Event) the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock other than Preferred Stock,
thereafter the number of such other shares so receivable upon exercise of any
Right and the Purchase Price thereof shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Stock contained in Sections 11(a), (b),
(c), (e), (g), (h), (i), (j), (k) and (m), and the provisions of Sections 7, 9,
10, 13 and 14 with respect to the Preferred Stock shall apply on like terms to
any such other shares.
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<PAGE> 27
(g) Post-Adjustment Rights Issuances. All Rights originally
issued by the Company subsequent to any adjustment made to the Purchase Price
hereunder shall evidence the right to purchase, at the adjusted Purchase Price,
the number of one one-thousandths of a share of Preferred Stock purchasable from
time to time hereunder upon exercise of the Rights, all subject to further
adjustment as provided herein.
(h) Preferred Stock Anti-Dilution. Unless the Company shall
have exercised its election as provided in Section 11(i) (Adjustment of Purchase
Price; Number and Kind of Shares or Number of Rights -- Adjustment of Number of
Rights), upon each adjustment of the Purchase Price as a result of the
calculations made in Section 11(b) (Adjustment of Purchase Price; Number and
Kind of Shares or Number of Rights -- Purchase Price Adjustment -- Capital
Stock) and Section 11(c) (Adjustment of Purchase Price; Number and Kind of
Shares or Number of Rights -- Purchase Price Adjustment -- Cash, Assets, etc.),
each Right outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Purchase Price, that
number of one one-thousandths of a share of Preferred Stock (calculated to the
nearest one-millionth) obtained by (i) multiplying (x) the number of one
one-thousandths of a share covered by a Right immediately prior to this
adjustment, by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price, and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
(i) Adjustment of Number of Rights. The Company may elect on or
after the date of any adjustment of the Purchase Price to adjust the number of
Rights, in lieu of any adjustment in the number of one one-thousandths of a
share of Preferred Stock purchasable upon the exercise of a Right. Each of the
Rights outstanding after the adjustment in the number of Rights shall be
exercisable for the number of one one-thousandths of a share of Preferred Stock
for which a Right was exercisable immediately prior to such adjustment. Each
Right held of record prior to such adjustment of the number of Rights shall
become that number of Rights (calculated to the nearest one-ten-thousandth)
obtained by dividing the Purchase Price in effect immediately prior to
adjustment of the Purchase Price by the Purchase Price in effect immediately
after adjustment of the Purchase Price. The Company shall make a public
announcement of its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Rights Certificates have
been issued, shall be at least ten (10) calendar days later than the date of the
public announcement. If Rights Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i), the Company
shall, as promptly as practicable, cause to be distributed to holders of record
of Rights Certificates on such record date Rights Certificates evidencing,
subject to Section 14 (Fractional Rights and Fractional Shares) the additional
Rights to which such holders shall be entitled as a result of such adjustment,
or, at the option of the Company, shall cause to be distributed to such holders
of record in substitution and replacement for the Rights Certificates held by
such holders prior to the date of adjustment, and upon surrender thereof, if
required by the Company, new Rights Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment. Rights Certificates
so to be distributed shall be issued, executed and countersigned in the manner
provided for herein (and may bear, at the option of the Company, the adjusted
Purchase Price) and shall be
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<PAGE> 28
registered in the names of the holders of record of Rights Certificates on the
record date specified in the public announcement.
(j) Rights Certificates. Irrespective of any adjustment or
change in the Purchase Price or the number of one one-thousandths of a share of
Preferred Stock issuable upon the exercise of the Rights, the Rights
Certificates theretofore and thereafter issued may continue to express the
Purchase Price per one one-thousandth of a share and the number of one
one-thousandths of a share which were expressed in the initial Rights
Certificates issued hereunder.
(k) Adjustment Below Par Value. Before taking any action that
would cause an adjustment reducing the Purchase Price below the then par or
stated value, if any, of the number of one one-thousandths of a share of
Preferred Stock issuable upon exercise of the Rights, the Company shall take any
corporate action which is or may, in the opinion of its counsel, be necessary in
order that the Company may validly and legally issue fully paid and
nonassessable such number of one one-thousandths of a share of Preferred Stock
at such adjusted Purchase Price.
(l) Adjustment Effective as of Future Date; Exercise. In any
case in which this Section 11 (Adjustment of Purchase Price; Number and Kind of
Shares or Number of Rights) shall require that an adjustment in the Purchase
Price be made effective as of a record date for a specified event, the Company
may elect to defer until the occurrence of such event the issuance to the holder
of any Right exercised after such record date the number of one one-thousandths
of a share of Preferred Stock and other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the number of one
one-thousandths of a share of Preferred Stock and other capital stock or
securities of the Company, if any, issuable upon such exercise on the basis of
the Purchase Price in effect prior to such adjustment; provided, however, that
the Company shall deliver to such holder a due bill or other appropriate
instrument evidencing such holder's right to receive such additional shares
(fractional or otherwise) or securities upon the occurrence of the event
requiring such adjustment.
(m) Tax Adjustments. Anything in this Section 11 (Adjustment of
Purchase Price; Number and Kind of Shares or Number of Rights) to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that in its good faith judgment the Board shall
determine to be advisable in order that any (i) consolidation or subdivision of
the Preferred Stock, (ii) issuance wholly for cash of any shares of Preferred
Stock at less than the Current Market Price, (iii) issuance wholly for cash of
shares of Preferred Stock or securities which by their terms are convertible
into or exchangeable for shares of Preferred Stock, (iv) stock dividends or (v)
issuance of rights, options or warrants referred to in this Section 11,
hereafter made by the Company to holders of its Preferred Stock shall not be
taxable to such stockholders.
(n) Restriction on Certain Transactions. The Company shall not,
at any time after the earlier of the Stock Acquisition Date or the Distribution
Date, (i) consolidate with any other Person (other than a Subsidiary of the
Company in a transaction which complies with Section 11(o) (Adjustment of
Purchase Price; Number and Kind of Shares or Number of Rights -- Restriction
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<PAGE> 29
Against Diminishing Benefits of the Rights)), (ii) merge with or into any other
Person (other than a Subsidiary of the Company in a transaction which complies
with Section 11(o)), (iii) enter into a statutory share exchange or similar
transaction with any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o)), or (iv) sell or transfer (or
permit any Subsidiary to sell or transfer), in one transaction, or a series of
related transactions, assets, cash flow or earning power aggregating more than
50% of the assets, cash flow or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons (other than the
Company and/or any of its Subsidiaries in one or more transactions each of which
complies with Section 11(o)), if (x) at the time of or immediately after such
consolidation, merger, statutory share exchange or similar transaction, or sale
there are any rights, warrants or other instruments or securities outstanding or
agreements in effect which would substantially diminish or otherwise eliminate
the benefits intended to be afforded by the Rights or (y) prior to,
simultaneously with or immediately after such consolidation, merger, statutory
share exchange or similar transaction, or sale, the stockholders of the Person
who constitutes, or would constitute, the "Principal Party" for purposes of
Section 13(a) (Consolidation, Merger or Sale or Transfer of Assets or Earning
Power -- Flip-over Event) shall have received a distribution of Rights
previously owned by such Person or any of its Affiliates and Associates.
(o) Restriction Against Diminishing Benefits of the Rights. The
Company covenants and agrees that, after the earlier of the Stock Acquisition
Date or the Distribution Date, it will not, except as permitted by Section 23
(Redemption and Termination) or Section 27 (Supplements and Amendments) take (or
permit any Subsidiary to take) any action if at the time such action is taken it
is reasonably foreseeable that such action will diminish substantially or
otherwise eliminate the benefits intended to be afforded by the Rights.
(p) Common Stock Adjustments. Anything in this Agreement to the
contrary notwithstanding, in the event that the Company shall at any time after
the Rights Dividend Declaration Date and prior to the Distribution Date (i)
declare a dividend on the outstanding shares of Common Stock payable in shares
of Common Stock, (ii) subdivide or split the outstanding shares of Common Stock,
or (iii) combine the outstanding shares of Common Stock into a smaller number of
shares, the number of Rights associated with each share of Common Stock then
outstanding, or issued or delivered thereafter but prior to the Distribution
Date, shall be proportionately adjusted so that the number of Rights thereafter
associated with each share of Common Stock following any such event shall equal
the result obtained by multiplying the number of Rights associated with each
share of Common Stock immediately prior to such event by a fraction, the
numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to the occurrence of the event and the denominator
of which shall be the total number of shares of Common Stock outstanding
immediately following the occurrence of such event. The adjustments provided for
in this Section 11(p) shall be made successively whenever such a dividend is
declared or paid or such subdivision, combination or consolidation is effected.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 (Adjustment of Purchase
Price; Number and Kind of Shares or Number of Rights) and Section 13
(Consolidation, Merger or Sale or Transfer of Assets
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<PAGE> 30
or Earning Power) the Company shall (a) promptly prepare a certificate setting
forth such adjustment and a brief statement of the facts accounting for such
adjustment, (b) promptly file with the Rights Agent, and with each transfer
agent for the Preferred Stock and the Common Stock, a copy of such certificate,
and (c) mail or cause the Rights Agent to mail a brief summary thereof to each
holder of a Rights Certificate (or, if prior to the Distribution Date, to each
holder of a certificate representing shares of Common Stock) in accordance with
Section 26 (Notices). The Rights Agent shall be fully protected in relying on
any such certificate and on any adjustment therein contained.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) Flip-over Event. In the event that, following the Stock
Acquisition Date, directly or indirectly, (x) the Company shall consolidate
with, or merge with and into, or enter into a statutory stock exchange or
similar transaction with, any other Person (other than a Subsidiary of the
Company in a transaction which complies with Section 11(o)(Adjustment of
Purchase Price; Number and Kind of Shares or Number of Rights -- Restriction
Against Diminishing Benefits of the Rights)), and the Company shall not be the
continuing or surviving corporation of such consolidation, merger or statutory
share exchange or similar transaction, (y) any Person (other than a Subsidiary
of the Company in a transaction which complies with Section 11(o)) shall
consolidate with, or merge with or into, or enter into a statutory stock
exchange or similar transaction with, the Company, and the Company shall be the
continuing or surviving corporation of such consolidation, merger or statutory
share exchange or similar transaction and, in connection with such
consolidation, merger or statutory share exchange or similar transaction, all or
part of the outstanding shares of Common Stock shall be changed into or
exchanged for stock or other securities of any other Person or cash or any other
property, or (z) the Company shall sell or otherwise transfer (or one or more of
its Subsidiaries shall sell or otherwise transfer), in one transaction or a
series of related transactions, assets, cash flow or earning power aggregating
more than 50% of the assets, cash flow or earning power of the Company and its
Subsidiaries (taken as a whole) to any Person or Persons (other than the Company
or any Subsidiary of the Company in one or more transactions each of which
complies with Section 11(o)), then, and in each such case (except as may be
contemplated by Section 13(d) (Consolidation, Merger or Sale or Transfer of
Assets or Earning Power -- Exceptions)), (i) proper provision shall be made so
that: each holder of a Right, except as provided in Section 7(e) (Exercise of
Rights; Purchase Price; Expiration Date of Rights -- Termination of Acquiring
Person's Rights) shall thereafter have the right to receive, upon the exercise
thereof at the then current Purchase Price in accordance with the terms of this
Agreement, such number of validly authorized and issued, fully paid,
nonassessable and freely tradeable shares of Common Stock of the Principal
Party, not subject to any liens, encumbrances, rights of first refusal or other
adverse claims, as shall be equal to the result obtained by (A) multiplying the
then current Purchase Price by the number of one one- thousandths of a share of
Preferred Stock for which a Right is exercisable immediately prior to the first
occurrence of a Flip-over Event (or, if a Flip-in Event has occurred prior to
the first occurrence of a Flip-over Event, multiplying the number of such one
one-thousandths of a share for which a Right was exercisable immediately prior
to the first occurrence of a Flip-in Event by the Purchase Price in effect
immediately prior to such first occurrence), and (B) dividing that product
(which, following the first occurrence of a Flip-over Event, shall be referred
to as the "Purchase Price" for each Right and for all purposes of this
Agreement) by 50% of the Current Market Price per share
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<PAGE> 31
of the Common Stock of such Principal Party on the date of consummation of such
Flip-over Event; (ii) such Principal Party shall thereafter be liable for, and
shall assume, by virtue of such Flip-over Event, all the obligations and duties
of the Company pursuant to this Agreement; (iii) the term "Company" shall
thereafter be deemed to refer to such Principal Party, it being specifically
intended that the provisions of Section 11 (Adjustment of Purchase Price; Number
and Kind of Shares or Number of Rights) shall apply only to such Principal Party
following the first occurrence of a Flip- over Event; (iv) such Principal Party
shall take such steps (including, but not limited to, the reservation of a
sufficient number of shares of its Common Stock) in connection with the
consummation of any such transaction as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to its shares of Common Stock thereafter deliverable upon the
exercise of the Rights; and (v) the provisions of Section 11(a)(ii) (Adjustment
of Purchase Price; Number and Kind of Shares or Number of Rights -- Certain
Adjustments) hereof shall be of no effect following the first occurrence of any
Flip-over Event.
(b) Principal Party. "Principal Party" shall mean
(i) in the case of any transaction described in
clause (x) or (y) of the first sentence of Section 13(a)
(Consolidation, Merger or Sale or Transfer of Assets or Earning Power
-- Flip-over Event), the Person that is the issuer of any securities
into which shares of Common Stock of the Company are converted in such
consolidation, merger or statutory share exchange or similar
transaction, and if no securities are so issued, the Person that is the
other party to such consolidation, merger or statutory share exchange
or similar transaction, and
(ii) in the case of any transaction described in
clause (z) of the first sentence of Section 13(a) (Consolidation,
Merger or Sale or Transfer of Assets or Earning Power -- Flip-over
Event), the Person that is the party receiving the greatest portion of
the assets, cash flow or earning power transferred pursuant to such
transaction or transactions;
provided, however, that in any such case, (1) if the Common Stock of such Person
is not at such time and has not been continuously over the preceding twelve (12)
month period registered under Section 12 of the Exchange Act, and such Person is
a direct or indirect Subsidiary of another Person the Common Stock of which is
and has been so registered, "Principal Party" shall refer to such other Person;
and (2) in case such Person is a Subsidiary, directly or indirectly, of more
than one Person, the Common Stocks of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever of such Persons is the
issuer of the total outstanding Common Stock having the greatest aggregate
market value.
(c) Supplemental Agreement. The Company shall not consummate a
Flip-over Event unless the Principal Party shall have a sufficient number of
authorized shares of its Common Stock which have not been issued or reserved for
issuance to permit the exercise in full of the Rights in accordance with this
Section 13 (Consolidation, Merger or Sale or Transfer of Assets or Earning
Power) and unless prior thereto the Company and such Principal Party shall have
executed and delivered to the Rights Agent a supplemental agreement providing
for the terms set forth in
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<PAGE> 32
paragraphs (a) and (b) of this Section 13 and further providing that, as soon as
practicable after the date of such Flip-over Event, the Principal Party will
(i) prepare and file a registration statement under
the Act, with respect to the Rights and the securities purchasable upon
exercise of the Rights on an appropriate form, and will use its best
efforts to cause such registration statement to (A) become effective as
soon as practicable after such filing and (B) remain effective (with a
prospectus at all times meeting the requirements of the Act) until the
Expiration Date and take all such other action as may be necessary to
enable the Principal Party to issue the securities purchasable upon
exercise of the Rights, including but not limited to the registration
or qualification of such securities under all requisite securities laws
or jurisdictions of the various states and the listing of such
securities on such exchange and trading markets as may be necessary or
appropriate; and
(ii) will deliver to holders of the Rights historical
financial statements for the Principal Party and each of its Affiliates
which comply in all respects with the requirements for registration on
Form 10 under the Exchange Act.
The provisions of this Section 13 (Consolidation, Merger or Sale or Transfer of
Assets or Earning Power) shall similarly apply to successive consolidations,
mergers or statutory share exchanges or similar transactions or sales or other
transfers. In the event that a Flip-over Event shall occur at any time after the
occurrence of a Flip-in Event, the Rights which have not theretofore been
exercised shall thereafter become exercisable in the manner described in Section
13(a) (Consolidation, Merger or Sale or Transfer of Assets or Earning Power --
Flip-over Event).
(d) Exceptions. Notwithstanding anything in this Agreement to
the contrary, Section 13 (Consolidation, Merger or Sale or Transfer of Assets or
Earning Power) shall not be applicable to a transaction described in
subparagraphs (x) and (y) of Section 13(a) (Consolidation, Merger or Sale or
Transfer of Assets or Earning Power -- Flip-over Event) if (i) such transaction
is consummated with a Person or Persons who acquired shares of Common Stock
pursuant to a tender offer or exchange offer for all outstanding shares of
Common Stock which complies with the provisions of Section 11(a)(ii)(A)
(Adjustment of Purchase Price; Number and Kind of Shares or Number of Rights --
Certain Adjustments) (or a wholly-owned subsidiary of any such Person or
Persons), (ii) the price per share of Common Stock offered in such transaction
is not less than the price per share of Common Stock paid to all holders of
shares of Common Stock whose shares were purchased pursuant to such tender or
exchange offer and (iii) the form of consideration being offered in such
transaction is the same as the form of consideration paid to all holders of
shares of Common Stock whose shares were purchased pursuant to such tender offer
or exchange offer. Upon consummation of any such transaction contemplated by
this Section 13(d), all Rights hereunder shall expire.
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Section 14. Fractional Rights and Fractional Shares.
(a) Fractional Rights. The Company shall not be required to
issue fractions of Rights, except prior to the Distribution Date as provided in
Section 11(p) (Adjustment of Purchase Price; Number and Kind of Shares or Number
of Rights -- Common Stock Adjustments), or to distribute Rights Certificates
which evidence fractional Rights. In lieu of such fractional Rights, there shall
be paid to the registered holders of the Rights Certificates with regard to
which such fractional Rights would otherwise be issuable, an amount in cash
equal to the same fraction of the current market value of a whole Right. For
purposes of this Section 14(a), the current market value of a whole Right shall
be the closing price of the Rights for the Trading Day immediately prior to the
date on which such fractional Rights would have been otherwise issuable. The
closing price of the Rights for any Trading Day shall be the last sale price,
regular way, or, in case no such sale takes place on such Trading Day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Rights are listed or admitted to trading, or if the Rights are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System or such other system then in
use or, if on any such date the Rights are not quoted by any such organization,
the average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Rights selected by the Board. If on any such
date no such market maker is making a market in the Rights, the fair value of
the Rights on such date as determined in good faith by the Board shall be used.
(b) Fractional Shares of Preferred Stock. The Company shall not
be required to issue fractions of shares of Preferred Stock (other than
fractions which are integral multiples of one one-thousandth of a share of
Preferred Stock which may at the option of the Company, be evidenced by
depositary receipts) upon exercise of the Rights or to distribute certificates
which evidence fractional shares of Preferred Stock (other than fractions which
are integral multiples of one one-thousandth of a share of Preferred Stock).
Interests in fractions of Preferred Stock in integral multiples of one
one-thousandth of a share of Preferred Stock may, at the election of the
Company, be evidenced by depositary receipts, pursuant to an appropriate
agreement between the Company and a depositary selected by it; provided,
however, that such agreement shall provide that the holders of such depositary
receipts shall have all the rights, privileges and preferences to which they are
entitled as beneficial owners of the Preferred Stock represented by such
depositary receipts. In lieu of fractional shares of Preferred Stock that are
not integral multiples of one one-thousandth of a share of Preferred Stock, the
Company may pay to the registered holders of Rights Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one one-thousandth of a share of
Preferred Stock. For purposes of this Section 14(b), the current market value of
one one-thousandth of a share of Preferred Stock shall be one one-thousandth of
the closing price of a share of Preferred Stock (as determined pursuant to
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<PAGE> 34
Section 11(d)(ii) (Adjustment of Purchase Price; Number and Kind of Shares or
Number of Rights -- Current Market Price) for the Trading Day immediately prior
to the date of such exercise.
(c) Fractional Shares of Common Stock. Following the occurrence
of a Triggering Event, the Company shall not be required to issue fractions of
shares of Common Stock upon exercise of the Rights or to distribute certificates
which evidence fractional shares of Common Stock. In lieu of fractional shares
of Common Stock, the Company may pay to the registered holders of Rights
Certificates at the time such Rights are exercised as herein provided an amount
in cash equal to the same fraction of the current market value of one (1) share
of Common Stock. For purposes of this Section 14(c), the current market value of
one share of Common Stock shall be the closing price of one share of Common
Stock (as determined pursuant to Section 11(d)(i) (Adjustment of Purchase Price;
Number and Kind of Shares or Number of Rights -- Current Market Price) for the
Trading Day immediately prior to the date of such exercise.
(d) Waiver of Fractional Rights and Shares. The holder of a
Right by the acceptance of the Right expressly waives his or her right to
receive any fractional Rights or any fractional shares upon exercise of a Right,
except as permitted by this Section 14 (Fractional Rights and Fractional
Shares).
Section 15. Rights of Action. All rights of action in respect of this
Agreement are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Stock); and any registered holder of any Rights Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Stock), may, in his or her own behalf and for
his or her own benefit, enforce, and may institute and maintain any suit, action
or proceeding against the Company to enforce, or otherwise act in respect of,
his or her right to exercise the Rights evidenced by such Rights Certificate in
the manner provided in such Rights Certificate and in this Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and shall be entitled to specific
performance of the obligations hereunder and injunctive relief against actual or
threatened violations of the obligations hereunder of any Person subject to this
Agreement.
Section 16. Agreement of Rights Holders. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office or offices of the Rights Agent designated for such
purposes, duly endorsed or accompanied by a proper instrument of transfer and
with the appropriate forms and certificates fully executed;
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(c) subject to Section 6(a) (Transfer, Split Up, Combination
and Exchange of Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates -- Procedure) and Section 7(f) (Exercise of Rights; Purchase Price;
Expiration Date of Rights -- Surrender of Rights Certificates; Identity of
Beneficial Owner), the Company and the Rights Agent may deem and treat the
person in whose name a Rights Certificate (or, prior to the Distribution Date,
the associated Common Stock certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Rights Certificates or the associated Common Stock
certificate made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent, subject to
the last sentence of Section 7(e) (Exercise of Rights; Purchase Price;
Expiration Date of Rights -- Termination of Acquiring Person's Rights), shall be
required to be affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree, judgment or ruling (whether interlocutory or
final) issued by a court of competent jurisdiction or by a governmental,
regulatory or administrative agency or commission, or any statute, rule,
regulation or executive order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining performance of such obligation;
provided, however, the Company must use its best efforts to have any such order,
decree, judgment or ruling lifted or otherwise overturned as soon as possible.
Section 17. Rights Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the number of one
one-thousandths of a share of Preferred Stock or any other securities of the
Company which may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Rights
Certificate be construed to confer upon the holder of any Rights Certificate, as
such, any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in Section 25 (Notice of Certain Events)), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by such
Rights Certificate shall have been exercised in accordance with the provisions
hereof.
Section 18. Concerning the Rights Agent.
(a) Compensation. The Company shall pay to the Rights Agent
reasonable compensation for all services rendered by it hereunder and, from time
to time, on demand of the Rights Agent, its reasonable expenses and counsel fees
and other disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder. The Company
agrees to indemnify the Rights Agent for, and to hold it harmless against, any
loss, liability, or expense, incurred without negligence, bad faith or willful
misconduct on the part of the Rights Agent, for anything done or omitted to be
done by the Rights Agent in connection
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with the acceptance and administration of this Agreement, including the costs
and expenses of defending against or investigating any claim of liability in the
premises.
(b) Reliance. The Rights Agent shall be protected and shall
incur no liability for or in respect of any action taken, suffered or omitted to
be taken by it in connection with its administration of this Agreement in
reliance upon any Rights Certificate or certificate for Common Stock or for
other securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper Person or Persons, or otherwise upon the advice of counsel as set
forth in Section 20 (Duties of Rights Agent).
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Successor. Any Person into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be consolidated, or
any Person resulting from any merger or consolidation to which the Rights Agent
or any successor Rights Agent shall be a party, or any Person succeeding to the
business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto;
provided, however, that such Person would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21 (Change of Rights
Agent). In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Rights Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of a predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor or in
the name of the successor Rights Agent; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.
(b) Prior Countersignatures. In case at any time the name of
the Rights Agent shall be changed and at such time any of the Rights
Certificates shall have been countersigned but not delivered, the Rights Agent
may adopt the countersignature under its prior name and deliver Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, the Rights Agent may countersign
such Rights Certificates either in its prior name or in its changed name; and in
all such cases such Rights Certificates shall have the full force provided in
the Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, shall be bound:
(a) Legal Counsel. The Rights Agent may consult with legal
counsel (who may be legal counsel for the Company), and the opinion of such
counsel shall be full and complete
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authorization and protection to the Rights Agent as to any action taken or
omitted to be taken by it in good faith and in accordance with such opinion.
(b) Certification by the Company. Whenever in the performance
of its duties under this Agreement the Rights Agent shall deem it necessary or
desirable that any fact or matter (including, without limitation, the identity
of any Acquiring Person and the determination of Current Market Price) be proved
or established by the Company prior to taking or suffering any action hereunder,
such fact or matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved and established
by a certificate signed by the President, any Vice President, the Secretary, any
Assistant Secretary, the Treasurer or any Assistant Treasurer of the Company and
delivered to the Rights Agent; and such certificate shall be full authorization
to the Rights Agent for any action taken or suffered in good faith by it under
the provisions of this Agreement in reliance upon such certificate.
(c) Liability for Negligence, etc. The Rights Agent shall be
liable hereunder only for its own negligence, bad faith or willful misconduct.
(d) Statements of Fact or Recitals. The Rights Agent shall not
be liable for or by reason of any of the statements of fact or recitals
contained in this Agreement or in the Rights Certificates or be required to
verify the same (except as to its countersignature on such Rights Certificates),
but all such statements and recitals are and shall be deemed to have been made
by the Company only.
(e) Agreement; Adjustments. The Rights Agent shall not be under
any responsibility in respect of the validity of this Agreement or the execution
and delivery hereof (except the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any Rights Certificate (except its
countersignature); nor shall it be responsible for any breach by the Company of
any covenant or condition contained in this Agreement or in any Rights
Certificate; nor shall it be responsible for any adjustment required under the
provisions of Section 11 (Adjustment of Purchase Price; Number and Kind of
Shares or Number of Rights) or Section 13 (Consolidation, Merger or Sale or
Transfer of Assets or Earning Power) or responsible for the manner, method or
amount of any such adjustment or the ascertaining of the existence of facts that
would require any such adjustment (except with respect to the exercise of Rights
evidenced by Rights Certificates after actual notice of any such adjustment);
nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any shares of Common Stock or
Preferred Stock to be issued pursuant to this Agreement or any Rights
Certificate or as to whether any shares of Common Stock or Preferred Stock will,
when so issued, be validly authorized and issued, fully paid and nonassessable.
(f) Further Assurances. The Company will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of this Agreement.
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(g) Instructions. The Rights Agent is hereby authorized and
directed to accept instructions with respect to the performance of its duties
hereunder from the President, any Vice President, the Secretary, any Assistant
Secretary, the Treasurer or any Assistant Treasurer of the Company and to apply
to such persons for advice or instructions in connection with its duties, and it
shall not be liable for any action taken or suffered to be taken by it in good
faith in accordance with the instructions of any such person.
(h) Dealing in Rights. The Rights Agent and any stockholder,
director, officer or employee of the Rights Agent may buy, sell or deal in any
of the Rights or other securities of the Company or become pecuniarily
interested in any transaction in which the Company may be interested, or
contract with or lend money to the Company or otherwise act as fully and freely
as though it were not Rights Agent under this Agreement. Nothing herein shall
preclude the Rights Agent from acting in any other capacity for the Company or
for any other Person.
(i) Agents; Reasonable Care. The Rights Agent may execute and
exercise any of the rights or powers hereby vested in it or perform any duty
hereunder either itself or by or through its attorneys or agents, and the Rights
Agent shall not be answerable or accountable for any act, default, neglect or
misconduct of any such attorneys or agents or for any loss to the Company or any
other Person resulting from any such act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct; provided, however, reasonable care was
exercised in the selection and continued employment thereof.
(j) Expenses; Repayment Assurances. No provision of this
Agreement shall require the Rights Agent 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 its rights if there shall be reasonable grounds
for believing that repayment of such funds or adequate indemnification against
such risk or liability is not reasonably assured to it.
(k) Exercise of Rights; Consultation with Company. If, with
respect to any Rights Certificate surrendered to the Rights Agent for exercise
or transfer, the certificate attached to the form of assignment or form of
election to purchase, as the case may be, has either not been completed or
indicates an affirmative response to clause 1 and/or 2 thereof, the Rights Agent
shall not take any further action with respect to such requested exercise of
transfer without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon thirty (30) calendar days' notice in writing mailed to the Company, and to
each transfer agent of the Common Stock and Preferred Stock, by registered or
certified mail, and to the holders of the Rights Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent upon
thirty (30) calendar days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Common Stock and Preferred Stock, by registered or certified mail, and to the
holders of the Rights Certificates by first-class mail. If the Rights Agent
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<PAGE> 39
shall resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Rights Agent. If the Company shall fail
to make such appointment within a period of thirty (30) calendar days after
giving notice of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent or by
the holder of a Rights Certificate (who shall, with such notice, submit his
Rights Certificate for inspection by the Company), then the registered holder of
any Rights Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be (a) a corporation organized and
doing business under the laws of the United States or of any State of the United
States, in good standing, which is authorized under such laws to exercise stock
transfer or corporate trust powers, is subject to supervision or examination by
federal or state authority and has at the time of its appointment as Rights
Agent a combined capital and surplus of at least $50,000,000 or (b) an Affiliate
of a corporation described in clause (a) of this sentence. After appointment,
the successor Rights Agent shall be vested with the same powers, rights, duties
and responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Stock and the Preferred Stock, and mail a
notice thereof in writing to the registered holders of the Rights Certificates.
Failure to give any notice provided for in this Section 21 (Change of Rights
Agent), or any defect therein, shall not affect the legality or validity of the
resignation or removal of the Rights Agent or the appointment of the successor
Rights Agent, as the case may be.
Section 22. Issuance of New Rights Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Rights Certificates evidencing Rights in such form
as may be approved by the Board to reflect any adjustment or change in the
Purchase Price and the number or kind or class of shares or other securities or
property purchasable under the Rights Certificates made in accordance with the
provisions of this Agreement. In addition, in connection with the issuance or
sale of shares of Common Stock following the Distribution Date and prior to the
redemption or expiration of the Rights, the Company (a) shall, with respect to
shares of Common Stock so issued or sold pursuant to the exercise of stock
options or under any employee plan or arrangement, or upon the exercise,
conversion or exchange of securities hereafter issued by the Company, in either
case outstanding as of the Distribution Date, and (b) may, in any other case, if
deemed necessary or appropriate by the Board, issue Rights Certificates
representing the appropriate number of Rights in connection with such issuance
or sale; provided, however, that (i) no such Rights Certificate shall be issued
if, and to the extent that, the Company shall be advised by counsel that such
issuance would create a significant risk of material, adverse tax consequences
to the Company or the Person to whom such Rights Certificate would be issued,
and (ii) no such Rights Certificate shall be issued if, and to the extent that,
appropriate adjustment shall otherwise have been made in lieu of the issuance
thereof.
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Section 23. Redemption and Termination.
(a) Redemption. The Company may, at its option, at any time
prior to the earlier of (i) the Stock Acquisition Date, or (ii) the Final
Expiration Date, redeem (the date of such redemption being referred to herein as
the "Redemption Date") all but not less than all of the then outstanding Rights
at a redemption price of $0.001 per Right, as such amount may be appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being hereinafter
referred to as the "Redemption Price"). The redemption of the Rights by the
Company may be made effective at such time, on such basis and with such
conditions as the Board in its sole discretion, may establish. The Company may,
at its option, pay the Redemption Price in cash, shares of Common Stock (based
on the Current Market Price of the Common Stock at the time of redemption) or
any other form of consideration deemed appropriate by Board.
(b) Effect of Redemption; Procedure. Immediately upon the
action of the Company ordering the redemption of the Rights and without any
further action and without any notice, the right to exercise the Rights will
terminate and the only right thereafter of the holders of Rights shall be to
receive the Redemption Price for each Right so held. Promptly after the
Redemption Date, the Company shall (i) give notice of such redemption to the
Rights Agent, (ii) give public notice of such redemption; provided, however,
that the failure to give, or any defect in, such notice shall not affect the
validity of such redemption, and (iii) mail notice of such redemption to the
holders of the then outstanding Rights at their last addresses as they appear
upon the registry books of the Rights Agent or, prior to the Distribution Date,
on the registry books of the Transfer Agent for the Common Stock. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of redemption will state
the method by which the payment of the Redemption Price will be made. Amounts
payable shall be rounded down to the nearest $0.01.
Section 24. Exchange.
(a) Right to Exchange. The Company may, at its option, at any
time and from time to time after the first occurrence of a Flip-in Event,
exchange all or part of the then outstanding and exercisable Rights (other than
Rights which have become void as provided in Section 7(e) (Exercise of Rights;
Purchase Price; Expiration Date of Rights -- Termination of Acquiring Person's
Rights)) for the Exchange Number of shares of Common Stock, shares or units of
Preferred Stock which the Board has determined to be a Common Stock Equivalent,
units of other property or any combination thereof as determined by the Board.
Notwithstanding the foregoing, the Company shall not be empowered to effect such
exchange at any time after any Person (other than the Company, any Subsidiary of
the Company, any employee benefit plan of the Company or any such Subsidiary or
any entity holding shares of Common Stock for or pursuant to any such plan),
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of 50% or more of the shares of Common Stock then outstanding.
The exchange of the Rights by the Company may be made effective at such time, on
such basis and with such conditions as the Board in its sole discretion may
establish.
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(b) Effect of Exchange; Procedure. Immediately upon the action
of the Company ordering the exchange of any Rights pursuant to paragraph (a) of
this Section 24, evidence of which shall have been filed with the Rights Agent
and without any further action and without any notice, the right to exercise
such Rights will terminate and the only right thereafter of a holder of such
Rights shall be to receive that number of shares of Common Stock, Common Stock
Equivalents or units of other property equal to the number of such Rights held
by such holder multiplied by the Exchange Number. Promptly after the action of
the Company ordering the exchange of the Rights, the Company shall (i) file
evidence of such action with the Rights Agent, (ii) give public notice of such
exchange; provided, however, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange, and (iii) mail notice of
such exchange to the holders of such Rights at their last addresses as they
appear upon the registry books of the Rights Agent. Any notice which is mailed
in the manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of exchange will state the method by which
the exchange will be effected and, in the event of any partial exchange, the
number of Rights which will be exchanged. Any partial exchange shall be effected
pro rata based on the number of Rights (other than Rights which have become void
as provided in Section 7(e) (Exercise of Rights; Purchase Price; Expiration Date
of Rights -- Termination of Acquiring Person's Rights)) held by each holder of
Rights.
(c) Common Stock Equivalents. In any exchange pursuant to this
Section 24, the Company, at its option, may substitute Common Stock Equivalents
for Common Stock exchangeable for Rights, at the initial rate of one share of
Common Stock Equivalent for each share of Common Stock, as appropriately
adjusted to reflect adjustments in the voting rights of the Common Stock
pursuant to the Company's Certificate of Incorporation, so that the share of
Common Stock Equivalent delivered in lieu of each share of Common Stock shall
have the same voting rights as one share of Common Stock.
(d) Insufficient Common Stock. In the event that the number of
shares of Common Stock which are authorized by the Company's Certificate of
Incorporation but not outstanding or reserved for issuance for purposes other
than upon exercise of the Rights is not sufficient to permit any exchange of
Rights in accordance with this Section 24, the Company may, at its option, take
all such action as may be necessary to authorize additional shares of Common
Stock for issuance upon such exchange.
(e) Fractional Shares. Upon the action of the Company ordering
the exchange of any Rights pursuant to paragraph (a) of this Section 24, the
Company shall not be required to issue fractions of shares or to distribute
certificates which evidence fractional shares. In lieu of such fractional
shares, the Company may pay to the registered holders of the Rights Certificates
with regard to which such fractional shares would otherwise be issuable an
amount in cash equal to the same fraction of the current market value of one
share of Common Stock. For purposes of this Section 24, the current market value
of one share of Common Stock shall be the closing price of one share of Common
Stock (as determined pursuant to Section 11(d)(i) (Adjustment of Purchase Price;
Number and Kind of Shares or Number of Rights -- Current Market Price)) for the
Trading Day immediately prior to the date of exchange pursuant to this Section
24, and the value of any Common
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Stock Equivalent shall be deemed to have the same current market value as the
Common Stock on such date.
Section 25. Notice of Certain Events.
(a) Preferred Stock Transactions, etc. In case the Company
shall propose, at any time after the Distribution Date, (i) to pay any dividend
payable in stock of any class to the holders of Preferred Stock or to make any
other distribution to the holders of Preferred Stock (other than a regular
quarterly cash dividend out of earnings or retained earnings of the Company);
(ii) to offer to the holders of Preferred Stock rights or warrants to subscribe
for or to purchase any additional shares of Preferred Stock or shares of stock
of any class or any other securities, rights or options; (iii) to effect any
reclassification of its Preferred Stock (other than a reclassification involving
only the subdivision of outstanding shares of Preferred Stock); (iv) to effect
any consolidation with, merger into or with, or statutory share exchange or
similar transaction with, any other Person (other than a Subsidiary of the
Company in a transaction which complies with Section 11(o) (Adjustment of
Purchase Price; Number and Kind of Shares or Number of Rights -- Restriction
against Diminishing Benefits of the Rights)), or to effect any sale or other
transfer (or to permit one or more of its Subsidiaries to effect any sale or
other transfer), in one transaction or a series of related transactions, of more
than 50% of the assets, cash flow or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons (other than the
Company and/or any of its Subsidiaries in one or more transactions each of which
complies with Section 11(o)); (v) to effect the liquidation, dissolution or
winding up of the Company, or (vi) to declare or pay any dividend on the shares
of Common Stock payable in Common Stock or to effect a subdivision, combination
or consolidation of the shares of Common Stock (by reclassification or otherwise
than by payment of dividends in Common Stock), then, in each such case, the
Company shall give to each holder of a Rights Certificate, to the extent
feasible and in accordance with Section 26 (Notices), a notice of such proposed
action, which shall specify the record date for the purposes of such stock
dividend, distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, statutory share exchange or similar
transaction, sale, transfer, liquidation, dissolution, or winding up is to take
place and the date of participation therein by the holders of the shares of
Preferred Stock, if any such date is to be fixed, and such notice shall be so
given in the case of any action covered by clause (i) or (ii) above at least
twenty (20) calendar days prior to the record date for determining holders of
the shares of Preferred Stock for purposes of such action, and in the case of
any such other action, at least twenty (20) calendar days prior to the date of
the taking of such proposed action or the date of participation therein by the
holders of the shares of Preferred Stock, whichever shall be the earlier.
(b) Other Transactions. In case any of the events set forth in
Section 11(a)(ii) (Adjustment of Purchase Price; Number and Kind of Shares or
Number of Rights -- Certain Adjustments) shall occur, then, in any such case,
(i) the Company shall as soon as practicable thereafter give to each holder of a
Rights Certificate, to the extent feasible and in accordance with Section 26
(Notices), a notice of the occurrence of such event, which shall specify the
event and the consequences of the event to holders of Rights under Section
11(a)(ii), and (ii) all references in the
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preceding paragraph to Preferred Stock shall be deemed thereafter to refer to
Common Stock and/or, if appropriate, other securities.
Section 26. Notices. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Rights Certificate
to or on the Company shall be sufficiently given or made if sent by telecopier
(with receipt confirmed) or by first-class mail, postage prepaid, addressed
(until another address is filed in writing with the Rights Agent) as follows:
Alamosa PCS Holdings, Inc.
4403 Brownfield Highway
Lubbock, Texas 79407
Attention: Chief Executive Officer
Telecopier: (806) 722-1127
Subject to the provisions of Section 21 (Change of Rights Agent), any notice or
demand authorized by this Agreement to be given or made by the Company or by the
holder of any Rights Certificate to or on the Rights Agent shall be sufficiently
given or made if sent by telecopier (with receipt confirmed) or by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Company) as follows:
------------------------------------------
------------------------------------------
------------------------------------------
Attention:
--------------------------------
Telecopier:
-------------------------------
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Common Stock) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.
Section 27. Supplements and Amendments. For so long as the Rights are
redeemable, and subject to the penultimate sentence of this Section 27, the
Company may, and the Rights Agent shall, if the Company so directs, supplement
or amend any provision of this Agreement without the approval of any holders of
certificates representing shares of Common Stock or, on and after the
Distribution Date, any holders of Rights Certificates. At any time when the
Rights are no longer redeemable and subject to the penultimate sentence of this
Section 27, the Company and the Rights Agent shall, if the Company so directs,
supplement or amend this Agreement without the approval of any holders of Rights
Certificates; provided, however, that no such supplement or amendment may (i)
adversely affect the interests of the holders of Rights Certificates, or, prior
to the Distribution
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Date, the holders of the Common Stock (other than an Acquiring Person or an
Affiliate or Associate of any such Person), (ii) cause this Agreement again to
become amendable other than in accordance with this sentence, or (iii) cause the
Rights again to become redeemable. Upon the delivery of a certificate from an
appropriate officer of the Company which states that the proposed supplement or
amendment is in compliance with the terms of this Section 27, the Rights Agent
shall execute such supplement or amendment. Notwithstanding anything contained
in this Agreement to the contrary, no supplement or amendment shall be made
which changes the Redemption Price, the Final Expiration Date, the Purchase
Price, or the number of one one-thousandths of a share of Preferred Stock for
which a right is exercisable; provided, however, that at any time prior to (i) a
Stock Acquisition Date or (ii) the date that a tender or exchange offer by any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or any Subsidiary of the Company, or any Person or
entity organized, appointed or established by the Company for or pursuant to the
terms of any such plan) is first published or sent or given within the meaning
of Rule 14d-2(a) of the General Rules and Regulations under the Exchange Act, if
upon consummation thereof, such Person would be the Beneficial Owner of 15% or
more of the shares of Common Stock then outstanding, the Board may amend this
Agreement to increase the Purchase Price or extend the Final Expiration Date.
Prior to the Distribution Date, the interests of the holders of Rights shall be
deemed coincident with the interests of the holders of Common Stock.
Section 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. Determinations and Actions by the Board of Directors, etc.
For all purposes of this Agreement, any calculation of the number of shares of
Common Stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of Common Stock
of which any Person is the Beneficial Owner, shall be made in accordance with
the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations
under the Exchange Act. The Board shall have the exclusive power and authority
to administer this Agreement and to exercise all rights and powers specifically
granted to the Board or to the Company, or as may be necessary or advisable in
the administration of this Agreement, including, without limitation, the right
and power to (i) interpret the provisions of this Agreement, and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement (including a determination to redeem or not redeem the Rights or to
amend the Agreement). All such actions, calculations, interpretations and
determinations (including, for purposes of clause (y) below, all omissions with
respect to the foregoing) which are done or made by the Board, in good faith,
shall (x) be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Rights and all other parties, and (y) not subject the Board to
any liability to the holders of the Rights.
Section 30. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of the Common Stock) any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole
39
<PAGE> 45
and exclusive benefit of the Company, the Rights Agent and the registered
holders of the Rights Certificates (and, prior to the Distribution Date,
registered holders of the Common Stock).
Section 31. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board determines
in its good faith judgment that severing the invalid language from this
Agreement would adversely affect the purpose or effect of this Agreement, the
right of redemption set forth in Section 23 (Redemption and Termination) shall
be reinstated and shall not expire until the Close of Business on the tenth
Business Day following the date of such determination by the Board.
Section 32. Governing Law. This Agreement, each Right and each Rights
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts made
and to be performed entirely within such State.
Section 33. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
Section 34. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
* * * * *
40
<PAGE> 46
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
ALAMOSA PCS HOLDINGS, INC.
By:
-----------------------------------
David E. Sharbutt, Chairman of the
Board and Chief Executive Officer
By:
------------------------------------
Name:
----------------------------
Title:
----------------------------
41
<PAGE> 47
EXHIBIT 1
CERTIFICATE OF
DESIGNATION, PREFERENCES AND RIGHTS OF
SERIES A PREFERRED STOCK
OF
ALAMOSA PCS HOLDINGS, INC.
Pursuant to Section 151 of the General Corporation Law of the State of
Delaware
We, David E. Sharbutt, Chairman of the Board and Chief Executive
Officer, and Ray M. Clapp, Secretary, of Alamosa PCS Holdings, Inc. (the
"Corporation"), a corporation organized and existing under the General
Corporation Law of the State of Delaware (the "GENERAL CORPORATION LAW"), in
accordance with the provisions of Section 103 of the GENERAL CORPORATION LAW, DO
HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors
(the "Board") by the Amended and Restated Certificate of Incorporation of the
Corporation, the said Board on __________, _____, adopted the following
resolutions creating a series of one hundred thousand shares of Preferred
Stock, par value $0.01 per share, designated as Series A Preferred Stock:
RESOLVED, that, pursuant to the authority vested in the Board in
accordance with the provisions of its Amended and Restated Certificate of
Incorporation, the Board does hereby create, authorize and provide for the
issuance upon the exercise of the Corporation's Preferred Stock Purchase Rights,
of a series of Preferred Stock of the Corporation, and does hereby fix and state
that the designations, amounts, powers, preferences and relative and other
special rights and the qualifications, limitations or restrictions thereof are
as follows:
Series A Preferred Stock
Section 1. Designation and Amount. The shares of such series shall be
designated as Series A Preferred Stock and the number of shares constituting
such series shall be 100,000.
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of
any shares of any series of Preferred Stock ranking prior and superior to the
shares of Series A Preferred Stock with respect to dividends, the holders of
shares of Series A Preferred Stock shall be entitled to receive, when, as and if
declared by the Board of Directors out of funds legally available for that
purpose, quarterly dividends payable in cash on the 1st day of January, April,
July and October, in each year commencing __________, _____ (each such date
being referred to herein as a "Quarterly Dividend
42
<PAGE> 48
Payment Date"), commencing on the first Quarterly Dividend Payment Date after
the first issuance of a share or fraction of a share of Series A Preferred
Stock, in an amount per share (rounded to the nearest cent) equal to the greater
of (a) $0.01 or (b) subject to the provision for adjustment hereinafter set
forth, one thousand (1,000) times the aggregate per share amount of all cash
dividends, and one thousand (1,000) times the aggregate per share amount
(payable in kind) of all non-cash dividends or other distributions other than a
dividend payable in shares of the common stock of the Corporation, par value
$0.01 per share ("the Common Stock"), or a subdivision of the outstanding shares
of Common Stock (by reclassification or otherwise), declared on the Common
Stock, since the immediately preceding Quarterly Dividend Payment Date, or, with
respect to the first Quarterly Dividend Payment Date, since the first issuance
of any share or fraction of a share of Series A Preferred Stock. In the event
the Corporation shall at any time after __________, _____ (the "Rights
Declaration Date") (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the amount to which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event under clause (b) of the preceding sentence shall
be adjusted by multiplying such amount by a fraction the numerator of which is
the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution
on the Series A Preferred Stock as provided in paragraph (A) above immediately
after it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided that, in the event no
dividend or distribution shall have been declared on the Common Stock during the
period between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $0.01 per share on the Series A
Preferred Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of Series A
Preferred Stock, unless the date of issue of such shares is prior to the record
date for the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or is a date after
the record date for the determination of holders of shares of Series A Preferred
Stock entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall begin to
accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but
unpaid dividends shall not bear interest. Dividends paid on the shares of Series
A Preferred Stock in an amount less than the total amount of such dividends at
the time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of shares of
Series A Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be no more than thirty
(30) days prior to the date fixed for the payment thereof.
43
<PAGE> 49
Section 3. Voting Rights. The holders of shares of Series A Preferred
Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Preferred Stock shall entitle the holder thereof
to one thousand (1,000) votes on all matters submitted to a vote of the
stockholders of the Corporation. In the event the Corporation shall at any time
after the Rights Declaration Date (i) declare any dividend on Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock,
or (iii) combine the outstanding Common Stock into a smaller number of shares,
then in each such case the number of votes per share to which holders of shares
of Series A Preferred Stock were entitled immediately prior to such event shall
be adjusted by multiplying such number by a fraction the numerator of which is
the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the holders
of shares of Series A Preferred Stock and the holders of shares of Common Stock
shall vote together as one class on all matters submitted to a vote of
stockholders of the Corporation. Except as otherwise provided herein or by law,
the holders of the shares of Series A Preferred Stock shall not be entitled to
vote as a separate class on any matters submitted to a vote of the stockholders.
(C) (i) If at any time dividends on any Series A Preferred
Stock shall be in arrears in an amount equal to six (6) quarterly dividends
thereon, the holders of the Series A Preferred Stock, voting as a separate
series from all other series of Preferred Stock and classes of capital stock,
shall be entitled to elect two members of the Board of Directors in addition to
any directors elected by any other series, class or classes of securities, and
the authorized number of directors will automatically be increased by two.
Promptly thereafter, the Board of Directors of this Corporation shall, as soon
as may be practicable, call a special meeting of holders of Series A Preferred
Stock for the purpose of electing such members of the Board of Directors. Said
special meeting shall in any event be held within 45 days of the occurrence of
such arrearage.
(ii) During any period when the holders of Series
A Preferred Stock, voting as a separate series, shall be entitled and shall have
exercised their right to elect two directors, then and during such time as such
right continues (a) the then authorized number of directors shall be increased
by two, and the holders of Series A Preferred Stock, voting as a separate
series, shall be entitled to elect the additional directors so provided for, and
(b) each such additional director shall not be a member of any existing class of
the Board of Directors, but shall serve until the next annual meeting of
stockholders for the election of directors, or until his successor shall be
elected and shall qualify, or until his right to hold such office terminates
pursuant to the provisions of this Section 3(C).
(iii) A director elected pursuant to the terms hereof
may b removed with or without cause by the holders of Series A Preferred Stock
entitled to vote in an election of such Director.
44
<PAGE> 50
(iv) If during any interval between annual
meetings of stockholders for the election of directors and while the holders of
Series A Preferred Stock shall be entitled to elect two directors, there is no
such director in office by reason of resignation, death or removal, then,
promptly thereafter, the Board of Directors shall call a special meeting of the
holders of Series A Preferred Stock for the purpose of filling such vacancy and
such vacancy shall be filled at such special meeting. Such special meeting shall
in any event be held within 90 days of the occurrence of such vacancy, unless an
annual meeting of stockholders is scheduled during such 90-day period.
(v) At such time as the arrearage is fully
cured, and all dividends accumulated and unpaid on any shares of Series A
Preferred Stock outstanding are paid, and, in addition thereto, at least one
regular dividend has been paid subsequent to curing such arrearage, the term of
office of any directors elected pursuant to this Section 3(C), or his successor,
shall automatically terminate, and the authorized number of directors shall
automatically decrease by two, the rights of the holders of the shares of the
Series A Preferred Stock to vote as provided in this Section 3(C) shall cease,
subject to renewal from time to time upon the same terms and conditions, and the
holders of shares of the Series A Preferred Stock shall have only the limited
voting rights elsewhere herein set forth.
(D) Except as set forth herein, holders of Series A Preferred
Stock shall have no special voting rights and their consent shall not be
required (except to the extent they are entitled to vote with holders of Common
Stock as set forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in Section 2
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Preferred Stock
outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for consideration
any shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to, the Series A Preferred Stock;
(ii) declare or pay dividends on, or make any
other distributions on, any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock, except dividends paid ratably on the Series A Preferred Stock
and all such junior stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A Preferred Stock,
provided that the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such parity stock in exchange for shares of any stock of
the
45
<PAGE> 51
Corporation ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series A Preferred Stock; or
(iv) purchase or otherwise acquire for
consideration any shares of Series A Preferred Stock, or any shares of stock
ranking on a parity with the Series A Preferred Stock, except in accordance with
a purchase offer made in writing or by publication (as determined by the Board
of Directors) to all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable treatment among the
respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
to be created by resolution or resolutions of the Board of Directors, subject to
the conditions and restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up.
(A) Upon any liquidation (voluntary or otherwise), dissolution
or winding up of the Corporation, no distribution shall be made to the holders
of shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock unless, prior
thereto, the holders of shares of Series A Preferred Stock shall have received
$_____ per share, plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment (the
"Series A Liquidation Preference"), plus the Series A Pro Rata Liquidation
Preference, as defined below. The "Series A Pro Rata Liquidation Preference"
means the ratable and proportionate share of the assets to be distributed to the
holders of Series A Preferred Stock after subtracting (i) the amount of the
Series A Liquidation Preference to be distributed to the holders of shares of
Series A Preferred Stock as provided in the previous sentence and (ii) the
amount of the Common Adjustment to be distributed to the holders of shares of
Common Stock, as provided in the next sentence, in the ratio of the Adjustment
Number (as defined below) to one (1) with respect to all outstanding shares of
Preferred Stock and Common Stock, on a per share basis, respectively. Following
the payment of the full amount of the Series A Liquidation Preference and the
Series A Pro Rata Liquidation Preference, the holders of shares of Common Stock
shall receive an amount per share (the "Common Adjustment") equal to the
quotient obtained by dividing (i) the Series A Liquidation Preference by (ii)
one thousand (1,000) (as appropriately adjusted as set forth in paragraph (C) of
this Section to reflect such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock) (such number in
46
<PAGE> 52
clause (ii) immediately above being referred to as the "Adjustment Number").
Following the payment of the full amount of the Series A Liquidation Preference,
the Series A Pro Rata Liquidation Preference and the Common Adjustment in
respect of all outstanding shares of Series A Preferred Stock and Common Stock,
respectively, holders of shares of Common Stock shall receive their ratable and
proportionate share of the remaining assets to be distributed.
(B) In the event, however, that there are not sufficient
assets available to permit payment in full of the Series A Liquidation
Preference and the liquidation preferences of all other series of preferred
stock, if any, which rank on a parity with the Series A Preferred Stock, then
such remaining assets shall be distributed ratably to the holders of such parity
shares in proportion to their respective liquidation preferences. In the event,
however, that there are not sufficient assets available to permit payment in
full of the Common Adjustment, then such remaining assets shall be distributed
ratably to the holders of Common Stock.
(C) In the event the Corporation shall at any time after the
Rights Declaration Date (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number of shares, then in
each such case the Adjustment Number in effect immediately prior to such event
shall be adjusted by multiplying such Adjustment Number by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock,
securities, cash or any other property, then in any such case the shares of
Series A Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to one thousand (1,000) times the aggregate amount
of stock, securities, cash and/or any other property (payable in kind), as the
case may be, into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (ii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the amount set forth in the preceding sentence with respect to the exchange or
change of shares of Series A Preferred Stock shall be adjusted by multiplying
such amount by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
Section 8. Redemption. The outstanding shares of Series A Preferred
Stock may be redeemed at the option of the Board of Directors as a whole, but
not in part, at any time, or from to time to time, at a cash price per share
equal to one hundred five percent (105%) of (i) the product of the Adjustment
Number times the Average Market Value (as such term is hereinafter defined) of
the Common Stock, plus (ii) all dividends which on the redemption date have
accrued on the shares
47
<PAGE> 53
to be redeemed and have not been paid, or declared and a sum sufficient for the
payment thereof set apart, without interest. The "Average Market Value" is the
average of the closing sale prices of the Common Stock during the thirty (30)
day period immediately preceding the date before the redemption date on the
Composite Tape for New York Stock Exchange Listed Stocks, or, if such stock is
not quoted on the Composite Tape, on the New York Stock Exchange, or, if such
stock is not listed on such Exchange, on the principal United States securities
exchange registered under the Securities Exchange Act of 1934, as amended, on
which such stock is listed, or, if such stock is not listed on any such
exchange, the average of the closing sale prices with respect to a share of
Common Stock during such thirty (30) day period, as quoted on the National
Association of Securities Dealers, Inc. Automated Quotations System or any
system then in use, or if no such quotations are available, the fair market
value of the Common Stock as determined by the Board of Directors in good faith.
Section 9. Ranking. The Series A Preferred Stock shall rank junior to
all other series of the Corporation's Preferred Stock as to the payment of
dividends and the distribution of assets, unless the terms of any such series
shall provide otherwise.
Section 10. Amendment. Except as otherwise provided in the Restated
Articles of Incorporation, as amended, or by law, the Restated Articles of
Incorporation of the Corporation, as amended, shall not be further amended in
any manner which would materially alter or change the powers, preferences or
special rights of the Series A Preferred Stock so as to affect them adversely
without the affirmative vote of the holders of a majority or more of the
outstanding shares of Series A Preferred Stock, voting separately as a class.
Section 11. Fractional Shares. At the Corporation's sole discretion,
Series A Preferred Stock may be issued in fractions of a share which shall
entitle the holder, in proportion to such holder's fractional shares, to
exercise voting rights, receive dividends, participate in distributions and to
have the benefit of all other rights of holders of Series A Preferred Stock.
* * * * *
48
<PAGE> 54
IN WITNESS WHEREOF, we have executed and subscribed this Certificate
and do affirm the foregoing as true as of __________, ____.
--------------------------------------------
David E. Sharbutt, Chairman of the Board and
Chief Executive Officer
Attest:
- ------------------------
Ray M. Clapp, Secretary
49
<PAGE> 1
EXHIBIT 5.1
[HAYNES AND BOONE, LLP LETTERHEAD]
December ___, 1999
Alamosa PCS Holdings, Inc.
4403 Brownfield Highway
Lubbock, Texas 79407
Re: Alamosa PCS Holdings, Inc. Registration Statement on Form S-1
Gentlemen:
We have acted as counsel to Alamosa PCS Holdings, Inc., a Delaware corporation
(the "Company"), in connection with the preparation of the Company's
Registration Statement on Form S-1 (Registration No. 333-89995) and the
amendments thereto (the Registration Statement, as amended, is hereinafter
referred to as the "Registration Statement") filed with the Securities and
Exchange Commission under the Securities Act of 1933, as amended (the
"Securities Act"). The Registration Statement relates to the offer and sale by
the Company of up to 12,321,100 shares of its Common Stock, par value $0.01 per
share ("Common Stock"). The opinions expressed herein relate solely to, are
based solely upon and are limited exclusively to, the internal substantive laws
of the State of Texas, the General Corporation Laws of the State of Delaware and
applicable federal laws of the United States of America.
In connection therewith, we have examined and relied upon the original, or
copies certified to our satisfaction, of (i) the Amended and Restated
Certificate of Incorporation of the Company (the "Certificate of
Incorporation"), and the Amended and Restated Bylaws of the Company (the
"Bylaws"); (ii) the minutes and records of the corporate proceedings of the
Company with respect to the issuance by the Company of the shares of Common
Stock; (iii) the Registration Statement and all exhibits thereto; (iv) the form
of Underwriting Agreement (herein so called), to be entered into among the
Company and Salomon Smith Barney Inc., Credit Suisse First Boston Corporation
and Deutsche Bank Securities Inc., as Underwriters named in the Underwriting
Agreement; (v) such other documents and instruments as we have deemed necessary
for the expression of the opinions contained herein and (vi) the specimen Common
Stock certificate filed as Exhibit 4.1 to the Registration Statement.
In making the foregoing examinations, we have assumed the genuineness of all
signatures and the authenticity of all documents submitted to us as originals,
and the conformity to original documents of all documents submitted to us as
certified or photostatic copies thereof. As to various questions of fact
material to this opinion, where such facts have not been independently
established, and as to the content and form of certain minutes, records,
resolutions and other documents or writings of the Company, we have relied, to
the extent we have deemed reasonably appropriate, upon representations or
certificates of officers of
<PAGE> 2
Alamosa PCS Holdings, Inc.
December ___, 1999
Page 2
the Company or governmental officials. We have assumed that the Underwriting
Agreement will be executed in substantially the same form submitted to us.
Finally, we have assumed that all formalities required by the Company's
Certificate of Incorporation, Bylaws and the Delaware General Corporation Law
will be complied with when the shares of Common Stock are issued.
Based upon the foregoing, and having due regard for such legal considerations as
we deem relevant, we are of the opinion that the shares of Common Stock, upon
receipt by the Company of the full consideration for the shares of Common Stock
in accordance with the terms of the Underwriting Agreement and upon passage of
the pricing resolutions of the Pricing Committee of the Company's Board of
Directors, will, when sold, be validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion with the Securities and Exchange
Commission as Exhibit 5.1 to the Registration Statement and any abbreviated
registration statements relating thereto that may be filed to register
additional securities identical to those covered by the Registration Statement
(including a registration statement filed pursuant to Rule 462(b) under the
Securities Act), and to the reference to our firm under the caption "Legal
Matters" in the prospectus constituting a part of such Registration Statement.
In giving such consent, we do not hereby admit that we are in the category of
persons whose consent is required under Section 7 of the Securities Act.
Very truly yours,
Haynes and Boone, LLP
<PAGE> 1
EXHIBIT 10.1
THIS AGREEMENT HAS CONFIDENTIAL PORTIONS OMITTED, WHICH PORTIONS HAVE BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS ARE
INDICATED IN THIS AGREEMENT WITH "[TEXT OMITTED - CONFIDENTIAL TREATMENT
REQUESTED]"
CDMA 1900
SPRINTCOM
ADDITIONAL AFFILIATE AGREEMENT
BETWEEN
ALAMOSA PCS LLC
AND
NORTHERN TELECOM INC.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE PAGE
------- ----
<S> <C>
1. DEFINITIONS 1
2. SCOPE 7
3. PURCHASE ORDERS 8
4. PRICE 9
5. SELLER FINANCING 10
6. PAYMENT 11
7. DELIVERY, RISK OF LOSS, TITLE 13
8. WARRANTIES, REMEDIES AND LIMITATION OF WARRANTIES AND
REMEDIES AND DISCLAIMERS OF WARRANTIES AND LIABILITY 14
9. FORCE MAJEURE 18
10. PATENT OR COPYRIGHT INFRINGEMENTS 18
11. SOFTWARE LICENSE 19
12. SOFTWARE CHANGES 19
13. REMEDIES 20
14. ACCEPTANCE TESTING 21
15. COVERAGE, INTERFERENCE AND THIRD-PARTY FACILITIES 23
16. REGULATORY COMPLIANCE 23
17. CHANGES 24
18. CONDITION OF INSTALLATION SITE(S) 26
19. RELEASE OF INFORMATION 26
20. CONFIDENTIALITY 27
21. INTERCONNECTION 27
22. ANNEXES 28
23. GENERAL 29
</TABLE>
i
<PAGE> 3
TABLE OF CONTENTS (CONT)
<TABLE>
<S> <C>
ANNEXES
ANNEX 1 - EQUIPMENT/PRICING
ANNEX 2 - SERVICES
ANNEX 3 - TURNOVER AND ACCEPTANCE NOTICES
ANNEX 4 - SELLER WARRANTY SERVICES
ANNEX 5 - SOFTWARE LICENSE
ANNEX 6 - DOCUMENTATION
ANNEX 7 - ADJUNCT PLATFORMS
</TABLE>
ii
<PAGE> 4
CDMA 1900
SPRINTCOM
ADDITIONAL AFFILIATE AGREEMENT
AGREEMENT dated December 21, 1998, by and between Alamosa PCS LLC (hereinafter
referred to as "Buyer") a Texas corporation with offices located at 4727 South
Loop 289, Lubbock, Texas 79424 and Northern Telecom Inc., a Delaware corporation
with offices located at 2435 N. Central Expressway, Richardson, Texas 75080
(hereinafter referred to as "Nortel" or "Seller").
WITNESSETH:
WHEREAS, SprintCom has designated Buyer an Additional Affiliate and Seller has
approved such designation in accordance with the Nortel/SprintCom contract dated
October 1, 1997 ("SprintCom Contract"); and
WHEREAS, Buyer desires to purchase certain equipment and/or services from
Seller;
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, the parties hereby agree as follows:
1. DEFINITIONS
As used herein, the following capitalized terms have the following
meanings:
1.1 "ADDITIONAL AFFILIATE" shall mean any entity designated by SprintCom
and approved by Seller which has been licensed by the FCC or
otherwise has the right to provide PCS in the United States, but
which is not an Initial Affiliate provided that, (i) SprintCom or any
Initial Affiliate has at least [TEXT OMITTED-CONFIDENTIAL TREATMENT
REQUESTED] equity ownership in such entity, (ii) such entity is
controlled by or under the common control with SprintCom or any
Initial Affiliate, or (iii) there exists between SprintCom and the
entity an Additional Affiliate Arrangement.
1.2 "ADDITIONAL AFFILIATE ARRANGEMENT" shall mean a formal arrangement
related to or in connection with SprintCom's buildout of the
Nationwide Network or any part thereof between SprintCom and a party
to be designated an Additional Affiliate
1
<PAGE> 5
under the terms of SprintCom Contract, which arrangement will
include, an agreement on marketing and any one or more of the
following: backhaul, common billing, resale agreements and/or revenue
sharing; provided that roaming agreements and/or arrangements alone
will not by themselves constitute Additional Affiliate Arrangements.
1.3 "ADD-ON EQUIPMENT" shall mean the Equipment other than that
comprising a portion of the Initial System, which Equipment requires
Seller's engineering and Installation/Commissioning Services.
1.4 "ADJUNCT PLATFORM" shall mean third party hardware and/or software,
onto which Seller has added software in support of the applications
listed in Annex 7 hereof ("Value-added Software") and in some cases,
integrated such third-party hardware and Value-added Software into a
system providing peripheral functionality for the DMS-MTX, all more
fully described in Annex 7, "Adjunct Platforms."
1.5 "AFFILIATES" shall mean the collective reference to the Initial
Affiliates and the Additional Affiliates.
1.6 "APPLICABLE PERMITS" shall mean any waiver, exemption, zoning,
building, variance, franchise, permit, authorization, approval,
license or similar order of or from any North American or foreign,
federal, state, provincial, county, municipal, regional,
environmental or other governmental body, instrumentality, agency,
authority, court or other body having jurisdiction over all or any
part of any PCS System, the Nationwide Network or the Work to be
performed pursuant to the terms of this Agreement.
1.7 "APPROVED CIQ" shall mean a Customer Information Questionnaire for
ordered DMS-MTX(s) or BSCs, which such Customer Information
Questionnaire has been executed by authorized representatives of both
parties.
1.8 "BASE STATION CONTROLLER (`BSC')" shall mean Seller engineered
Equipment providing radio channel management between the Switch and
the BTS. The BSC includes the Base Station Manager ("BSM").
1.9 "BASE TRANSCEIVER STATION (`BTS')" shall mean Seller engineered
Equipment, controlled by the BSC, providing the radio link with
mobile subscribers.
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1.10 "CODE DIVISION MULTIPLE ACCESS (`CDMA')" shall mean CDMA-based
telecommunication services provided by the System, operational in the
1900 MHz band.
1.11 "COMMISSIONING" shall mean the on-site validation of Equipment
performance by Seller in accordance with the standard test procedures
of Seller and/or the applicable OEM Equipment vendor, as such
procedures are more fully described in Section 14.1 and Schedule B of
Annex 2 hereof; provided, however, that validation of certain OEM
Equipment (i.e., Commissioning Criteria not included under Schedule B
of Annex 2) may be at additional charge to Buyer.
1.12 "DATABASE ENGINEERING" shall mean the Services provided by the Seller
with respect to the creation and integration of the configuration
files and datafill required to operate Equipment, pursuant to a
Purchase Order accepted by Seller.
1.13 "DEFECTS AND DEFICIENCIES" "DEFECTS OR DEFICIENCIES," OR "DEFECTS"
shall mean any one or a combination of the following items: (a) when
used with respect to the performance of Services (including
performance by Seller's subcontractors), such Services that are not
provided in a workmanlike manner and in accordance with the standards
and/or specifications set forth herein; (b) when used with respect to
structures, materials, and Equipment (whether provided by Seller or
Seller's subcontractors), such items that are not new and of good
quality and free from improper workmanship and defects in accordance
with the standards and/or specifications set forth herein or
established hereunder and standards of good procurement,
manufacturing and construction; (c) in general, (i) Work (including
Work by Seller's subcontractors) that does not conform to the
specifications and/or requirements of this Agreement, or (ii) any
engineering, start-up activities, materials, Equipment, tools,
supplies, or training, as applicable, that (1) does not conform to
the standards and/or specifications set forth herein or established
hereunder, (2) has inferior workmanship, or (3) would materially and
adversely affect the ability of Equipment and/or Services to meet the
applicable performance criteria specified herein on a consistent and
reliable basis.
1.14 "DESIGNATED SWITCH SITE" shall mean with respect to the DMS-MTX, the
location designated by the Buyer to the Seller in the applicable
DMS-MTX Purchase Order to which the Seller is required to deliver,
Install and Commission such DMS-MTX.
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1.15 "DOCUMENTATION" shall mean System documentation, whether in written
or electronic form, delivered to Buyer in the medium set forth in
Buyer's Purchase Order, such media being more fully described in
Annex 6, "Documentation." All Documentation delivered to Buyer shall
be subject to any copyright and confidentiality restrictions.
1.16 "EQUIPMENT" shall mean either singularly or collectively the
Nortel-manufactured Hardware and Software products provided
hereunder. The terms of this Agreement applicable to "Equipment"
shall also be deemed to apply to OEM Equipment, unless otherwise
expressly excluded in this Agreement and subject to the limitations
set forth in Subsection 2.1.5.
1.17 "HARDWARE" shall mean the Nortel manufactured CDMA 1900 MHz hardware
components as may comprise a System, Add-on Equipment, or
Merchandise.
1.18 "INITIAL AFFILIATES" shall mean the collective reference to those
companies listed in Schedule 3 of the SprintCom Contract.
1.19 "INITIAL SYSTEM" shall mean the System and Services initially being
provided hereunder as set forth in Article 1 of Annex 1.
1.20 "INSTALLATION" shall mean the installation of Equipment by Seller as
set forth in Schedule B of Annex 2.
1.21 "INSTALLATION SITE" shall mean the location (continental United
States) specified in Buyer's Purchase Order for Installation of
Equipment.
1.22 "MERCHANDISE" shall mean miscellaneous components of Hardware, with
respect to which no engineering, Installation, or Commissioning are
to be provided by Seller.
1.23 "MTA" shall mean major trading area as defined by the FCC.
1.24 "NATIONWIDE NETWORK" shall mean all of the PCS Systems built or to be
owned and/or operated by SprintCom or its Affiliates in Canada,
Mexico and the United States.
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1.25 "NETWORK" shall mean Buyer's System dimensioned by Seller to
interconnect to the PSTN and intra-System nodes (i.e., MTX, BSC,
BTSs) and to such other nodes which may be further defined.
1.26 "NETWORK ENGINEERING" shall mean those network engineering Services
provided by Seller as described in Schedule A of Annex 2, pursuant to
a Purchase Order accepted by Seller.
1.27 "OEM EQUIPMENT" shall mean miscellaneous items of non-Nortel
equipment made available for sale to Buyer by Seller under this
Agreement, not integrated into the Hardware during the manufacturing
process.
1.28 "PCS SYSTEM" shall mean all Equipment, tools and Software, all system
locations and any property located thereat necessary or required to
provide personal communications services in a given specified
geographic area, as defined in the SprintCom Contract.
1.29 "PROJECT SCHEDULE" shall mean those delivery, installation and/or
in-service dates agreed to by Buyer and Seller.
1.30 "PURCHASE CREDITS" shall mean credits to be applied towards the
purchase of CDMA 1900 Equipment and related Installation and
Commissioning Services under this Agreement as described in Article
5.
1.31 "PURCHASE ORDER" shall mean any purchase order issued by Buyer
hereunder to Seller pursuant to Article 3 of this Agreement.
1.32 "RF ENGINEERING SERVICES" shall mean those RF Engineering Services
provided by Seller pursuant to Schedule A of Annex 2, pursuant to a
Purchase Order accepted by Seller.
1.33 "SERVICES" shall mean those services performed by Seller under this
Agreement.
1.34 "SHIP DATE" shall mean the scheduled date agreed upon by Buyer and
Seller as the date on which the appropriate Equipment shall be
shipped.
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1.35 "SOFTWARE" shall mean (a) the proprietary and/or third party software
computer programs (consisting of firmware and logic instructions in
machine-readable code residing in, or intended to be loaded in
Hardware memories which provide basic logic, operating instructions
and user-related application instructions, but excluding customer
data) as well as associated documentation used to describe, maintain
and use the programs which are integral to any Hardware furnished to
Buyer, and (b) any Software Enhancements, Software Release and
Software Upgrades furnished to the Buyer hereunder. Any reference
herein to Equipment or Software being "sold," "purchased" or the like
is understood to be a reference in fact to the program being
licensed.
1.36 "SOFTWARE COMBINED RELEASE" has the meaning ascribed thereto in
Section 12.3.
1.37 "SOFTWARE ENHANCEMENTS" shall mean modifications or improvements made
to the Software which improve performance or capacity of the Software
or which provide additional functions to the Software.
1.38 "SOFTWARE RELEASE" shall mean (a) the base operating Software for
each of the Switch, BSC and/or BTS Equipment, together with certain
standard incremental subscriber and/or carrier software features
included at Seller's sole discretion, such base operating Software
and standard subscriber and/or carrier features together forming a
base load ("Base Load") as well as, (b) in addition to the Base Load,
certain features that may be activated in increments at Buyer's
option ("Optional Features") upon payment of the applicable fees,
including by way of example and not by limitation, Software features
associated with an Adjunct Platform, which may include Value-added
Software, as described in Annex 7 hereof.
1.39 "SOFTWARE UPGRADES" shall mean periodic updates to the Software
issued by the Seller to the Buyer under Warranty and Software
maintenance obligations to correct Defects or Deficiencies in the
Software (which may be referred to by the Seller as "patches").
1.40 "SPECIFICATIONS" shall mean the specifications and performance
standards of the Equipment as set forth in the applicable sections of
Northern Telecom Practices ("NTPs"), incorporated herein by
reference, including statements in the NTPs as to conformance with
specific Standards. Seller shall have the right, at its sole
discretion to modify, change or amend the Specifications at any time
so long as
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such modification does not result in a material, service-effecting
degradation in the performance of Buyer's Equipment.
1.41 "SPRINTCOM" shall mean SprintCom Inc., a Kansas corporation.
1.42 "STANDARDS" shall mean interim and/or final version(s) of technical
specifications derived by an ANSI accredited standards organization,
governing the operational and/or interface standards for CDMA 1900
equipment.
1.43 "STANDING TIME" shall mean any interruption or delay in the Project
Schedule caused by Buyer.
1.44 "SWITCH" shall mean a Seller engineered DMS-MTX providing CDMA 1900
switching functions.
1.45 "SYSTEM" shall mean the combination of a Switch, and each of one or
more BSC(s) and BTS(s) furnished hereunder.
1.46 "TERM" shall mean the period commencing on the date first set forth
above (hereinafter "Effective Date") and ending three (3) years
therefrom, unless terminated earlier in accordance with the terms and
conditions hereof, or unless extended by the mutual agreement of the
parties hereto.
1.47 "WORK" shall mean performance of the Services as described in
Annex 2.
2. SCOPE
2.1 During the Term, in accordance with a Purchase Order for Equipment
and/or Services which has been accepted by Seller, Seller shall:
2.1.1 provide Network Engineering and RF Engineering Services in accordance
with Schedule A of Annex 2;
2.1.2 engineer, deliver, Install (or have installed) and Commission
Equipment for use in the continental United States;
2.1.3 upon payment of the applicable fees, and in accordance with Annex 5
hereof, grant to Buyer a nonexclusive license to use all Software
associated with, and integral to, Hardware purchased by Buyer
hereunder;
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2.1.4 carry out the Installation and Commissioning of Equipment at the
applicable Installation Site substantially in accordance with the
applicable Project Schedule set forth in Schedule B of Annex 2 and in
accordance with the relevant Purchase Orders;
2.1.5 furnish OEM Equipment to Buyer, including Adjunct Platforms, subject
to such OEM vendor's then-current applicable terms, conditions and
specifications, and in the case of Adjunct Platforms, in accordance
with the terms set out in Annex 7, "Adjunct Platforms";
2.1.6 for System purchases, provide Buyer with on-site technical support in
accordance with Schedule C of Annex 2.
2.2 During the Term, in accordance with a Purchase Order for Equipment
and/or Services which has been accepted by Seller, Buyer shall:
2.2.1 Purchase Equipment and Services including all Services required for
the Installation and Commissioning of all Switch and Switch-related
Equipment, and license use of the Software as listed in and described
in Annex 1 in accordance with the terms of this Agreement.
2.2.2 Perform Buyer's duties as set forth in this Agreement, including by
way of example, but not by way of limitation, those duties set forth
in Annex 2 in accordance with the Project Schedule;
2.2.3 Insure that only qualified technicians perform any maintenance and/or
repair to the Equipment during the Hardware Warranty Period, which
maintenance and/or repair shall be confined to routine tasks
performed in accordance with Seller provided documentation;
2.2.4 Not unreasonably withhold Acceptance, as defined in Article 14.
3. PURCHASE ORDERS
3.1 Notwithstanding that a Purchase Order may not refer to this
Agreement, any Purchase Order for Equipment and/or Services issued
during the Term of this Agreement shall be deemed to have been issued
pursuant to this Agreement and
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shall be governed by the terms and conditions of this Agreement,
unless the parties expressly agree to the contrary in writing (duly
signed by authorized representatives of both parties). Buyer hereby
expressly agrees that except for non-conflicting administrative terms
as provided below, any additional or preprinted terms or conditions
on the applicable Purchase Order, shall be null, void and of no
effect. Each such Purchase Order shall specify:
3.1.1 The description of the ordered Equipment and/or Services, including
any identification referenced in the price list herein attached as
Annex 1;
3.1.2 Requested place and date of delivery as previously agreed by Seller;
3.1.3 Applicable Price for the ordered Equipment and/or Services as set
forth in Annex 1 or as may be separately quoted by Seller from time
to time;
3.1.4 Prices for Network Engineering Services, RF Engineering Services, and
Equipment Installation and Commissioning to be quoted by Seller,
together with a mutually agreed Installation and Commissioning
schedule;
3.1.5 Installation Site(s) where applicable;
3.1.6 Other appropriate information as may be required by Seller necessary
to fill the Purchase Order such as Buyer's floor plan and frequency
plan; and
3.1.7 Location to which the applicable invoice shall be rendered for
payment.
3.2 Any Purchase Order issued by Buyer and not rejected in writing within
ten (10) business days after receipt by Seller shall be deemed
accepted.
4. PRICE
4.1 As set forth in Annex 1, the price ("Price") for any Equipment and
Services shall consist of (i) the Price of the Initial System
Purchase Order or any subsequent Purchase Orders; (ii) unit list
Prices for Hardware, Merchandise, and Services; (iii) license fees to
use the Software associated with such Hardware; and (iv) for OEM
Equipment and Services, the Prices as may be quoted by Seller from
time to time.
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4.2 Unless otherwise specified, the Prices set forth in Annex 1 are
exclusive of Seller's charges for any Services associated therewith.
4.3 The Prices are exclusive of any taxes, which shall be the
responsibility of Buyer pursuant to Section 6.4 hereof.
5. SELLER FINANCING
5.1 Buyer understands and agrees that the execution of this Agreement
constitutes a firm non-cancelable Purchase Order for the Initial
System set forth in Article 1 of Annex 1; provided, such
non-cancelable Purchase Order shall be subject to the execution of
the financing agreement between Buyer and Seller as hereinafter
described.
5.2 Seller shall have no obligation to ship the Initial System or any
portion thereof, until such time as either (i) Seller has formally
committed a financing facility to the Buyer which is satisfactory to
Seller, such facility having been approved by Seller's senior
management, and all preconditions to such financing have been
satisfied; or (ii) Seller determines that Buyer has completed a
financing facility with a third party reasonably satisfactory to
Seller, such facility is available to be drawn upon, and all
preconditions to such financing have been met. Buyer shall provide
all reasonable assistance requested by Seller necessary for Seller to
make such determination including the necessary documentation to
evaluate the financial soundness of any third party lender providing
financing for Buyer's purchases hereunder. Seller shall have no
obligation to ship any additional Equipment or perform any additional
Services until such time as Seller has accepted Purchase Orders with
respect thereto and subject to any credit arrangements agreed upon in
connection with such Purchase Orders.
5.3 Buyer agrees to purchase and take delivery of Equipment and Services
in a net amount (net Price, after applicable Equipment discounts, but
exclusive of sales taxes) totaling not less than [TEXT
OMITTED-CONFIDENTIAL TREATMENT REQUESTED] during the Term ("Volume
Commitment"); provided, such Volume Commitment is subject to the
execution of the financing agreement between Buyer and Seller as
described above. Only Purchase Orders issued under this Agreement
shall accrue toward the Volume Commitment.
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5.4 The Price for any Equipment and Services purchased under this
Agreement and financed by Seller shall include an additional [TEXT
OMITTED-CONFIDENTIAL TREATMENT] ("Financing Premium") over Additional
Affiliate pricing as set forth in Annex 1.
5.5 On March 1, 2000, Seller will make available as Purchase Credits an
aggregate amount of [TEXT OMITTED-CONFIDENTIAL TREATMENT]. Such
Purchase Credits may be applied to any Purchase Order issued
hereunder for Seller's Equipment and/or Services after March 1, 2000
and continuing throughout the remainder of the Term or until the
total amount of Purchase Credits has been expended, whichever occurs
first; provided, however, such Purchase Credits shall not reduce the
Price of any Purchase Order by more than [TEXT OMITTED-CONFIDENTIAL
TREATMENT].
5.6 Notwithstanding the foregoing, Buyer expressly acknowledges that
Seller makes no commitment and has no obligation whatsoever to
provide financing to Buyer under this Agreement and any such
commitment on the part of Seller shall be made only in separate
financial agreement.
6. PAYMENT
6.1 With respect to Purchase Orders for Equipment that include
Installation and Commissioning Services therefor, Buyer shall pay
Seller the Price in accordance with the following schedule:
6.1.1 Equipment and Services
6.1.1.1 [TEXT OMITTED-CONFIDENTIAL TREATMENT] of the Equipment Price
contained in Purchase Orders shall be invoiced by Seller
incrementally upon shipment of the Equipment.
6.1.1.2 [TEXT OMITTED-CONFIDENTIAL TREATMENT] of the Services prices
contained in Purchase Orders shall be invoiced by Seller, (i) upon
completion of such Service or, (ii) for that amount which is equal to
the percentage of Services completed at the end of each month in
which such Service(s) were performed, whichever occurs first.
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6.1.2 Software Fees
6.1.2.1 [TEXT OMITTED-CONFIDENTIAL TREATMENT REQUESTED] of the first Software
Fee (as defined in Section 2.5 of Annex 1) applicable to each DMS-MTX
will not be invoiced until the earlier of (i) the commercial,
revenue-producing service of each DMS-MTX; or (ii) ninety (90) days
after Buyer's Acceptance of Sellers Installation of such DMS-MTX
pursuant to Schedule B of Annex 2; thereafter, annual Software Fees
for any such DMS-MTX will be invoiced annually on the anniversary
date of such first invoice.
6.2 Any additional monies that become due to Seller (including, without
limitation, Merchandise orders, freight, such items as are described
in Section 6.4, Software Release license fees described in Article 2
of Annex 1, Equipment purchases wherein Installation is not provided
by Seller, or OEM Equipment not part of the original System order)
shall be invoiced [TEXT OMITTED-CONFIDENTIAL TREATMENT REQUESTED]
upon shipment or, in the case of Software license fees other than the
Software Fee, upon implementation of such Software. Any cancellation
charges due Seller pursuant to Section 17.5 shall be invoiced upon
receipt of Buyer's written cancellation notice. Incidental and/or
additional Services not included under Section 6.1 shall be invoiced
monthly as performed or upon completion, whichever occurs first.
6.3 Buyer shall pay all amounts invoiced by Seller pursuant to this
Article 6 within thirty (30) days from the date of Seller's invoice
therefor. All past due amounts (collectively, "Past Due Amounts")
shall bear interest at the rate of [TEXT OMITTED-CONFIDENTIAL
TREATMENT REQUESTED] per month (or such lesser rate as may be the
maximum permissible rate under applicable law), beginning with the
date on which the applicable Past Due Amount was due and payable.
6.4 Buyer shall promptly reimburse and/or pay Seller, upon demand, or
shall pay directly, if so requested by Seller, all taxes and charges,
including without limitation, penalties and interest, imposed by any
federal, state, or local governmental or taxing authority, relating
to the purchase, license, ownership, possession, use, operation or
relocation of Equipment or Services provided by Seller under this
Agreement, excluding, however, all taxes computed upon the net income
of Seller; provided, however, Seller shall be responsible for any
additional
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penalties or interest imposed by any governmental or taxing authority
due solely to Seller's failure to timely notify Buyer of such taxes
and charges or to take such other timely action as may be required
with respect to any such taxes that Seller is required by law to
collect. To the extent Seller is required by law to collect such
taxes (state or local), [TEXT OMITTED-CONFIDENTIAL TREATMENT
REQUESTED] thereof shall be added to invoices as separately stated
charges and paid in full by Buyer, unless the Buyer is exempt from
such taxes and furnishes Seller with a certificate of exemption in a
form reasonably acceptable to Seller prior to issuance of such
invoice. Each party shall hold the other party harmless from any and
all claims levied by a proper taxing authority for such taxes,
including any interest, penalties or late charges due to the other
party's failure to perform hereunder. Each party's obligations
pursuant to this Section 6.4 shall survive the expiration of
termination of this Agreement.
6.5 Until the total Price for each Purchase Order is paid to Seller,
Seller shall retain and Buyer hereby grants to Seller a purchase
money security interest in the Equipment, and Buyer shall cooperate
with Seller in perfecting such interest.
6.6 Prior to payment in full of the Price and all additional monies due
to Seller, without written permission of Seller, Buyer shall not sell
or lease Equipment purchased by it, or assign any license to use the
Software, or allow any liens or encumbrances to attach to any such
Equipment, or remove such Equipment or Software from the Installation
Site.
6.7 Seller reserves the right to require reasonable assurances of payment
by Buyer as a condition to accepting certain Purchase Orders. Seller
may, from time to time, evaluate Buyer's credit standing, and on that
basis, establish a credit limit to accommodate Buyer's issuance of
Purchase Orders as herein provided.
7. DELIVERY, RISK OF LOSS, TITLE
7.1 Equipment shall be priced and shipped F.O.B. place of shipment.
Seller will pre-pay freight charges from the place of shipment and
invoice such charges back to Buyer. Switch and/or BSC Equipment shall
be shipped to the Installation Site(s). BTS Equipment shall be
shipped to Buyer's designated delivery location (i.e., a staging
center or warehouse). Buyer shall be responsible for the coordination
of all BTS delivery arrangements required to comply with Project
Schedule dates and for
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freight and handling charges from Buyer's delivery location to the
Installation Sites.
7.2 Title to Equipment furnished by Seller to Buyer in accordance with
this Agreement shall pass to Buyer at the point and on the date of
shipment. Risk of loss or damage to such Equipment shall pass to
Buyer upon delivery of such Equipment at the initial destination
specified in Buyer's Purchase Order. Seller warrants to Buyer that
such title shall be good and clear title, free and clear of all liens
and encumbrances. The foregoing notwithstanding, title to Software
shall not pass to Buyer at any time.
7.3 Not later than thirty (30) days prior to the earliest Ship Date
relating to any of the items covered by the applicable Purchase
Order, Buyer may notify Seller that Buyer (i) does not wish to
receive shipment of any Equipment on the Ship Date, or (ii) that
Buyer's facilities are not prepared pursuant to Annex 2 hereof in
sufficient time for Seller to make delivery pursuant to the Ship
Date. In such case Seller shall have the right to place such
Equipment in storage and Buyer shall be liable for all additional
transportation, demurrage, loading, storage, and associated costs
thereby incurred by Seller. The shipment of Equipment to a storage
location as provided in this Section 7.3 shall be deemed to
constitute shipment and/or delivery of the Equipment for purposes of
invoicing as set forth in Section 6.1.1.1, passage of title and risk
of loss, and commencement of the Hardware Warranty Period.
8. WARRANTIES, REMEDIES AND LIMITATION OF WARRANTIES AND REMEDIES AND
DISCLAIMERS OF WARRANTIES AND LIABILITY
8.1 Hardware Warranty
8.1.1 Seller warrants that for a period of [TEXT OMITTED-CONFIDENTIAL
TREATMENT REQUESTED] from the date of Buyer's Acceptance of the
Hardware furnished under this Agreement ("Hardware Warranty Period"),
shall be free from defects in material and workmanship, and shall
conform to the applicable portions of the Specifications. Any and all
claims for breach of this warranty are conclusively deemed waived
unless made during the Hardware Warranty Period. Performance of
Seller's obligations hereunder shall not extend the Hardware Warranty
Period, except that any Hardware repaired, replaced or corrected
during this period shall continue to be warranted for the balance of
the Hardware Warranty Period.
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8.2 Service Warranty
8.2.1 Seller warrants that for a period of [TEXT OMITTED-CONFIDENTIAL
TREATMENT REQUESTED] from the date of completion of such Service
("Service Warranty Period"), including Installation and
Commissioning, as the case may be, provided by the Seller to the
Buyer pursuant to the terms of this Agreement, such Services will be,
(i) in accordance with the applicable Specifications, (ii) in
compliance with all material applicable laws and material Applicable
Permits in effect at the time of the completion of such Services, and
(iii) free from Defects or Deficiencies in design, materials,
workmanship or otherwise.
8.3 Software Warranty
Seller warrants that for a period of [TEXT OMITTED-CONFIDENTIAL
TREATMENT REQUESTED] commencing on the date of Seller's Acceptance of
the Software ("Software Warranty Period"), provided the Software is
not altered by Buyer, and provided the Software is used in
conjunction with the Hardware purchased under this Agreement and such
Hardware has been maintained in accordance with Seller's recommended
maintenance procedures, the Software shall function during the
Software Warranty Period without defects which materially affect
Buyer's use of the Software in accordance with Seller's
Specifications for the Software. In the event the Software fails to
so perform and Buyer's use of the System is materially affected by
such failure, Buyer's exclusive remedy under this warranty is to
require Seller to correct such failure and such remedy is conditioned
upon Seller's receiving written notice (or oral notice promptly
confirmed in writing) within this period of such failure. The
correction of any Software failure shall not extend the Software
Warranty Period.
8.4 Seller's sole obligation and Buyer's exclusive remedy under this
warranty are limited to the replacement or repair, at Seller's
option, of the defective Hardware component, or the correction of
Software failures or faulty Services. Such replacement Hardware may
be new or reconditioned to perform as new, at Seller's option. Buyer
shall be responsible for deinstallation of any such defective
Hardware and reinstallation of any replacement Hardware, as well as
risk of loss and transportation costs for defective Hardware shipped
to Seller. Seller shall bear the risk of loss and transportation
costs for replacement Hardware shipped to Buyer.
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Title to defective or replacement Hardware shall pass to Seller or
Buyer, as appropriate, upon receipt thereof.
8.5 Response Services/Time
8.5.1 During the Warranty Period, Seller's technical assistance service
("TAS") department shall provide reasonable assistance in the
investigation and resolution of service-affecting warranty Defects
and/or Deficiencies. If such assistance is requested by Buyer, Buyer
agrees to follow Seller's standard policies and procedures related to
such TAS services as set forth in Annex 4, "Seller Warranty
Services." The Hardware Warranty Period shall include TAS only to the
extent that any TAS services provided under the Switch warranty also
apply to Hardware operating in conjunction with the applicable
Switch. For routine warranty service situations, Seller shall ship
replacement or repaired Hardware (or components thereof) within [TEXT
OMITTED-CONFIDENTIAL TREATMENT REQUESTED] of receipt of the defective
Hardware (or components thereof) from Buyer.
8.5.2 For emergency warranty service situations, Seller shall, during the
Hardware Warranty Period, use all reasonable efforts to ship
replacement Hardware (or components thereof) within twenty-four (24)
hours of notification of the warranty Defect and/or Deficiency by
Buyer. Buyer shall pay to Seller the surcharge set forth in Annex 4,
for such expedited shipment of replacement Hardware. Buyer shall ship
the defective Hardware to Seller within [TEXT OMITTED-CONFIDENTIAL
TREATMENT REQUESTED] of receipt of the replacement Hardware. In the
event Seller fails to receive such defective Hardware within such
[TEXT OMITTED-CONFIDENTIAL TREATMENT REQUESTED] period, Seller shall
invoice Buyer for the replacement Hardware at the then-current price
in effect therefor. For the purpose of this Agreement, an emergency
shall be deemed to exist upon the occurrence of a Priority E1 or E2
problem, as defined in Annex 4.
8.6 OEM Equipment
8.6.1 Miscellaneous OEM Equipment furnished in conjunction with a Switch,
(i.e., terminals and printers), shall be warranted in accordance with
the Hardware warranties set forth in Section 8.1 and handled through
Seller's Repair and Return
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department. With respect to all other OEM Equipment ordered by Buyer,
OEM Equipment shall be warranted directly by such OEM vendors in
accordance with their standard terms and conditions, including by way
of example and not by limitation, such vendor's standard response
time(s) and procedure(s) for repair and return. Except for the
warranty of title extended in Section 6.2 hereof, the warranties
provided in this Section 8.6 are Buyer's sole and exclusive remedy
with respect to OEM Equipment provided by Seller under this
Agreement.
8.7 THE WARRANTIES AND REMEDIES SET FORTH ABOVE CONSTITUTE THE ONLY
WARRANTIES WITH RESPECT TO THE EQUIPMENT AND SERVICES PROVIDED, AND
BUYER'S EXCLUSIVE REMEDIES IN THE EVENT SUCH WARRANTIES ARE BREACHED.
THEY ARE IN LIEU OF ALL OTHER WARRANTIES WRITTEN OR ORAL, STATUTORY,
EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION THE WARRANTY OF
MERCHANTABILITY AND THE WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE.
SELLER SHALL NOT BE LIABLE FOR ANY INCIDENTAL, CONSEQUENTIAL, OR
SPECIAL DAMAGES OF ANY NATURE WHATSOEVER.
8.7.1 Seller's obligations under this Article 8 shall not apply to (i)
Equipment or components thereof such as fuses and bulbs that are
normally consumed in operation, or have a normal life inherently
shorter than the Hardware Warranty Period; (ii) defects that are the
result of improper storage, installation, use, maintenance or repair
by the Buyer (including, without limitation, operation of the
Equipment outside the environmental parameters defined in the
Specifications); (iii) improper operation of Equipment with other
hardware or software used by Buyer, including the operation of
Equipment with hardware or software not authorized by Seller for use
with the Equipment, or use of the Equipment with any improperly
operating hardware or software not supplied by Seller under this
Agreement; (iv) Equipment or components thereof that due to no fault
of Seller have been subjected to any other kind of misuse or
detrimental exposure or have been involved in an accident, fire
explosion, any other cause not attributable to Seller, or Act of God,
or (v) Equipment or Installation Services altered, repaired,
installed or relocated by any party other than Seller or Seller's
agents. For purposes of subsection (v), "install" shall not mean the
routine plug-in of the components done in accordance with NTP
guidelines.
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9. FORCE MAJEURE
If the performance of this Agreement, or of any obligation hereunder
except for the obligations set forth in Article 4 is prevented,
restricted or interfered with by reason of fires, breakdown of plant,
labor disputes, embargoes, government ordinances or requirements,
civil or military authorities, acts of God or of the public enemy,
acts or omissions of carriers, inability to obtain necessary
materials or services from suppliers, or other causes beyond the
reasonable control of the party whose performance is affected, then
the party affected, upon giving prompt notice to the other party, as
set forth in Section 23.2 shall be excused from such performance on a
day-for-day basis to the extent of such prevention, restriction, or
interference (and the other party shall likewise be excused from
performance of its obligations on a day-for-day basis to the extent
such party's obligations relate to the performance so prevented,
restricted or interfered with); provided that the party so affected
shall use reasonable efforts to avoid or remove such causes of
non-performance and both parties shall proceed to perform their
obligations with dispatch whenever such causes are removed or cease.
10. PATENT OR COPYRIGHT INFRINGEMENTS
10.1 Seller agrees to indemnify Buyer with respect to any suit, claim, or
proceeding brought against Buyer alleging that Buyer's use of the
Equipment constitutes an infringement of any United States patent or
copyright. Seller agrees to defend Buyer against any such claims and
to pay all litigation costs, reasonable attorney's fees, settlement
payments and any damages awarded in any final judgment arising from
such suit, claim or proceeding; provided, however, that Buyer shall
promptly advise Seller of any such suit, claim, or proceeding and
shall cooperate with Seller in the defense or settlement of such
suit, claim or proceeding and provided Seller shall have sole control
thereof.
10.2 In the event that an injunction is obtained against Buyer's use of
Equipment arising from such patent or copyright suit, claim or
proceeding, in whole or in part, Seller shall, at its option, either:
(i) procure for Buyer the right to continue using the portion of a
System enjoined from use; or (ii) replace or modify the same so that
Buyer's use is not subject to any such injunction.
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<PAGE> 22
10.3 In the event that Seller cannot perform under Section 10.2, Buyer
shall have the right to return such Equipment or portion thereof to
Seller upon written notice to Seller and in the event of such return,
neither party shall have any further liabilities or obligations under
this Agreement, except that Seller shall refund the depreciated value
of any such Equipment or portion thereof as carried on the Buyer's
books at the time of such return.
10.4 Seller's indemnity obligations under Section 10.1 shall not apply to
infringement claims (i) arising from any portion of the Equipment
that is manufactured to Buyer's design, (ii) arising from the use of
the Equipment in combination with any other apparatus or material not
supplied by Seller to the extent that the claims arise from such
combination usage, or (iii) alleging that method of use claims in
such patent are infringed by any service offering and/or by any use
by Buyer of Equipment furnished hereunder to make such service
offering available to the extent such service offering or use is not
described by Seller in its Specifications.
10.5 The foregoing states the entire liability of Seller for patent or
copyright infringement by the Equipment. Seller shall have no
liability whatsoever for any patent or copyright infringement arising
from Buyer's use of the OEM Equipment, and Seller makes no warranty
with respect thereto.
11. SOFTWARE LICENSE
11.1 With respect to Equipment containing Software acquired under this
Agreement and upon payment of the appropriate license fees as set
forth in Section 2.5 of Annex 1, Buyer is hereby granted a
non-exclusive, non-transferable (except as set forth in Annex 5)
license to use the Software in accordance with the terms set forth in
Annex 5, "Software License." Buyer is granted no title or ownership
rights to the Software, which rights shall remain in Seller or
Seller's suppliers as appropriate. The license fees paid by Buyer
shall cover fees for Software as described in Section 2.5 of Annex 1.
11.2 The obligations of Buyer under this Article 11 and Annex 5 shall
survive the expiration or termination of this Agreement.
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12. SOFTWARE CHANGES
12.1 Software Upgrades will be provided by Seller at no charge to Buyer
during the Software Warranty Period.
12.2 Software Enhancement license fees shall be quoted by Seller at
Buyer's request and assume that Buyer's System is operating on
Software at the same level of maintainability as set forth in Section
12.4. Otherwise, retrofitting features from a new Software Release
onto Buyer's System shall be considered and quoted by Seller on a
case-by-case basis. Additionally, future Hardware purchases may
require the support of a then-current Software Release. Buyer
acknowledges that any Software Enhancement may require the purchase
of additional Hardware by Buyer.
12.3 In the event the Seller at any time issues a Software Upgrade which
is combined with any Software Enhancement (collectively the "Software
Combined Release") to such Software, the Software Combined Release
will be quoted by Seller at Buyer's request.
12.4 If Buyer elects to remain on a prior Software Release, Seller's sole
obligation hereunder shall be to make available maintenance for the
Software for the previous two consecutive releases from the
then-current, Seller-numbered release (i.e., numbered Software
Release).
12.5 Buyer further acknowledges that the proper operation of the Equipment
and/or the availability of certain Optional Features is dependent
upon having the appropriate Software Release installed, as
applicable, to the Switch, BSC and/or BTS Equipment.
13. REMEDIES
13.1 In the event Buyer ceases to be an Additional Affiliate, Seller shall
have the right to immediately terminate this Agreement in its
entirety upon written notice to Buyer, provided, however, the parties
may mutually agree to modify the Agreement establishing new
non-Additional Affiliate prices, terms and conditions.
13.2 Seller shall have the right to suspend its performance under this
Agreement by written notice to the Buyer and forthwith remove and
take possession of any portion of the Equipment that has been
delivered if the Buyer, prior to payment to Seller of
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<PAGE> 24
the Price, shall become insolvent or bankrupt, make a general
assignment for the benefit of, or enter into any arrangement with
creditors, file a voluntary petition under any bankruptcy,
insolvency, or similar law, or have proceedings under any such laws
or proceedings seeking appointment of a receiver, trustee or
liquidator instituted against it which are not terminated within
thirty (30) days of such commencement.
13.3 In the event of any material breach of this Agreement by either party
which shall continue for thirty (30) or more days after written
notice of such breach (including a reasonably detailed statement of
the nature of such breach) shall have been given to the breaching
party by the aggrieved party, the aggrieved party shall be entitled
at its option:
13.3.1 if the aggrieved party is the Buyer, to suspend its performance under
Article 6 with regard to Equipment or Services affected by the breach
of the Agreement for so long as the breach continues uncorrected or;
13.3.2 if the aggrieved party is Seller, to suspend performance of all of
its obligations under the Agreement for so long as the breach
continues uncorrected or;
13.3.3 to avail itself of any and all remedies available at law or equity
whether or not it elects to suspend its performance under Subsection
13.3.1 or 13.3.2 as applicable.
13.4 EXCEPT WITH RESPECT TO A BREACH OF ARTICLE 11, SOFTWARE LICENSE, OR
ARTICLE 20, CONFIDENTIALITY, NEITHER PARTY SHALL BE LIABLE FOR
INCIDENTAL, INDIRECT, CONSEQUENTIAL, OR SPECIAL DAMAGES OF ANY NATURE
WHATSOEVER FOR ANY ACTION OR INACTION ARISING UNDER THIS AGREEMENT.
13.5 Any action for breach of this Agreement or to enforce any right
hereunder shall be commenced within two (2) years after the cause of
action accrues or it shall be deemed waived and barred (except that
any action for nonpayment may be brought at any time permitted by
applicable law).
14. ACCEPTANCE TESTING
14.1 On completion of Installation of Equipment furnished and installed by
Seller, Seller
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<PAGE> 25
shall provide Buyer [TEXT OMITTED-CONFIDENTIAL TREATMENT REQUESTED]
prior written notification that such Equipment is ready for
Commissioning. Following such notification, Buyer agrees to have a
representative present to witness and acknowledge completion of such
testing. Seller or Seller's subcontractor, as applicable, shall test
the Equipment in accordance with its standard testing procedures to
determine Equipment conformity with the standards and specifications
(hereinafter "Commissioning Criteria") of the applicable Seller
installation manuals, as may be amended from time to time.
14.2 On the date that such Commissioning has been successfully completed,
Seller shall turn the Equipment over to Buyer ("Turnover"). On the
date of Turnover, Buyer shall complete and return to Seller the
"Turnover Notice" as described in Annex 3.
14.3 For purposes of this Agreement, the occurrence of any of the
following shall be deemed to constitute "Acceptance" of the
Equipment:
14.3.1 Within [TEXT OMITTED-CONFIDENTIAL TREATMENT REQUESTED] following the
date of Turnover, Buyer shall either accept the Equipment in writing
as provided in Annex 3, "Acceptance Notice," or notify Seller in
writing specifying in reasonable detail those particulars in which
the Equipment does not meet the Commissioning Criteria. With respect
to any such particulars, Seller shall promptly proceed to take
corrective action, and following correction, Buyer shall accept the
Equipment in writing.
14.3.2 The failure of Buyer to notify Seller within [TEXT
OMITTED-CONFIDENTIAL TREATMENT REQUESTED] after Turnover (or, in the
case of correction, [TEXT OMITTED-CONFIDENTIAL TREATMENT REQUESTED]
following such correction) of any particulars in which the Equipment
does not meet the Commissioning Criteria, or the use by Buyer of the
Equipment or any portion thereof in revenue-producing service at any
time, shall be deemed Acceptance of such Equipment.
14.4 Acceptance of Equipment not installed by Seller shall be deemed to
occur upon receipt of and inspection by Buyer, but no later than
[TEXT OMITTED-CONFIDENTIAL TREATMENT REQUESTED] from receipt thereof.
In the event of a defect in the Equipment, Buyer shall notify Seller
in writing specifying, in reasonable detail, the defect within [TEXT
OMITTED-CONFIDENTIAL
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<PAGE> 26
TREATMENT REQUESTED] of receipt or Acceptance shall be deemed to have
occurred.
15. COVERAGE, INTERFERENCE AND THIRD-PARTY FACILITIES
15.1 Seller shall have no liability as a result of non-performance,
failures or poor performance of the System caused by, resulting from
or attributable to Buyer-provided specifications or equipment
configuration requirements, which are inconsistent with
Specifications. Seller may rely upon and utilize any Buyer-provided
designs, studies, specifications or requirements, including but not
limited to microwave path studies, RF propagation studies and tower
location and loading requirements, without liability for
non-performance, failures or performance of the System caused by,
resulting from or attributable to any such Buyer-provided designs,
studies, specifications or requirements.
15.2 Seller shall not be responsible for any failures or inadequacies of
performance resulting from equipment not supplied and installed by
Seller or Seller's agents or subcontractors pursuant to this
Agreement. Seller shall not be responsible for interference or
disruption of service caused by operation of other radio systems,
lightning, motor ignition or other similar interference. In the event
Buyer utilizes facilities or services supplied by others such as
common carrier circuits, antennas or towers, Buyer shall have the
total responsibility for the availability or adequacy of such
services or facilities.
16. REGULATORY COMPLIANCE
16.1 Seller shall use all reasonable efforts to furnish and install
Equipment so that it shall comply in all material respects with all
Federal, State, and local laws and regulations in force on the
Effective Date of this Agreement, which directly impose obligations
upon the manufacturer, Seller, or installer thereof.
16.2 The Prices set forth for the Equipment described herein are based on
Seller's design, manufacture, and delivery of the Equipment pursuant
to its design criteria and manufacturing processes and procedures in
effect on the Effective Date. If, as a result of the imposition of
requirements by any Federal, State or local government during the
Term of this Agreement there is a change in such criteria, processes
or procedure or any change in the Equipment, the Prices will be
adjusted equitably to
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<PAGE> 27
reflect the added cost and expense of such change. Any such changes
shall include, by way of example and not by way of limitation,
mandatory compliance with Standards or government requirements.
17. CHANGES
17.1 Up to ninety (90) days prior to the scheduled Ship Date (or such
later time as is acceptable to Seller), Buyer may request Equipment
addition(s) or deletion(s) to an original Equipment configuration.
All such Equipment reconfigurations or changes to the Statement of
Work or Project Schedule ("Changes") shall be subject to prior
written approval of Seller.
17.2 Except as provided in 17.3 below, all Changes shall be documented in
a written change order ("Change Order"), which shall be executed by
Buyer and returned to Seller prior to implementation of the requested
Changes. The Change Order shall detail any adjustments to the Price,
Statement of Work or Project Schedule required by Seller for any
aspect of its performance under this Agreement.
17.3 Buyer understands and agrees that the Price is based on Seller's
providing the Services only as herein specified. Should any factors
(e.g., changed site conditions) cause an increase in the extent of
Services to be provided, Seller may, without liability, temporarily
suspend performance and promptly notify Buyer of such factors and
request a Change Order to reflect any increased costs of Seller's
performance and/or Seller's performance of additional Services. Upon
Buyer's authorization, such Changes shall be documented in a Change
Order. Seller shall also be granted an equitable extension in the
time for performance due to the occurrence of any such changed
conditions or other factors outside Seller's control.
17.3.1 Seller shall have no liability for delays caused by or attributable
to obtaining FCC permits or other permits, certificates or
applications requiring approval of local, state or federal agencies
or for delays that occur due to Buyer's or Seller's or Seller's
agent's inability to obtain clear title to real estate, local
construction ordinances, or other similar obstructions relative to
site acquisition. All such delays shall be regarded as force majeure
events under Article 9.
17.3.2 Upon written request of Buyer for a Change that entails additional
services totaling [TEXT OMITTED-CONFIDENTIAL TREATMENT REQUESTED] or
less, and
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<PAGE> 28
upon written acceptance thereof by Seller, Seller will proceed in
good faith to implement such Change prior to receipt of an executed
Change Order. Within five (5) days following Buyer's written request,
the parties shall agree upon an appropriate price for such Changes,
all of which will be summarized in a subsequent Change Order and
executed by an authorized representative of Buyer within fifteen (15)
days following the date of the request for Change.
17.4 Calculations for any Equipment reconfigurations prior to the Ship
Date shall be based on Prices set forth in Annex 1, provided that (i)
any additions shall include any necessary engineering, Installation
and testing charges and (ii) any deletions shall include applicable
discounts, and further provided that the net cumulative amount of
Changes shall not reduce the Price of a Purchase Order by more than
[TEXT OMITTED-CONFIDENTIAL TREATMENT REQUESTED].
17.5 Except for the Initial System Purchase Order described in Article 5,
Buyer may elect to cancel, upon prior written notification to Seller,
subsequent Purchase Orders prior to shipment of Equipment subject to
the following:
17.5.1 Without charge, Buyer may cancel any such subsequent Purchase Order
no later than ninety (90) days prior to the earliest scheduled Ship
Date; or
17.5.2 If Buyer cancels any subsequent Purchase Order less than ninety (90)
days prior to the earliest scheduled Ship Date, Buyer shall pay a
cancellation charge of [TEXT OMITTED-CONFIDENTIAL TREATEMENT
REQUESTED] of the Price to Seller; or
17.5.3 If Buyer cancels any subsequent Purchase Order less than sixty (60)
days prior to the earliest scheduled Ship Date, Buyer shall pay to
Seller a cancellation charge of [TEXT OMITTED-CONFIDENTIAL TREATMENT
REQUESTED] of the Price; or
17.5.4 If Buyer cancels any subsequent Purchase Order less than thirty (30)
days prior to the earliest scheduled Ship Date, Buyer shall pay to
Seller a cancellation charge of [TEXT OMITTED-CONFIDENTIAL TREATMENT
REQUESTED] of the Price.
17.5.5 Buyer may not cancel a Purchase Order subsequent to the Ship Date.
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<PAGE> 29
17.5.6 The payment of such charges as are described in this Section 17.5
shall be Seller's sole remedy and Buyer's sole obligation for such
canceled Purchase Order(s).
18. CONDITION OF INSTALLATION SITE(S)
Based on reasonable due diligence, Buyer warrants that, to the best
of its knowledge, all Installation Site(s) are free from friable
asbestos or other hazardous materials or contamination. In the event
that such contamination is found to be present at the Installation
Site, Seller shall be relieved of all of its delivery and
Installation obligations hereunder until such contamination is
removed. Delivery of any Equipment affected by such contamination
shall be managed in accordance with and subject to Article 7. In the
event that Buyer fails or refuses to remove such contamination,
Seller shall have the right to remove the Equipment or portions
thereof if already delivered and relocate the Equipment to an
alternate site provided by Buyer and charge Buyer for (i) any
additional delivery charges to the new Installation Site, (ii) all
materials expended at the site including cabling, permanently affixed
equipment, and those items which cannot reasonably be removed for use
elsewhere, (iii) specifically ordered items requested by Buyer, and
(iv) all labor and materials expended at the sites relating to the
relocation using Seller's then current rates.
19. RELEASE OF INFORMATION
19.1 Unless required by law, or as otherwise permitted under this
Agreement, Buyer and Seller agree that the terms and conditions of
this Agreement shall not be disclosed to any other party without the
prior written consent of the other; provided, however, that Seller
may release information to (i) Northern Telecom Ltd., its research
and development affiliates or any majority-owned subsidiaries of such
companies on a need-to-know basis and/or (ii) a subcontractor or
potential subcontractor of Seller for purposes of performance of this
Agreement.
19.2 Neither Buyer nor Seller shall publish or use any advertising, sales
promotion, press releases or publicity matters relating to this
Agreement without the prior written approval of the other.
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20. CONFIDENTIALITY
Buyer, Seller and Seller's affiliates shall receive in confidence
from each other all technical information, business information,
documentation and expertise which is either (i) stamped or otherwise
marked as being confidential or proprietary whether in written or
electronic form, or (ii) if delivered in oral form, is summarized in
a written memorandum within ten (10) days thereafter and listed as
being confidential ("Confidential Information") and shall not, except
as previously authorized in writing by the other party, publish,
disclose or make use of such information (except as required by law
and after notice to the other party), unless and until the
Confidential Information shall have ceased to be proprietary as
evidenced by general public knowledge or shall have been legally
acquired by such party; provided, however, that either party may
provide such Confidential Information, or portions thereof, to Sprint
Spectrum as may be necessary in connection with the build out of the
Nationwide Network or the performance of the activities contemplated
by this Agreement. This prohibition against disclosure, publication
or use of Confidential Information shall not restrict either party
from developing similar information in the exercise of its own
technical skill, so long as such other information is independently
developed by such party without making use of Confidential
Information.
21. INTERCONNECTION
21.1 Buyer is given the option to purchase individual units of Equipment
hereunder, and Buyer understands that such units of Equipment
purchased hereunder do not necessarily provide Buyer with a complete
System. In some cases, Buyer may intend to interconnect the Equipment
to equipment and facilities for interconnection which may not have
been purchased under this Agreement. In the event that Buyer
interconnects Equipment to equipment not purchased under this
Agreement, it is understood and agreed that the making and
maintaining of all necessary arrangements (whether commercial, legal
or otherwise) with the supplier of such equipment, including not only
arrangements necessary to permit the timely performance by Seller of
its responsibilities under this Agreement, (e.g., physical and remote
dial-up access for installation and services purposes), but also any
arrangements necessary for the ongoing operation of the equipment in
conjunction with the Equipment, shall be solely the responsibility of
Buyer, and failure by Buyer to timely make or maintain any necessary
arrangements shall not excuse Buyer from its obligations under this
Agreement. However, at Buyer's request and expense, Seller agrees to
assist Buyer in determining the cause of any problems,
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<PAGE> 31
defects or failures associated with the Equipment and isolate and
correct any such problem, defect or failure (even if such problem,
defect or failure is caused by the equipment of another vendor) as
promptly as practicable; provided, however, that Seller shall not be
required to repair or modify any such equipment unless Seller has the
ability, necessary resources and authorization from Buyer and such
other vendor to do so. Notwithstanding the preceding, Seller makes no
warranty, and shall have no responsibility whatsoever under this
Agreement, for the proper performance of equipment not purchased
hereunder, or for any failures of equipment not purchased hereunder
resulting from improper performance of the Equipment.
21.2 Buyer further acknowledges that Seller makes no warranty or
representations that the System or individual units of Equipment will
operate in conjunction with other vendor equipment. If Buyer wishes
Seller to conduct compatibility testing between Seller's Equipment
and other equipment not purchased from Seller, Buyer and Seller shall
reach agreement on the scope of such testing and charges associated
therewith.
22. ANNEXES
The following Annexes shall form an integral part of this Agreement
as though written out in full in this Agreement:
Annex 1 - Equipment and Services Pricing
Annex 2 - Services
Annex 3 - Turnover and Acceptance Notices
Annex 4 - Seller Warranty Services
Annex 5 - Software License
Annex 6 - Documentation
Annex 7 - Adjunct Platforms
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23. GENERAL
23.1 Buyer may assign or transfer this Agreement or any rights hereunder
to any other party only with the prior written consent of Seller,
which consent shall not be unreasonably withheld or delayed. No
assignment or sublicense of or under this Agreement, or of any rights
under this Agreement, by Buyer shall relieve Buyer of primary
responsibility for performance of Buyer's obligations under this
Agreement. Seller reserves the right to refuse to honor any
assignment or sublicense which, in the opinion of its legal counsel,
would require Seller to violate any United States export restriction,
other law, or regulation. Seller reserves the right to subcontract
any portion of its obligation under this Agreement, but no such
subcontract shall relieve Seller of primary responsibility for
performance of Seller's obligations under this Agreement.
23.2 Notices and other communications shall be transmitted in writing by
Certified U.S. Mail, postage prepaid, return receipt requested,
addressed to the parties as follows:
Northern Telecom Inc.
2435 N. Central Expressway
Richardson, Texas 75080
Attention: Director, Contracts
cc: Program Manager
Alamosa PCS LLC
4727 South Loop 289
Lubbock, Texas 79424
Attention: David Sharbutt, Chairman
cc: Don Stull, Chief Technical Officer
Any notice given pursuant to this Section 23.2 shall be effective
five (5) days after the day it is mailed or upon receipt as evidenced
by the U.S. Postal Service return receipt card, whichever is earlier.
23.3 This Agreement may not be modified or amended or any rights of a
party to it waived except in a writing signed by duly authorized
representatives of the parties hereto.
23.4 Failure by either party at any time to require performance by the
other party or to claim a breach of any provision of this Agreement
shall not be construed as affecting any subsequent breach or the
right to require performance with respect thereto or to claim a
breach with respect thereto.
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23.5 Each party shall be liable for direct losses incurred by the other
party due to bodily injury or damage to tangible property, including
the Hardware, which results from the negligence of that party's
employees or agents, provided, however, that nothing in this Section
shall affect or in any way increase Seller's obligation under this
Agreement with respect to the performance of the Hardware and/or
Software. Except for bodily injury, death, or damage to tangible
property, the total liability of Seller for all claims of any kind
for any loss or damage, whether in contract, warranty, tort
(including negligence), strict liability or otherwise, or claims for
indemnification arising out of, connected with, or resulting from the
performance or non-performance of this Agreement shall in no case
exceed the total Price of the Purchase Order accepted under this
Agreement giving rise to the claim.
23.6 The rights and obligations of the parties and all interpretations and
performance of this Agreement shall be governed in all respects by
the laws of the State of Texas except for its rules with respect to
the conflict of laws.
23.7 Article headings are inserted for convenience only and shall not be
used in any way to construe the terms of this Agreement.
23.8 The invalidity in whole or in part, of any provision of this
Agreement shall not affect the validity of the remainder of such
provision of this Agreement.
23.9 This Agreement may be executed in multiple counterparts, each of
which shall be deemed an original and all of which taken together
shall constitute one and the same instrument.
23.10 Each party hereto represents and warrants that (i) it has obtained
all necessary approvals, consents and authorizations of third parties
and governmental authorities to enter into this Agreement and to
perform and carry out its obligations hereunder; (ii) the persons
executing this agreement on its behalf have express authority to do
so, and, in so doing, to bind the party thereto; (iii) the execution,
delivery, and performance of this Agreement does not violate any
provision of any bylaw, charter, regulation, or any other governing
authority of the party; and (iv) the execution, delivery and
performance of this Agreement has been duly authorized by all
necessary partnership or corporate action and this Agreement is a
valid and
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binding obligation of such party, enforceable in accordance with its
terms.
23.11 This Agreement constitutes the entire agreement between Seller and
the Buyer with respect to the subject matter hereof and supersedes
all previous negotiations, proposals, commitments, writings,
advertisements, publications and understandings of any nature
whatsoever. No agent, employee or representative of Seller has any
authority to bind Seller to any affirmation, representation, or
warranty concerning the System, except as stated in this Agreement
and unless such affirmation, representation, or warranty is
specifically included within this Agreement, it shall not be
enforceable by Buyer or any assignee or sublicensee of Buyer. Buyer
and Seller hereby acknowledge and agree that they have not relied on
any representations or warranties other than those expressly set
forth in this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their representatives being thereunto duly authorized.
ALAMOSA PCS LLC NORTHERN TELECOM INC.
By: /s/ David Sharbutt By: /s/ Nancy J. White
------------------------------- -------------------------------
Name: David Sharbutt Name: Nancy J. White
------------------------------- -------------------------------
(Type/Print) (Type/Print)
Title: Chairman Title: VP and GM- Wireless Networks
------------------------------- -------------------------------
Date: Dec. 12, 1998 Date: December 21, 1998
------------------------------- -------------------------------
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EXHIBIT 10.2
THIS AGREEMENT HAS CONFIDENTIAL PORTIONS OMITTED, WHICH PORTIONS HAVE BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS ARE
INDICATED IN THIS AGREEMENT WITH "[TEXT OMITTED - CONFIDENTIAL TREATMENT
REQUESTED]"
AMENDMENT NO. 1
TO
DMS-MTX CELLULAR SUPPLY AGREEMENT
BETWEEN
ALAMOSA PCS, LLC
AND
NORTHERN TELECOM INC.
This Amendment No. 1 is made effective as of the 12th day of January 1999, by
and between Northern Telecom Inc. ("Seller") and Alamosa PCS, LLC ("Buyer").
WHEREAS, Buyer and Seller entered into a Supply Agreement dated December 21,
1998 for the sale and purchase of Seller's Equipment and Services ("Agreement");
and,
WHEREAS, Buyer and Seller now desire to amend the Agreement to provide for,
among other things, an initial shipment by Seller to Buyer's El Paso, Laredo,
and Albuquerque Cell Sites.
NOW, THEREFORE, in consideration of the mutual covenants herein contained, Buyer
and Seller hereby agree to amend the Agreement as follows:
1. Delete the first sentence of Section 6.3 and replace it with the
following:
"Buyer shall pay all amounts invoiced by Seller pursuant to this
Article 6 within [TEXT OMITTED-CONFIDENTIAL TREATMENT REQUESTED] from
the date of Seller's invoice therefor, except that for the "Initial
Shipment Equipment", as set forth in Annex 1A, attached hereto and
incorporated herein, Buyer shall pay all amounts invoiced by Seller for
such Equipment on or before the earlier of: (i) [TEXT
OMITTED-CONFIDENTIAL TREATMENT REQUESTED] from the date of Seller's
invoice therefor; (ii) February 23, 1999; or, (iii) the date of the
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occurrence of any Insolvency Event, as defined in the financing
agreement between Buyer and Seller."
2. Delete the first sentence of Section 7.2 and replace it with the
following:
"Title to Equipment furnished by Seller to Buyer in accordance with
this Agreement shall pass to Buyer at the point and on the date of
shipment, except that Seller shall retain title to the Initial Shipment
Equipment until the purchase price therefor shall have been paid by
Buyer in full."
3. Add a new Annex 1A (INITIAL SHIPMENT EQUIPMENT), as included in
Schedule "A" attached hereto and incorporated herein, and adjust the
Table of Contents and Article 22, Annexes, of the Agreement
accordingly.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to be
executed by their representatives being thereunto duly authorized.
ALAMOSA PCS, LLC NORTHERN TELECOM INC.
By: /s/ David Sharbutt By: /s/ Nancy J. White
------------------------ -------------------------------
Name: David Sharbutt Name: Nancy J. White
----------------------- ------------------------------
(Type/Print) (Type/Print)
Title: Chairman Title: VP and GM- Wireless Networks
----------------------- -----------------------------
Date: Feb. 12, 1999 Date: 3-8-99
----------------------- -----------------------------
2
<PAGE> 1
EXHIBIT 10.3
THIS AGREEMENT HAS CONFIDENTIAL PORTIONS OMITTED, WHICH PORTIONS HAVE BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS ARE
INDICATED IN THIS AGREEMENT WITH "[TEXT OMITTED - CONFIDENTIAL TREATMENT
REQUESTED]"
AMENDMENT NO. 2
TO
DMS-MTX CELLULAR SUPPLY AGREEMENT
BETWEEN
ALAMOSA PCS LLC
AND
NORTHERN TELECOM INC.
This Amendment No. 2 is made effective as of the 1st day of March 1999, by and
between Northern Telecom Inc. ("Seller") and Alamosa PCS LLC ("Buyer").
WHEREAS, Buyer and Seller entered into a Supply Agreement dated December 21,
1998 for the sale and purchase of Seller's Equipment and Services ("Agreement");
and,
WHEREAS, Buyer and Seller now desire to amend the Agreement to adjust Buyer's
Volume Commitment; and
NOW, THEREFORE, in consideration of the mutual covenants herein contained, Buyer
and Seller hereby agree to amend the Agreement as follows:
1. Amend Section 5.3 by deleting the reference to "[TEXT
OMITTED-CONFIDENTIAL TREATMENT REQUESTED]" and replacing it with
"[TEXT OMITTED-CONFIDENTIAL TREATMENT REQUESTED]".
2. Except as specifically modified by Amendment No. 1 and this
Amendment No. 2, the Agreement in all other respects shall continue
in full force and effect.
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<PAGE> 2
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 2 to be
executed by their representatives being thereunto duly authorized.
ALAMOSA PCS LLC NORTHERN TELECOM INC.
By: /s/ DAVID SHARBUTT By: /s/ NANCY J. WHITE
---------------------------------- ------------------------------------
Name: David Sharbutt Name: Nancy J. White
-------------------------------- ----------------------------------
(Type/Print) (Type/Print)
Title: Chairman of the Board Title: VP & GM, Wireless Solutions
------------------------------- ---------------------------------
Date: 3-12-99 Date: 3-12-99
-------------------------------- ----------------------------------
2
<PAGE> 1
EXHIBIT 10.4
AMENDMENT NO. 3
TO
DMS-MTX CELLULAR SUPPLY AGREEMENT
BETWEEN
ALAMOSA PCS LLC
AND
NORTEL NETWORKS INC.
This Amendment No. 3 is made effective as of the 11th day of August 1999, by and
between Nortel Networks Inc. successor in interest to Northern Telecom Inc.
("Seller") and Alamosa PCS LLC ("Buyer").
WHEREAS, Buyer and Seller entered into a Supply Agreement dated December 21,
1998, as amended, for the sale and purchase of Seller's Equipment and Services
("Agreement"); and,
WHEREAS, Buyer and Seller now wish to, among other things, amend the Agreement
to adjust Annex 1 (Pricing); and
NOW, THEREFORE, in consideration of the mutual covenants herein contained, Buyer
and Seller hereby agree to amend the Agreement as follows:
1. Unless otherwise defined, capitalized terms herein shall have the
same meaning as in the Agreement.
2. Amend Annex 1 by deleting Section 2.3 and Subsection 3.1.3 in their
entirety and replacing them with the text contained in Schedule 1
attached hereto and incorporated herein.
3. Add a new Schedule B-1 to Annex 2 as set forth in Schedule 2
attached hereto and incorporated herein and amend the table of
contents of the Agreement and the title page of Annex 2 accordingly.
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4. Except as specifically modified herein, the Agreement in all other
respects shall continue in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 3 to be
executed by their representatives being thereunto duly authorized.
ALAMOSA PCS LLC NORTEL NETWORKS INC.
By: /s/ DAVID SHARBUTT By: /s/ NANCY J. WHITE
-------------------------------- -------------------------------------
Name: David Sharbutt Name: Nancy J. White
------------------------------ -----------------------------------
(Type/Print) (Type/Print)
Title: Chairman Title: VP & GM, Wireless Solutions
----------------------------- ----------------------------------
Date: 7-20-99 Date: 8-11-99
------------------------------ -----------------------------------
2
<PAGE> 1
EXHIBIT 10.5
SPRINT PCS MANAGEMENT AGREEMENT
This SPRINT PCS MANAGEMENT AGREEMENT is made July 17, 1998, between
Sprint Spectrum L.P., a Delaware limited partnership, WirelessCo, L.P., a
Delaware limited partnership, SprintCom, Inc., a Kansas corporation, and ALAMOSA
PCS LLC, a Texas limited liability company (but not any Related Party)
("Manager"). The definitions for this agreement are set forth on the attached
"Schedule of Definitions."
RECITALS
A. Sprint Spectrum L.P., a Delaware limited partnership, WirelessCo,
L.P., a Delaware limited partnership, SprintCom, Inc., a Kansas corporation, APC
PCS, LLC, a Delaware limited liability company, American PCS Communications,
LLC, a Delaware limited liability company, PhillieCo Partners I, L.P., a
Delaware limited partnership, PhillieCo, L.P., a Delaware limited partnership,
Cox Communications PCS, L.P., a Delaware limited partnership, and Cox PCS
License, L.L.C., a Delaware limited liability company, hold and exercise,
directly or indirectly, control over licenses to operate wireless services
networks.
B. The entity or entities named in Recital A that execute this
agreement hold, directly or indirectly, the Licenses for the areas identified on
the Service Area Exhibit and are referred to in this agreement as "Sprint PCS."
Because this agreement addresses the rights and obligations of each license
holder with respect to each of its Licenses, each reference in this agreement to
"Sprint PCS" refers to the entity that owns, directly or indirectly, the License
referred to in that particular instance or application of the provision of this
agreement. If Sprint Spectrum does not own the License, it will provide on
behalf of Sprint PCS most or all of the services required under this agreement
to be provided by Sprint PCS.
C. The Sprint PCS business was established to use the Sprint PCS
Network, a nationwide wireless services network, to offer seamless, integrated
voice and data services using, wireless technology. Sprint PCS offers the
services to customers under a single national brand.
D. This agreement, therefore, includes provisions defining Manager's
obligations with respect to:
o The design, construction and management of the Service Area
Network;
o Offering and promoting products and services designated by
Sprint PCS as the Sprint PCS Products and Services of the
Sprint PCS Network;
o Adherence to Program Requirements established by Sprint PCS to
ensure seamless interoperability throughout the Sprint PCS
Network and uniform and consistent quality of product and
service offerings;
o Adherence to Customer Service Program Requirements established
by Sprint PCS to ensure consistency in interactions with
customers (including billing, customer care, etc.); and
o Adherence to Program Requirements relating to the marketing,
promotion and distribution of Sprint PCS Products and
Services.
E. Manager wishes to enter into this agreement to help construct,
operate, manage and maintain for Sprint PCS a portion of the Sprint PCS Network
in the Service Area. Sprint PCS has determined that permitting Manager to manage
a portion of the Sprint PCS Network in accordance with the terms of this
<PAGE> 2
agreement will facilitate Sprint PCS' expansion of fully digital, wireless
coverage under the License and will enhance the wireless service for customers
of Sprint PCS.
F. All managers of a portion of the business of Sprint PCS, including
Manager, must construct facilities and operate in accordance with Program
Requirements established by Sprint PCS with respect to certain aspects of the
development and offering of wireless products and services and the presentation
of the products and services to customers, to establish and operate the Sprint
PCS Network successfully by providing seamless, integrated voice and data
services, using wireless technology.
AGREEMENT
In consideration of the recitals and mutual covenants and agreements
contained in this agreement, the sufficiency of which are hereby acknowledged,
the parties, intending to be bound, agree as follows:
1. MANAGER
1.1 OVERVIEW. Manager will:
(a) construct and manage the Service Area Network in
compliance with the License and in accordance with the terms of this agreement;
(b) distribute continuously during the Term the Sprint PCS
Products and Services and to establish distribution channels in the Service
Area;
(c) conduct continually during the Term advertising and
promotion activities in the Service Area (including mutual decisions to "go
dark", with respect to advertising and promotion activities, for reasonable
periods of time); and
(d) manage that portion of the customer base of Sprint PCS
that has the NPA-NXX assigned to the Service Area Network.
Sprint PCS has the right to unfettered access to the Service Area
Network to be constructed by Manager under this agreement.
1.2 PROGRAM REQUIREMENTS. Manager must adhere to the Program
Requirements established by Sprint PCS and as modified from time to time to
ensure uniform and consistent operation of all wireless systems within the
Sprint PCS Network and to present the Sprint PCS Products and Services to
customers in a uniform and consistent manner under the Brands.
1.3 VENDOR PURCHASE AGREEMENTS. Manager may participate in discounted
volume-based pricing on wireless-related products and services and in the
warranties Sprint PCS receives from its vendors, as is commercially reasonable
and to the extent permitted by applicable procurement agreements (e.g.,
agreements related to network infrastructure equipment, subscriber equipment,
interconnection, and collocation). Sprint PCS will use commercially reasonable
efforts to obtain for managers the same price Sprint PCS receives from vendors;
this does not prohibit Sprint PCS from entering into procurement agreements that
do not provide managers with the Sprint PCS prices.
Manager must purchase subscriber and infrastructure equipment from a
Sprint PCS approved list of products, which will include a selection from a
variety of manufacturers. Where required, the products must include proprietary
software developed by the manufacturers for Sprint PCS to allow seamless
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interoperability in the Sprint PCS Network. Sprint PCS or the vendor may require
Manager to execute a separate license agreement for the software prior to
Manager's use of the software.
Manager may only make purchases under this Section 1.3 for items to be
used exclusively in the Service Area (e.g., Manager may not purchase base
stations under a Sprint PCS contract for use in a system not affiliated with
Sprint PCS).
1.4 INTERCONNECTION. If Manager desires to interconnect a portion of
the Service Area Network with another carrier and Sprint PCS can interconnect
with that carrier at a lower rate, then to the extent permitted by applicable
laws, tariffs and contracts, Sprint PCS may arrange for the interconnection
under its agreements with the carrier and if it does so, Sprint PCS will bill
the interconnection fees to Manager.
1.5 SEAMLESSNESS. Manager will design and operate its systems,
platforms, products and services in the Service Area and the Service Area
Network so as to seamlessly interface them into the Sprint PCS Network.
1.6 FORECASTING. Manager and Sprint PCS will work cooperatively to
generate mutually acceptable forecasts of important business metrics including
traffic volumes, handset sales, subscribers and Collected Revenue for the Sprint
PCS Products and Services. The forecasts are for planning purposes only and do
not constitute Manager's obligation to meet the quantities forecast.
1.7 FINANCING. The construction and operation of the Service Area
Network requires a substantial financial commitment by Manager. The manner in
which Manager will finance the build-out of the Service Area Network and provide
the necessary working capital to operate the business is described in detail on
Exhibit 1.7. Manager will allow Sprint PCS an opportunity to review before
filing any registration statement or prospectus or any amendment or supplement
thereto before distributing any offering memorandum or amendment or supplement
thereto, and agrees not to file or distribute any such document if Sprint PCS
reasonably objects in writing on a timely basis to any portion of the document
that refers to Sprint PCS, its Related Parties, their respective businesses,
this agreement or the Services Agreement.
1.8 ETHICAL CONDUCT AND RELATED COVENANTS. Each party must perform its
obligations under this agreement in a diligent, legal, ethical, and professional
manner.
2. BUILD-OUT OF NETWORK
2.1 BUILD-OUT PLAN. Manager will build-out the Service Area Network in
the Service Area in accordance with a Build-out Plan. Sprint PCS and Manager
will jointly develop each Build-out Plan, except Sprint PCS must approve the
final Build-out Plan. Manager will report to Sprint PCS its performance
regarding the critical milestones included in the Build-out Plan on a periodic
basis as mutually agreed to by the parties, but no less frequently than
quarterly. The Build-out Plan and the Service Area Network as built must comply
with Sprint PCS Program Requirements and federal and local regulatory
requirements.
Any modifications, additions or expansions to a Build-out Plan will be
subject to prior written approval by Sprint PCS. The Build-out Plan in effect as
of the date of this agreement is attached as Exhibit 2.1. Each new or amended
Build-out Plan will also become part of Exhibit 2.1.
2.2 COMPLIANCE WITH REGULATORY RULES. During the build-out of the
Service Area Network, Sprint PCS authorizes Manager to make all filings with
regulatory authorities regarding the build-out, including filings with the
Federal Aviation Administration, environmental authorities, and historical
districts.
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Manager may further delegate its duty under this Section 2.2 to a qualified site
acquisition company. Manager must ensure that a copy of every filing is given to
Sprint PCS. Manager must ensure that Sprint PCS is notified in writing of any
contact by a regulatory agency including the FCC with Manager or Manager's site
acquisition company regarding any filing. Sprint PCS has the right to direct any
proceeding, inquiry, dispute, appeal or other activity with a regulatory or
judicial authority regarding any filing made on behalf of Sprint PCS. Manager
will amend, modify, withdraw, refile and otherwise change any filing as Sprint
PCS requires. Notwithstanding the preceding sentences in this Section 2.2, and
in conjunction with Section 16, Sprint PCS is solely responsible for making any
and all filings with the FCC regarding the build-out. Manager will notify Sprint
PCS of any activity, event or condition related to the build-out that might
require an FCC filing.
2.3 EXCLUSIVITY OF SERVICE AREA. Manager will be the only person or
entity that is a manager or operator for Sprint PCS with respect to the Service
Area and neither Sprint PCS nor any of its Related Parties will own, operate,
build or manage another wireless mobility communications network in the Service
Area so long as this agreement remains in full force and effect and there is no
Event of Termination that has occurred giving Sprint PCS the right to terminate
this agreement, except that:
(a) Sprint PCS may cause Sprint PCS Products and Services to
be sold in the Service Area through the Sprint PCS National Accounts Program
Requirements and Sprint PCS National or Regional Distribution Program
Requirements;
(b) A reseller of Sprint PCS Products and Services may sell
its products and services in the Service Area;
(c) Sprint PCS may build-out and sell Sprint PCS Products and
Services in a New Area, or permit a third party to do so, if Manager has chosen
not to build-out the New Area; and
(d) Sprint PCS and its Related Parties may engage in the
activities described in Sections 2.4(a) and 2.4(b) with Manager in the
geographic areas within the Service Area in which one of them owns an incumbent
local exchange carrier as of the date of this agreement.
2.4 RESTRICTION. In geographic areas within the Service Area in which
Sprint PCS or any of its Related Parties owns an incumbent local exchange
carrier as of the date of this agreement, Manager must not offer any Sprint PCS
Products or Services specifically designed for the competitive local exchange
market ("fixed wireless local loop"), except that:
(a) Manager may designate the local exchange carrier that is a
Related Party of Sprint to be the exclusive distributor of the fixed wireless
local loop product in the territory served by the local exchange carrier, even
if a portion of its territory is within the Service Area; or
(b) Manager may sell the fixed wireless local loop product
under the terms and conditions specified by Sprint PCS (e.g., including
designation by Sprint PCS of an exclusive distribution agent for the territory).
This restriction exists with respect to a particular geographic area only so
long as Sprint PCS or its Related Party owns such incumbent local exchange
carrier.
Nothing in this Section 2.4 prohibits Manager from offering Sprint PCS
Products and Services primarily designed for mobile functionality. The
restricted markets as of the date of this agreement are set forth on Exhibit
2.4.
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2.5 MANAGER'S RIGHT OF FIRST REFUSAL FOR NEW AREA BUILD-OUT. Sprint PCS
grants to Manager the right of first refusal to build-out New Areas. Sprint PCS
will give to Manager a written notice of a New Area within the Service Area that
Sprint PCS decides should be built-out. Manager must communicate to Sprint PCS
within 90 days after receipt of the notice whether it will build-out the New
Area, otherwise Manager's right of first refusal terminates with regard to the
New Area described in the notice.
If Manager decides to build-out the New Area then Manager and Sprint
PCS will diligently negotiate and execute an amendment to the Build-out Plan and
proceed as set forth in Sections 2.1 and 2.2. The amended Build-out Plan will
contain critical milestones that provide Manager a commercially reasonable
period in which to implement coverage in the New Area. In determining what
constitutes a "commercially reasonable period" as used in this paragraph, the
parties will consider several factors, including local zoning processes and
other legal requirements, weather conditions, equipment delivery schedules, the
need to arrange additional financing, and other construction already in progress
by the Manager. Manager will construct and operate the network in the New Area
in accordance with the terms of this agreement.
If Manager declines to exercise its right of first refusal or Manager
fails to build-out the New Area in accordance with the amended Build-out Plan
then Sprint PCS may construct the New Area itself or allow a Sprint PCS Related
Party or an Other Manager to construct the New Area. Sprint PCS has the right,
in a New Area that it constructs or that is constructed by a third party, to
manage the network, allow a Sprint PCS Related Party to manage the network, or
hire a manager to operate the network in the New Area. Any New Area that Sprint
PCS or a third party builds-out is deemed removed from the Service Area and the
Service Area Exhibit is deemed amended to reflect the change in the Service
Area. If Manager does not exercise its right of first refusal with respect to a
New Area, Manager's right of first refusal does not terminate with respect to
the remainder of the Service Area.
2.6 PURCHASE OF ASSETS BY MANAGER. If Sprint PCS has assets located in
the Service Area that Manager could reasonably use in its construction of the
Service Area Network and if Sprint PCS is willing to sell such assets, then
Manager agrees to purchase from Sprint PCS and Sprint PCS agrees to sell to
Manager the assets in accordance with the terms and conditions of the asset
purchase agreement attached as Exhibit 2.6.
2.7 MICROWAVE RELOCATION. Sprint PCS will relocate interfering
microwave sources in the spectrum in the Service Area to the extent necessary to
permit the Service Area Network to carry the anticipated call volume as set out
in the Build-out Plan. If the spectrum cleared is not sufficient to carry the
actual call volume then Sprint PCS will clear additional spectrum of its
choosing to accommodate the call volume. Sprint PCS may choose to clear spectrum
one carrier at a time. The parties will share equally all costs associated with
clearing spectrum under this Section 2.7.
2.8 DETERMINATION OF POPS. If any provision in this agreement requires
the determination of pops in a given area, then the pops will be determined
using the census block group pop forecast then used by Sprint PCS, except that a
different forecast will be used for any FCC filing and in preparing the
Build-out Plan if required by the FCC. Sprint PCS presently uses the forecast of
Equifax/NDS, but it may choose in its sole discretion to use another service
that provides comparable data.
3. PRODUCTS AND SERVICES; IXC SERVICE
3.1 SPRINT PCS PRODUCTS AND SERVICES. Manager must offer for sale,
promote and support all Sprint PCS Products and Services within the Service
Area, unless the parties otherwise agree in advance in writing. Within the
Service Area, Manager may only sell, promote and support wireless products and
services
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that are Sprint PCS Products and Services or are other products and services
authorized under Section 3.2. The Sprint PCS Products and Services as of the
date of this agreement are attached as Exhibit 3.1. Sprint PCS may modify the
Sprint PCS Products and Services from time to time in its sole discretion by
delivering to Manager a new Exhibit 3.1.
3.2 OTHER PRODUCTS AND SERVICES. Manager may offer wireless products
and services that are not Sprint PCS Products and Services, on the terms Manager
determines, if the offer of the additional products and services:
(a) does not violate the obligations of Manager under this
agreement;
(b) does not cause distribution channel conflict with or
consumer confusion regarding Sprint PCS' regional and national offerings of
Sprint PCS Products and Services;
(c) complies with the Trademark License Agreements; and
(d) does not materially impede the development of the Sprint
PCS Network.
Manager will not offer any products or services under this Section 3.2
that are confusingly similar to Sprint PCS Products and Services. Manager must
request that Sprint PCS determine whether Sprint PCS considers a product or
service to be confusingly similar to any Sprint PCS Products and Services by
providing advance written notice to Sprint PCS that describes those products and
services that could be interpreted to be confusingly similar to Sprint PCS
Products and Services. If Sprint PCS fails to provide a response to Manager
within 30 days after receiving the notice, then the products and services are
deemed to create confusion with the Sprint PCS Products and Services and the
request therefore rejected. In rejecting any request Sprint PCS must provide the
reasons for the rejection. If the rejection is based on Sprint PCS' failure to
respond within 30 days and Manager requests an explanation for the deemed
rejection, then Sprint PCS must provide within 30 days the reasons for the
rejection.
3.3 CROSS-SELLING WITH SPRINT. Manager and Sprint and Sprint's Related
Parties may enter into arrangements to sell Sprint's services, including long
distance service (except those long distance services governed by Section 3.4),
Internet access, customer premise equipment, prepaid phone cards, and any other
services that Sprint or its Related Parties make available from time to time.
Sprint's services may be packaged with the Sprint PCS Products and Services.
If Manager chooses to resell the long distance services, Internet
access or competitive local telephony services including prepaid phone cards, of
third parties (other than Manager's Related Parties), Manager will give Sprint
the right of last offer to provide those services on the same terms and
conditions as the offer to which Manager is prepared to agree, subject to the
terms of any existing agreements Manager was subject to prior to execution of
this agreement.
Within the Service Area, Manager will facilitate sales by Sprint of the
Sprint PCS Products and Services, including the packaging of wireless, local
exchange and other products and services with Sprint products and services.
3.4 IXC SERVICES. Manager must purchase from Sprint long distance
telephony services for the Sprint PCS Products and Services at wholesale rates.
Long distance telephone calls are those calls between the local calling area
for the Service Area Network and areas outside the local calling area. The local
calling area will be defined by mutual agreement of Sprint PCS and Manager. If
the parties cannot agree on the extent of the local calling area they will
resolve the matter through the dispute resolution process in
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Section 14. Any arrangement must have terms at least as favorable to Manager (in
all material respects) as those offered by Sprint to any wholesale customer of
Sprint in comparable circumstances (taking into consideration volume, traffic
patterns, etc.). If Manager is bound by an agreement for these services and the
agreement was not made in anticipation of this agreement, then the requirements
of this Section 3.4 do not apply during the term of the other agreement. If the
other agreement terminates for any reason then the requirements of this Section
3.4 do apply.
3.5 RESALE OF PRODUCTS AND SERVICES.
3.5.1 MANDATORY RESALE OF PRODUCTS AND SERVICES. Sprint PCS
must, under FCC rules, permit Sprint PCS' service plans to be resold by a
purchaser of the service plan. Sprint PCS will not grant the purchaser of a
service plan the right to use any of the support services offered by Sprint PCS,
including customer care, billing, collection, and advertising nor the right to
use the Brands. The reseller only has the right to use the service purchased.
Consequently, Manager agrees not to interfere with any purchaser of the Sprint
PCS Products or Services who resells the service plans in accordance with this
agreement and applicable law. Manager will notify purchaser that the purchaser
does not have a right to use the Brands or Sprint PCS' support services. In
addition, Manager will notify Sprint PCS if it reasonably believes a reseller of
retail service plans is using the support services or Brands.
3.5.2 VOLUNTARY RESALE OF PRODUCTS AND SERVICES. Sprint PCS
may choose to offer a resale product under which resellers will resell Sprint
PCS Products and Services under brand names other than the Brands, except Sprint
PCS may permit the resellers to use the Brands for limited purposes related to
the resale of Sprint PCS Products and Services (e.g., to notify people that the
handsets of the resellers will operate on the Sprint PCS Network). The resellers
may also provide their own support services (e.g., customer care and billing) or
may purchase the support services from Sprint PCS. If Sprint PCS chooses to
offer a voluntary resale product, it will adopt a program that will be a Program
Requirement under this agreement and that addresses the manner in which Manager
and Other Managers interact with the resellers. Sprint PCS will discuss such
program with Manager during development.
Manager must not sell Sprint PCS Products and Services for resale
unless Sprint PCS consents to such sales in advance in writing, except as
required under the regulations and rules concerning mandatory resale.
3.6 NON-COMPETITION. Neither Manager nor any of its Related Parties may
offer Sprint PCS Products and Services outside of the Service Area without the
prior written approval of Sprint PCS.
Within the Service Area, Manager and Related Parties may offer, market
or promote telecommunications products or services only under the following
brands:
(a) products or services with the Brands;
(b) other products and services approved under Section 3.2,
except no brand of a significant competitor of Sprint PCS or its Related Parties
in the telecommunications business may be used by Manager's Related Parties on
these products and services;
(c) products or services with Manager's brand; or
(d) products or services with the brands of Manager's Related
Parties,
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except no brand of a significant competitor of Sprint PCS or its Related Parties
in the telecommunications business may be used by Manager's Related Parties on
these products and services.
If Manager or any of its Related Parties has licenses to provide
broadband personal communication services outside the Service Area, neither
Manager nor such Related Party may utilize the spectrum to offer Sprint PCS
Products and Services without prior written consent from Sprint PCS.
Additionally, when Manager's customers from inside the Service Area travel or
roam to other geographic areas, Manager will route the customers' calls, both
incoming and outgoing, according to the Sprint PCS Network Roaming and Inter
Service Area Program Requirements, without regard to any wireless networks
operated by Manager or its Related Parties. For example, Manager will program
the preferred roaming list for handsets sold in the Service Area to match the
Sprint PCS preferred roaming list.
3.7 RIGHT OF LAST OFFER. Manager will offer to Sprint the right to make
to Manager the last offer to provide backhaul and transport services for call
transport for the Service Area Network, if Manager decides to use third parties
for backhaul and transport services rather than self-provisioning the services
or purchasing the services from Related Parties of Manager. Sprint will have a
reasonable time to respond to Manager's request for last offer to provide
backhaul and transport pricing and services, which will be no greater than 5
Business Days after receipt of the request for the services and pricing from
Manager.
If Manager has an agreement in effect as of the date of this agreement
for these services and the agreement was not made in anticipation of this
agreement, then the requirements of this Section 3.7 do not apply during the
term of the other agreement. If the other agreement terminates for any reason
then the requirements of this Section 3.7 do apply.
4. MARKETING AND SALES ACTIVITIES
4.1 SPRINT PCS NATIONAL OR REGIONAL DISTRIBUTION PROGRAM REQUIREMENTS.
During the term of this agreement, Manager must participate in any Sprint PCS
National or Regional Distribution Program (as in effect from time to time), and
will pay or receive compensation for its participation in accordance with the
terms and conditions of that program. The Sprint PCS National or Regional
Distribution Program Requirements in effect as of the date of this agreement are
attached as Exhibit 4.1.
4.1.1 TERRITORIAL LIMITATIONS ON MANAGER'S DISTRIBUTION
ACTIVITIES. Neither Manager nor any of its Related Parties will market, sell or
distribute Sprint PCS Products and Services outside of the Service Area, except:
(a) as otherwise agreed upon by the parties in advance in
writing; or
(b) Manager may place advertising in media that has
distribution outside of the Service Area, so long as that advertising is
intended by Manager to reach primarily potential customers within the Service
Area.
Manager may establish direct local distribution programs in accordance
with the Sprint PCS Distribution Program Requirements, subject to the terms and
conditions of the Trademark License Agreements and the non-competition and other
provisions contained in this agreement.
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4.1.2 SETTLEMENT OF EQUIPMENT SALES. Sprint PCS will establish
a settlement policy and process that will be included in the Sprint PCS National
or Regional Distribution Program Requirements to:
(a) reconcile sales of subscriber equipment made in the
service areas of Sprint PCS or Other Managers of Sprint PCS, that result in
activations in the Service Area; and
(b) reconcile sales of subscriber equipment made in the
Service Area that result in activations in service areas of Sprint PCS or Other
Managers.
In general, the policy will provide that the party in whose service
area the subscriber equipment is activated will be responsible for the payment
of any subsidy (i.e., the difference between the price paid to the manufacturer
and the suggested retail price for direct channels and the difference between
the price paid to the manufacturer and the wholesale price for third party
retailers) and for other costs associated with the sale, including logistics,
inventory carrying costs, direct channel commissions and other retailer
compensation.
4.1.3 USE OF THIRD-PARTY DISTRIBUTORS. Manager may request
that Sprint PCS and a local distributor enter into Sprint PCS' standard
distribution agreement regarding the purchase from Sprint PCS of handsets and
accessories. Sprint PCS will use commercially reasonable efforts to reach
agreement with the local distributor. Sprint PCS may refuse to enter into a
distribution agreement with a distributor for any reasonable reason, including
that the distributor fails to pass Sprint PCS' then current credit and
background checks or the distributor fails to agree to the standard terms of the
Sprint PCS distribution agreement. Any local distributor will be subject to the
terms of the Trademark License Agreements or their equivalent. Manager will
report to Sprint PCS the activities of any local distributor that Manager
believes to be in violation of the distribution agreement.
4.2 SPRINT PCS NATIONAL ACCOUNTS PROGRAM REQUIREMENTS. During the term
of this agreement, Manager must participate in the Sprint PCS National Accounts
Program (as in effect from time to time), and will be entitled to compensation
for its participation and will be required to pay the expenses of the program in
accordance with the terms and conditions of that program. The Sprint PCS
National Accounts Program Requirements in effect as of the date of this
agreement are attached as Exhibit 4.2.
4.3 SPRINT PCS ROAMING AND INTER SERVICE AREA PROGRAM REQUIREMENTS.
Manager will participate in the Sprint PCS Roaming and Inter Service Area
Program established and implemented by Sprint PCS, including roaming price plans
and inter-carrier settlements. The Sprint PCS Roaming and Inter Service Area
Program Requirements in effect as of the date of this agreement are attached as
Exhibit 4.3.
As part of the Sprint PCS Roaming and Inter Service Area Program
Requirements, Sprint PCS will establish a settlement policy and process to
equitably distribute between the members making up the Sprint PCS Network (i.e.,
Sprint PCS, Manager and all Other Managers) the revenues received by one member
for services used by its customers when they travel into other members' service
areas.
4.4 PRICING. Manager will offer and support all Sprint PCS pricing
plans designated for regional or national offerings of Sprint PCS Products and
Services (e.g., national inter service area rates, regional home rates, and
local price points). The Sprint PCS pricing plans as of the date of this
agreement are attached as Exhibit 4.4. Sprint PCS may modify the Sprint PCS
pricing plans from time to time in its sole discretion by delivering to Manager
a new Exhibit 4.4.
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Additionally, with prior approval from Sprint PCS, which approval will
not be unreasonably withheld, Manager may establish price plans for Sprint PCS
Products and Services that are only offered in its local market, subject to:
(a) the non-competition and other provisions contained in this
agreement;
(b) consistency with regional and national pricing plans;
(c) regulatory requirements; and
(d) capability and cost of implementing rate plans in Sprint
PCS systems (if used).
Manager must provide advance written notice to Sprint PCS with details
of any pricing proposal for Sprint PCS Products or Services in the Service Area.
If Sprint PCS fails to respond to Manager within 20 days after receiving such
notice, then the price proposed for those Sprint PCS Products or Services is
deemed approved.
At the time Sprint PCS approves a pricing proposal submitted by
Manager. Sprint PCS will provide Manager an estimate of the costs and expenses
Sprint PCS will incur to implement the proposed pricing plan. Manager agrees to
promptly reimburse Sprint PCS for any cost or expense incurred by Sprint PCS to
implement such a pricing plan, which will not exceed the amount estimated by
Sprint PCS if Manager waited for Sprint PCS' response to Manager's proposal.
4.5 HOME SERVICE AREA. Sprint PCS and Manager will agree to the initial
home service area for each base station in the Service Area Network prior to the
date the Service Area Network goes into commercial operation. If the parties
cannot agree to the home service area for each base station in the Service Area
Network, then the parties will use the dispute resolution process in Section 14
of this agreement to assign each base station to a home service area.
5. USE OF BRANDS
5.1 USE OF BRANDS.
(a) Manager must enter into the Trademark License Agreements
on or before the date of this agreement.
(b) Manager must use the Brands exclusively in the marketing,
promotion, advertisement, distribution, lease or sale of any Sprint PCS Products
and Services within the Service Area, except Manager may use other brands to the
extent permitted by the Trademark License Agreements and not inconsistent with
the terms of this agreement.
(c) Neither Manager nor any of its Related Parties may market,
promote, advertise, distribute, lease or sell any of the Sprint PCS Products and
Services or Manager's Products and Services on a non-branded, "private label"
basis or under any brand, trademark, trade name or trade dress other than the
Brands, except (i) for sales to resellers required under this agreement, or (ii)
as permitted under the Trademark License Agreements.
(d) The provisions of this Section 5.1 do not prohibit Manager
from including Sprint PCS Products and Services under the Brands within the
Service Area as part of a package with its other products and services that bear
a different brand or trademark. The provisions of this Section 5.1 do not apply
to the extent that they are inconsistent with applicable law or in conflict with
the Trademark License Agreements.
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5.2 CONFORMANCE TO MARKETING COMMUNICATIONS GUIDELINES. Manager must
conform to the Marketing Communications Guidelines in connection with the
marketing, promotion, advertisement, distribution, lease and sale of any of the
Sprint PCS Products and Services. The Marketing Communications Guidelines in
effect as of the date of this agreement have been provided to Manager. Sprint
and Sprint Spectrum may amend the Marketing Communications Guidelines from time
to time in accordance with the terms of the Trademark License Agreements.
5.3 JOINT MARKETING WITH THIRD PARTIES.
(a) Manager may engage in various joint marketing activities
(e.g., promotions with sports teams and entertainment providers or tournament
sponsorships) with third parties in the Service Area from time to time during
the term of this agreement with respect to the Sprint PCS Products and Services,
except that Manager may engage in the joint marketing activities only if the
joint marketing activities:
(i) Are conducted in accordance with the terms and
conditions of the Trademark License Agreements and the Marketing
Communications Guidelines;
(ii) Do not violate the terms of this agreement;
(iii) Are not likely (as determined by Sprint PCS, in
its sole discretion) to cause confusion between the Brands and any
other trademark or service mark used in connection with the activities;
(iv) Are not likely (as determined by Sprint, in its
sole discretion) to cause confusion between the Sprint Brands and any
other trademark or service mark used in connection with the activities;
and
(v) Are not likely (as determined by Sprint PCS, in
its sole discretion) to give rise to the perception that the Sprint PCS
Products and Services are being advertised, marketed or promoted under
any trademark or service mark other than the Brands, except as provided
in the Trademark License Agreements. Manager will not engage in any
activity that includes co-branding involving use of the Brands (that
is, the marketing, promotion, advertisement, distribution, lease or
sale of any of the Sprint PCS Products and Services under the Brands
and any other trademark or service mark), except as provided in the
Trademark License Agreements.
(b) Manager must provide advance written notice to Sprint PCS
describing those joint marketing activities that may:
(i) cause confusion between the Brands and any other
trademark or service mark used in connection with the proposed
activities; or
(ii) give rise to the perception that the Sprint PCS
Products and Services are being advertised, marketed or promoted under
any trademark or service mark other than the Brands, except as provided
in the Trademark License Agreements.
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(c) If Sprint PCS fails to provide a response to Manager
within 20 days after receiving such notice, then the proposed activities are
deemed, as the case may be:
(i) not to create confusion between the Brands and
any other trademark or service mark; or
(ii) not to give rise to the perception that
Manager's products and services are being advertised, marketed or
promoted under any trademark or service mark other than the Brands,
except as provided in the Trademark License Agreements.
5.4 PRIOR APPROVAL OF USE OF BRANDS. Manager must obtain advance
written approval from Sprint for use of the Sprint Brands to the extent required
by the Sprint Trademark License Agreement and from Sprint PCS for use of the
Sprint PCS Brands to the extent required by the Sprint PCS Trademark License
Agreement. Sprint PCS will use commercially reasonable efforts to facilitate any
review of Manager's use of the Brands, if Sprint PCS is included in the review
process.
5.5 DURATION OF USE OF BRAND. Manager is entitled to use the Brands
only during the term of the Trademark License Agreements and any transition
period during which Manager is authorized to use the Brands following their
termination.
6. ADVERTISING AND PROMOTION
6.1 NATIONAL ADVERTISING AND PROMOTION. Sprint PCS is responsible for
(a) all national advertising and promotion of the Sprint PCS Products and
Services, including the costs and expenses related to national advertising and
promotions, and (b) all advertising and promotion of the Sprint PCS Products and
Services in the markets where Sprint PCS operates without the use of a Manager.
6.2 IN-TERRITORY ADVERTISING AND PROMOTION. Manager must advertise and
promote the Sprint PCS Products and Services in the Service Area (and may do so
in the areas adjacent to the Service Area so long as Manager intends that such
advertising or promotion primarily reach potential customers within the Service
Area). Manager must advertise and promote the Sprint PCS Products and Services
in accordance with the terms and conditions of this agreement. the Trademark
License Agreements and the Marketing Communication Guidelines. Manager is
responsible for the costs and expenses incurred by Manager with respect to
Manager's advertising and promotion activities in the Service Area.
Manager will be responsible for a portion of the cost of any promotion
or advertising done by third party retailers in the Service Area (e.g., Best
Buy) in accordance with any cooperative advertising arrangements based on per
unit handset sales.
Sprint PCS has the right to use in any promotion or advertising done by
Sprint PCS any promotion or advertising materials developed by Manager from time
to time with respect to the Sprint PCS Products and Services. Sprint PCS will
reimburse Manager for the reproduction costs related to such use.
Sprint PCS will make available to Manager the promotion or advertising
materials developed by Sprint PCS from time to time with respect to Sprint PCS
Products and Services in current use by Sprint PCS (e.g., radio ads, television
ads, design of print ads, design of point of sale materials, retail store
concepts and designs, design of collateral). Manager will bear the cost of using
such materials (e.g., cost of local radio and television ad placements, cost of
printing collateral in quantity, and building out and finishing retail stores).
6.3 REVIEW OF ADVERTISING AND PROMOTION CAMPAIGNS. Sprint PCS and
Manager will jointly review the upcoming marketing and promotion campaigns of
Manager with respect to Sprint PCS Products and Services (including advertising
and promotion expense budgets) and will use good faith efforts to
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coordinate Manager's campaign with Sprint PCS' campaign to maximize the market
results of both parties. Sprint PCS and Manager may engage in cooperative
advertising or promotional activities during the term of this agreement as the
parties may agree in writing.
6.4 PUBLIC RELATIONS. If Manager conducts local public relations
efforts, then Manager must conduct the local public relations efforts consistent
with the Sprint PCS Communications Policies. The Sprint PCS Communications
Policies as of the date of this agreement are attached as Exhibit 6.4. Sprint
PCS may modify the Sprint PCS Communications Policies from time to time by
delivering to Manager a new Exhibit 6.4.
7. SPRINT PCS TECHNICAL PROGRAM REQUIREMENTS
7.1 CONFORMANCE TO SPRINT PCS TECHNICAL PROGRAM REQUIREMENTS.
(a) Manager must meet or exceed the Sprint PCS Technical
Program Requirements established by Sprint PCS from time to time for the Sprint
PCS Network. Manager will be deemed to meet the Sprint PCS Technical Program
Requirements if:
(i) Manager operates the Service Area Network at a
level equal to or better than the lower of the Operational Level of
Sprint PCS or the operational level contemplated by the Sprint PCS
Technical Program Requirements; or
(ii) Sprint PCS is responsible under the Services
Agreement to ensure the Service Area Network complies with the Sprint
PCS Technical Program Requirements.
(b) Manager must demonstrate to Sprint PCS that Manager has
complied with the Sprint PCS Technical Program Requirements prior to connecting
the Service Area Network to the rest of the Sprint PCS Network. Once the Service
Area Network is connected to the Sprint PCS Network, Manager must continue to
comply with the Sprint PCS Technical Program Requirements. Sprint PCS agrees
that the Sprint PCS Technical Program Requirements adopted for Manager will be
the same Sprint PCS Technical Program Requirements applied by Sprint PCS to the
Sprint PCS Network.
7.2 ESTABLISHMENT OF SPRINT PCS TECHNICAL PROGRAM REQUIREMENTS. Sprint
PCS has delivered to Manager a copy of the current Sprint PCS Technical Program
Requirements, attached as Exhibit 7.2. Sprint PCS drafted the Sprint PCS
Technical Program Requirements to ensure a minimum, base-line level of quality
for the Sprint PCS Network. The Sprint PCS Technical Program Requirements
include standards relating to voice quality, interoperability, consistency
(seamlessness) of coverage, RF design parameters, system design, capacity, and
call blocking ratio. Sprint PCS has selected code division multiple access as
the initial air interface technology for the Sprint PCS Network (subject to
change in accordance with Section 7.3).
7.3 HANDOFF TO ADJACENT NETWORKS. If technically feasible and
commercially reasonable, Manager will operate the Service Area Network in a
manner that permits a seamless handoff of a call initiated on the Service Area
Network to any adjacent PCS network that is part of the Sprint PCS Network, as
specified in the Sprint PCS Technical Program Requirements. Sprint PCS agrees
that the terms and conditions for seamless handoffs adopted for the Service Area
Network will be the same as the terms Sprint PCS applies to the other parts of
the Sprint PCS Network for similar configurations of equipment.
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8. SPRINT PCS CUSTOMER SERVICE PROGRAM REQUIREMENTS
8.1 COMPLIANCE WITH SPRINT PCS CUSTOMER SERVICE PROGRAM REQUIREMENTS.
Manager must comply with the Sprint PCS Customer Service Program Requirements in
providing the Sprint PCS Products and Services to any customer of Manager,
Sprint PCS or any Sprint PCS Affiliate. Manager will be deemed to meet the
standards if:
(a) Manager operates the Service Area Network, at a level
equal to or better than the lower of the Operational Level of Sprint PCS or the
operational level contemplated by the Program Requirements; or
(b) Manager has delegated to Sprint PCS under the Services
Agreement responsibility to ensure the Service Area Network complies with the
Sprint PCS Customer Service Standards.
Sprint PCS has delivered to Manager a copy of the Sprint PCS Customer
Service Standards, which are attached as Exhibit 8.1.
9. SPRINT PCS PROGRAM REQUIREMENTS
9.1 PROGRAM REQUIREMENTS GENERALLY. This agreement contains numerous
references to Sprint PCS National and Regional Distribution Program
Requirements, Sprint PCS National Accounts Program Requirements, Sprint PCS
Roaming and Inter Service Area Program Requirements, Sprint PCS Technical
Program Requirements and Sprint PCS Customer Service Program Requirements.
Sprint PCS may unilaterally amend from time to time in the manner described in
Section 9.2 all Program Requirements, guidelines and policies mentioned in this
agreement. The most current version of the requirements programs, guidelines and
policies mentioned in the first sentence of this Section 9.1 have been provided
to Manager.
9.2 AMENDMENTS TO PROGRAM REQUIREMENTS. Sprint PCS may amend any of the
Sprint PCS Program Requirements, subject to the following conditions:
(a) The applicable Program Requirements, as amended, will
apply equally to Manager, Sprint PCS and each Other Manager, except if Manager
and Sprint PCS agree otherwise or if Sprint PCS grants a waiver to Manager.
Sprint PCS may grant waivers to Other Managers without affecting Manager's
obligation to comply with the Program Requirements;
(b) Each amendment will be reasonably required to fulfill the
purposes set forth in Section 1.2 with respect to uniform and consistent
operations of the Sprint PCS Network and the presentation of Sprint PCS Products
and Services to customers in a uniform and consistent manner;
(c) Each amendment will otherwise be on terms and conditions
that are commercially reasonable with respect to the construction, operation and
management of the Sprint PCS Network. With respect to any amendment to Program
Requirements, Sprint PCS may provide for reasonable transition periods and,
where appropriate, grandfathering provisions for existing activities by Manager
that were permitted under the applicable Program Requirements before the
amendment;
(d) Sprint PCS must give Manager reasonable, written notice of
the amendment, but in any event the notice will be given at least 30 days prior
to the effective date of the amendment; and
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(e) Manager must implement any changes in the Program
Requirements within a commercially reasonable period of time unless otherwise
consented to by Sprint PCS. Sprint PCS will determine what constitutes a
commercially reasonable period of time taking into consideration relevant
business factors, including the strategic significance of the changes to the
Sprint PCS Network, the relationship of the changes to the yearly marketing
cycle, and the financial demands on and capacity generally of Other Managers.
Notwithstanding the preceding two sentences, Manager will not be required to
implement any change in the Service Area Network or the business of Manager
required by an amendment to a Program Requirement until Sprint PCS has
implemented the required changes in substantially all of that portion of the
Sprint PCS Network that Sprint PCS operates without the use of a manager, unless
the amendment to the Program Requirement relates to an obligation regarding the
Service Area Network mandated by law. When necessary for reasons related to new
technical standards, new equipment or strategic reasons, Sprint PCS can require
Manager to implement the changes in the Service Area Network or Manager's
business concurrently with Sprint PCS, in which case Sprint PCS will reimburse
Manager for its costs and expenses if Sprint PCS discontinues the Program
Requirement changes prior to implementation.
Sprint PCS may grant Manager appropriate waivers and variances from the
requirements of any Program Requirements. Sprint PCS has the right to adopt any
Program Requirements that implement any obligation regarding the Service Area
Network mandated by law.
Any costs and expenses incurred by Manager in connection with
conforming to any change to the Program Requirements during the term of this
agreement are the responsibility of Manager.
9.3 MANAGER'S RIGHT TO REQUEST REVIEW OF CHANGES. If Sprint PCS
announces a change to a Program Requirement that will:
(a) cause the Manager to spend an additional amount greater
than 5 % of Manager's shareholder's equity or capital account plus Manager's
long-term debt (i.e., notes that mature more than one year from the date
issued), as reflected on Manager's books; or
(b) cause the long term operating expenses of Manager on a per
unit basis using a 10-year time frame to increase by more than 10% on a net
present value basis, then Manager may give Sprint PCS a written notice
requesting Sprint PCS to reconsider the change.
The Sprint PCS Vice President or the designee of the Sprint PCS Chief
Officer in charge of the group that manages the Sprint PCS relationship with
Manager will review Manager's request. If after the review and decision by the
Vice President, Manager is still dissatisfied, then Manager may ask that the
Chief Officer to whom the Vice President reports review the matter. If Sprint
PCS still requires Manager to implement the change to the Program Requirement,
then upon Manager's failure to implement the change Sprint PCS will have the
rights under Section 11.
9.4 SPRINT PCS' RIGHT TO IMPLEMENT CHANGES. If Manager requests Sprint
PCS to reconsider a change to a Program Requirement as permitted under Section
9.3 and Sprint PCS decides it will not require Manager to make the change,
Sprint PCS may, but is not required to, implement the change at Sprint PCS'
expense, in which event Manager will be required to operate the Service Area
Network, as changed, but Sprint PCS will be entitled to any revenue derived from
the change.
9.5 RIGHTS OF INSPECTION. Sprint PCS and its authorized agents and
representatives may enter upon the premises of any office or facility operated
by or for Manager at any time, with reasonable advance notice to Manager if
possible, to inspect, monitor and test in a reasonable manner the Service Area
Network,
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including the facilities, equipment, books and records of Manager, to ensure
that Manager has complied or is in compliance with all covenants and obligations
of Manager under this agreement, including Manager's obligation to conform to
the Program Requirements. The inspection, monitoring and testing may not disrupt
the operations of the office or facility, nor impede Manager's access to the
Service Area Network.
9.6 MANAGER'S RESPONSIBILITY TO INTERFACE WITH SPRINT PCS. Manager will
use platforms fully capable of interfacing with the Sprint PCS platforms in
operating the Service Area Network and in providing Sprint PCS Products and
Services. Manager will pay the expense of making its platforms fully capable of
interfacing with Sprint PCS, including paying for the following:
(i) Connectivity;
(ii) Any changes that Manager requests Sprint PCS to
make to Sprint PCS systems to interconnect with Manager's systems that
Sprint PCS, in its sole discretion, agrees to make;
(iii) Equipment to run Manager's software;
(iv) License fees for Manager's software; and
(v) Manager upgrades or changes to its platforms.
10. FEES
10.1 FEES AND PAYMENTS.
10.1.1 FEE BASED ON COLLECTED REVENUE. Sprint PCS will pay to
Manager a weekly fee equal to 92% of Collected Revenues for the week for all
obligations of Manager under this Agreement. The fee will be due on Thursday of
the week following the week for which the fee is calculated.
10.1.2 PAYMENT OF UNIVERSAL SERVICE FUNDS. Sprint PCS and
Manager will share any federal and state subsidy funds (e.g., payments by a
state of universal service fund subsidies to Sprint PCS or Manager), if any,
received by Sprint PCS or Manager for customers who reside in the portion of the
Service Area served by the Service Area Network. Manager is entitled to 92% of
any amount received by either party and Sprint PCS is entitled to 8% of such
amounts.
10.1.3 INTER SERVICE AREA FEES. Sprint PCS will pay to Manager
monthly a fee as set out in the Sprint PCS Roaming and Inter Service Area
Program, for each minute of use that a customer of Sprint PCS or one of the
Other Managers whose NPA-NXX is not assigned to the Service Area Network uses
the Service Area Network. Manager will pay to Sprint PCS a fee, as set out in
the Sprint PCS Roaming and Inter Service Area Program, for each minute of use
that a customer whose NPA-NXX is assigned to the Service Area Network uses a
portion of the Sprint PCS Network other than the Service Area Network. Manager
acknowledges that the manner in which the NPA-NXX is utilized could change,
which will require a modification in the manner in which the inter service area
fees, if any, will be calculated.
10.1.4 INTERCONNECT FEES. Manager will pay to Sprint PCS (or
to other carriers as appropriate) monthly the interconnect fees, if any, as
provided under Section 1.4.
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10.1.5 OUTBOUND ROAMING FEES. If not otherwise provided under
any Program Requirement:
(a) Sprint PCS will pay to Manager monthly the amount of
Outbound Roaming fees that Sprint PCS collects for the month from end users
whose NPA-NXX is assigned to the Service Area; and
(b) Manager will pay to Sprint PCS (or to a clearinghouse or
other carrier as appropriate) the direct cost of providing the capability for
the Outbound Roaming, including any amounts payable to the carrier that handled
the roaming call and the clearinghouse operator.
10.1.6 REIMBURSEMENTS. Manager will pay to or reimburse Sprint
PCS for any amounts that Sprint PCS is required to pay to a third party (e.g., a
telecommunications carrier) to the extent Sprint PCS already paid such amount to
Manager under this Section 10.
10.2 MONTHLY TRUE UP. Manager will report to Sprint PCS monthly the
amount of Collected Revenue received directly by the Manager (e.g., customer
mails payment to the business address of Manager rather than to the lockbox or a
customer pays a direct sales force representative in cash). Sprint PCS will on a
monthly basis true up the fees and payments due under Section 10.1 against the
actual payments made by Sprint PCS to Manager. Sprint PCS will provide to
Manager a true up report each month showing the true up and the net amount due
from one party to the other, if any. If the weekly payments made to Manager
exceed the actual fees and payments due to Manager, then Manager will remit the
amount of the overpayment to Sprint PCS within 5 Business Days after receiving
the true up report from Sprint PCS. If the weekly payments made to Manager are
less than the actual fees and payments due to Manager, then Sprint PCS will
remit the shortfall to Manager within 5 Business Days after sending the true up
report to Manager.
If a party disputes any amount on the true up report, the disputing
party must give the other party written notice of the disputed amount and the
reason for the dispute within 90 days after it receives the true up report. The
dispute will be resolved through the dispute resolution process in Section 14.
The parties must continue to pay to the other party any undisputed amounts owed
under this agreement during the dispute resolution process. The dispute of an
item does not stay or diminish a party's other rights and remedies under this
agreement.
10.3 TAXES. Manager will pay or reimburse Sprint PCS for any sales,
use, gross receipts or similar tax, administrative fee, telecommunications fee
or surcharge for taxes or fees levied by a governmental authority on the fees
and charges payable by Sprint PCS to Manager.
10.4 COLLECTED REVENUES DEFINITION. "Collected Revenues" means actual
payments received by or on behalf of Sprint PCS or Manager for Sprint PCS
Products and Services from others including the customers whose NPA-NXX is the
same as that for the portion of the Service Area served by the Service Area
Network. In determining Collected Revenues the following principles will apply.
(a) The following items will be treated as follows:
(i) Collected Revenues do not include revenues from
federal and state subsidy funds; they are handled separately as noted
in Section 10.1.2;
(ii) Collected Revenues do include any amounts
received for the payment of Inbound Roaming charges and interconnect
fees when calls are carried on the Service Area Network; and
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(iii) Collected Revenues do not include any amounts
received with respect to any changes made by Sprint PCS under Section
9.4.
(b) The following items are not Collected Revenues; Sprint PCS
is obligated to remit the amounts received with respect to such items, if any,
to Manager, as follows:
(i) Inter service area payments will be paid as
provided under Section 10.1.3;
(ii) Outbound Roaming and related charges will be
paid as provided under Section 10.1.5;
(iii) Proceeds from the sale or lease of subscriber
equipment and accessories will be paid to Manager, subject to the
equipment settlement process in Section 4.1.2;
(iv) Proceeds from sales not in the ordinary course
of business (e.g., sales of switches, cell sites, computers, vehicles
or other fixed assets); and
(v) Any amounts collected with respect to sales and
use taxes, gross receipts taxes, transfer taxes, and similar taxes,
administrative fees, telecommunications fees, and surcharges for taxes
and fees that are collected by a carrier for the benefit of a
governmental authority, subject to Manager's obligation under Section
10.3.
(c) The following items are not Collected Revenues; neither
party will collect any amounts respecting such items:
(i) Reasonable adjustments of a customer's account
(e.g., if Sprint PCS or Manager reduces a customer's bill, then the
amount of the adjustment is not Collected Revenue); and
(ii) Amount of bad debt and fraud associated with
customers whose NPA-NXX is assigned to the Service Area (e.g., if
Sprint PCS or Manager writes off a customer's bill as a bad debt, there
is no Collected Revenue on which a fee is due to Manager).
10.5 LATE PAYMENTS. Any amount due under this Section 10 that is not
paid by one party to the other party in accordance with the terms of this
agreement will bear interest at the Default Rate beginning (and including) the
3rd day after the due date until (and including) the date paid.
10.6 SETOFF RIGHT IF FAILURE TO PAY AMOUNTS DUE. If Manager fails to
pay any undisputed amount due Sprint PCS or a Related Party of Sprint PCS under
this agreement, the Services Agreement, or any other agreement with Sprint PCS
or a Related Party, then Sprint PCS may setoff against standard payment
intervals (e.g. weekly) against the amounts paid to Manager under Section 10.1
until such time as Manager pays any such unpaid amounts.
Sprint PCS may setoff the following amounts:
(a) any amount that Manager owes to Sprint PCS or a Related
Party of Sprint PCS, including amounts due under the Services Agreement; and
(b) any amount that Sprint PCS reasonably estimates will be
due to Sprint PCS for the current month under the Services Agreement (e.g., if
under the Services Agreement customer care calls are
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billed monthly, Sprint PCS can deduct from the weekly payment to Manager an
amount Sprint PCS reasonably estimates will be due Sprint PCS under the Services
Agreement).
On a monthly basis Sprint PCS will true up the estimated amounts
deducted against the actual amounts due Sprint PCS. If the estimated amounts
deducted by Sprint PCS exceed the actual amounts due to Sprint PCS. then Sprint
PCS will remit the excess to Manager with the next weekly payment. If the
estimated amounts deducted are less than the actual amounts due to Sprint PCS
and its Related Parties, then Sprint PCS may continue to setoff the payments to
Manager against the amounts due to Sprint PCS. This right of setoff is in
addition to any other right that Sprint PCS may have under this agreement.
11. TERM; TERMINATION; EFFECT OF TERMINATION
11.1 INITIAL TERM. This agreement commences on the date of execution
and, unless terminated earlier in accordance with the provisions of this Section
11, continues for a period of 20 years (the "Initial Term").
11.2 RENEWAL TERMS. Following expiration of the Initial Term, this
agreement will automatically renew for 3 successive 10-year renewal periods (for
a maximum of 50 years including the Initial Term), unless at least 2 years prior
to the commencement of any renewal period either party notifies the other party
in writing that it does not wish to renew this agreement.
11.2.1 NON-RENEWAL RIGHTS OF MANAGER. If this agreement will
terminate because Sprint PCS gives Manager timely written notice of non-renewal
of this agreement, then Manager may exercise its rights under Section 11.2.1.1
or, if applicable, its rights under Section 11.2.1.2.
11.2.1.1 Manager's Put Right. Manager may within 30
days after the date Sprint PCS gives notice of non-renewal put to
Sprint PCS all of the Operating Assets. Sprint PCS will pay to Manager
for the Operating Assets an amount equal to 80% of the Entire Business
Value. The closing of the purchase of the Operating Assets will occur
within 20 days after the later of (a) the receipt by Sprint PCS of the
written notice of determination of the Entire Business Value provided
by the appraisers under Section 11.7 or (b) the receipt of all
materials required to be delivered to Sprint PCS under Section 11.8.
Upon closing the purchase of the Operating Assets this agreement will
be deemed terminated. The exercise of the put, the determination of the
Operating Assets, the representations and warranties made by Manager
with respect to the Operating Assets and the business, and the process
for closing the purchase will be subject to the terms and conditions
set forth in Section 11.8.
11.2.1.2 Manager's Purchase Right.
(a) If Sprint PCS owns 20 MHZ or more of PCS spectrum
in the Service Area under the License on the date this agreement is
executed, then Manager may, subject to receipt of FCC approval of the
necessary disaggregation and partition, purchase from Sprint PCS the
Disaggregated License for an amount equal to the greater of (1) the
original cost of the License to Sprint PCS (pro rated on a pops and
spectrum basis) plus the microwave relocation costs paid by Sprint PCS
or (2) 10% of the Entire Business Value.
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(b) Upon closing the purchase of the spectrum this
agreement will be deemed terminated. The closing of the purchase of the
Disaggregated License will occur within the later of:
(1) 20 days after the receipt by Manager of
the written notice of determination of the Entire Business
Value by the appraisers under Section 11.7; or
(2) 10 days after the approval of the sale
of the Disaggregated License by the FCC.
(c) The exercise of the purchase right, the
determination of the geographic extent of the Disaggregated License
coverage, the representations and warranties made by Sprint PCS with
respect to the Disaggregated License, and the process for closing the
purchase will be subject to the terms and conditions set forth in
Section 11.8.
(d) After the closing of the purchase Manager will
allow:
(1) subscribers of Sprint PCS to roam on
Manager's network; and
(2) Sprint PCS to resell Manager's Products
and Services.
Manager will charge Sprint PCS a MFN price in either case.
11.2.2 NON-RENEWAL RIGHTS OF SPRINT PCS. If this agreement
will terminate because of any of the following five (5) events, then Sprint PCS
may exercise its rights under Section 11.2.2.1 or, if applicable, its rights
under Section 11.2.2.2:
(a) Manager gives Sprint PCS timely written notice of
non-renewal of this agreement;
(b) both parties give timely written notices of non-renewal;
(c) this agreement expires with neither party giving a written
notice of non-renewal;
(d) either party elects to terminate this agreement under
Section 11.3.4(a); or
(e) Manager elects to terminate this agreement under Section
11.3.4(b).
11.2.2.1 Sprint PCS' Purchase Right. Sprint PCS may
purchase from Manager all of the Operating Assets. Sprint PCS will pay
to Manager an amount equal to 80% of the Entire Business Value. The
closing of the purchase of the Operating Assets will occur within 20
days after the later of (a) the receipt by Sprint PCS of the written
notice of determination of the Entire Business Value provided by the
appraisers under Section 11.7 or (b) the receipt of all materials
required to be delivered to Sprint PCS under Section 11.8. Upon closing
the purchase of the Operating Assets this agreement will be deemed
terminated. The exercise of the purchase right, the determination of
the Operating Assets, the representations and warranties made by
Manager with respect to the Operating Assets and the business, and the
process for closing the purchase will be subject to the terms and
conditions set forth in Section 11.8.
11.2.2.2 Sprint PCS' Put Right.
(a) Sprint PCS may, subject to receipt of FCC
approval, put to Manager the Disaggregated License for a purchase price
equal to the greater of (1) the original cost of the License to Sprint
PCS (pro rated on a pops and spectrum basis) plus the microwave
relocation costs paid by Sprint PCS or (2) 10% of the Entire Business
Value.
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(b) Upon closing the purchase of the Disaggregated
License this agreement will be deemed terminated. The closing of the
purchase of the Disaggregated License will occur within the later of:
(1) 20 days after the receipt by Sprint PCS
of the written notice of determination of the Entire Business
Value by the appraisers under Section 11.7; or
(2) 10 days after the approval of the sale
of the Disaggregated License by the FCC.
(c) The exercise of the put, the determination of the
geographic extent of the Disaggregated License coverage, the
representations and warranties made by Sprint PCS with respect to the
Disaggregated License, and the process for closing the purchase will be
subject to the terms and conditions set forth in Section 11.8.
(d) Manager may, within 10 days after it receives
notice of Sprint PCS' exercise of its put, advise Sprint PCS of the
amount of spectrum (not to exceed 10 MHZ) it wishes to purchase.
After the purchase Manager will allow:
(1) subscribers of Sprint PCS to roam on
Manager's network; and
(2) Sprint PCS to resell Manager's Products
and Services.
Manager will charge Sprint PCS a MFN price in either case.
11.2.2.3 Extended Term Awaiting FCC Approval. If
Manager is buying the Disaggregated License as permitted or required
under Sections 11.2.1.2 or 11.2.2.2, then the Term of this agreement
will extend beyond the original expiration date until the closing of
the purchase of the Disaggregated License. The parties agree to
exercise their respective commercially reasonable efforts to obtain FCC
approval of the transfer of the Disaggregated License.
11.3 EVENTS OF TERMINATION. An "Event of Termination" is deemed to
occur when a party gives written notice to the other party of the Event of
Termination as permitted below:
11.3.1 TERMINATION OF LICENSE.
(a) At the election of either party this agreement may be
terminated at the time the FCC revokes or fails to renew the License. Unless
Manager has the right to terminate this agreement under Section 11.3.1(b),
neither party has any claim against the other party if the FCC revokes or fails
to renew the License, even if circumstances would otherwise permit one party to
terminate this agreement based on a different Event of Termination, except that
the parties will have the right to pursue claims against each other as permitted
under Section 11.4(b).
(b) If the FCC revokes or fails to renew the License because
of a breach of this agreement by Sprint PCS, then Manager has the right to
terminate this agreement under Section 11.3.3 and not this Section 11.3.1.
11.3.2 BREACH OF AGREEMENT: PAYMENT OF MONEY TERMS. At the
election of the non-breaching party this agreement may be terminated upon the
failure by the breaching party to pay any amount
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due under this agreement or any other agreement between the parties or their
respective Related Parties if the breach is not cured within 30 days after the
breaching party's receipt of written notice of the nonpayment from the
non-breaching party.
11.3.3 BREACH OF AGREEMENT; OTHER TERMS. At the election of
the nonbreaching party this agreement may be terminated upon the material breach
by the breaching party of any material term contained in this agreement that
does not regard the payment of money, if the breach is not cured within 30 days
after the breaching party's receipt of written notice of the breach from the
non-breaching party, except the cure period will continue for a reasonable
period beyond the 30-day period, but will under no circumstances exceed 180 days
after the breaching party's receipt of written notice of the breach, if it is
unreasonable to cure the breach within the 30- day period, and the breaching
party takes action prior to the end of the 30-day period that is reasonably
likely to cure the breach and continues to diligently take action necessary to
cure the breach.
11.3.4 REGULATORY CONSIDERATIONS.
(a) At the election of either party this agreement may be
terminated if this agreement violates any applicable law in any material respect
where such violation (i) is classified as a felony or (ii) subjects either party
to substantial monetary fines or other substantial damages, except that before
causing any termination the parties must use best efforts to modify this
agreement, as necessary to cause this agreement (as modified) to comply with
applicable law and to preserve to the extent possible the economic arrangements
set forth in this agreement.
(b) At the election of Manager this agreement may be
terminated if the regulatory action described under 11.3.4(a) is the result of a
deemed change of control of the License and the parties are unable to agree upon
a satisfactory resolution of the matter with the regulatory authority without a
complete termination of this agreement.
11.3.5 TERMINATION OF TRADEMARK LICENSE AGREEMENTS. If either
Trademark License Agreement terminates under its terms, then:
(a) Manager may terminate this agreement if the Trademark
License Agreement terminated because of a breach of the Trademark License
Agreement by Sprint PCS or Sprint; and
(b) Sprint PCS may terminate this agreement if the Trademark
License Agreement terminated because of a breach of -the Trademark License
Agreement by Manager.
11.3.6 FINANCING CONSIDERATIONS. At the election of Sprint PCS
this agreement may be terminated upon the failure of Manager to obtain the
financing described in Exhibit 1.7 by the deadline(s) set forth on such Exhibit.
11.3.7 BANKRUPTCY OF A PARTY. At the election of the
non-bankrupt party, this agreement may be terminated upon the occurrence of a
Voluntary Bankruptcy or an Involuntary Bankruptcy of the other party.
"Voluntary Bankruptcy" means:
(a) The inability of a party generally to pay its
debts as the debts become due, or an admission in writing by a
party of its inability to pay its debts generally or a general
assignment by a party for the benefit of creditors;
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(b) The filing of any petition or answer by a party
seeking to adjudicate itself a bankrupt or insolvent, or
seeking any liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition
for itself or its debts under any law relating to bankruptcy.
insolvency or reorganization or relief of debtors, or seeking,
consenting to, or acquiescing in the entry of an order for
relief or the appointment of a receiver, trustee, custodian or
other similar official for itself or for substantially all of
its property; or
(c) Any action taken by a party to authorize any of
the actions set forth above.
"Involuntary Bankruptcy" means, without the consent or
acquiescence of a party:
(a) The entering of an order for relief or approving
a petition for relief or reorganization;
(b) Any petition seeking any reorganization,
arrangement, composition, readjustment, liquidation,
dissolution or other similar relief under any present or
future bankruptcy, insolvency or similar statute, law or
regulation;
(c) The filing of any petition against a party, which
petition is not dismissed within 90 days; or
(d) Without the consent or acquiescence of a party,
the entering of an order appointing a trustee, custodian,
receiver or liquidator of party or of all or any substantial
part of the property of the party, which order is not
dismissed within 90 days.
11.4 EFFECT OF AN EVENT OF TERMINATION.
(a) Upon the occurrence of an Event of Termination, the party
with the right to terminate this agreement or to elect the remedy upon the Event
of Termination, as the case may be, may:
(i) in the case of an Event of Termination under
Sections 11.3. 1 (a) or 11.3.7, give the other party written notice
that the agreement is terminated effective as of the date of the
notice, in which case neither party will have any other remedy or claim
for damages (except any claim the non-bankrupt party has against the
bankrupt party and any claims permitted under Section 11.4(b)); or
(ii) in the case of an Event of Termination other
than under Section 11.3.1(a), give the other party written notice that
the party is exercising one of its rights, if any, under Section 11.5
or Section 11.6.
(b) If the party terminates this agreement under Section
11.4(a)(i) then all rights and obligations of each party under this agreement
will immediately cease, except that:
(i) Any rights arising out of a breach of any terms
of this agreement will survive any termination of this agreement;
(ii) The provisions of this Section 11.4 and of
Sections 12.2, 13, 14 and 16 will survive any termination of this
agreement;
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(iii) The payment obligations under Section 10 will
survive any termination of this agreement if, and to the extent, any
costs or fees have accrued or are otherwise due and owing as of the
date of termination of this agreement from Manager to Sprint PCS or any
Sprint PCS Related Party or from Sprint PCS to Manager or any Manager
Related Party;
(iv) Either party may terminate this agreement in
accordance with the terms of this agreement without any liability for
any loss or damage arising out of or related to such termination,
including any loss or damage arising out of the exercise by Sprint PCS
of its rights under Section 11.6.3;
(v) The parties will use all commercially reasonable
efforts to cease immediately all of their respective efforts to market,
sell, promote or distribute the Sprint PCS Products and Services;
(vi) Sprint PCS has the option to buy from Manager
any new unsold subscriber equipment and accessories, at the prices
charged to Manager;
(vii) The parties will immediately stop making any
statements or taking any action that might cause third parties to infer
that any business relationship continues to exist between the parties,
and where necessary or advisable, the parties will inform third parties
that the parties no longer have a business relationship; and
(viii) If subscriber equipment and accessories are in
transit when this agreement is terminated, Sprint PCS may, but does not
have the obligation to, cause the freight carrier to not deliver the
subscriber equipment and accessories to Manager but rather to deliver
the subscriber equipment and accessories to Sprint PCS.
(c) If the party exercises its rights under Section
11.4(a)(ii), this agreement will continue in full force and effect until
otherwise terminated.
(d) If this agreement terminates for any reason other than
Manager's purchase of the Disaggregated License, Manager will not, for 3 years
after the date of termination compile, create, or use for the purpose of selling
merchandise or services similar to the Sprint PCS Products or Services, or sell,
transfer or otherwise convey to a third party, a list of customers who
purchased, leased or used Sprint PCS Products or Services. Manager may use such
a list for its own internal analysis of its business practices and operations.
If this agreement terminates because of Manager's purchase of the Disaggregated
License, then Sprint PCS will transfer to Manager the Sprint PCS customers with
a MIN assigned to the Service Area covered by the Disaggregated License, but
Sprint PCS retains the customers of a national account and any resellers who
have entered into a resale agreement with Sprint PCS. Manager agrees not to
solicit, directly or indirectly, any customers of Sprint PCS not transferred to
Manager under this Section 11.4(d) for 2 years after the termination of this
agreement.
11.5 MANAGER'S EVENT OF TERMINATION RIGHTS AND REMEDIES. In addition to
any other right or remedy that Manager may have under this agreement, the
parties agree that Manager will have the rights and remedies set forth in this
Section 11.5 and that such rights and remedies will survive the termination of
this agreement. If Manager has a right to terminate this agreement as the result
of the occurrence of an Event of Termination under Sections 11.3.2, 11.3.3,
11.3.5 or 11.3.7 (if Manager is the non-bankrupt party), then Manager has the
right to elect one of the following three (3) remedies, except Manager cannot
elect its remedies under Sections 11.5.1 or 11.5.2 during the first 2 years of
the Initial Term with respect to an Event of Termination under Section 11.3.3.
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11.5.1 MANAGER'S PUT RIGHT. Manager may put to Sprint PCS
within 30 days after the Event of Termination all of the Operating Assets.
Sprint PCS will pay to Manager an amount equal to 80% of the Entire Business
Value. The closing of the purchase of the Operating Assets will occur within 20
days after the later of:
(a) the receipt by Sprint PCS of the written notice of
determination of the Entire Business Value by the appraisers under Section 11.7;
or
(b) the receipt of all materials required to be delivered to
Sprint PCS under Section 11.8.
Upon closing the purchase of the Operating Assets this agreement will
be deemed terminated. The exercise of the put, the determination of the
Operating Assets, the representations and warranties made by the Manager with
respect to the Operating Assets and the business, and the process for closing
the purchase will be subject to the terms and conditions set forth in Section
11.8.
11.5.2 MANAGER'S PURCHASE RIGHT.
(a) If Sprint PCS owns 20 MHZ or more of PCS spectrum in the
Service Area under the License on the date this agreement is executed, then
Manager may, subject to receipt of FCC approval, purchase from Sprint PCS the
Disaggregated License for the greater of (1) the original cost of the License to
Sprint PCS (pro rated on a pops and spectrum basis) plus the microwave
relocation costs paid by Sprint PCS or (2) 9% (10% minus a 10% penalty) of the
Entire Business Value.
(b) Upon closing the purchase of the Disaggregated License
this agreement will be deemed terminated. The closing of the purchase of the
Disaggregated License will occur within the later of:
(1) 20 days after the receipt by Manager of
the written notice of determination of the Entire Business
Value by the appraisers under Section 11.7; or
(2) 10 days after the approval of the sale
of the Disaggregated License by the FCC.
The exercise of the purchase right, the determination of the geographic extent
of the Disaggregated License coverage, the representations and warranties made
by Sprint PCS with respect to the Disaggregated License, and the process for
closing the purchase will be subject to the terms and conditions set forth in
Section 11.8.
(c) After the closing of the purchase Manager will allow:
(1) subscribers of Sprint PCS to roam on
Manager's network; and
(2) Sprint PCS to resell Manager's Product
and Services.
Manager will charge Sprint PCS a MFN price in either case.
11.5.3 MANAGER'S ACTION FOR DAMAGES OR OTHER RELIEF. Manager
may seek damages or other appropriate relief in accordance with the dispute
resolution process in Section 14.
11.6 SPRINT PCS' EVENT OF TERMINATION RIGHTS AND REMEDIES. In addition
to any other right or remedy that Sprint PCS may have under this agreement, the
parties agree that Sprint PCS will have the
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rights and remedies set forth in this Section 11.6 and that such rights and
remedies will survive the termination of this agreement. If Sprint PCS has a
right to terminate this agreement as the result of the occurrence of an Event of
Termination under Sections 11.3.2, 11.3.3, 11.3.5, 11.3.6 or 11.3.7 (if Sprint
PCS is the non-bankrupt party), then Sprint PCS has the right to elect one of
the following four (4) remedies, except that (i) if Sprint PCS elects the
remedies under Sections 11.6.1, 11.6.2 or 11.6.4, Sprint PCS may pursue its
rights under Section 11.6.3 concurrently with its pursuit of one of the other
three remedies, (ii) Sprint PCS cannot elect its remedies under Sections 11.6.1
or 11.6.2 during the first 2 years of the Initial Term with respect to an Event
of Termination under Section 11.3.3 (unless the Event of Termination is caused
by a breach related to the Build-out Plan or the build-out of the Service Area
Network), and (iii) Sprint PCS cannot elect its remedy under Section 11.6.2
during the first 2 years of the Initial Term with respect to an Event of
Termination under Section 11.3.6.
11.6.1 SPRINT PCS' PURCHASE RIGHT. Sprint PCS may purchase
from Manager all of the Operating Assets. Sprint PCS will pay to Manager an
amount equal to 72% (80% minus a 10% penalty) of the Entire Business Value. The
closing of the purchase of the Operating Assets will occur within 20 days after
the later of:
(a) the receipt by Sprint PCS of the -written notice of
determination of the Entire Business Value by the appraisers pursuant to Section
11.7; or
(b) the receipt of all materials required to be delivered to
Sprint PCS under Section 11.8.
Upon closing the purchase of the Operating Assets this agreement will
be deemed terminated. The exercise of the purchase right, the determination of
the Operating Assets, the representations and warranties made by Manager with
respect to the Operating Assets and the business, and the process for closing
the purchase will be subject to the terms and conditions set forth in Section
11.8.
11.6.2 SPRINT PCS' PUT RIGHT.
(a) Sprint PCS may, subject to receipt of FCC approval, put to
Manager the Disaggregated License for a purchase price equal to the greater of
(1) the original cost of the License to Sprint PCS (pro rated on a pops and
spectrum basis) plus the microwave relocation costs paid by Sprint PCS or (2)
10% of the Entire Business Value.
(b) Upon closing the purchase of the Disaggregated License
this agreement will be deemed terminated. The closing of the purchase of the
Disaggregated License will occur within the later of:
(1) 20 days after the receipt by Sprint PCS
of the written notice of determination of the Entire Business
Value by the appraisers under Section 11.7; or
(2) 10 days after the approval of the sale
of the Disaggregated License by the FCC.
(c) The exercise of the put, the determination of the
geographic extent of the Disaggregated License coverage, the representations and
warranties made by Sprint PCS with respect to the Disaggregated License, and the
process for closing the purchase will be subject to the terms and conditions set
forth in Section 11.8.
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(d) Manager may, within 10 days after it receives notice of
Sprint PCS' exercise of its put, advise Sprint PCS of the amount of spectrum
(not to exceed 10 MHZ) it wishes to purchase. After the closing of the purchase
Manager will allow:
(1) subscribers of Sprint PCS to roam on
Manager's network; and
(2) Sprint PCS to resell Manager's Products
and Services.
Manager will charge Sprint PCS a MFN price in either case.
11.6.3 SPRINT PCS' RIGHT TO CAUSE A CURE.
(a) Sprint PCS' Right. Sprint PCS may, but is not obligated
to, take such action as it deems necessary to cure Manager's breach of this
agreement, including assuming operational responsibility for the Service Area
Network to complete construction, continue operation, complete any necessary
repairs, implement changes necessary to comply with the Program Requirements and
terms of this agreement, or take such other steps as are appropriate under the
circumstances, or Sprint PCS may designate a third party or parties to do the
same, to assure uninterrupted availability and deliverability of Sprint PCS
Products and Services in the Service Area, or to complete the build-out of the
Service Area Network in accordance with the terms of this agreement. In the
event that Sprint PCS elects to exercise its right under this Section 11.6.3,
Sprint PCS will give Manager written notice of such election. Upon giving such
notice:
(1) Manager will collect and make available
at a convenient, central location at its principal place of
business, all documents, books, manuals, reports and records
related to the Build-out Plan and required to operate and
maintain the Service Area Network; and
(2) Sprint PCS, its employees, contractors
and designated third parties will have the unrestricted right
to enter the facilities and offices of Manager for the purpose
of curing the breach and, if Sprint PCS deems necessary,
operate the Service Area Network.
Manager agrees to cooperate with and assist Sprint PCS to the extent requested
by Sprint PCS to enable Sprint PCS to exercise its rights under this Section
11.6.3.
(b) Liability. Sprint PCS' exercise of its rights under this
Section 11.6.3 will not be deemed an assumption by Sprint PCS of any liability
attributable to Manager or any other party, except that, without limiting the
provisions of Section 13, during the period that Sprint PCS is curing a breach
under this agreement or operating any portion of the Service Area Network
pursuant to this Section 11.6.3, Sprint PCS Will indemnify and defend Manager
and its directors, partners, officers, employees and agents from and against,
and reimburse and pay for, all claims, demands, damages, losses, judgments,
awards, liabilities, costs and expenses (including reasonable attorneys' fees,
court costs and other expenses of litigation), whether or not arising out of
third party claims, in connection with any suit, claim, action or other legal
proceeding relating to the bodily injury, sickness or death of persons or the
damage to or destruction of property, real or personal, resulting from or
arising out of Sprint PCS' negligence or willful misconduct in curing the breach
or in the operation of the Service Area Network. Sprint PCS' obligation under
this Section 11.6.3(b) will not apply to the extent of any claims, demands,
damages, losses, judgments, awards, liabilities, costs and expenses resulting
from the negligence or willful misconduct of Manager or arising from any
contractual obligation of Manager.
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(c) Costs and Payments. During the period that Sprint PCS is
curing a breach or operating the Service Area Network under this Section 11.6.3,
Sprint PCS and Manager will continue to make any and all payments due to the
other party and to third parties under this agreement, the Services Agreement
and any other agreements to which such party is bound, except that Sprint PCS
may deduct from its payments to Manager all reasonable costs and expenses
incurred by Sprint PCS in connection with the exercise of its right under this
Section 11.6.3. Sprint PCS' operation of the Service Area Network pursuant to
this Section 11.6.3 is not a substitution for Manager's performance of its
obligations under this agreement and does not relieve Manager of its other
obligations under this agreement.
(d) Length of Right. Sprint PCS may continue to operate the
Service Area Network in accordance with Section 11.6.3 until (i) Sprint PCS
cures all breaches by Manager under this agreement; (ii) Manager cures all
breaches and demonstrates to Sprint PCS' satisfaction that it is financially and
operationally willing, ready and able to perform in accordance with this
agreement and resumes such performance; (iii) Sprint PCS consummates the
purchase of the Operating Assets under Section 11.6.1 or the sale of the
Disaggregated License under Section 11.6.2; or (iv) Sprint PCS terminates this
agreement.
(e) Not Under Services Agreement. The exercise by Sprint PCS
of its right under this Section 11.6.3 does not represent services rendered
under the Services Agreement, and therefore it does not allow Manager to be
deemed in compliance with the Program Requirements under Sections 7.1(a)(ii),
8.1(b).
11.6.4 SPRINT PCS' ACTION FOR DAMAGES OR OTHER RELIEF. Sprint
PCS may seek damages or other appropriate relief in accordance with the dispute
resolution process in Section 14.
11.7 DETERMINATION OF ENTIRE BUSINESS VALUE.
11.7.1 APPOINTMENT OF APPRAISERS. Sprint PCS and Manager must
each designate an independent appraiser within 30 days after giving the Purchase
Notice under Exhibit 11.8. Sprint PCS and Manager will direct the two appraisers
to jointly select a third appraiser within 15 days after the day the last of
them is appointed. Each appraiser must be an expert in the valuation of wireless
telecommunications businesses. Sprint PCS and Manager must direct the three
appraisers to each determine, within 45 days after the appointment of the last
appraiser, the Entire Business Value. Sprint PCS and Manager will each bear the
costs of the appraiser appointed by it, and they will share equally the costs of
the third appraiser.
11.7.2 MANAGER'S OPERATING ASSETS. The following assets are
included in the Operating Assets (as defined in the Schedule of Definitions):
(a) network assets, including all personal property, real
property interests in cell sites and switch sites, leasehold interests,
collocation agreements, easements, and rights of way;
(b) all of the real, personal, tangible and intangible
property and contract rights that Manager owns and uses in conducting the
business of providing the Sprint PCS Products and Services, including the
goodwill resulting from Manager's customer base;
(c) sale and distribution assets primarily dedicated (i.e., at
least 80% of their revenue is derived from the sale of Sprint PCS Products and
Services) to the sale by Manager of Sprint PCS Products and Services. For
example, a retail store that derives at least 80% of its revenue from the sale
of Sprint PCS Products and Services is an operating asset. A store that derives
65% of its revenue from Sprint PCS Products and Services is not an operating
asset;
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(d) customers, if any, that use both the other products and
services approved under Section 3.2 and the Sprint PCS Products and Services;
(e) handset inventory;
(f) books and records of the wireless business, including all
engineering drawings and designs and financial records;
(g) all contracts used by Manager in operating the wireless
business including T1 service agreements, service contracts, interconnection
agreements, distribution agreements, software license agreements, equipment
maintenance agreements, sales agency agreements and contracts with all equipment
suppliers.
11.7.3 ENTIRE BUSINESS VALUE. Utilizing the valuation
principles set forth below and in Section 11.7.4, "Entire Business Value" means
the fair market value of Manager's wireless business in the Service Area, valued
on a going concern basis.
(a) The fair market value is based on the price a willing
buyer would pay a willing seller for the entire on-going business.
(b) The appraisers will use the then-current customary means
of valuing a wireless telecommunications business.
(c) The business is conducted under the Brands and existing
agreements between the parties and their respective Related Parties.
(d) Manager owns the Disaggregated License (in the case where
Manager will be buying the Disaggregated License under Sections 11.2.1.2,
11.2.2.2, 11.5.2 or 11.6.2) or Manager owns the spectrum and the frequencies
actually used by Manager under this agreement (in the case where Sprint PCS will
be buying the Operating Assets under Sections 11.2.1.1, 11.2.2.1, 11.5.1 or
11.6.1).
(e) The valuation will not include any value for the business
represented by Manager's Products and Services or any business not directly
related to Sprint PCS Products and Services.
11.7.4 CALCULATION OF ENTIRE BUSINESS VALUE. The Entire
Business Value to be used to determine the purchase price of the Operating
Assets or the Disaggregated License under this agreement is as follows:
(a) If the highest fair market value determined by the
appraisers is within 10% of the lowest fair market value, then the Entire
Business Value used to determine the purchase price under this agreement will be
the arithmetic mean of the three appraised fair market values.
(b) If two of the fair market values determined by the
appraisers are within 10% of one another, and the third value is not within 10%
of the other fair market values, then the Entire Business Value used to
determine the purchase price under this agreement will be the arithmetic mean of
the two more closely aligned fair market values.
(c) If none of the fair market values is within 10 % of the
other two fair market values, then the Entire Business Value used to determine
the purchase price under this agreement will be the middle value of the three
fair market values.
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11.8 CLOSING TERMS AND CONDITIONS. The closing terms and conditions for
the transactions contemplated in this Section 11 are attached as Exhibit 11.8.
11.9 CONTEMPORANEOUS AND IDENTICAL APPLICATION. The parties agree that
any action regarding renewal or non-renewal and any Event of Termination will
occur contemporaneously and identically with respect to all Licenses. For
example, if Manager exercises its purchase right under Section 11.5.2, it must
exercise such right with respect to all of the Licenses under this agreement.
The Term of this agreement will be the same for all Licenses; Manager will not
be permitted to operate a portion of the Service Area Network with fewer than
all of the Licenses.
12. BOOKS AND RECORDS; CONFIDENTIAL INFORMATION; INSURANCE
12.1 BOOKS AND RECORDS.
12.1.1 GENERAL. Each party must keep and maintain books and
records to support and document any fees, costs, expenses or other charges due
in connection with the provisions set forth in this agreement. The records must
be retained for a period of at least 3 years after the fees, costs, expenses or
other charges to which the records relate have accrued and have been paid, or
such other period as may be required by law.
12.1.2 AUDIT. On reasonable advance notice, each party must
provide access to appropriate records to the independent auditors selected by
the other party for purposes of auditing the amount of fees, costs, expenses or
other charges payable in connection with the Service Area with respect to the
period audited. The auditing party will conduct the audit no more frequently
than annually. If the audit shows that Sprint PCS was underpaid then, unless the
amount is contested, Manager will pay to Sprint PCS the amount of the
underpayment within 10 Business Days after Sprint PCS gives Manager written
notice of the determination of the underpayment. If the audit determines that
Sprint PCS was overpaid then, unless the amount is contested, Sprint PCS will
pay to Manager the amount of the overpayment within 10 Business Days after
Sprint PCS determines Sprint PCS was overpaid.
Notwithstanding the above provisions of this Section 12.1.2, Sprint PCS
may elect to have its own independent auditors certify to the accuracy of the
charges with respect to Manager, rather than allow Manager's independent
auditors access to Sprint PCS' records.
12.1.3 CONTESTING AN AUDIT. If the party that did not select
the independent auditor does not agree with. the findings of the audit, then
such party can contest the findings by providing notice of such disagreement to
the other party (the "Dispute Notice"). The date of delivery of such notice is
the "Dispute Notice Date." If the parties are unable to resolve the disagreement
within 10 Business Days after the Dispute Notice Date, they will resolve the
disagreement in accordance with the following procedures.
The two parties and the auditor that conducted the audit will all agree
on an independent certified public accountant with a regional or national
accounting practice in the wireless telecommunications industry (the "Arbiter")
within 15 Business Days after the Dispute Notice Date. If, within 15 Business
Days after the Dispute Notice Date, the three parties fail to agree on the
Arbiter, then at the request of either party to this agreement, the Arbiter will
be selected pursuant to the rules then in effect of the American Arbitration
Association. Each party will submit to the Arbiter within 5 Business Days after
its selection and engagement all information reasonably requested by the Arbiter
to enable the Arbiter to independently resolve the issue that is the subject of
the Dispute Notice. The Arbiter will make its own determination of the amount of
fees,
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costs, expenses or other charges payable under this agreement with respect to
the period audited. The Arbiter will issue a written report of its determination
in reasonable detail and will deliver a copy of the report to the parties within
10 Business Days after the Arbiter receives all of the information reasonably
requested. The determination made by the Arbiter will be final and binding and
may be enforced by any court having jurisdiction. The parties will cooperate
fully in assisting the Arbiter and will take such actions as are necessary to
expedite the completion of and to cause the Arbiter to expedite its assignment.
If the amount owed by a contesting party is reduced by more than 10% or
the amount owed to a contesting party is increased by more than, 10% then the
non-contesting party will pay the costs and expenses of the Arbiter, otherwise
the contesting party will pay the costs and expenses of the Arbiter.
12.2 CONFIDENTIAL INFORMATION.
(a) Except as specifically authorized by this agreement, each
of the parties must, for the Term and 3 years after the date of termination of
this agreement, keep confidential, not disclose to others and use only for the
purposes authorized in this agreement, all Confidential Information disclosed by
the other party to the party in connection with this agreement, except that the
foregoing obligation will not apply to the extent that any Confidential
Information:
(i) is or becomes, after disclosure to a party,
publicly known by any means other than through unauthorized acts or
omissions of the party or its agents; or
(ii) is disclosed in good faith to a party by a third
party entitled to make the disclosure.
(b) Notwithstanding the foregoing, a party may use, disclose
or authorize the disclosure of Confidential Information that it receives that:
(i) has been published or is in the public domain, or
that subsequently comes into the public domain, through no fault of the
receiving party;
(ii) prior to the effective date of this agreement
was properly within the legitimate possession of the receiving party,
or subsequent to the effective date of this agreement, is lawfully
received from a third party having rights to publicly disseminate the
Confidential Information without any restriction and without notice to
the recipient of any restriction against its further disclosure;
(iii) is independently developed by the receiving
party through persons or entities who have not had, either directly or
indirectly, access to or knowledge of the Confidential Information;
(iv) is disclosed to a third party consistent with
the terms of the written approval of the party originally disclosing
the information;
(v) is required by the receiving party to be produced
under order of a court of competent jurisdiction or other similar
requirements of a governmental agency, and the Confidential Information
will otherwise continue to be Confidential Information required to be
held confidential for purposes of this agreement;
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(vi) is required by the receiving party to be
disclosed by applicable law or a stock exchange or association on which
the receiving party's securities (or those of its Related Parties) are
or may become listed; or
(vii) is disclosed by the receiving party to a
financial institution or accredited investor (as that term is defined
in Rule 501 (a) under the Securities Act of 1933) that is considering
providing financing to the receiving party and which financial
institution or accredited investor has agreed to keep the Confidential
Information confidential in accordance with an agreement at least as
restrictive as this Section 12.
(c) Notwithstanding the foregoing, Manager authorizes Sprint
PCS to disclose to the public in public relations announcements and regulatory
filings Manager's identity and the Service Area to be developed and managed by
Manager.
(d) The party making a disclosure under Sections 12.2(b)(v),
12.2(b)(vi) or 12.2(b)(vii) must inform the disclosing party as promptly as is
reasonably necessary to enable the disclosing party to take action to, and use
the party's reasonable best efforts to, limit the disclosure and maintain
confidentiality to the extent practicable.
(e) Manager will not except when serving in the capacity of
Manager under this agreement, use any Confidential Information of any kind that
it receives under or in connection with this agreement. For example, if Manager
operates a wireless company in a different license area, Manager may not use any
of the Confidential Information received under or in connection with this
agreement in operating the other wireless business.
12.3 INSURANCE.
12.3.1 GENERAL. During the term of this agreement, Manager
must obtain and maintain, and will cause any subcontractors to obtain and
maintain, with financially reputable insurers licensed to do business in all
jurisdictions where any work is performed under this agreement and who are
reasonably acceptable to Sprint PCS, the insurance described in the Sprint PCS
Insurance Requirements. The Sprint PCS Insurance Requirements as of the date of
this agreement are attached as Exhibit 12.3. Sprint PCS may modify the Sprint
PCS Insurance Requirements as is commercially reasonable from time to time by
delivering to Manager a new Exhibit 12.3.
12.3.2 WAIVER OF SUBROGATION. Manager must look first to any
insurance in its favor before making any claim against Sprint PCS or Sprint, and
their respective directors, officers, employees, agents or representatives for
recovery resulting from injury to any person (including Manager's or its
subcontractor's employees) or damage to any property arising from any cause,
regardless of negligence. Manager does hereby release and waive to the fullest
extent permitted by law, and will cause its respective insurers to waive, all
rights of recovery by subrogation against Sprint PCS or Sprint, and their
respective directors, officers, employees, agents or representatives.
12.3.3 CERTIFICATES OF INSURANCE. Manager and all of its
subcontractors, if any, must, as a material condition of this agreement and
prior to the commencement of any work under and any renewal of this agreement,
deliver to Sprint PCS a certificate of insurance, satisfactory in form and
content to Sprint PCS, evidencing that the above insurance, including waiver of
subrogation, is in force and will not be canceled or materially altered without
first giving Sprint PCS at least 30 days prior written notice and that all
coverages are primary to any insurance carried by Sprint PCS, its directors,
officers, employees, agents or representatives.
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Nothing contained in this Section 12.3.3 will limit Manager's liability
to Sprint PCS, its directors, officers, employees, agents or representatives to
the limits of insurance certified or carried.
13. INDEMNIFICATION
13.1 INDEMNIFICATION BY SPRINT PCS. Sprint PCS agrees to indemnify,
defend and hold harmless Manager, its directors, managers, officers, employees,
agents and representatives from and against any and all claims, demands, causes
of action, losses, actions, damages, liability and expense, including costs and
reasonable attorneys' fees, against Manager, its directors, managers, officers,
employees, agents and representatives arising from or relating to the violation
by Sprint PCS of any law, regulation or ordinance applicable to Sprint PCS or by
Sprint PCS' breach of any representation, warranty or covenant contained in this
agreement or any other agreement between Sprint PCS or its Related Parties and
Manager or its Related Parties except where and to the extent the claim, demand,
cause of action, loss, action, damage, liability and/or expense results solely
from the negligence or willful misconduct of Manager.
13.2 INDEMNIFICATION BY MANAGER. Manager agrees to indemnify, defend
and hold harmless Sprint PCS and Sprint, and their respective directors,
managers, officers, employees, agents and representatives from and against any
and all claims, demands, causes of action, losses, actions, damages, liability
and expense, including costs and reasonable attorneys' fees, against Sprint PCS
or Sprint, and their respective directors; managers, officers, employees, agents
and representatives arising from or relating to Manager's violation of any law.
regulation or ordinance applicable to Manager, Manager's breach of any
representation, warranty or covenant contained in this agreement or any other
agreement between Manager or its Related Parties and Sprint PCS and its Related
Parties, Manager's ownership of the operating assets or the operation of the
Service Area Network, or the actions or failure to act of any of Manager's
contractors, subcontractors, agents, directors, managers, officers, employees
and representatives of any of them in the performance of any work under this
agreement, except where and to the extent the claim, demand, cause of action,
loss, action, damage, liability and expense results solely from the negligence
or willful misconduct of Sprint PCS or Sprint, as the case may be.
13.3 PROCEDURE.
13.3.1 NOTICE. Any party being indemnified ("Indemnitee") will
give the party making the indemnification ("Indemnitor") written notice as soon
as practicable but no later than 5 Business Days after the party becomes aware
of the facts, conditions or events that give rise to the claim for
indemnification if:
(a) Any claim or demand is made or liability is asserted
against Indemnitee; or
(b) Any suit, action, or administrative or legal proceeding is
instituted or commenced in which Indemnitee is involved or is named as a
defendant either individually or with others.
Failure to give notice as described in this Section 13.3.1 does not
modify the indemnification obligations of this provision, except if Indemnitee
is harmed by failure to provide timely notice to Indemnitor, then Indemnitor
does not have to indemnify Indemnitee for the harm caused by the failure to give
the timely notice.
13.3.2 DEFENSE BY INDEMNITOR. If within 30 days after giving
notice Indemnitee receives written notice from Indemnitor stating that
Indemnitor disputes or intends to defend against the claim,
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demand, liability, suit, action or proceeding, then Indemnitor will have the
right to select counsel of its choice and to dispute or defend against the
claim, demand, liability, suit, action or proceeding, at its expense.
Indemnitee will fully cooperate with Indemnitor in the dispute or
defense so long as Indemnitor is conducting the dispute or defense diligently
and in good faith. Indemnitor is not permitted to settle the dispute or claim
without the prior written approval of Indemnitee, which approval will not be
unreasonably withheld. Even though Indemnitor selects counsel of its choice,
Indemnitee has the right to retain additional representation by counsel of its
choice to participate in the defense at Indemnitee's sole cost and expense.
13.3.3 DEFENSE BY INDEMNITEE. If no notice of intent to
dispute or defend is received by Indemnitee within the 30-day period, or if a
diligent and good faith defense is not being or ceases to be conducted,
Indemnitee has the right to dispute and defend against the claim, demand or
other liability at the sole cost and expense of Indemnitor and to settle the
claim, demand or other liability, and in either event to be indemnified as
provided in this Section 13.3.3. Indemnitee is not permitted to settle the
dispute or claim without the prior written approval of Indemnitor, which
approval will not be unreasonably withheld.
13.3.4 COSTS. Indemnitor's indemnity obligation includes
reasonable attorneys' fees, investigation costs, and all other reasonable costs
and expenses incurred by Indemnitee from the first notice that any claim or
demand has been made or may be made, and is not limited in any way by any
limitation on the amount or type of damages, compensation, or benefits payable
under applicable workers' compensation acts-, disability benefit acts, or other
employee benefit acts.
14. DISPUTE RESOLUTION
14.1 NEGOTIATION. The parties will attempt in good faith to resolve any
dispute arising out of or relating to this agreement promptly by negotiation
between or among representatives who have authority to settle the controversy.
Either party may escalate any dispute not resolved in the normal course of
business to the appropriate (as determined by the party) officers of the parties
by providing written notice to the other party.
Within 10 Business Days after delivery of the notice, the appropriate
officers of each party will meet at a mutually acceptable time and place, and
thereafter as often as they deem reasonably necessary, to exchange relevant
information and to attempt to resolve the dispute.
Either party may elect, by giving written notice to the other party, to
escalate any dispute arising out of or relating to the determination of fees
that is not resolved in the normal course of business or by the audit process
set forth in Sections 12.1.2 and 12.1.3, first to the appropriate financial or
accounting officers to be designated by each party. The designated officers will
meet in the manner described in the preceding paragraph. If the matter has not
been resolved by the designated officers within 30 days after the notifying
party's notice, either party may elect to escalate the dispute to the
appropriate (as determined by the party) officers in accordance with the prior
paragraphs of this Section 14.1.
14.2 UNABLE TO RESOLVE. If a dispute has not been resolved within 60
days after the notifying party's notice, either party may continue to operate
under this agreement and sue the other party for damages or seek other
appropriate remedies as provided in this agreement. If, and only if, this
agreement does not provide a remedy (as in the case of Sections 3.4 and 4.5,
where the parties are supposed to reach an agreement), then either party may
give the other party written notice that it wishes to resolve the dispute or
claim arising out of the parties' inability to agree under such Sections of this
agreement by using the arbitration procedure set forth in this Section 14.2.
Such arbitration will occur in Kansas City, Missouri,
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unless the parties otherwise mutually agree, with the precise location being as
agreed upon by the parties or, absent such agreement, at a location in Kansas
City, Missouri selected by Sprint PCS. Such arbitration will be conducted
pursuant to the procedures prescribed by the Missouri Uniform Arbitration Act,
as amended from time to time, or, if none, pursuant to the rules then in effect
of the American Arbitration Association (or at any other place and by any other
form of arbitration mutually acceptable to the parties). Any award rendered in
such arbitration will be confidential and will be final and conclusive upon the
parties, and a judgment on the award may be entered in any court of the forum,
state or federal, having jurisdiction. The expenses of the arbitration will be
borne equally by the parties to the arbitration, except that each party must pay
for and bear the cost of its own experts, evidence, and attorneys' fees.
The parties must each, within 30 days after either party gives notice
to the other party of the notifying party's desire to resolve a dispute or claim
under the arbitration procedure in this Section 14.2, designate an independent
arbitrator, who is knowledgeable with regard to the wireless telecommunications;
industry, to participate in the arbitration hearing. The two arbitrators thus
selected will select a third independent arbitrator, who is knowledgeable with
regard to the wireless telecommunications industry, who will act as chairperson
of the board of arbitration. If, within 15 days after the day the last of the
two named arbitrators is appointed, the two named arbitrators fail to agree upon
the third, then at the request of either party, the third arbitrator shall be
selected pursuant to the rules then in effect of the American Arbitration
Association. The three independent arbitrators will comprise the board of
arbitration, which will preside over the arbitration hearing and will render all
decisions by majority vote. If either party refuses or neglects to appoint an
independent arbitrator within such 30-day period, the independent arbitrator who
has been appointed as of the 31st day after the notifying party's notice will be
the sole independent arbitrator and will solely preside over the arbitration
hearing. The arbitration hearing will commence no sooner than 30 days after the
date the last arbitrator is appointed and no later than 60 days after such date.
The arbitration hearing will be conducted during normal working hours on
Business Days without interruption or adjournment of more than. 2 Business Days
at any one time or 6 Business Days in the aggregate.
The arbitrators will deliver their decision to the parties in writing
within 10 days after the conclusion of the arbitration hearing. The arbitration
award will be accompanied by findings of fact and a statement of reasons for the
decision. There will be no appeal from the written decision, except as permitted
by applicable law. The arbitration proceedings, the arbitrators' decision, the
arbitration award, and any other aspect, matter, or issue of or relating to the
arbitration are confidential, and disclosure of such confidential information is
an actionable breach of this agreement.
Notwithstanding any other provision of this agreement, arbitration will
not be required of any issue for which injunctive relief is properly sought by
either party.
14.3 ATTORNEYS AND INTENT. If an officer intends to be accompanied at a
meeting by an attorney, the other party's officer will be given at least 3
Business Days prior notice of the intention and may also be accompanied by an
attorney. All negotiations under Section 14.1 are confidential and will be
treated as compromise and settlement negotiations for purposes of the Federal
Rules of Civil Procedure and state rules of evidence and civil procedure.
14.4 TOLLING OF CURE PERIODS. Any cure period under Section 11.3 that
is less than 90 days will be tolled during the pendency of the dispute
resolution process. Any cure period under Section 11.3 that is 90 days or longer
will not be tolled during the pendency of the dispute resolution process.
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15. REPRESENTATIONS AND WARRANTIES
Each party for itself makes the following representations and
warranties to the other party:
15.1 DUE INCORPORATION OR FORMATION; AUTHORIZATION OF AGREEMENTS. The
party is either a corporation, limited liability company, or limited partnership
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization. Manager is qualified to do business and in
good standing in every jurisdiction in which the Service Area is located. The
party has the full power and authority to execute and deliver this agreement and
to perform its obligations under this agreement.
15.2 VALID AND BINDING OBLIGATION. This agreement constitutes the valid
and binding obligation of the party, enforceable in accordance with its terms,
except as may be limited by principles of equity or by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally.
15.3 NO CONFLICT; NO DEFAULT. Neither the execution, delivery and
performance of this agreement nor the consummation by the party of the
transactions contemplated in this agreement will conflict with, violate or
result in a breach of (a) any law, regulation, order, writ, injunction, decree,
determination or award of any governmental authority or any arbitrator,
applicable to such party, (b) any term, condition or provision of the articles
of incorporation, certificate of limited partnership, certificate of
organization, bylaws, partnership agreement or limited liability company
agreement (or other governing documents) of such party or of any material
agreement or instrument to which such party is or may be bound or to which any
of its material properties or assets is subject.
15.4 LITIGATION. No action, suit, proceeding or investigation is
pending or, to the knowledge of the party, threatened against or affecting the
party or any of its properties, assets or businesses in any court or before or
by any governmental agency that could, if adversely determined, reasonably be
expected to have a material adverse effect on the party's ability to perform its
obligations under this agreement. The party has not received any currently
effective notice of any default that could reasonably be expected to result in a
breach of the preceding sentence.
16. REGULATORY COMPLIANCE
16.1 REGULATORY COMPLIANCE. Manager will construct, operate, and manage
the Service Area Network in compliance with applicable federal, state, and local
laws and regulations, including Siting Regulations. Nothing in this Section 16.1
will limit Manager's obligations under Section 2.2 and the remainder of this
Section 16. Manager acknowledges that failure to comply with applicable federal,
state, and local laws and regulations in its construction, operation, and
management of the Service Area Network may subject the parties and the License
to legal and administrative agency actions, including forfeiture penalties and
actions that affect the License, such as license suspension and revocation, and
accordingly, Manager agrees that it will cooperate with Sprint PCS to maintain
the License in full force and effect.
Manager will write and implement practices and procedures governing
construction and management of the Service Area Network in compliance with
Siting Regulations. Manager will make its Siting Regulations practices and
procedures available upon request to Sprint PCS in the manner specified by
Sprint PCS for its inspection and review, and Manager will modify those Siting
Regulations practices and procedures as may be requested by Sprint PCS. Every
six months, and at the request of Sprint PCS, Manager will provide a written
certification from one of Manager's chief officers that Manager's Service Area
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Network complies with Siting Regulations. Manager's first certification of
compliance with Siting Regulations will be provided to Sprint PCS six months
after the date of this agreement.
Manager will conduct an audit and physical inspection of its Service
Area Network at the request of Sprint PCS to confirm compliance with Siting
Regulations, and Manager will report the results of the audit and physical
inspection to Sprint PCS in the form requested by Sprint PCS. Manager will bear
the cost of Siting Regulations compliance audits and physical inspections
requested by Sprint PCS.
Manager will retain for 3 years records demonstrating compliance with
Siting Regulations, including compliance audit and inspection records. Manager
will make those records available upon request to Sprint PCS for production,
inspection, and copying in the manner specified by Sprint PCS. Sprint PCS will
bear the cost of production, inspection, and copying.
16.2 FCC COMPLIANCE. The parties agree to comply with all applicable
FCC rules governing the License or the Service Area Network and specifically
agree as follows:
(a) The party billing a customer will advise the customer that
service is provided over spectrum licensed to Sprint PCS. Neither Manager nor
Sprint PCS will represent itself as the legal representative of the other before
the FCC or any other third party, but will cooperate with each other with
respect to FCC matters concerning the License or the Service Area Network.
(b) Sprint PCS will use commercially reasonable efforts to
maintain the License in accordance with the terms of the License and all
applicable laws, policies and regulations and to comply in all material respects
with all other legal requirements applicable to the operation of the Sprint PCS
Network and its business. Sprint PCS has sole responsibility, except as
specifically provided otherwise in Section 2.2, for keeping the License in full
force and effect and for preparing submissions to the FCC or any other relevant
federal, state or local authority of all reports, applications, interconnection
agreements. renewals, or other filings or documents. Manager must cooperate and
coordinate with Sprint PCS' actions to comply with regulatory requirements,
which cooperation and coordination must include, without limitation, the
provision to Sprint PCS of all information that Sprint PCS deems necessary to
comply with the regulatory requirements. Manager must refrain from taking any
action that could impede Sprint PCS from fulfilling its obligations under the
preceding sentence, and must not take any action that could cause Sprint PCS to
forfeit or cancel the License.
(c) Sprint PCS and Manager are familiar with Sprint PCS'
responsibility under the Communications Act of 1934, as amended, and applicable
FCC rules. Nothing in this agreement is intended to diminish or restrict Sprint
PCS' obligations as an FCC Licensee and both parties desire that this agreement
and each party's obligations under this agreement be in compliance with the FCC
rules.
(d) Nothing in this agreement will preclude Sprint PCS from
permitting or facilitating, resale of Sprint PCS Products and Services to the
extent required or elected under applicable FCC regulations. Manager will take
the actions necessary to facilitate Sprint PCS' compliance with FCC regulations.
To the extent permitted by applicable regulations, Sprint PCS will not authorize
a reseller that desires to sell services and products in only the Service Area
to resell Sprint PCS wholesale. products and services, unless Manager agrees in
advance to such sales.
(e) If a change in FCC policy or rules makes it necessary to
obtain FCC consent for the implementation, continuation or further effectuation
of any term or provision of this agreement, Sprint PCS will use all commercially
reasonable efforts diligently to prepare, file and prosecute before the FCC all
petitions, waivers, applications, amendments, rulemaking comments and other
related documents necessary
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to secure and/or retain FCC approval of all aspects of this agreement Manager
will use commercially reasonable efforts to provide to Sprint PCS any
information that Sprint PCS may request from Manager with respect to any matter
involving Sprint PCS. the FCC, the License, the Sprint PCS Products and Services
or any other products and services approved under Section 3.2. Each party will
bear its own costs of preparation of the documents and prosecution of the
actions.
(f) If the FCC determines that this agreement is inconsistent
with the terms and conditions of the License or is otherwise contrary to FCC
policies, rules and regulations, or if regulatory or legislative action
subsequent to the date of this agreement alters the permissibility of this
agreement under the FCC's rules or other applicable law, rules or regulations,
then the parties must use best efforts to modify this agreement as necessary to
cause this agreement (as modified) to comply with the FCC policies, rules,
regulations and applicable law and to preserve to the extent possible the
economic arrangements set forth in this agreement.
16.3 MARKING AND LIGHTING. Manager will conform to applicable FAA
standards when Siting Regulations require marking and lighting of Manager's
Service Area Network cell sites. Manager will cooperate with Sprint PCS in
reporting lighting malfunctions as required by Siting Regulations.
16.4 REGULATORY NOTICES. Manager will, within 2 Business Days after its
receipt, give Sprint PCS written notice of all oral and written communications
it receives from regulatory authorities (including but not limited to the FCC,
the FAA, state public service commissions, environmental authorities, and
historic preservation authorities) and complaints respecting Manager's
construction, operation, and management of the Service Area Network that could
result in actions affecting the License as well as written notice of the details
respecting such communications; and complaints, including a copy of any written
material received in connection with such communications and complaints. Manager
will cooperate with Sprint PCS in responding to such communications and
complaints received by Manager. Sprint PCS has the right to respond to all such
communications and complaints, with counsel and consultants of its own choice.
If Sprint PCS chooses to respond to such communications and complaints, Manager
will not respond to them without the consent of Sprint PCS, and Manager will pay
the costs of Sprint PCS' responding to such communications and complaints,
including reasonable attorneys' and consultants' fees, investigation costs, and
all other reasonable costs and expenses incurred by Sprint PCS.
16.5 REGULATORY POLICY-SETTING PROCEEDINGS. Manager will not intervene
in or otherwise participate in a rulemaking, investigation, inquiry, contested
case, or similar regulatory policy setting proceedings before a regulatory
authority concerning the License or construction, operation, and management of
the Service Area Network and the Sprint PCS business operated using the Service
Area Network.
17. GENERAL PROVISIONS
17.1 NOTICES. Any notice, payment, demand, or communication required or
permitted to be given by any provision of this agreement must be in writing and
mailed (certified or registered mail, postage prepaid, return receipt
requested), sent by hand or overnight courier, or sent by facsimile (with
acknowledgment received and a copy sent by overnight courier), charges prepaid
and addressed as described on the Notice Address Schedule attached to the Master
Signature Page, or to any other address or number as the person or entity may
from time to time specify by written notice to the other parties.
All notices and other communications given to a party in accordance
with the provisions of this agreement will be deemed to have been given when
received.
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17.2 CONSTRUCTION. This agreement will be construed simply according to
its fair meaning and not strictly for or against either party.
17.3 HEADINGS. The table of contents, section and other headings
contained in this agreement are for reference purposes only and are not intended
to describe, interpret, define, limit or expand the scope. extent or intent of
this agreement.
17.4 FURTHER ACTION. Each party agrees to perform all further acts and
execute, acknowledge, and deliver any documents that may be reasonably
necessary, appropriate, or desirable to carry out the intent and purposes of
this agreement.
17.5 COUNTERPART EXECUTION. This agreement may be executed in any
number of counterparts with the same effect as if both parties had signed the
same document. All counterparts will be construed together and will constitute
one agreement.
17.6 SPECIFIC PERFORMANCE. Each party agrees with the other party that
the party would be irreparably damaged if any of the provisions of this
agreement were not performed in accordance with their specific terms and that
monetary damages alone would not provide an adequate remedy. Accordingly, in
addition to any other remedy to which the non-breaching party may be entitled,
at law or in equity, the non-breaching party will be entitled to injunctive
relief to prevent breaches of this agreement and specifically to enforce the
terms and provisions of this agreement.
17.7 ENTIRE AGREEMENT; AMENDMENTS. The provisions of this agreement,
the Services Agreement and the Trademark License Agreements (including the
exhibits to those agreements) set forth the entire agreement and understanding
between the parties as to the subject matter of this agreement and supersede all
prior agreements, oral or written, and other communications between the parties
relating to the subject matter of this agreement. Except for Sprint PCS' right
to amend the Program Requirements in accordance with Section 9.2 and its right
to unilaterally modify and amend certain other provisions as expressly provided
in this agreement, this agreement may be modified or amended only by a written
amendment signed by persons or entities authorized to bind each party and, with
respect to the sections set forth on the signature page for Sprint, the persons
or entities authorized to bind Sprint.
17.8 LIMITATION ON RIGHTS OF OTHERS. Except as set forth on the
signature page for Sprint, nothing in this agreement, whether express or
implied, will be construed to give any person or entity other than the parties
any legal or equitable right, remedy or claim under or in respect of this
agreement.
17.9 WAIVERS.
17.9.1 WAIVERS--GENERAL. The observance of any term of this
agreement may be waived (whether generally or in a particular instance and
either retroactively or prospectively) by the party entitled to enforce the
term, but any waiver is effective only if in a writing signed by the party
against which the waiver is to be asserted. Except as otherwise provided in this
agreement, no failure or delay of either party in exercising any power or right
under this agreement will operate as a waiver of the power or right, nor will
any single or partial exercise of any right or power preclude any other or
further exercise of the right or power or the exercise of any other right or
power.
17.9.2 WAIVERS--MANAGERS. Manager is not in breach of any
covenant in this agreement and no Event of Termination will have occurred as a
result of the occurrence of any event, if Manager had delegated to Sprint
Spectrum under the Services Agreement (or any successor to that agreement)
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responsibility for taking any action necessary to ensure compliance with the
covenant or to prevent the occurrence of the event.
17.9.3 FORCE MAJEURE. Neither Manager nor Sprint PCS, as the
case may be, is in breach of any covenant in this agreement and no Event of
Termination will have occurred as a result of the occurrence of the event, if
such party's non-compliance with the covenant results primarily from:
(i) any FCC order or any other injunction issued by
any governmental authority impeding the party's ability to comply with
the covenant;
(ii) the failure of any governmental authority to
grant any consent, approval, waiver, or authorization or any delay on
the part of any governmental authority in granting any consent,
approval, waiver or authorization;
(iii) the failure of any vendor to deliver in a
timely manner any equipment or services; or
(iv) any act of God, act of war or insurrection,
riot, fire, accident, explosion, labor unrest, strike, civil unrest,
work stoppage, condemnation or any similar cause or event not
reasonably within the control of such party.
17.10 WAIVER OF JURY TRIAL. EACH PARTY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
17.11 BINDING EFFECT. Except as otherwise provided in this agreement,
this agreement is binding upon and inures to the benefit of the parties and
their respective and permitted successors, transferees, and assigns, including
any permitted successor, transferee or assignee of the Service Area Network or
of the License. The parties intend that this agreement bind only the party
signing this agreement and that the agreement is not binding on the Related
Parties of a party unless the agreement expressly provides that Related Parties
are bound.
17.12 GOVERNING LAW. The internal laws of the State of Missouri
(without regard to principles of conflicts of law) govern the validity of this
agreement, the construction of its terms, and the interpretation of the rights
and duties of the parties.
17.13 SEVERABILITY. The parties intend every provision of this
agreement to be severable. If any provision of this agreement is held to be
illegal, invalid, or unenforceable for any reason, the parties intend that a
court enforce the provision to the maximum extent permissible so as to effect
the intent of the parties (including the enforcement of the remaining
provisions). If necessary to effect the intent of the parties, the parties will
negotiate in good faith to amend this agreement to replace the unenforceable
provision with an enforceable provision that reflects the original intent of the
parties.
17.14 LIMITATION OF LIABILITY. NO PARTY WILL BE LIABLE TO THE OTHER
PARTY FOR SPECIAL, INDIRECT, INCIDENTAL, EXEMPLARY, CONSEQUENTIAL OR PUNITIVE
DAMAGES, OR LOSS OF PROFITS, ARISING FROM THE RELATIONSHIP OF THE PARTIES OR THE
CONDUCT OF BUSINESS UNDER, OR BREACH OF, THIS AGREEMENT, EXCEPT WHERE SUCH
DAMAGES OR LOSS OF PROFITS ARE CLAIMED BY OR AWARDED TO A THIRD PARTY IN A CLAIM
OR
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ACTION AGAINST WHICH A PARTY TO THIS AGREEMENT HAS A SPECIFIC OBLIGATION TO
INDEMNIFY ANOTHER PARTY TO THIS AGREEMENT.
17.15 NO ASSIGNMENT; EXCEPTIONS.
17.15.1 GENERAL. Neither party will, directly or indirectly,
assign this agreement or any of the party's rights or obligations under this
agreement without the prior written consent of the other party, except as
otherwise specifically provided in this Section 17. Sprint PCS may deny its
consent to any assignment or transfer in its sole discretion except as otherwise
provided in this Section 17.
Any attempted assignment of this agreement in violation of this Section
17.15 will be void and of no effect.
A party may assign this agreement to a Related Party of the party,
except that Manager cannot assign this agreement to a Related Party that is a
significant competitor of Sprint, Sprint PCS or their respective Related Parties
in the telecommunications business. Except as provided in Section 17.15.5, an
assignment does not release the assignor from its obligations under this
agreement unless the other party to this agreement consents in writing in
advance to the assignment and expressly grants a release to the assignor.
Except as provided in Section 17.15.5, Sprint PCS must not assign this
agreement to any entity that does not also own the License covering the Service
Area directly or indirectly through a Related Party. Manager must not assign
this agreement to any entity (including a Related Party), unless such entity
assumes all rights and obligations under the Services Agreement, the Trademark
License Agreements and any related agreements.
17.15.2 ASSIGNMENT RIGHT OF MANAGER TO FINANCIAL LENDER. If
Manager is no longer able to satisfy its financial obligations and other duties,
then Manager has the right to assign its obligations and rights under this
agreement to its Financial Lender, if:
(a) Manager or Financial Lender provides Sprint PCS at least
10 days advance written notice of such assignment;
(b) Financial Lender cures or commits to cure any outstanding
material breach of this agreement by Manager prior to the end of any applicable
cure period. If Financial Lender fails to make a timely cure then Sprint PCS may
exercise its rights under Section 11;
(c) Financial Lender agrees to serve as an interim trustee for
the obligations and duties of Manager under this agreement for a period not to
exceed 180 days. During this interim period, Financial Lender must identify a
proposed successor to assume the obligations and rights of Manager under this
agreement;
(d) Financial Lender assumes all of Manager's rights and
obligations under the Services Agreement, the Trademark License Agreements and
any related agreements; and
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(e) Financial Lender provides to Sprint PCS advance written
notice of the proposed successor to Manager that Financial Lender has identified
("Successor Notice"). Sprint PCS may give to Financial Lender written notice of
Sprint PCS' decision whether to consent to such proposed successor within 30
days after Sprint PCS' receipt of the Successor Notice. Sprint PCS may not
unreasonably withhold such consent, except that Sprint PCS is not required to
consent to a proposed successor that:
(i) has, in the past, materially breached prior
agreements with Sprint PCS or its Related Parties;
(ii) is a significant competitor of Sprint PCS or its
Related Parties in the telecommunications business;
(iii) does not meet Sprint PCS' reasonable credit
criteria;
(iv) fails to execute an assignment, of all relevant
documents related to this agreement including the Services Agreement
and the Trademark License Agreements; or
(v) refuses to assume the obligations of Manager
under this Agreement, the Services Agreement, the Trademark License
Agreements and any related agreements.
If Sprint PCS fails to provide a response to Financial Lender within 30
days after receiving the Successor Notice, then the proposed successor is deemed
rejected. Any Financial Lender disclosed on the Build-out Plan on Exhibit 2.1 is
deemed acceptable to Sprint PCS.
17.15.3 CHANGE OF CONTROL RIGHTS. If there is a Change of
Control of Manager, then:
(a) Manager must provide to Sprint PCS advance written notice
detailing relevant and appropriate information about the new ownership interests
effecting the Change of Control of Manager.
(b) Sprint PCS must provide to Manager written notice of its
decision whether to consent to or reject the proposed Change of Control within
30 days after its receipt of such notice. Sprint PCS may not unreasonably
withhold such consent, except that Sprint PCS is not required to consent to a
Change of Control in which:
(i) the final controlling entity or any of its
Related Parties has in the past materially breached prior agreements
with Sprint PCS or its Related Parties;
(ii) the final controlling entity or any of its
Related Parties is a significant competitor of Sprint PCS or its
Related Parties in the telecommunications business;
(iii) the final controlling entity does not meet
Sprint PCS' reasonable credit criteria;
(iv) the final controlling entity fails to execute an
assignment of all relevant documents related to this agreement
including the Services Agreement and the Trademark License Agreements;
or
(v) the final controlling entity or its Related
Parties refuse to assume the obligations of Manager under this
agreement.
(c) In the event that Sprint PCS provides notice that it does
not consent to the Change of Control, Manager is entitled to either:
(i) contest such determination pursuant to the
dispute resolution procedure in Section 14; or
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(ii) abandon the proposed Change of Control.
(d) Nothing in this agreement requires Sprint PCS' consent to:
(i) a public offering of Manager that does not result
in a Change of Control (i.e., a shift from one party being in control
to no party being in control is not a Change of Control); or
(ii) a recapitalization or restructuring of the
ownership interests of Manager that Manager determines is necessary to:
(A) facilitate the acquisition of commercial
financing and lending arrangements that will support Manager's
operations and efforts to fulfill its obligations under this
agreement; and
(B) does not constitute a Change of Control.
(e) "Change of Control" means that in any one transaction or
series of related transactions occurring during any 365-day period, the ultimate
parent entity of the Manager changes. The ultimate parent entity is to be
determined using the Hart-Scott-Rodino Antitrust Improvements Act of 1976 rules.
A Change of Control does not occur if.
(i) a party changes the form of its organization
without materially changing their ultimate ownership (e.g., converting
from a limited partnership to a limited liability company); or
(ii) one of the owners of the party on the date of
this agreement or on the date of the closing of Manager's initial
equity offering for purposes of financing its obligations under this
agreement ultimately gains control over the party, unless such party is
a significant competitor of Sprint PCS or its Related Parties in the
telecommunications business.
17.15.4 RIGHT OF FIRST REFUSAL. Notwithstanding any other
provision in this agreement, Manager grants Sprint PCS the right of first
refusal described below. If Manager determines it wishes to sell an Offered
Interest, upon receiving any Offer to purchase an Offered Interest, Manager
agrees to promptly deliver to Sprint PCS an Offer Notice. The Offer Notice is
deemed to constitute an offer to sell to Sprint PCS, on the terms set forth in
the Offer, all but not less than all of the Offered Interest. Sprint PCS will
have a period of 60 days from the date of the Offer Notice to notify Manager
that it agrees to purchase the Offered Interest on such terms. If Sprint PCS
timely agrees in writing to purchase the Offered Interest, the parties will
proceed to consummate such purchase not later than the 180th day after the date
of the Offer Notice. If Sprint PCS does not agree within the 60-day period to
purchase the Offered Interest, Manager will have the right, for a period of 120
days after such 60th day, subject to the restrictions set forth in this Section
17, to sell to the person or entity identified in the Offer Notice all of the
Offered Interest on terms and conditions no less favorable to Manager than those
set forth in the Offer. If Manager fails to sell the Offered Interest to such
person or entity on such terms and conditions within such 120-day period,
Manager will again be subject to the provisions of this Section 17.15.4 with
respect to the Offered Interest.
17.15.5 TRANSFER OF SPRINT PCS NETWORK. Sprint PCS may sell,
transfer or assign the Sprint PCS Network, including its rights and obligations
under this agreement, the Services Agreement and any related agreements, to a
third party without Manager's consent so long as the third party assumes the
rights and obligations under this agreement and the Services Agreement. Manager
agrees that Sprint PCS and its
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Related Parties will be released from any and all obligations under and with
respect to any and all such agreements upon such sale, transfer or assignment in
accordance with this Section 17.15.5, without the need for Manager to execute
any document to effect such release.
17.16 PROVISION OF SERVICES BY SPRINT SPECTRUM. As described in the
Recitals, the party or parties to this agreement that own the Licenses are
referred to in this agreement as "Sprint PCS." Sprint Spectrum will provide most
or all of the services required to be provided by Sprint PCS under this
agreement on behalf of Sprint PCS, other than the services to be rendered by
Manager. For example, Sprint Spectrum is the party to the contracts relating to
the national distribution network, the roaming and long distance services, and
the procurement arrangements. Accordingly, Sprint PCS and Manager will deal with
Sprint Spectrum to provide many of the attributes of the Sprint PCS Network.
17.17 NUMBER PORTABILITY. Manager understands that the manner in which
customers are assigned to the Service Area Network could change as telephone
numbers become portable without any relation to the service area in which they
are initially activated. To the extent the relationship between NPA-NXX and the
Service Area changes, Sprint PCS will develop an alternative system, to attempt
to assign customers who primarily live and work in the Service Area to the
Service Area. The terms of this agreement will be deemed to be amended to
reflect the new system that Sprint PCS develops.
17.18 DISCLAIMER OF AGENCY. Neither party by this agreement makes the
other party a legal representative or agent of the party, nor does either party
have the right to obligate the other party in any manner, except if the other
party expressly permits the obligation by the party or except for provisions in
this agreement expressly authorizing one party to obligate the other.
17.19 INDEPENDENT CONTRACTORS. The parties do not intend to create any
partnership, joint venture or other profit-sharing arrangement, landlord-tenant
or lessor-lessee relationship, employer-employee relationship, or any other
relationship other than that expressly provided in this agreement. Neither party
to this agreement has any fiduciary duty to the other party.
17.20 EXPENSE. Each party bears the expense of complying with this
agreement except as otherwise expressly provided in this agreement. The parties
must not allocate any employee cost or other cost to the other party, except as
otherwise provided in the Program Requirements or to the extent the parties
expressly agree in advance to the allocation.
17.21 GENERAL TERMS. (a) This agreement is to be interpreted in
accordance with the following rules of construction:
(i) The definitions in this agreement apply equally
to both the singular and plural forms of the terms defined unless the
context otherwise requires.
(ii) The words "include," "includes" and "including"
are deemed to be followed by the phrase "without limitation".
(iii) All references in this agreement to Sections
and Exhibits are references to Sections of, and Exhibits to, this
agreement, unless otherwise specified; and
(iv) All references to any agreement or other
instrument or statute or regulation are to it as amended and
supplemented from time to time (and, in the case of a statute or
regulation, to any corresponding provisions of successor statutes or
regulations), unless the context otherwise requires.
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(b) Any reference in this agreement to a "day" or number of "days"
(without the explicit qualification of "Business") is a reference to a calendar
day or number of calendar days. If any action or notice is to be taken or given
on or by a particular calendar day, and the calendar day is not a Business Day,
then the action or notice may be taken or given on the next Business Day.
17.22 CONFLICTS WITH OTHER AGREEMENTS. The provisions of the Management
Agreement govern over those of the Services Agreement if the provisions
contained in this agreement conflict with analogous provisions in the Services
Agreement. The provisions of each Trademark License Agreement governs over those
of this agreement if the provisions contained in this agreement conflict with
analogous provisions in a Trademark License Agreement.
17.23 ANNOUNCED TRANSACTION. Sprint Enterprises, L.P., TCI Telephony
Services, Inc., Comcast Telephony Services and Cox Telephony Partnership have
executed a Restructuring and Merger Agreement and related agreements that
provide for restructuring the ownership of Sprint Spectrum L.P., SprintCom,
Inc., PhillieCo Partners I, L.P., and Cox Communications PCS, L.P. Upon
consummation of the transactions contemplated by those agreements, Sprint would
control each of the four entities. While Sprint and Sprint PCS anticipate the
proposed transactions will be consummated, there can be no assurances.
17.24 ADDITIONAL TERMS AND PROVISIONS. Certain additional and
supplemental terms and provisions of this agreement, if any, are set forth in
the Addendum to Sprint PCS Management Agreement attached hereto and incorporated
herein by this reference. Manager represents and warrants that the Addendum also
describes all existing contracts and arrangements (written or verbal) that
relate to or affect the rights of Sprint PCS or Sprint under this agreement
(e.g., agreements relating to long distance telephone services (Section 3.4) or
backhaul and transport services (Section 3.7)).
17.25 MASTER SIGNATURE PAGE. Each party agrees that it will execute the
Master Signature Page that evidences such party's agreement to execute, become a
party to and be bound by this agreement, which document is incorporated herein
by this reference.
17.26 AGENT AUTHORIZATION. Because of the close operational
relationship between the following parties listed together below, each entity
designates the other entity as its agent and authorizes it to act on its behalf
in every capacity under this agreement: (a) WirelessCo, L.P. and Sprint Spectrum
L.P.; (b) Cox PCS License, L.L.C. and Cox Communications PCS, L.P.; (c) APC PCS,
LLC and American PCS Communications, LLC; and (d) PhillieCo, L.P. and PhillieCo
Partners I, L.P.
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SPRINT PCS/ALAMOSA PCS LLC
MASTER SIGNATURE PAGE
This Master Signature Page is dated and effective as of July _, 1998
(the "Effective Date"). This document provides the means by which each of the
undersigned entities executes and becomes a party to and bound by, to the extent
set forth above such party's signature, the Management Agreement, Services
Agreement, Sprint Trademark and Service Mark License Agreement, Sprint Spectrum
Trademark and Service Mark License Agreement, and Addendum I to the Management
Agreement. This document may be executed in one or more counterparts. The Notice
Address Schedule attached to this document sets forth the addresses to which
notices should be sent under the agreements.
THE MANAGEMENT AGREEMENT AND THE SERVICES AGREEMENT
CONTAIN BINDING ARBITRATION PROVISIONS THAT MAY BE
ENFORCED BY THE PARTIES TO THOSE AGREEMENTS
SPRINT SPECTRUM L.P.
For and in consideration of the covenants contained in the Management
Agreement, Addendum I to the Management Agreement, Services Agreement and Sprint
Spectrum Trademark and Service Mark License Agreement (collectively, the
"Executed Agreements"), and for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Sprint Spectrum L.P. executes,
becomes a party to, and agrees to be bound by and to perform its obligations
under each of the Executed Agreements as of the Effective Date. The execution by
Sprint Spectrum L.P. of this Master Signature Page has the same force and effect
as if Sprint Spectrum L.P. executed individually each of the Executed
Agreements.
SPRINT SPECTRUM L.P.
By: /s/ Bernard A. Bianchino
Bernard A. Bianchino
Chief Business Development Officer
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SPRINTCOM, INC.
For and in consideration of the covenants contained in the Management
Agreement and Addendum I to the Management Agreement (collectively, the
"Executed Agreements"), and for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, SprintCom, Inc. executes, becomes
a party to, and agrees to be bound by and to perform its obligations under each
of the Executed Agreements as of the Effective Date. The execution by SprintCom,
Inc. of this Master Signature Page has the same force and effect as if
SprintCom, Inc. executed individually each of the Executed Agreements.
SPRINTCOM, INC.
By: /s/ William R. Blessing
William R. Blessing
Vice President, Wireless
SPRINT COMMUNICATIONS COMPANY, L.P.
For and in consideration of the covenants contained in the Management
Agreement, Sprint Trademark and Service Mark License Agreement, and Addendum I
to the Management Agreement (collectively, the "Executed Agreements"), and for
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Sprint Communications Company, L.P. executes, becomes a party to,
and agrees to be bound by and to perform its obligations under each of the
Executed Agreements as of the Effective Date; provided, that Sprint
Communications Company, L.P. only agrees to be bound by and perform its
obligations under, and will enjoy the benefits given to it under the Management
Agreement, with respect to only those provisions that expressly apply to Sprint
Communications Company, L.P., including its obligations and benefits under
Sections 2, 3 and 10. The execution by Sprint Communications Company, L.P. of
this Master Signature Page has the same force and effect as if Sprint
Communications Company, L.P. executed individually each of the Executed
Agreements.
SPRINT COMMUNICATIONS COMPANY, L.P.
By: /s/ William R. Blessing
William R. Blessing
Vice President, Wireless
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WIRELESSCO, L.P.
For and in consideration of the covenants contained in the Management
Agreement and Addendum I to the Management (collectively, the "Executed
Agreements"), and for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, WirelessCo, L.P. executes, becomes
a party to, and agrees to be bound by and to perform its obligations under each
of the Executed Agreements as of the Effective Date. The execution by
WirelessCo, L.P. of this Master Signature Page has the same force and effect as
if WirelessCo, L.P. executed individually each of the Executed Agreements.
WIRELESSCO, L.P.
By: /s/ Bernard A. Bianchino
Bernard A. Bianchino
Chief Business Development Officer
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ALAMOSA PCS LLC
For and in consideration of the covenants contained in the Management
Agreement, Services Agreement, Sprint Trademark and Service Mark License
Agreement, Sprint Spectrum Trademark and Service Mark License Agreement, and
Addendum I to the Management Agreement (collectively, the "Executed
Agreements"), and for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, ALAMOSA PCS LLC executes, becomes
a party to, and agrees to be bound by and to perform its obligations under each
of the Executed Agreements as of the Effective Date. The execution by ALAMOSA
PCS LLC of this Master Signature Page has the same force and effect as if
ALAMOSA PCS LLC executed individually each of the Executed Agreements.
ALAMOSA PCS LLC
By: /s/ David Sharbutt
Name: David Sharbutt
Title: Chairman
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NOTICE ADDRESS SCHEDULE
The addresses to which notice is to be sent pursuant to Section 17.1 of
the Management Agreement, Section 9.1 of the Services Agreement, Section 15.1 of
the Sprint Trademark and Service Mark License Agreement, or Section 15.1 of the
Sprint Spectrum Trademark and Service Mark License Agreement are as follows:
SPRINT SPECTRUM L.P.
4900 Main, 12th Floor with a copy to: 4900 Main, 12th Floor
Kansas City, Missouri 64112 Kansas City, Missouri 64112
Telephone: (916) 559-1000 Telephone: (916) 559-1000
Telecopier: (816) 559-1290 Telecopier: (816) 559-1290
Attention: Chief Executive Officer Attention: General Counsel
SPRINTCOM, INC. AND
SPRINT COMMUNICATIONS COMPANY, L.P. (and notices regarding the Sprint Brands)
c/o Sprint Corporation
2330 Shawnee Mission Parkway
Westwood, Kansas 66205
Telephone: 913-624-3326
Telecopier: 913-624-8233
Attention: Corporate Secretary
Mail Stop: KSWESA0110
ALAMOSA PCS LLC
c/o Hicks & Ragland with a copy to: Crenshaw, Dupree and
4747 South Loop 289 Milam, L.L.P.
Lubbock, TX 79464 1500 Broadway, 10th Floor
Telephone: (806) 791-7700 Lubbock, TX 79401
Telecopier: (806) 791-7711 Telephone: (806) 762-5281
Attn: Chief Executive Officer Telecopier: (806) 762-3510
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EXHIBIT 10.5 (CONT.)
SCHEDULE OF DEFINITIONS
This Schedule of Definitions is the "Schedule of Definitions" referred
to in and incorporated by reference under the Management Agreement, Services
Agreement, and Trademark License Agreements (as such agreements are defined
below). Whenever the phrase "this agreement" is used below, such phrase refers
to the particular agreement under whose terms this Schedule of Definitions is
being applied in that instance. If citations to sections or exhibits of
different agreements are included in a definition, the citation to the
particular agreement under whose terms this Schedule of Definitions is being
applied controls to the exclusion of the citations to different agreements.
The following words and phrases used in this agreement have the
following meanings:
"Addendum" means any addendum attached to this agreement that contains
the amendments to this agreement; such Addendum is expressly incorporated as a
part of this agreement.
"Agent" has the meaning set forth in Section 3.1 of the Sprint Spectrum
Trademark and Service Mark License Agreement or Section 3.1 of the Sprint
Trademark and Service Mark License Agreement.
"Arbiter" has the meaning set forth in Section 12.1.3 of the Management
Agreement or Section 5.1.3 of the Services Agreement.
"Available Services" means those categories of services listed on
Exhibit 2.1.1 to the Services Agreement (as the same may be amended from time to
time by Sprint Spectrum and made available to Manager under the terms of the
Services Agreement).
"Available Services and Fees Schedule" means that schedule set forth on
Exhibit 2.1.1 to the Services Agreement, which sets forth the Available Services
offered from time to time and the fees charged for such Available Services.
"Bankruptcy" means, for the purposes of the Trademark License
Agreements, either a Voluntary Bankruptcy or an Involuntary Bankruptcy.
"Brands" means the Sprint PCS Brands and the Sprint Brands.
"BTA" means a Basic Trading Area for which a Basic Trading Area (BTA)
license is issued by the FCC.
"Build-out Plan" means the plan agreed upon by Manager and Sprint PCS,
along with any modifications and updates to the plan, respecting the
construction and design of the Service Area Network, a copy of which is attached
as Exhibit 2.1 to the Management Agreement.
"Business Day" means a day of the year that banks are not required or
authorized to close in the State of New York.
"Cancelled Service" has the meaning set forth in Section 3.2 of the
Services Agreement.
"CDMA" means code division multiple access.
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"Change of Control" has the meaning set forth in Section 17.15.3 of the
Management Agreement.
"Collected Revenues" has the meaning set forth in Section 10.4 of the
Management Agreement.
"Confidential Information" means all Program Requirements, guidelines,
standards, and programs, the technical, marketing, financial, strategic and
other information provided by each party under the Management Agreement,
Services Agreement, and Trademark License Agreements, and any other information
disclosed by one party to the other party pursuant to the Management Agreement,
Services Agreement, and Trademark License Agreements that is not specifically
excluded by Section 12.2 of the Management Agreement. In addition to the
preceding sentence, "Confidential Information" has the meaning set forth in
Section 3.1 of the Sprint Spectrum Trademark and Service Mark License Agreement
or Section 3.1 of the Sprint Trademark and Service Mark License Agreement.
"Controlled Related Party" means the Parent of any Person and each
Subsidiary of such Parent. As used in Section 1.2 and Article 3 of the Sprint
Spectrum Trademark and Service Mark License Agreement or Section 1.2 and Article
3 of the Sprint Trademark and Service Mark License Agreement, the term
"Controlled Related Party" will also include any Related Party of a Person that
such Person or its Parent ran directly or indirectly unilaterally cause to take
or refrain from taking any of the actions required, prohibited or otherwise
restricted by such Section, whether through ownership of voting securities,
contractually or otherwise.
"Default Rate" means the rate per annum (computed on the basis of the
actual number of days elapsed in a year of 365 or 366 days, as applicable),
compounded monthly, equal to the Prime Rate (adjusted as and when changes in the
Prime Rate occur) plus five percent (5%).
"Disaggregated License" means that portion of the License that Manager
may or is required to purchase under Section 11 of the Management Agreement from
Sprint PCS under certain circumstances, after Sprint PCS' receipt of FCC
approval of the necessary disaggregation and partition, which portion comprises
no less than the amount of spectrum sufficient to operate one duplex CDMA
carrier (including the required guard bands) within the PCS Spectrum, and no
more than 10 MHz of the Spectrum (at Manager's designation) covering the Service
Area, and which includes the frequencies then in use in the Service Area Network
and, if applicable, adjacent frequencies, so long as such frequencies in the
aggregate do not exceed 10 MHz.
"Dispute Notice" has the meaning set forth in Section 12.1.3 of the
Management Agreement or Section 5.1.3 of the Services Agreement.
"Dispute Notice Date" has the meaning set forth in Section 12.1.3 of
the Management Agreement or Section 5.1.3 of the Services Agreement.
"Encumbrances" has the meaning set forth in Section 5.1(a) of the
Sprint Spectrum Trademark and Service Mark License Agreement or Section 5.1(a)
of the Sprint Trademark and Service Mark License Agreement.
"Entire Business Value" has the meaning set forth in Section 11.7.3 of
the Management Agreement.
"Event of Termination" means any of the events described in Section
11.3 of the Management Agreement. For the purposes of the Sprint Spectrum
Trademark and Service Mark License Agreement only,
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"Event of Termination" has the meaning set forth in Section 13.2 of that
agreement. For the purposes of the Sprint Trademark and Service Mark License
Agreement only, "Event of Termination" has the meaning set forth in Section 13.2
of that agreement.
"FAA" means the Federal Aviation Administration.
"FCC" means the Federal Communications Commission.
"Financial Lender" means any and all of those commercial and financial
institutions that provide material credit to Manager for the purpose of
assisting Manager with the fulfillment of its obligations and duties under this
agreement.
"fixed wireless local loop" has the meaning set forth in Section 2.4 of
the Management Agreement.
"home service area" means the geographic area within which a customer
can make a local call on the customer's PCS phone (i.e., the customer does not
incur an extra charge).
"Inbound Roaming" means calls placed by a non-Sprint PCS Network
customer on the Sprint PCS Network.
"'Indemnitee" and "Indemnitor" have the meanings set forth in Section
14.3.1 of the Management Agreement or Section 6.3.1 of the Services Agreement.
"Initial Term" has the meaning set forth in Section 11.1 of the
Management Agreement.
"Involuntary Bankruptcy" has the meaning set forth in Section 11.3.7 of
the Management Agreement.
"Law" means all laws (statutory or otherwise), ordinances, rules,
regulations, bylaws, Orders and codes of all governmental and regulatory
authorities, whether United States Federal, state or local, which are applicable
to the Sprint PCS Products and Services.
"License" means the PCS license(s) issued by the FCC described on the
Service Area Exhibit to the Management Agreement.
"Licensed Marks" means the trademarks and service marks referred to in
the Recitals section of the Trademark License Agreement under whose terms this
definition is being applied, and such other marks as may be adopted and
established under said agreement from time to time.
"Licensee" has the meaning set forth in the introductory paragraph to
the particular agreement under whose terms this definition is being applied.
"Licensor" has the meaning set forth in the introductory paragraph to
the particular agreement under whose terms this definition is being applied.
"local calling area" means the geographic area within which a customer
can make a local call on the customer's PCS handset without incurring a long
distance charge.
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<PAGE> 54
"Loss" means any and all damage, loss, liability, claim, out-of-pocket
cost and expense, including reasonable expenses of investigation and reasonable
attorneys' fees and expenses, but excluding consequential or special damages.
"Management Agreement" means that certain Sprint PCS Management
Agreement executed by Manager and Sprint PCS and any documents incorporated by
reference in said agreement.
"Manager" means the party to this agreement as indicated in the
introductory paragraph of this agreement.
"Manager's Products and Services" means all types and categories of
wireless communications services and associated products that are offered by
Manager in the Service Area under Section 3.2 of the Management Agreement.
"Marketing Communications Guidelines" means the guidelines issued by
Sprint or Sprint PCS in connection with the marketing, promotion, advertising,
distribution, lease and sale of Sprint PCS Products and Services.
"MFN pricing" or "Most Favored Nation pricing" means, with respect to
resale, the best local market price offered to any third party for the purchase
of air time on Manager's network including but not limited to any third party
who may use the air time for its own wireless communications services or resell
the air time, and, with respect to roaming, the lowest roaming charge of Manager
to other wireless carriers when their customers roam on the Service Area
Network.
"MIN" means the 24-bit mobile identification number corresponding to
the 7-digit telephone number assigned to the handset, used for both billing and
receiving calls.
"MTA" means a Major Trading Area for which a MTA license is issued by
the FCC.
"New Area(s)" means those portions of the Service Area not covered by
the then-existing Build-out Plan, that Sprint PCS or Manager decides should be
built-out.
"NPA-NXX" means as follows: "NPA" means numbering plan area, which is
the area code for a telephone number. "NXX" refers to the first three digits of
a telephone number, which identify the specific telephone company central office
that serves that number.
"Offer" means an offer received by Manager to sell substantially all of
the assets comprising or used in connection with the operation and management of
the Service Area Network or any portion of the Service Area Network.
"Offer Notice" means a written notice given by Manager to Sprint PCS
that sets forth in detail the terms and conditions of an Offer and the name and
address of the person or entity making the Offer.
"Offered Interest" means the assets that Manager proposes to sell
pursuant to an Offer.
"Operating Assets" means the assets Manager or its Related Parties owns
and uses in connection with the operation of the Service Area Network, at the
time of termination, to provide the Sprint PCS Products and Services. Operating
Assets does not include items such as furniture, fixtures and buildings that
Manager
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or its Related Parties use in connection with other businesses. Examples of
Operating Assets include without limitation: switches, towers, cell sites,
systems, records and retail stores.
"Operational Level of Sprint PCS" means the average operational level
of all the service area networks operated by Sprint PCS and its Related Parties
without the use of a manager, as measured by Sprint PCS, unless the operational
level, as measured by Sprint PCS, of all of the service area networks operated
by Sprint PCS and its Related Parties without the use of a manager that are
contiguous to the Service Area are below the national average, in which case
"Operational Level of Sprint PCS" means the average operational level of those
contiguous service area networks.
"Order" means any order, writ, injunction, decree, judgment, award or
determination of any court or governmental or regulatory authority.
"Other Managers" means any person or entity with which Sprint PCS has
entered into an agreement similar to this agreement under which the person or
entity designs, constructs and manages a service area network and offers and
promotes Sprint PCS Products or Services.
"Outbound Roaming" means calls placed by a Sprint PCS Network customer
on a non-Sprint PCS network.
"Parent" means, with respect to any Person, the ultimate parent entity
(as determined in accordance with the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 and the rules and regulations promulgated thereunder) of such
Person; except that if such ultimate parent entity is an individual, the Parent
will be the highest entity in the ownership chain from the ultimate parent
entity to and including such Person that is not an individual.
"Parties" means, with respect to the Management Agreement, Sprint PCS
and Manager. For the purpose of the services Agreement only, "parties" means
Sprint Spectrum and Manager. Sprint is not a party to the Management Agreement,
except to the limited extent described on the signature page executed on behalf
of Sprint. For the purpose of the Trademark License Agreements only, "parties"
means Licensor and Licensee.
"PCS" means a radio communication system authorized under the rules for
broadband personal communications services designated as Subpart E of Part 24 of
the FCC's rules, including the network, marketing, distribution, sales, customer
interface and operations functions relating thereto.
"PCS Spectrum" means the range of frequencies that Sprint PCS is
authorized to use under the License.
"Permitted Assignee" means any assignee of the rights and obligations
of Licensee pursuant to an assignment consented to in writing by Licensor, in
its sole discretion, in accordance with Section 14.1 of the Sprint Spectrum
Trademark and Service Mark License Agreement or Section 14.1 of the Sprint
Trademark and Service Mark License Agreement, or any subsequent permitted
assignee of any such permitted assignee.
"Person" means any individual, partnership, limited partnership,
limited liability company, corporation, trust, other business association or
business entity, estate, or other entity.
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"pops" means the population covered by a license or group of licenses.
Unless otherwise noted, as used in the Management Agreement, pops means the most
recent Rand-McNally Population Survey estimate of the population of a geographic
area.
"Premium and Promotional Items" means all items, including clothing,
memorabilia and novelties, used to display the Licensed Marks for the purpose of
promoting the awareness, sale or image of the Sprint PCS Products and Services;
provided, however, that Premium and Promotional Items does not include marketing
and advertising materials prepared by Licensee that are subject to the Marketing
Communications Guidelines (e.g. printed materials such as bill stuffers,
brochures and similar materials).
"Prime Rate" means the rate announced from time to time by The Chase
Manhattan Bank, or its successor(s), as its prime rate.
"Program Requirements" means the standards, guidelines and programs
established by Sprint PCS from time to time regarding the operation and
management of the Service Area Network and the Sprint PCS business operated
using the Service Area Network, including the Program Requirements set forth in
Sections 4.1, 4.2, 4.3, 7.2 and 8.1 of the Management Agreement. Sprint PCS may
also implement Program Requirements respecting a voluntary resale program, as
defined in Section 3.5.2 of the Management Agreement.
"Quality Standards" has the meaning set forth in Section 2.1(a) of the
Sprint Spectrum Trademark and Service Mark License Agreement or Section 2.1(a)
of the Sprint Trademark and Service Mark License Agreement.
"Rand-McNally Population Survey" means the most recent population
survey published by Rand-McNally or, if Rand-McNally no longer publishes the
surveys, then the most recent population survey published by any successor
organization to Rand-McNally or, if no such organization exists, an organization
selected by Sprint PCS that provides surveys similar to the Rand-McNally
surveys.
"Receiving Party" has the meaning set forth in Section 3.1 of the
Sprint Spectrum Trademark and Service Mark License Agreement or Section 3.1 of
the Sprint Trademark and Service Mark License Agreement.
"Related Equipment" means customer-controlled equipment for use in
connection with the Sprint PCS Products and Services including telephones,
wireless handsets and related accessories, PCMCIA cards, "smart" cards, PDA's,
PBX's, set-top boxes and data terminals.
"Related Party" means, with respect to any Person, any other Person
that directly or indirectly through one or more intermediaries controls, is
controlled by, or is under common control with the Person. For purposes of the
Management Agreement, Sprint Spectrum, SprintCom, American PCS Communications,
LLC, PhillieCo Partners I, L.P., and Cox Communications PCS, L.P. will be deemed
to be Related Parties. For purposes of this definition, the term "controls"
(including its correlative meanings "controlled by" and "under common control
with") means the possession, direct or indirect, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
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<PAGE> 57
"Restricted Party" has the meaning set forth in Section 3.1 of the
Sprint Spectrum Trademark and Service Mark License Agreement or Section 3.1 of
the Sprint Trademark and Service Mark License Agreement.-
"Selected Services" means those Available Services selected by Manager
to be provided by Sprint Spectrum under Section 2.1 of the Services Agreement.
An Available Service will not be treated as a Selected Service until Sprint
Spectrum begins providing that service.
"Services Agreement" means that certain Sprint PCS Services Agreement
executed by Manager and Sprint Spectrum and any documents incorporated by
reference in said agreement, whereby Manager may delegate the performance of
certain services to Sprint PCS for fees that represent an adjustment of the fees
paid by Sprint PCS to Manager under Section 10 of the Management Agreement.
"Service Area" means the geographic area described on the Service Area
Exhibit to the Management Agreement, except that the term does not include any
New Areas that Manager chooses not to build out.
"Service Area Network" means the network and business activities
managed by Manager under the Management Agreement in the Service Area under the
License.
"Services Agreement" means that certain Services Agreement entered into
between Manager and Sprint Spectrum concurrently with the execution of the
Management Agreement.
"Siting Regulations" means:
(1) FCC regulations governing tower siting, lighting, marking,
monitoring, and reporting of lighting malfunctions as set forth in 47
CFR Sections 17.1 through 17.58, and as may be amended;
(2) FAA regulations governing tower siting, lighting, marking,
monitoring, and reporting of lighting malfunctions as set forth in 14
CFR Sections 77.1 through 77.75, and as may be amended;
(3) FCC land use regulations as set forth in 47
CFR Sections 1.1301 through 1.1319, and as may be amended; and
(4) FCC radio frequency exposure regulations as set forth in
47 CFR Sections 1.1301 through 1.1319, and as may be amended.
"spectrum" has the same meaning as PCS Spectrum.
"Sprint" means Sprint Communications Company, L.P., a Delaware limited
partnership.
"Sprint Brands" means the "Licensed Marks" as that term is defined
under the Sprint Trademark and Service Mark License Agreement.
"Sprint PCS" means any or all of the following Related Parties who are
License holders and signatories to the Management Agreement: Sprint Spectrum
L.P., a Delaware limited partnership, SprintCom, Inc., a Kansas corporation,
PhillieCo Partners I, L.P., a Delaware limited partnership, Cox Communications
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<PAGE> 58
PCS, L.P., a Delaware limited partnership, and American PCS Communications, LLC,
a Delaware limited liability company. Each entity listed above is a Related
Party to each of the other listed entities.
"Sprint PCS Communications Policies" means the policies established in
accordance with Section 6.4 of the Management Agreement with respect to public
relations development, maintenance and management, as they may be amended from
time to time by Sprint PCS in accordance with the terms of the Management
Agreement.
"Sprint PCS Customer Service Program Requirements" means the program
established in accordance with Section 8.1 of the Management Agreement with
respect to customer service development, maintenance and management, as it may
be amended from time to time by Sprint PCS in accordance with the terms of the
Management Agreement.
"Sprint PCS Customer Service Standards" means those customer service
standards developed by Sprint PCS with respect to customer service and
maintenance as described in Section 8.1 of the Management Agreement, as it may
be amended from time to time by Sprint PCS in accordance with the terms of the
Management Agreement.
"Sprint PCS Insurance Requirements" means the insurance requirements
developed by Sprint PCS as described in Section 12.3 of the Management
Agreement, as they may be amended from time to time by Sprint PCS.
"Sprint PCS National Accounts Program Requirements" means the program
established in accordance with Section 4.2 of the Management Agreement with
respect to national accounts development, maintenance and management, as it may
be amended from time to time by Sprint PCS in accordance with the terms of the
Management Agreement.
"Sprint PCS National or Regional Distribution Program Requirements"
means any distribution program established in accordance with Section 4.1 of the
Management Agreement, as it may be amended from time to time by Sprint PCS in
accordance with the terms of the Management Agreement, and entered into by
Sprint PCS or its Related Parties and a third-party distributor (for example, a
national chain of retail electronics stores) from time to time, under which the
third party will distribute, lease, or sell Sprint PCS Products and Services on
a national or regional basis. The term "distributor" means a reseller of Sprint
PCS Products and Services, or an agent of Sprint PCS authorized to sell Sprint
PCS Products and Services on behalf of Sprint PCS, or a person engaged in any
other means of wholesale or retail distribution of Sprint PCS Products and
Services.
"Sprint PCS Network" means the national wireless network and business
activities to be developed by Sprint PCS, Manager and Other Managers in the
United States and certain of its territories and possessions, which network
includes the Service Area Network.
"Sprint PCS Network Roaming and Inter Service Area Program
Requirements" means:
(i) the roaming program established in accordance with Section
4.3 of the Management Agreement, as amended from time to time, to
provide for customers from a carrier not associated with the Sprint PCS
Network to operate the customer's handset on the Sprint PCS Network and
for customers from the Sprint PCS Network (whether customers of Sprint
PCS, Manager or an Other
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<PAGE> 59
Manager) to operate the customer's handset on a network of a carrier
not associated with the Sprint PCS Network, and
(ii) the program established in accordance with Section 4.3 of
the Management Agreement, as amended from time to time, to provide for
customers from one Service Area on the Sprint PCS Network, whether
managed by Sprint PCS, Manager, or an Other Manager, to operate the
customer's handsets and otherwise receive seamless service, regardless
of whether the customer makes its call to or from the Sprint PCS
Network and regardless of whether the customer is a customer of Sprint
PCS, Manager or an Other Manager.
"Sprint PCS Products and Services" means all types and categories of
wireless communications services and associated products that are designated by
Sprint PCS (whether now existing or developed and implemented in the future) as
products and services to be offered by Sprint PCS, Manager and all Other
Managers as the products and services of the Sprint PCS Network for fixed and
mobile voice, short message and other data services under the FCC's rules for
broadband personal communications services, including all local area service
plans. Sprint PCS Products and Services do not include wireline products
services, including local exchange service, wireline long distance service, and
wireline based Internet access.
"Sprint PCS Technical Program Requirements" means the operating and
technical performance standards established by Sprint PCS, in accordance with
Section 7.2 of the Management Agreement, as amended from time to time, for the
Sprint PCS Network is they may be amended from time to time by Sprint PCS in
accordance with the terms of the Management Agreement.
"Sprint Spectrum" means Sprint Spectrum L.P., a Delaware limited
partnership.
"Sprint Spectrum Brands" means the "Licensed Marks" as that term is
defined under the Sprint Spectrum Trademark and Service Mark License Agreement.
"Sprint Spectrum Trademark and Service Mark License Agreement" means
that certain Sprint Spectrum Trademark and Service Mark License Agreement
executed by Manager and Sprint Spectrum and any documents incorporated by
reference in said agreement.
"Sprint Trademark and Service Mark License Agreement" means that
certain Sprint Trademark and Service Mark License Agreement executed by Manager
and Sprint and any documents incorporated by reference in said agreement.
"SprintCom" means SprintCom, Inc., a Kansas corporation.
"Subsidiary" of any Person as of any relevant date means a corporation,
company or other entity (i) more than 50% of whose outstanding shares or equity
securities are, as of such date, owned or controlled, directly or indirectly
through one or more Subsidiaries, by such Person, and the shares or securities
so owned entitle such Person and/or Subsidiaries to elect at least a majority of
the members of the board of directors or other managing authority of such
corporation, company or other entity notwithstanding the vote of the holders of
the remaining shares or equity securities so entitled to vote or (ii) which does
not have outstanding shares or securities, as may be the case in a partnership,
joint venture or unincorporated association, but more than 50% of whose
ownership interest is, as of such date, owned or controlled, directly or
indirectly through one or more Subsidiaries, by such Person, and in which the
ownership interest so owned entitles such Person and/or Subsidiaries to make the
decisions for such corporation, company or other entity.
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"Successor Notice" has the meaning set forth in Section 17.15.2(d) of
the Management Agreement.
"Term" means during the term of the Management Agreement, including the
Initial Term and any renewal terms.
"Trademark and Service Mark Usage Guidelines" means the rules governing
the depiction and presentation of the Licensed Marks then generally in use by
Licensor, to be furnished by Licensor to Licensee (as the same may be amended
and updated from time to time by Licensor).
"Trademark License Agreements" means the Sprint Trademark and Service
Mark License Agreement and the Sprint Spectrum Trademark and Service Mark
License Agreement.
"Voluntary Bankruptcy" has the meaning set forth in Section 11.3.7 of
the Management Agreement.
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EXHIBIT 10.5 (CONT.)
ADDENDUM I
TO
SPRINT PCS MANAGEMENT AGREEMENT
MANAGER: ALAMOSA PCS, LLC
SERVICE AREA BTAS: ABILENE, TX ALBUQUERQUE, NM
AMARILLO, TX CARLSBAD, NM
EAGLE PASS, TX FARMINGTON, NM-DURANGO, CO
EL PASO, TX GALLUP, NM
LAREDO, TX LAS CRUCES, NM
LUBBOCK, TX ROSWELL, NM
MIDLAND, TX SANTA FE, NM
ODESSA, TX FLAGSTAFF, AZ
SAN ANGELO, TX PRESCOTT, AZ
GRAND JUNCTION, CO NAVAJO COUNTY, AZ
PUEBLO, CO
This Addendum contains certain additional and supplemental terms and
provisions of that certain Sprint PCS Management Agreement (the "Management
Agreement") entered into contemporaneously with and by the same parties as the
Addendum to the Management Agreement. The terms and provisions of this Addendum
control, supersede and amend any conflicting terms and provisions contained in
the Management Agreement. Except for express modifications made in this
Addendum, the Management Agreement continues in full force and effect.
Capitalized terms used and not otherwise defined in this Addendum have
the meanings described to them in that certain Schedule of Definitions. Section
and Exhibit references are to Sections and Exhibits of the Management Agreement
unless otherwise noted.
The Management Agreement is modified as follows:
1. "WIRELESS MOBILITY COMMUNICATIONS NETWORK" DEFINED. In Section 2.3,
the phrase "Wireless Mobility Communications Network" means a radio
communications system operating in the 1900 MHZ spectrum range under the rules
designated as subpart E of part 24 of the FCC's rules.
2. AMENDMENTS TO PROGRAM REQUIREMENTS. The second sentence of Section
9.2(c) is revised to change the phrase "may provide" to "will provide."
3. NEW MEXICO GROSS RECEIPTS TAX. The following new paragraph is
inserted at the end of Section 10.4:
The parties agree to work jointly in good faith to establish,
by a ruling from the Taxation and Revenue Department of the State of
New Mexico, that Manager's receipts under Section 10.1 of this
agreement and Sprint PCS' receipts under the Services Agreement are not
subject to New Mexico gross receipts tax. Each party will bear its own
costs in this endeavor.
4. DEFINITION OF "RTFC". For purposes of this Addendum, "RTFC" means
Rural Telephone Finance Cooperative.
5. REPAYMENT OF MANAGER DEBT. If Sprint PCS purchases the Operating
Assets under Section 11.2.1.1, 11.2.2.1, 11.5.1 or 11.6.1, Sprint PCS agrees
either to (a) repay the amount owed by
<PAGE> 62
Manager to RTFC directly attributable to the Service Area Network and reflected
on Manager's financial records, or (b) subject to satisfactory credit review by
RTFC, assume the debt to RTFC described in (a) of this paragraph.
6. LOCK BOX ACCOUNTS.
(a) EVENT OF TERMINATION. Should Manager obtain financing through RTFC,
if Manager purchases the Disaggregated License from Sprint PCS under Sections
11.2.1.2, 11.2.2.2, 11.5.2 or 11.6.2, the purchase agreement will set forth the
procedure for the orderly transfer to Manager effective the closing date of the
lock box account or, if such transfer is impractical for commercially reasonable
reasons, the procedure for the daily transfer to Manager of funds received in
the lock box account to which Manager is entitled. Such procedure will include a
procedure for periodic true-ups to provide Manager and Sprint PCS with the
amounts to which each is entitled.
(b) SPRINT PCS BANKRUPTCY. Should Manager obtain financing through
RTFC, Sprint PCS will in good faith investigate the alternatives and consider
RTFC's desire (if applicable) for Manager to obtain an interest in the lock box
account that will provide Manager with direct access to any funds in such
account to which Manager is entitled upon the occurrence of an Event of
Termination under Section 11.3.7 caused by the Voluntary Bankruptcy or
Involuntary Bankruptcy of Sprint PCS. If Sprint PCS determines in its sole
discretion that any such arrangement is commercially unreasonable or is
unacceptable to Sprint PCS' lenders, Sprint PCS is not required to alter such
accounts as requested by Manager.
7. NOTICE OF EVENT OF TERMINATION. Sprint PCS will give RTFC notice of
an event of termination to the following address:
Rural Telephone Finance Cooperative
Woodland Park
2201 Cooperative Way
Herndon, Virginia 20171-3025
Attention: Chief Executive Officer
Facsimile: 703-709-6776
8. REGULATORY NOTICES (RESPONSE PERIOD): In the first sentence of
Section 16.4, the phrase "2 Business Days" is replaced by the phrase "5 Business
Days."
9. REGULATORY NOTICES (COSTS). The following two sentences replace the
last sentence of Section 16.4: "If Sprint PCS chooses to respond to such
communications and complaints, Manager will not respond to them without the
consent of Sprint PCS. Sprint PCS will bear the cost of responding to any such
communications and complaints unless (1) such response is primarily the result
of Manager's acts or omissions that constitute negligence, willful misconduct,
or breach of any provision of this agreement (in which case Manager will pay the
costs of Sprint PCS' response), or (2) Manager's response is not requested by
Sprint PCS."
10. EXTEND TERM AS INTERIM TRUSTEE. Section 17.15.2 is modified to add
the following:
(a) If RTFC, during its I 90-day term as interim trustee under
Section 17.15.2(c) acts in accordance with the terms of the Management
Agreement, Services Agreement, Trademark License Agreements and any
related agreements, and acts diligently and in good faith to find a
2
<PAGE> 63
successor to Manager acceptable to Sprint PCS, then Sprint PCS will not
unreasonably withhold a request by RTFC to extend its term as interim
trustee for up to an additional 180 days.
(b) If Sprint PCS rejects a proposed successor to Manager
under Section 17.15.2(e) within the last 90 days of the 180-day interim
trustee period under Section 17.15.2(c), RTFC may continue to serve as
interim trustee until 90 days after Sprint PCS gives RTFC notice of
such rejection. If Sprint PCS rejects another proposed successor, RTFC
may continue to serve as interim trustee for an additional 90-day
period beginning the date Sprint PCS gives RTFC notice of the
rejection.
11. TRANSFER OF SPRINT PCS NETWORK. The first sentence of Section
17.15.5 is revised to replace "the Sprint PCS Network" with "the Sprint PCS
Network or any of the individual Licenses relating to the areas identified on
the Service Area Exhibit."
12. NUMBER PORTABILITY. At the end of the second sentence of Section
17.17, the following language is added: "in a manner that preserves the economic
benefits of this agreement."
13. COMPLIANCE. Sprint PCS acknowledges that smaller population centers
within the Service Area may merit an adjusted application of Sprint PCS' Retail
Store requirements and its Customer Service requirements in order to preserve
the economic benefits of this agreement for Manager and Sprint PCS. Accordingly,
with respect to cities located within the Service Area having a population of
less than 100,000 according to the 1990 United States government census, Sprint
PCS will exercise commercial reasonableness with respect to its Retail Store
requirements and its Customer Service requirements.
14. BUILD-OUT PLAN EXPANSION.
(a) In conjunction with Managers execution of its Build-Out
Plan with respect to Amarillo, TX Manager agrees to complete its
build-out of coverage from Amarillo, TX east on 140 to the Oklahoma
City, OK BTA boundary as contemporaneously as practicable with the
completion by Sprint PCS or an Other Manager of the build-out with
respect to 140 from Oklahoma City, OK to the Amarillo, TX BTA boundary.
(b) In conjunction with Manager's execution of its Build-Out
Plan with respect to Abilene, TX, Manager agrees to complete its
build-out of coverage from Abilene, TX east on I-20 to Dallas-Fort
Worth, TX as contemporaneously as practicable with the completion by
Sprint PCS or an Other Manager of the build-out of I-20 from Ft. Worth,
TX to the Abilene, TX BTA boundary.
15. SURVIVAL UPON TERMINATION. The provisions of Sections 10, 11.4,
11.5, 11.6, 12.2, 13, 14, 16 and 17 of the Management Agreement and paragraphs
3, 4, 5, 6, 8, 9, 10, 11 and 12 of this Addendum will survive any termination of
the Management Agreement.
[The remainder of this page is intentionally left blank.]
3
<PAGE> 64
EXHIBIT 10.5 (CONT.)
ADDENDUM II
TO
SPRINT PCS MANAGEMENT AGREEMENT
MANAGER: ALAMOSA PCS LLC
SERVICE AREA BTAS: ABILENE, TX ALBUQUERQUE, NM
AMARILLO, TX CARLSBAD, NM
EAGLE PASS, TX FARMINGTON, NM-DURANGO, CO
EL PASO, TX GALLUP, NM
LAREDO, TX LAS CRUCES, NM
LUBBOCK, TX ROSWELL, NM
MIDLAND, TX SANTA FE, NM
ODESSA, TX FLAGSTAFF, AZ
SAN ANGELO, TX PRESCOTT, AZ
GRAND JUNCTION, CO NAVAJO COUNTY, AZ
PUEBLO, CO
This Addendum II ("THIS ADDENDUM"), dated as of June 10, 1999,
contains certain additional and supplemental terms and provisions of that
certain Sprint PCS Management Agreement entered into as of July 17, 1998, by the
same parties as this Addendum, which Management Agreement was further amended by
that certain Addendum I entered into as of July 17, 1998 (the Management
Agreement, as amended by Addendum I, being the "MANAGEMENT AGREEMENT"). The
terms and provisions of this Addendum control, supersede and amend any
conflicting terms and provisions contained in the Management Agreement. Except
for express modifications made in this Addendum, the Management Agreement
continues in full force and effect.
Capitalized terms used and not otherwise defined in this
Addendum have the meanings ascribed to them in the Management Agreement. Section
and Exhibit references are to Sections and Exhibits of the Management Agreement
unless otherwise noted.
The Management Agreement is modified as follows:
1. USE OF LOAN PROCEEDS. Sprint PCS is entering into that
certain Consent and Agreement with Nortel Networks Inc. ("NORTEL")
(which Consent and Agreement, as amended and modified from time to
time, is referred to as the "CONSENT AND AGREEMENT") to enable Manager
to obtain loans from Nortel and its successors and assigns
(collectively, the "LENDERS"). Manager agrees that it will not use the
proceeds from any loan made to Manager to which the Consent and
Agreement relates or from any other loan or extension of credit to
which the Consent and Agreement relates for any purpose other than (a)
to construct and operate the wireless service within the Service Area
(as may be amended from time to time) as contemplated under the
Management Agreement, or (b) as expressly permitted under Section 2.10
of the Credit Agreement between Nortel, Manager and certain other
entities dated as of June 10, 1999 (the "CREDIT AGREEMENT"), as in
effect as of the date of execution thereof (a copy of which is attached
to this Addendum as Exhibit A) without giving effect to any subsequent
amendment, modification or waiver of any term, condition, definition or
other provision of the Credit Agreement or to any course of dealing
between Nortel and Manager that now exists or may hereafter be
established allowing a use of loan proceeds not allowed under in
Section 2. 10 of the Credit Agreement as in effect as of the date
hereof.
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2. CONSENT AND AGREEMENT NOT ASSIGNABLE. Except as expressly
required or permitted in the Consent and Agreement, Manager may not
assign the Consent and Agreement. Except as specifically provided under
Section 24 of the Consent and Agreement, Sprint PCS is not required to
agree to terms similar to those contained in the Consent and Agreement
with any other lender or creditor.
3. NOTICES. Manager agrees to promptly give Sprint PCS a copy
of any notice Manager receives from the Administrative Agent or any
Lender (as those terms are defined in the Consent and Agreement), and a
copy of any notice Manager gives to the Administrative Agent or any
Lender. Sprint PCS agrees to promptly give Manager a copy of any notice
Sprint PCS receives from the Administrative Agent or any Lender, and a
copy of any notice that Sprint PCS gives to the Administrative Agent or
any Lender.
4. NO DEFAULT UNDER CREDIT AGREEMENT OR MANAGEMENT AGREEMENT.
Manager warrants and represents that as of the date hereof, no Default
or Event of Default under the Credit Agreement has occurred, and no
Event of Termination under the Management Agreement or event that if
not cured, or if notice were to be provided, would constitute an Event
of Termination under the Management Agreement, has occurred.
5. NO KNOWN BREACH UNDER MANAGEMENT AGREEMENT. Sprint PCS
warrants and represents that, to the knowledge of its officers, as of
the date hereof, no Event of Termination under the Management Agreement
or event that if not cured, or if notice were to be provided, would
constitute an Event of Termination under the Management Agreement, has
occurred that has not been waived. Sprint PCS has waived the possible
breach by Manager under Section 12.2 of the Management Agreement
relating to the disclosure of Confidential Information to Nortel.
Because of the application of force majeure, Sprint PCS has agreed that
the deadline for the Albuquerque, New Mexico launch date under the
Build-Out Plan has been postponed until November 30, 1999.
6. SHARING CONFIDENTIAL INFORMATION WITH LENDERS. Section
12.2(b)(vii) of the Management Agreement is amended by inserting the
words "or has provided" between the words "is considering providing"
and "financing."
7. REAFFIRMATION OF SPRINT AGREEMENTS. Each of the undersigned
reaffirms in their entirety, together with their respective rights and
obligations thereunder, the Management Agreement, the Services
Agreement and the License Agreements.
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<PAGE> 66
IN WITNESS WHEREOF, the parties hereto have caused this Addendum II to
be executed by their respective authorized officers as of the date and year
first above written.
SPRINT SPECTRUM L.P.
By: /s/ Bernard A. Bianchino
Bernard A. Bianchino
Chief Business Development Officer
WIRELESSCO, L.P.
By: /s/ Bernard A. Bianchino
Bernard A. Bianchino
Chief Business Development Officer
SPRINT COMMUNICATIONS COMPANY, L.P.
By: /s/ Thomas Weigman
Name: Thomas Weigman
Title: SVP, Consumer Market,
Strategy and Communications
SPRINTCOM, INC.
By: /s/ Bernard Bianchino
Bernard A. Bianchino
Vice President
ALAMOSA PCS LLC
By: /s/ David Sharbutt
Name: David Sharbutt
Title: Chairman
3
<PAGE> 1
EXHIBIT 10.6
SPRINT PCS
SERVICES AGREEMENT
BETWEEN
SPRINT SPECTRUM L.P.
AND
ALAMOSA PCS LLC
JULY 17, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. ENGAGEMENT OF SPRINTSPECTRUM 1
1.1 ENGAGEMENT OF SPRINTSPECTRUM 1
1.2 RELIANCE ON AFFILIATE 1
1.3 NON-EXCLUSIVE SERVICE 1
1.4 MANAGER'S USE OF SERVICES 2
2. SERVICES 2
2.1 AVAILABLE SERVICES; SELECTED SERVICES 2
2.1.1 AVAILABLE SERVICES 2
2.1.2 SELECTED SERVICES 2
2.1.3 CHANGES TO SELECTED SERVICES 2
2.1.4 PERFORMANCE OF SELECTED SERVICES 3
2.2 THIRD PARTY VENDORS 3
2.3 CONTRACTS 3
3. FEES FOR SELECTED SERVICES 3
3.1 PAYMENT OF FEES 3
3.2 ADJUSTMENT OF FEES 4
3.3 LATE PAYMENTS 4
4. TERM; TERMINATION; EFFECT OF TERMINATION 4
4.1 TERM 4
4.2 EFFECT OF TERMINATION 4
5. BOOKS AND RECORDS; CONFIDENTIAL INFORMATION 4
5.1 BOOKS AND RECORDS 4
5.1.1 GENERAL 4
5.1.2 AUDIT 5
5.1.3 CONTESTING AN AUDIT. 5
5.2 CONFIDENTIAL INFORMATION 6
6. INDEMNIFICATION 7
6.1 INDEMNIFICATION BY SPRINT SPECTRUM 8
6.2 INDEMNIFICATION BY AFFILIATE 7
6.3 PROCEDURE 8
6.3.1 NOTICE 8
6.3.2 DEFENSE BY INDEMNITOR 8
6.3.3 DEFENSE BY INDEMNITEE 8
6.3.4 COSTS 8
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
7. DISPUTE RESOLUTION 9
7.1 NEGOTIATION 9
7.2 UNABLE TO RESOLVE 9
7.3 ATTORNEYS AND INTENT 9
8. REPRESENTATIONS AND WARRANTIES 9
8.1 DUE INCORPORATION OR FORMATION; AUTHORIZATION OF AGREEMENTS 9
8.2 VALID AND BINDING OBLIGATION 10
8.3 NO CONFLICT; NO DEFAULT 10
8.4 LITIGATION 10
9. GENERAL PROVISIONS 10
9.1 NOTICES 10
9.2 CONSTRUCTION 10
9.3 HEADINGS 10
9.4 FURTHER ACTION 11
9.5 SPECIFIC PERFORMANCE 11
9.6 ENTIRE AGREEMENT; AMENDMENTS 11
9.7 LIMITATION ON RIGHTS OF OTHERS 11
9.8 WAIVERS; REMEDIES 11
9.9 WAIVER OF JURY TRIAL 12
9.10 BINDING EFFECT 12
9.11 GOVERNING LAW 12
9.12 SEVERABILITY 12
9.13 LIMITATION OF LIABILITY 12
9.14 NO ASSIGNMENT; EXCEPTIONS 12
9.15 DISCLAIMER OF AGENCY 12
9.16 INDEPENDENT CONTRACTORS 13
9.17 EXPENSE 13
9.18 GENERAL TERMS 13
9.19 CONFLICTS WITH AFFILIATION AGREEMENT 13
9.20 MASTER SIGNATURE PAGE 13
</TABLE>
ii
<PAGE> 4
SPRINT PCS SERVICES AGREEMENT
This SERVICES AGREEMENT is made July 17, 1998, by and between Sprint
Spectrum L.P., a Delaware limited partnership ("SPRINT SPECTRUM"), and ALAMOSA
PCS L.L.C., a Texas limited liability company (but not any Related Party)
("MANAGER"). The definitions for this agreement are set forth on the "SCHEDULE
OF DEFINITIONS."
RECITALS
A. Manager and the holder of the License ("SPRINT PCS") are entering
into a Management Agreement contemporaneously with the execution of this
agreement, under which Manager will design, construct, operate, manage and
maintain a wireless services network in the Service Area in accordance with
Sprint PCS standards and will offer and promote Sprint PCS Products and Services
that operate on the Sprint PCS Network.
B. Manager desires to enter into this agreement with Sprint Spectrum,
under which Sprint Spectrum may furnish certain services to Manager to assist
Manager to build out, operate, manage and maintain the Service Area Network
under the License.
AGREEMENT
In consideration of the recitals and mutual covenants and agreements
contained in, this agreement, the sufficiency of which are hereby acknowledged,
the parties, intending to be bound, agree as follows:
1. ENGAGEMENT OF SPRINT SPECTRUM
1.1 ENGAGEMENT OF SPRINT SPECTRUM. Manager engages Sprint Spectrum to
assist Manager with certain specified services in connection with the operations
of Manager and in building out, operating, managing and maintaining the Service
Area Network, subject to the terms and conditions of this agreement. Sprint
Spectrum accepts the engagement and will use the same effort and demonstrate the
same care in performing its obligations under this agreement as it uses in
conducting its own business. Manager will use the efforts and demonstrate the
care necessary for Sprint Spectrum to meet its obligations under this agreement.
When providing the Selected Services, Sprint Spectrum will provide those
services to Manager in the same manner it provides those services to its own
business, including the use of third party vendors to provide certain Selected
Services.
1.2 RELIANCE ON MANAGER. Manager understands that Sprint Spectrum's
ability to provide the Selected Services will depend largely on Manager's
compliance with the Sprint PCS Program Requirements under the Management
Agreement and cooperation with Sprint Spectrum. Manager agrees to comply with
such requirements and to cooperate with Sprint Spectrum to enable Sprint
Spectrum to perform its obligations under this agreement.
1.3 NON-EXCLUSIVE SERVICE. Nothing contained in this agreement confers
upon Manager an exclusive right to any of the Available Services. Sprint
Spectrum may contract
<PAGE> 5
with others to provide expertise and services identical or
similar to those to be made available or provided to Manager under this
agreement.
1.4 MANAGER'S USE OF SERVICES. Manager agrees it will only use the
Selected Services in connection with its Service Area Network. Manager will not
use the Selected Services in connection with any other business or outside the
Service Area.
2. SERVICES
2.1 AVAILABLE SERVICES; SELECTED SERVICES.
2.1.1 Available Services. Subject to the terms of this
agreement, Manager may obtain any of the Available Services from Sprint Spectrum
in accordance with the provisions of this Section 2. 1. The Available Services
offered from time to time and the fees charged for such Available Services will
be set forth on the then current Exhibit 2.1.1 (the "AVAILABLE SERVICES AND FEES
SCHEDULE"). If Sprint Spectrum offers any new Available Service, it will deliver
a new Exhibit 2. 1.1 indicating the new service and the fee for the new service.
Manager may select one or more of the categories of Available
Services. If Manager selects a particular category of services it must take and
pay for all of the services under the category selected; Manager may not select
only particular services within that category.
If Sprint Spectrum determines to no longer offer an Available
Service and the service is not a Selected Service, then Sprint Spectrum may give
Manager written notice at any time during the term of this agreement that Sprint
Spectrum no longer offers the Available Service.
Sprint Spectrum may modify Exhibit 2. 1.1 from time to time.
Exhibit 2. 1.1 will be deemed amended upon delivery of the new Exhibit 2. 1.1 to
Manager.
2.1.2 Selected Services. During the term of this agreement,
and subject to the terms of this agreement, Manager has selected, and Sprint
Spectrum has agreed to furnish or cause to be furnished to Manager, the
Available Services listed on Exhibit 2.1.2 (which listed services will be the
Selected Services). Sprint Spectrum may require from time to time that certain
Available Services be Selected Services where necessary to comply with legal or
regulatory requirements (e.g., mandatory provision of emergency 911 service) or
applicable operating constraints (e.g., delivery of merchandise to the regional
distribution centers of national retail distributors).
2.1.3 Changes to Selected Services. If Manager determines it
no longer requires a Selected Service, then Manager must give Sprint Spectrum
written notice at least 3 months prior to the date on which Manager wishes to
discontinue its use of such Selected Service.
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<PAGE> 6
If Sprint Spectrum determines to no longer offer an Available
Service and such service is one of Manager's Selected Services, then Sprint
Spectrum must give Manager written notice at least 9 months prior to its
discontinuance of such Available Service that Sprint Spectrum will no longer
offer such Available Service. If the Available Service to be discontinued is
required by Sprint Spectrum to be a Selected Service, then Sprint Spectrum will
use commercially reasonable efforts to (a) help Manager provide the service
itself or find another vendor to provide the service, and (b) facilitate
Manager's transition to the new service provider.
2.1.4 Performance of Selected Services. Sprint Spectrum may
select the method, location and means of providing the Selected Services. If
Sprint Spectrum wishes to use Manager's facilities to provide the Selected
Services, Sprint Spectrum must obtain Manager's prior written consent. .
2.2 THIRD PARTY VENDORS. Some of the Available Services might be
provided by third party vendors under arrangements between Sprint Spectrum and
the third party vendors. In some instances, Manager may receive Available
Services from a third party vendor under the same terms and conditions that
Sprint Spectrum receives such services. In other instances, Manager may receive
Available Services under the terms and conditions set forth in an agreement
between Manager and the third party vendor. If Manager wishes to engage a third
party vendor to provide Available Services, Selected Services, or Available
Services that Sprint Spectrum will no longer offer, Manager must first obtain
Sprint Spectrum's prior written consent, which consent will not be unreasonably
withheld. Before Manager may obtain from the third party vendor any Available
Services, Selected Services, or Available Services that Sprint Spectrum will no
longer offer, such vendor must execute an agreement prepared by Sprint Spectrum
that obligates the vendor to maintain the confidentiality of any proprietary
information and that prohibits the vendor from using any proprietary technology,
information or methods for its benefit or the benefit of any other person or
entity. Manager's use of a third party vendor that is not providing Available
Services to Manager on behalf of Sprint PCS under the Management Agreement will
not qualify for assumed compliance with the Program Requirements under Sections
7. 1 (a)(ii) or 8. 1 (b) of the Management Agreement.
2.3 CONTRACTS. Manager will notify Sprint Spectrum of any contract or
other arrangement Manager has with any other party that will affect how Sprint
Spectrum is to provide the Selected Services.
3. FEES FOR SELECTED SERVICES
3.1 PAYMENT OF FEES. Sprint Spectrum and Manager agree that the fees
for the Available Services will initially be those set forth on Exhibit 2. 1. 1,
which fees represent an adjustment to any fees paid by Sprint PCS to Manager
under Section 10 of the Management Agreement . The monthly charge for any fees
based on the number of subscribers of the Service Area Network will be
determined based on the number of subscribers as of the 15th day of the month
for which the charge is being calculated. Manager agrees to pay the fees to
Sprint Spectrum within 20 days after the date of the invoice. If Manager enters
into an agreement with a third party vendor under Section 2.2, Manager agrees to
pay the fees for the services rendered by the third party vendor in accordance
with the terms and conditions of such agreement.
3
<PAGE> 7
3.2 ADJUSTMENT OF FEES. Sprint Spectrum may change the fee for any
service it provides once during any 12-month period by delivering a new Exhibit
2. 1.1 to Manager. Exhibit 2. 1.1 will be deemed amended. on the effective date
noted on the new Exhibit 2. 1. 1, which will be at least 30 days after
delivering the new Exhibit 2. 1.1. Manager must notify Sprint Spectrum in
writing before the effective date of the new Exhibit 2. 1. 1 if Manager wishes
to discontinue a Selected Service for which the price is being increased (a
"CANCELED SERVICE"). If Manager discontinues a Selected Service under this
Section 3.2, Sprint Spectrum will, at Manager's option, continue to provide the
Cancelled Service and to charge Manager the current fee (i.e., the fee under the
Exhibit 2. 1. 1 in effect on the date Manager gives its cancellation notice to
Sprint Spectrum) for the Cancelled Service for up to 9 months from the date
Sprint Spectrum gives Manager notice of the price change or until Manager no
longer needs the Cancelled Service, whichever occurs first. If Sprint Spectrum
continues to provide the Cancelled Service after the 9-month period, Sprint
Spectrum will apply the new fee, under the new Exhibit 2. 1. 1, and such fee
will be applied retroactively as of the effective date of the new schedule.
Manager agrees to pay such retroactive charge within 10 days after the date of
the invoice for such charge.
3.3 LATE PAYMENTS. Any payment due under this Section 3 that is not
paid by Manager to Sprint Spectrum in accordance with the terms of this
agreement will bear interest at the Default Rate beginning (and including) the
6th day after the due date until (and including) the date on which such payment
is made.
4. TERM; TERMINATION; EFFECT OF TERMINATION
4.1 TERM. This agreement commences on the date of execution and
continues until the Management Agreement terminates. This agreement
automatically terminates upon termination of the Management Agreement. Neither
party may terminate this agreement for any reason other than the termination of
the Management Agreement.
4.2 EFFECT OF TERMINATION. Upon the termination of this agreement, all
rights and obligations of each party under this agreement will immediately
cease. except that:
(a) Any rights arising out of a breach of any terms of this
agreement will survive any termination of this agreement;
(b) The provisions of this Section 4.2 and Sections 5.2, 6, 7,
and 9 will survive any termination of this agreement; and
(c) The payment obligations under Section 3 will survive any
termination of this agreement if, and to the extent, any fees have accrued or
are otherwise due and owing from Manager to Sprint Spectrum or any Sprint
Spectrum Related Party as of the date of termination of this agreement.
5. BOOKS AND RECORDS; CONFIDENTIAL INFORMATION
5.1 BOOKS AND RECORDS.
5.1.1 General. Each party must keep and maintain books and
records to support and document any fees, costs, expenses or other charges due
in connection with the provisions
4
<PAGE> 8
set forth in this agreement. The records must be retained for a period of at
least 3 years after the fees, costs, expenses or other charges to which the
records relate have accrued and have been paid, or such other period as may be
required by law.
5.1.2 Audit. On reasonable advance notice, each party must
provide access to appropriate records to the independent auditors selected by
the other party for purposes of auditing the amount of fees, costs, expenses or
other charges payable in connection with the Selected Services with respect to
the period audited. The auditing party will conduct the audit no more frequently
than annually. If the audit shows that Sprint Spectrum was underpaid then,
unless the amount is contested, Manager will pay to Sprint Spectrum the amount
of the underpayment within 10 Business Days after Sprint Spectrum gives Manager
written notice of the determination of the underpayment. If the audit determines
that Sprint Spectrum was overpaid then, unless the amount is contested, Sprint
Spectrum will pay to Manager the amount of the overpayment within 10 Business
Days after Sprint Spectrum determines Sprint Spectrum was overpaid.
Notwithstanding the above provisions of this Section 5.1.2,
Sprint Spectrum may elect to have its own independent auditors certify to the
accuracy of the charges with respect to Manager, rather than allow Manager's
independent auditors access to Sprint Spectrum's records.
5.1.3 Contesting an Audit. If the party that did not select
the independent auditor does not agree with the findings of the audit, then such
party can contest the findings by providing notice of such disagreement to the
other party (the "DISPUTE NOTICE"). The date of delivery of such notice is the
"DISPUTE NOTICE DATE." If the parties are unable to resolve the disagreement
within 10 Business Days after the Dispute Notice Date, they will resolve the
disagreement in accordance with the following procedures.
The two parties and the auditor that conducted the audit will
all agree on an independent certified public accountant with a regional or
national accounting practice in the wireless telecommunications industry (the
"ARBITER") within 15 Business Days after the Dispute Notice Date. If, within 15
Business Days after the Dispute Notice Date, the three parties fail to agree on
the Arbiter, then at the request of either party to this agreement, the Arbiter
will be selected pursuant to the rules then in effect of the American
Arbitration Association. Each party will submit to the Arbiter within 5 Business
Days after its selection and engagement all information reasonably requested by
the Arbiter to enable the Arbiter to independently resolve the issue that is the
subject of the Dispute Notice. The Arbiter will make its own determination of
the amount of fees, costs, expenses or other charges payable under this
agreement with respect to the period audited. The Arbiter will issue a written
report of its determination in reasonable detail and will deliver a copy of the
report to the parties within 10 Business Days after the Arbiter receives all of
the information reasonably requested. The determination made by the Arbiter will
be final and binding and may be enforced by any court having jurisdiction. The
parties will cooperate fully in assisting the Arbiter and will take such actions
as are necessary to expedite the completion of and to cause the Arbiter to
expedite its assignment.
If the amount owed by a contesting party is reduced by more than 10% or
the amount owed to a contesting party is increased by more than 10% then the
noncontesting party will
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<PAGE> 9
pay the costs and expenses of the Arbiter, otherwise the contesting party will
pay the costs and expenses of the Arbiter.
5.2 CONFIDENTIAL INFORMATION.
(a) Except as specifically authorized by this agreement, each
of the parties must, for the term of this agreement and 3 years after the date
of termination of this agreement, keep confidential, not disclose to others and
use only for the purposes authorized in this agreement, all Confidential
Information disclosed by the other party to the party in connection with this
agreement, except that the foregoing obligation will not apply to the extent
that any Confidential Information:
(i) is or becomes, after disclosure to a party,
publicly known by any means other than through unauthorized acts or omissions of
the party or its agents; or
(ii) is disclosed in good faith to a party by a third
party entitled to make
the disclosure.
(b) Notwithstanding the foregoing, a party may use, disclose
or authorize the disclosure of Confidential Information that it receives that:
(i) has been published or is in the public domain, or
that subsequently comes into the public domain, through no fault of the
receiving party;
(ii) prior to the effective date of this agreement
was properly within the legitimate possession of the receiving party, or
subsequent to the effective date of this agreement, is lawfully received from a
third party having rights to publicly disseminate the Confidential Information
without any restriction and without notice to the recipient of any restriction
against its further disclosure;
(iii) is independently developed by the receiving
party through persons or entities who have not had, either directly or
indirectly, access to or knowledge of the Confidential Information;
(iv) is disclosed to a third party consistent with
the terms of the written approval of the party originally disclosing the
information;
(v) is required by the receiving party to be produced
under order of a court of competent jurisdiction or other similar requirements
of a governmental agency, and the Confidential Information will otherwise
continue to be Confidential Information required to be held confidential for
purposes of this agreement;
(vi) is required by the receiving party to be
disclosed by applicable law or a stock exchange or association-on which the
receiving party's securities (or those of its Related Parties) are or may become
listed; or
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<PAGE> 10
(vii) is disclosed by the receiving party to a
financial institution or accredited investor (as that term is defined in Rule
501 (a) under the Securities Act of 1933) that is considering providing
financing to the receiving party and which financial institution or accredited
investor has agreed to keep the Confidential Information confidential in
accordance with an agreement at least as restrictive as this Section 5.
(c) The party making a disclosure under Sections 5.2(b)(v),
5.2(b)(vi) or 5.2(b)(vii) must inform the non-disclosing party as promptly as is
reasonably necessary to enable the non-disclosing party to take action to, and
use the disclosing party's reasonable best efforts to, limit the disclosure and
maintain confidentiality to the extent practicable.
(d) Manager will not, except when serving in the capacity of
Manager under this agreement, use any Confidential Information of any kind that
it receives under or in connection with this agreement. For example, if Manager
operates a wireless company in a different licensed area, Manager may not use
any of the Confidential Information received under or in connection with this
agreement in operating its other wireless business.
6. INDEMNIFICATION
6.1 INDEMNIFICATION BY SPRINT SPECTRUM. Sprint Spectrum agrees to
indemnify, defend and hold harmless Manager, its directors, managers, officers
and employees from and against any and all claims, demands, causes of action,
losses, ' actions, damages, liability and expense, including costs and
reasonable attorneys' fees, against Manager, its directors, managers, officers
and employees arising from or relating to the violation by Sprint Spectrum, its
directors, officers, employees, contractors, subcontractors, agents or
representatives of any law, regulation or ordinance applicable to Sprint
Spectrum in its performance of the Selected Services, or by Sprint Spectrum's,
or its directors', officers', employees', contractors', subcontractors', agents'
or representatives' breach of any representation, warranty or covenant contained
in this agreement, except where and to the extent the claim, demand, cause of
action, loss, action, damage, liability and expense results from the negligence
or willful misconduct of Manager, its directors, managers, officers, employees,
agents or representatives. Sprint Spectrum's indemnification obligations under
this Section 6.1 do not apply to any third party vendors that provide services
(including Selected Services) directly to Manager or its Related Parties under a
separate agreement.
6.2 INDEMNIFICATION BY MANAGER. Manager agrees to indemnify, defend and
hold harmless Sprint Spectrum, its directors, officers and employees from and
against any and all claims, demands, causes of action, losses, actions, damages,
liability and expense, including costs and reasonable attorneys' fees, against
Sprint Spectrum, its directors, officers and employees arising from or relating
to Manager's, or its directors', managers', officers', employees', contractors',
subcontractors', agents' or representatives' violation of any law, regulation or
ordinance applicable to Manager, or by Manager's, or its directors', managers',
officers', employees', contractors', subcontractors', agents' or
representatives' breach of any representation, warranty or covenant contained in
this agreement, Manager's ownership of the Operating Assets or the operation of
the Service Area Network, except where and to the extent the claim, demand,
cause of action, loss, action, damage, liability and expense results
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<PAGE> 11
from the negligence or willful misconduct of Sprint Spectrum, its directors,
officers, employees, contractors, subcontractors, agents or representatives.
6.3 PROCEDURE.
6.3.1 Notice. Any party being indemnified ("INDEMNITEE") will
give the party making the indemnification ("INDEMNITOR") written notice as soon
as practicable but no later than 5 Business Days after the party becomes aware
of the facts, conditions or events that give rise to the claim for
indemnification if-
(a) Any claim or demand is made or liability is asserted
against Indemnitee; or
(b) Any suit, action, or administrative or legal proceeding is
instituted or commenced in which Indemnitee is involved or is named as a
defendant either individually or with others.
Failure to give notice as described in this Section 6.3.1 does not
modify the indemnification obligations of this provision, except if Indemnitee
is harmed by failure to provide timely notice to Indemnitor, then Indemnitor
does not have to indemnify Indemnitee for the harm caused by the failure to give
the timely notice.
6.3.2 Defense by Indemnitor. If within 30 days after giving
notice Indemnitee receives written notice from Indemnitor stating that
Indemnitor disputes or intends to defend against the claim, demand, liability,
suit, action or proceeding, then Indemnitor will have the right to select
counsel of its choice and to dispute or defend against the claim, demand,
liability, suit, action or proceeding at its expense.
Indemnitee will fully cooperate with Indemnitor in the dispute or defense so
long as Indemnitor is conducting the dispute or defense diligently and in good
faith. Indemnitor is not permitted to settle the dispute or claim-without-the
prior written approval of Indemnitee, which approval will not be unreasonably
withheld. Even though Indemnitor selects counsel of its choice, Indemnitee has
the right to retain additional representation by counsel of its choice to
participate in the defense at Indemnitee's sole cost and expense.
6.3.3 Defense by Indemnitee. If no notice of intent to dispute
or defend is received by Indemnitee within the 30-day period, or if a diligent
and good faith defense is not being or ceases to be conducted, Indemnitee has
the right to dispute and defend against the claim, demand or other liability at
the sole cost and expense of Indemnitor and to settle the claim, demand or other
liability, and in either event to be indemnified as provided in this Section 6.
Indemnitee is not permitted to settle the dispute or claim without the prior
written approval of Indemnitor, which approval will not be unreasonably
withheld.
6.3.4 Costs. Indemnitor's indemnity obligation includes
reasonable attorneys' fees, investigation costs, and all other reasonable costs
and expenses incurred by Indemnitee from the first notice that any claim or
demand has been made or may be made, and is not limited in any way by any
limitation on the amount or type of damages, compensation, or
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<PAGE> 12
benefits payable under applicable workers' compensation acts, disability benefit
acts, or other employee benefit acts.
7. DISPUTE RESOLUTION
7.1 NEGOTIATION. The parties will attempt in good faith to resolve any
dispute arising out of or relating to this agreement promptly by negotiation
between or among representatives who have authority to settle the controversy.
Either party may escalate any dispute not resolved in the normal course of
business to the appropriate (as determined by the party) officers of the parties
by providing written notice to the other party-
Within 10 Business Days after delivery of the notice, the appropriate
officers of each party will meet at a mutually acceptable time and place, and
thereafter as often as they deem reasonably necessary, to exchange relevant
information and to attempt to resolve the dispute.
Either party may elect, by giving written notice to the other party, to
escalate any dispute arising out of or relating to the determination of fees
that is not resolved in the normal course of business or by the audit process
set forth in Sections 5.1.2 and 5.1.3, first to the appropriate financial or
accounting officers to be designated by each party. The designated officers will
meet in the manner described in the preceding paragraph. If the matter has not
been resolved by the designated officers within 30 days after the notifying
party's notice, either party may elect to escalate the dispute to the
appropriate (as determined by the party) officers in accordance with the prior
paragraphs of this Section 7. 1.
7.2 UNABLE TO RESOLVE. If a dispute has not been resolved within 60
days after the notifying party's notice, the parties will continue to operate
under this agreement and sue the other party for damages or seek other
appropriate remedies as provided in this agreement, except neither party may
bring a suit for damages based on an event that occurs during the first two
years of this agreement.
7.3 ATTORNEYS AND INTENT. If an officer intends to be accompanied at a
meeting by an attorney, the other party's officer will be given at least 3
Business Days prior notice of the intention and may also be accompanied by an
attorney. All negotiations under this Section 7 are confidential and will be
treated as compromise and settlement negotiations for purposes of the Federal
Rules of Civil Procedure and state rules of evidence and civil procedure.
8. REPRESENTATIONS AND WARRANTIES
Each party for itself makes the following representations and
warranties to the other parry:
8.1 DUE INCORPORATION OR FORMATION; AUTHORIZATION OF AGREEMENTS. The
party is either a corporation, limited liability company, or limited partnership
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization. Manager is qualified to do business and in
good standing in every jurisdiction in which the
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Service Area is located. The party has the full power and authority to execute
and deliver this agreement and to perform its obligations under this agreement.
8.2 VALID AND BINDING OBLIGATION. This agreement constitutes the valid
and binding obligation of the party, enforceable in accordance with its terms,
except as may be limited by principles of equity or by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally.
8.3 NO CONFLICT; NO DEFAULT. Neither the execution, delivery and
performance of this agreement nor the consummation by the party of the
transactions contemplated in this agreement will conflict with, violate or
result in a breach of (a) any law, regulation, order, writ, injunction, decree,
determination or award of any governmental authority or any arbitrator,
applicable to such party, or (b) any term, condition or provision of the
articles of incorporation. certificate of limited partnership, certificate of
organization, bylaws, partnership agreement or limited liability company
agreement (or other governing documents) of such party or of any material
agreement or instrument to which such party is or may be bound or to which any
of its material properties or assets is subject.
8.4 LITIGATION. No action, suit, proceeding or investigation is pending
or, to the knowledge of the party, threatened against or affecting the party or
any of its properties, assets or businesses in any court or before or by any
governmental agency that could, if adversely determined, reasonably be expected
to have a material adverse effect on the party's ability to perform its
obligations under this agreement. The party has not received any currently
effective notice of any default that could reasonably be expected to result in a
breach of the preceding sentence.
9. GENERAL PROVISIONS
9.1 NOTICES. Any notice, payment, demand, or communication required or
permitted to be given by any provision of this agreement must be in writing and
mailed (certified or registered mail, postage prepaid, return receipt
requested), sent by hand or overnight courier, or sent by facsimile (with
acknowledgment received and a copy sent by overnight courier), charges prepaid
and addressed described on the Notice Address Schedule attached to the Master
Signature Page, or to any other address or number as the person or entity -may
from time to time specify by written notice to the other parties.
All notices and other communications given to a party in accordance
with the provisions of this agreement will be deemed to have been given when
received.
9.2 CONSTRUCTION. This agreement will be construed simply according to
its fair meaning and not strictly for or against either party.
9.3 HEADINGS. The table of contents, section and other headings
contained in this agreement are for reference purposes only and are not intended
to describe, interpret, define, limit or expand the scope, extent or intent of
this agreement.
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9.4 FURTHER ACTION. Each party agrees to perform all further acts and
execute, acknowledge, and deliver any documents that may be reasonably
necessary, appropriate, or desirable to carry out the intent and purposes of
this agreement.
9.5 SPECIFIC PERFORMANCE. Each party agrees with the other party that
the party would be irreparably damaged if any of the provisions of this
agreement were not performed in accordance with their specific terms and that
monetary damages alone would not provide an adequate remedy. Accordingly, in
addition to any other remedy to which the non-breaching party may be entitled,
at law or in equity, the non-breaching party will be entitled to injunctive
relief to prevent breaches of this agreement and specifically to enforce the
terms and provisions of this agreement.
9.6 ENTIRE AGREEMENT; AMENDMENTS. The provisions of this agreement and
the Management Agreement (if Sprint Spectrum is a party to that agreement)
(including the exhibits to those agreements) set forth the entire agreement and
understanding between the parties as to the subject matter of this agreement and
supersede all prior agreements, oral or written, and other communications
between the parties relating to the subject matter of this agreement. Except for
Sprint Spectrum's right to amend the Available Services and the fees charged for
such services as shown on Exhibit 2. 1. 1, and Manager's right to amend the
Selected Services listed on Exhibit 2.1.2, this agreement may be modified or
amended only by a written amendment signed by persons or entities authorized to
bind each party.
9.7. LIMITATION ON RIGHTS OF OTHERS. Nothing in this agreement,
whether express or implied, will be construed to give any person or entity other
than the parties any legal or equitable right, remedy or claim under or in
respect of this agreement.
9.8 WAIVERS; REMEDIES. The observance of any term of this agreement may
be waived (whether generally or in a particular instance and either
retroactively or prospectively) by the party entitled to enforce the term, but
any waiver is effective only if in a writing signed by the party against which
the waiver is to be asserted. Except as otherwise provided in this agreement, no
failure or delay of either party in exercising any power or right under this
agreement will operate as a waiver of the power or right, nor will any single or
partial exercise of any right or power preclude any other or further exercise of
the right or power or the exercise of any other right or power.
Sprint Spectrum is not in breach of any covenant in this agreement, if
the occurrence of the event or Sprint Spectrum's non-compliance with the
covenant results primarily from:
(i) any FCC order or any other injunction issued by any
governmental authority impeding the ability to comply with the covenant;
(ii) the failure of any governmental authority to grant any
consent, approval, waiver, or authorization or any delay on the part of any
governmental authority in granting any consent, approval, waiver or
authorization;
(iii) the failure of any vendor to deliver in a timely manner
any equipment or service; or
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(iv) any act of God, act of war or insurrection, riot, fire,
accident, explosion, labor unrest, strike, civil unrest, work stoppage,
condemnation- or any similar cause or event not reasonably within the control of
Sprint Spectrum.
9.9 WAIVER OF JURY TRIAL. EACH PARTY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
9.10 BINDING EFFECT. Except as otherwise provided in this agreement,
this agreement is binding upon and inures to the benefit of the parties and
their respective and permitted successors, transferees, and assigns, including
any permitted successor, transferee or assignee of the Management Agreement. The
parties intend that this agreement bind only the party signing this agreement
and that the agreement is not binding on the Related Parties of a party unless
the agreement provides that Related Parties are bound.
9.11 GOVERNING LAW. The internal laws of the State of Missouri (without
regard to principles of conflicts of law) govern the validity of this agreement,
the construction of its terms, and the interpretation of the rights and duties
of the parties.
9.12 SEVERABILITY. The parties intend every provision of this agreement
to be severable. If any provision of this agreement is held to be illegal,
invalid, or unenforceable for any reason, the parties intend that a court
enforce the provision to the maximum extent permissible so as to effect the
intent of the parties (including the enforcement of the remaining provisions).
If necessary to effect the intent of the parties, the parties will negotiate in
good faith to amend this agreement to replace the unenforceable provision with
an enforceable provision that reflects the original intent of the parties.
9.13 LIMITATION OF LIABILITY. NO PARTY WILL BE LIABLE TO THE OTHER
PARTY FOR SPECIAL, INDIRECT, INCIDENTAL, EXEMPLARY, CONSEQUENTIAL OR PUNITIVE
DAMAGES, OR LOSS OF PROFITS, ARISING FROM THE RELATIONSHIP OF THE PARTIES OR THE
CONDUCT OF BUSINESS UNDER, OR BREACH OF, THIS AGREEMENT, EXCEPT WHERE SUCH
DAMAGES OR LOSS OF PROFITS ARE CLAIMED BY OR AWARDED TO A THIRD PARTY IN A CLAIM
OR ACTION AGAINST WHICH A PARTY TO THIS AGREEMENT HAS A SPECIFIC OBLIGATION TO
INDEMNIFY ANOTHER PARTY TO THIS AGREEMENT.
9.14 NO ASSIGNMENT; EXCEPTIONS. This agreement may only be assigned in
conjunction with and to the same party or parties to whom the Management
Agreement has been validly assigned under the Management Agreement's terms and
conditions.
9.15 DISCLAIMER OF AGENCY. Neither party by this agreement makes the
other party a legal representative or agent of the party, nor does either party
have the right to obligate the other party in any MANNER, EXCEPT if the other
party expressly permits the obligation by the party or except for provisions in
this agreement expressly authorizing one party to obligate the other.
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9.16 INDEPENDENT CONTRACTORS. The parties do not intend to create any
partnership, joint venture or other profit-sharing arrangement, landlord-tenant
or lessor-lessee relationship, employer-employee relationship, or any other
relationship other than that expressly provided in this agreement. Neither party
to this agreement has any fiduciary duty to the other party.
9.17 EXPENSE. Each party bears the expense of complying with this
agreement except as otherwise expressly provided in this agreement.
9.18 GENERAL TERMS.
(a) This agreement, including the attached Schedule of
Definitions, is to be interpreted in accordance with the following rules of
construction:
(i) The definitions in this agreement apply equally
to both the singular and plural forms of the terms defined unless the context
otherwise requires;
(ii) The words "include," "includes" and "including"
are deemed to be followed by the phrase "without limitation";
(iii) All references in this agreement to Sections
and Exhibits are references to Sections of, and Exhibits to, this agreement,
unless otherwise specified; and
(iv) All references to any agreement or other
instrument or statute or regulation are to it as amended and supplemented from
time to time (and, in the case of a statute or regulation, to any corresponding
provisions of successor statutes or regulations), unless the context otherwise
requires.
(b) Any reference in this agreement to a "day" or number of
"days" (without the explicit qualification of "Business") is a reference to a
calendar day or number of calendar days. If any action or notice is to be taken
or given on or by a particular calendar day, and the calendar day is not a
Business Day, then the action or notice may be taken or given on the next
Business Day.
9.19 CONFLICTS MANAGEMENT AGREEMENT. The provisions of the Management
Agreement govern over those of this Services Agreement if the provisions
contained in this agreement conflict with analogous provisions in the Management
Agreement.
9.20 MASTER SIGNATURE PAGE. Each party agrees that it will execute the
Master Signature Page that evidences such party's agreement to execute, become a
party to and be bound by this agreement, which document is incorporated herein
by this reference.
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EXHIBIT 10.7
SPRINT TRADEMARK AND
SERVICE MARK LICENSE AGREEMENT
THIS AGREEMENT is made as of the 17th day of July, 1998, by and between
Sprint Communications Company, L.P., a limited partnership organized under the
laws of the State of Delaware, as licensor ("Licensor"), and ALAMOSA PCS LLC as
licensee ("Licensee"). The definitions for this agreement are set forth on the
attached "Schedule of Definitions
RECITALS:
WHEREAS, Licensor is the owner of the U.S. trademarks and service marks
"Sprint", together with related "Diamond" logo, "Sprint PCS", "Sprint Personal
Communications Services" and the goodwill of the business symbolized thereby;
and
WHEREAS, Licensee desires to use the trademarks and service marks in
commerce;
NOW, THEREFORE, the parties, in consideration of the mutual agreements
herein contained and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, do hereby agree as follows:
ARTICLE 1
GRANT OF TRADEMARK AND SERVICE MARK RIGHTS; EXCLUSIVITY
Section 1.1. License.
(a) Grant of License. Subject to the terms and conditions hereof,
Licensor hereby grants to Licensee, and Licensee hereby
accepts from Licensor, for the term of this agreement, a
non-transferable, royalty-free license to use the Licensed
Marks solely for and in connection with the marketing,
promotion, advertisement, distribution, lease or sale of
Sprint PCS Products and Services and Premium and Promotional
Items in the Service Area.
(b) Related Equipment. The rights granted hereunder to Licensee
shall not include the right to manufacture equipment under the
Licensed Marks. However, subject to the terms and conditions
hereof, Licensor hereby grants to Licensee, and Licensee
hereby accepts from Licensor, for the term of this agreement,
a non-transferable, royalty-free license to market, promote,
advertise, distribute and resell and lease Related Equipment
in connection with the marketing, promotion, advertisement,
distribution, lease or sale by Licensee of Sprint PCS Products
and Services, and to furnish services relating to such Related
Equipment (including installation, repair and maintenance of
Related Equipment), under the Licensed Marks.
ARTICLE 2
QUALITY STANDARDS, MAINTENANCE
Section 2.1. Maintenance of Quality.
(a) Adherence to Quality Standards. In the course of marketing,
promoting, advertising, distributing, leasing and selling
Sprint PCS Products and Services and Premium and
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Promotional Items under the Licensed Marks, Licensee shall
maintain and adhere to standards of quality and specifications
that conform to or exceed those quality standards and
technical and operational specifications adopted and/or
amended in the manner provided below ("Quality Standards") and
those imposed by Law. Such Quality Standards are designed to
ensure that the quality of the Sprint PCS Products and
Services and Premium and Promotional Items marketed, promoted,
advertised, distributed, leased and sold under the Licensed
Marks are consistent with the high reputation of the Licensed
Marks and are in conformity with applicable Laws.
(b) Establishment of Quality Standards. The parties acknowledge
that the initial Quality Standards for the Sprint PCS Products
and Services and Premium and Promotional Items are attached to
the Affiliation Agreement as Exhibits 4.1, 4.2, 4.3, 7.2, and
8.1. The Quality Standards shall (i) be consistent with the
reputation for quality associated with the Licensed Marks and
(ii) be commensurate with a high level of quality (taking into
account Licensee's fundamental underlying technology and
standards), consistent with the level of quality being offered
in the market for products and services of the same kind as
the Sprint PCS Products and Services.
(c) Changes in Quality Standards. In the event that Licensor
wishes to change the Quality Standards, it will notify
Licensee in writing of such proposed amendments, and will
afford Licensee a reasonable time period in which to adopt
such changes as may be required in order for Licensee to
conform to the amended Quality Standards.
Section 2.2. Rights of Inspection. In order to ensure that the Quality
Standards are maintained, Licensor and its authorized agents and representatives
shall have the right, but not the obligation, with prior notice to Licensee, to
enter upon the premises of any office or facility operated by or for Licensee
with respect to Sprint PCS Products and Services and Premium and Promotional
Items at all reasonable times, to inspect, monitor and test in a reasonable
manner facilities and equipment used to furnish Sprint PCS Products and Services
and Premium and Promotional Items and, with prior written notice to Licensee, to
inspect the books and records of Licensee in a manner that does not unreasonably
interfere with the business and affairs of Licensee, all as they relate to the
compliance with the Quality Standards maintained hereunder.
Section 2.3. Marking; Compliance with Trademark Laws. Licensee shall
cause the appropriate designation "(TM)" or "(sm)" or the registration symbol
"(R)" to be placed adjacent to the Licensed Marks in connection with the use
thereof and to indicate such additional information as Licensor shall reasonably
specify from time to time concerning the license rights under which Licensee
uses the Licensed Marks. Licensee shall place the following notice on all
printed or electronic materials on which the Licensed Marks appear: "SPRINT",
the "DIAMOND" logo and "Sprint PCS", "Sprint Personal Communications Services"
are trademarks and/or service marks of Sprint Communications Company, L.P.,
"used under license" or such other notice as Licensor may specify from time to
time.
Section 2.4. Other Use Restrictions. Licensee shall not use the
Licensed Marks in any manner that would reflect adversely on the image of
quality symbolized by the Licensed Marks.
ARTICLE 3
CONFIDENTIAL INFORMATION
Section 3.1. Maintenance of Confidentiality. Each of Licensor and
Licensee and their respective Controlled Related Parties (each a "Restricted
Party") shall cause their respective officers and directors (in
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their capacity as such) to, and shall take all reasonable measures to cause
their respective employees, attorneys, accountants, consultants and other agents
and advisors (collectively, and together with their respective officers and
directors, "Agents") to, keep secret and maintain in confidence the terms of
this agreement and all confidential and proprietary information and data of the
other party or its Related Parties disclosed to it (in each case, a "Receiving
Party") in connection with the performance of its obligations under this
agreement (the "Confidential Information") and shall not, and shall cause their
respective officers and directors not to, and shall take all reasonable measures
to cause their respective other Agents not to, disclose Confidential Information
to any Person other than the parties, their Controlled Related Parties and their
respective Agents that need to know such Confidential Information. Each party
further agrees that it shall not use the Confidential Information for any
purpose other than determining and performing its obligations and exercising its
rights under this agreement. Each party shall take all reasonable measures
necessary to prevent any unauthorized disclosure of the Confidential Information
by any of their respective Controlled Related Parties or any of their respective
Agents. The measures taken by a Restricted Party to protect Confidential
Information shall be not deemed unreasonable if the measures taken are at least
as strong as the measures taken by the disclosing party to protect such
Confidential Information.
Section 3.2. Permitted Disclosures. Nothing herein shall prevent any
Restricted Party or its Agents from using, disclosing, or authorizing the
disclosure of Confidential Information it receives and which:
(i) has been published or is in the public domain, or which
subsequently comes into the public domain, through no fault of
the receiving party;
(ii) prior to receipt hereunder was property within the legitimate
possession of the Receiving Party or, subsequent to receipt
hereunder is lawfully received from a third party having
rights therein without restriction of the third party's right
to disseminate the Confidential Information and without notice
of any restriction against its further disclosure.
(iii) is independently developed by the Receiving Party through
Persons who have not had, either directly or indirectly,
access to or knowledge of such Confidential Information;
(iv) is disclosed to a third party with the written approval of the
party originally disclosing such information, provided that
such Confidential Information shall cease to be confidential
and proprietary information covered by this agreement only to
the extent of the disclosure so consented to;
(v) subject to the Receiving Party's compliance with Section 3.4
below, is required to be produced under order of a court of
competent jurisdiction or other similar requirements of a
governmental agency, provided that such Confidential
Information to the extent covered by a protective order or its
equivalent shall otherwise continue to be Confidential
Information required to be held confidential for purpose of
this agreement; or
(vi) subject to the Receiving Party's compliance with Section 3.4
below, is required to be disclosed by applicable Law or a
stock exchange or association on which such Receiving Party's
securities (or those of its Related Party) are listed.
Section 3.3. Financial Institutions. Notwithstanding this Article 3,
any party may provide Confidential Information to any financial institution in
connection with borrowings from such financial institution by such party or any
of its Controlled Related Parties, so long as prior to any such disclosure such
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financial institution executes a confidentiality agreement that provides
protection substantially equivalent to the protection provided the parties in
this Article 3.
Section 3.4. Procedures. In the event that any Receiving Party (i) must
disclose Confidential Information in order to comply with applicable Law or the
requirements of a stock exchange or association on which such Receiving Party's
securities or those of its Related Parties are listed or (ii) becomes legally
compelled (by oral questions, interrogatories, requests for information or
documents, subpoenas, civil investigative demand or otherwise) to disclose any
Confidential Information, the Receiving Party shall provide the disclosing party
with prompt written notice so that in the case of clause (i), the disclosing
party can work with the Receiving Party to limit the disclosure to the greatest
extent possible consistent with legal obligations or in the case of clause (ii),
the disclosing party may seek a protective order or other appropriate remedy or
waive compliance with the provisions of this agreement. In the case of a clause
(ii), (A) if the disclosing party is unable to obtain a protective order or
other appropriate remedy, or if the disclosing party so directs, the Receiving
Party shall, and shall cause its employees to, exercise all commercially
reasonable efforts to obtain a protective order or other appropriate remedy at
the disclosing party's reasonable expense, and (B) failing the entry of a
protective order or other appropriate remedy or receipt of a waiver hereunder,
the Receiving Party shall furnish only that portion of the Confidential
Information which it is advised by opinion of its counsel is legally required to
be furnished and shall exercise all commercially reasonable efforts to obtain
reliable assurance that confidential treatment shall be accorded such
Confidential Information, it being understood that such reasonable efforts shall
be at the cost and expense of the disclosing party whose Confidential
Information has been. sought.
Section 3.5. Survival. The obligations under this Article 3 shall
survive, as to any party, until two (2) years following the date of termination
of this agreement, and, as to any Controlled Related Party of a party, until two
(2) years following the earlier to occur of (A) the date that such Person is no
longer a Controlled Related Party of a party, or (B) the date of the termination
of this agreement; provided that such obligations shall continue indefinitely
with respect to any trade secret or similar information which is proprietary to
a party or its Controlled Related Parties and provides such party or its
Controlled Related Parties with an advantage over its competitors.
ARTICLE 4
REPRESENTATIONS WARRANTIES AND COVENANTS OF LICENSEE
Section 4.1. Licensor's Ownership. Licensee acknowledges Licensor's
exclusive right, title and interest in and to the Licensed Marks and
acknowledges that nothing herein shall be construed to accord to Licensee any
rights in the Service Area in the Licensed Marks except as expressly provided,
herein. Licensee acknowledges that its use in the Service Area of the Licensed
Marks shall not create in Licensee any right, title or interest in the Service
Area in the Licensed Marks and that all use in the Service Area of the Licensed
Marks and the goodwill symbolized by and connected with such use of the Licensed
Marks will inure solely to the benefit of the Licensor.
Section 4.2. No Challenge by Licensee. Licensee covenants that (i)
Licensee will not at any time challenge Licensor's rights, title or interest in
the Licensed Marks (other than to assert the specific rights granted to Licensee
under this agreement), (ii) Licensee will not do or cause to be done or omit to
do anything, the doing, causing or omitting of which would contest or in any way
impair or tend to impair the rights of Licensor in the Licensed Marks, and (iii)
Licensee will not represent to any third party that Licensee has any ownership
or rights in the Service Area with respect to the Licensed Marks other than the
specific rights conferred by this agreement.
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ARTICLE 5
REPRESENTATIONS, WARRANTIES AND COVENANTS OF LICENSOR
Section 5.1. Title to the Licensed Marks. Licensor represents and
warrants that:
(a) Licensor has good title to the Licensed Marks and has the
right to grant the licenses provided for hereunder in
accordance with the terms and conditions hereof, free of any
liabilities, charges, liens, pledges, mortgages, restrictions,
adverse claims, security interests, rights of others, and
encumbrances of any kind (collectively, "Encumbrances"), other
than Encumbrances which will not restrict or interfere in any
material respect with the exercise by Licensee of the rights
granted to Licensee hereunder.
(b) There is no claim, action, proceeding or other litigation
pending or, to the knowledge of Licensor, threatened with
respect to Licensor's ownership of the Licensed Marks or
which, if adversely determined, would restrict or otherwise
interfere in any material respect with the exercise by
Licensee of the rights purported to be granted to Licensee
hereunder.
Except as expressly provided above in this Section 5.1, Licensor makes
no representation or warranty of any kind or nature whether express or implied
with respect to the Licensed Marks (including freedom from third party
infringement of the Licensed Marks).
The representations and warranties provided for in this Section 5.1
shall survive the execution and delivery of this agreement.
Section 5.2. Other Licensees. In the event Licensor grants to any third
party any licenses or rights with respect to the Licensed Marks, Licensor shall
not, in connection with the grant of any such license or rights, take any
actions, or suffer any omission that would adversely affect the existence or
validity of the Licensed Marks or conflict with the rights granted to Licensee
hereunder.
Section 5.3. Abandonment. Licensor covenants and agrees that, during
the term of this agreement, it will not abandon the Licensed Marks.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF BOTH PARTIES
Section 6.1. Representations and Warranties. Each party hereby
represents and warrants to the other party as follows:
(a) Due Incorporation or Formation; Authorization of Agreement.
Such party is a corporation duly organized, a limited
liability company duly organized or a partnership duly formed,
validly existing and, if applicable, in good standing under
the laws of the jurisdiction of its incorporation or formation
and has the corporate, company or partnership power and
authority to own its property and carry on its business as
owned and carried on at the date hereof and as contemplated
hereby. Such party is duly licensed or qualified to do
business and, if applicable, is in good standing in each of
the jurisdictions in which the failure to be so licensed or
qualified would have a material adverse effect on its
financial condition or its ability to perform its obligations
hereunder. Such party has the corporate, company or
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<PAGE> 6
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 corporate, company or
partnership action. Assuming the due execution and delivery by
the other party hereto, this agreement constitutes the legal,
valid and binding obligation of such party enforceable against
such party 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.
(b) No Conflict with Restrictions; No Default. Neither the
execution, delivery and performance of this agreement nor the
consummation by such party of the transactions contemplated
hereby (i) will conflict with, violate or result in a breach
of any of the terms, conditions or provisions of 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 such party or any of its Controlled Related
Parties, (ii) will conflict with, violate, result in a breach
of or constitute a default under any of the terms, conditions
or provisions of the articles of incorporation, articles of
organization or certificate of formation, bylaws, operating
agreement or limited liability company agreement, or
partnership agreement of such party or any of its Controlled
Related Parties or of any material agreement or instrument to
which such party or any of its Controlled Related Parties is a
party or by which such party or any of its Controlled Related
Parties is or may be bound or to which any of its material
properties or assets is subject (other than any such conflict,
violation, breach or default that has been validly and
unconditionally waived), (iii) will conflict with, violate,
result in 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 material interests or rights or require any
consent, authorization or approval under any indenture,
mortgage, lease agreement or instrument to which such party or
any of its Controlled Related Parties is a party or by which
such party or any of its Controlled Related Parties is or may
be bound, or (iv) will result in the creation or imposition of
any lien upon any of the material properties or assets of such
party or any of its Controlled Related Parties, which in any
such case could reasonably be expected to materially impair
such party's ability to perform its obligations under this
agreement or to have a material adverse effect on the
consolidated financial condition of each party or its Parent.
(c) Governmental Authorizations. 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 such party in connection with the valid execution,
delivery, acceptance and performance by such party under this
agreement or the consummation by such party of any transaction
contemplated hereby has been completed, made or obtained, as
the case may be.
(d) Litigation. There are no actions, suits, proceedings or
investigations pending or, to the knowledge of such party,
threatened against or affecting such party or any of its
Controlled Related Parties or any of their 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 materially impair such
party's ability to perform its obligations under this
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agreement or to have a material adverse effect on the
consolidated financial condition of such party or its parent;
and such party or any of its Controlled Related Parties has
not received any currently effective notice of any default,
and such party or any of its Controlled Related Parties is not
in default, under any applicable order, writ, injunction,
decree, permit, determination or award of any court, any
governmental department, board, agency or instrumentality,
domestic or foreign, or any arbitrator, which default could
reasonably be expected to materially impair such party's
ability to perform its obligations under this agreement or to
have a material adverse effect on the consolidated financial
condition of such party or its Parent.
Section 6.2. Survival. The representations and warranties provided for
under this Article 6 will survive the execution and delivery of this agreement.
ARTICLE 7
PROSECUTION OF INFRINGEMENT CLAIMS
Section 7.1. Notice and Prosecution of Infringement. Licensee agrees to
notify Licensor promptly, in writing, of any alleged, actual or threatened
infringement of any of the Licensed Marks within the Service Area of which
Licensee becomes aware. Licensor has the sole right to determine whether or not
to take any action on such infringements. Licensor has the sole right to employ
counsel of its choosing and to direct any litigation and settlement of
infringement actions. Any recoveries, damages and costs recovered through such
proceedings shall belong exclusively to Licensor, and Licensor shall be solely
responsible for all costs and expenses (including attorney fees) of prosecuting
such actions. Licensee agrees to provide Licensor with all reasonably requested
assistance in connection with such proceedings.
ARTICLE 8
LICENSEE DEFENSE AND INDEMNIFICATION OF LICENSOR
Section 8.1. Indemnification. (a) Each party hereby agrees to indemnify
the other party against and agrees to hold it harmless from any Loss incurred or
suffered by such other party arising out of or in connection with:
(i) the material breach of any representation or warranty
made by such party in this agreement; and
(ii) the material breach of any covenant or agreement by
such party contained in this agreement.
(b) In addition to the indemnification provided for in Section 8.
1 (a), Licensee agrees to indemnify Licensor against and hold
it harmless from any Loss suffered or incurred by Licensor or
its Controlled Related Parties by reason of a third party
claim arising out of or relating to (i) the use of the
Licensed Marks by Licensee; or (ii) the marketing, promotion,
advertisement, distribution, lease or sale by Licensee ( or
any permitted sublicensee) or by any additional Licensee (or
any permitted sublicensee) of any Sprint PCS Products and
Services, Related Equipment or Premium and Promotional Items
under the Licensed Marks pursuant to this agreement, including
unfair or fraudulent advertising claims, warranty claims and
product defect or liability claims, pertaining to the Sprint
PCS Products and Services, Related Equipment or Premium and
Promotional Items. Notwithstanding the
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foregoing, Licensee will not be required under this paragraph
(b) to indemnify any Loss arising solely out of Licensee's use
of the Licensed Marks in compliance with the terms of the
Trademark and Service Mark Usage Guidelines; provided that
Licensor shall have no obligation to indemnify for third-party
claims alleged to arise from the specifics of uses of third
party trademarks or service marks, or the specifics of claims
made, in marketing materials prepared by or for Licensee,
which marketing materials have not been approved by Licensor
prior to the publication out of which such claims are alleged
to have arisen.
ARTICLE 9
OBLIGATIONS/SETOFF
Section 9.1. Obligations/Setoff. The obligations of the parties as set
forth in this agreement shall be unconditional and irrevocable, and shall not be
subject to any defense or be released, discharged or otherwise affected by any
matter, including impossibility, illegality, impracticality, frustration of
purpose, force majeure, act of government, the bankruptcy or insolvency of any
party hereto, and the obligations of each party shall not be subject to any
right of setoff or recoupment which such party may not or hereafter have against
the other party.
ARTICLE 10
LIMITATION ON USE OF LICENSED MARKS
Section 10.1. Restrictions on Use. Licensee is not permitted to make
any use of the Licensed Marks in connection with products or services other than
the Sprint PCS Products and Services, and as specifically authorized in Sections
1.1(b) above with respect to Related Equipment and Premium and Promotional
Items, nor to make any use of the Licensed Marks directed outside of the Service
Area.
Section 10.2. Adherence to Trademark and Service Mark Usage Guidelines.
Licensee agrees to comply with and adhere to Trademark and Service Mark Usage
Guidelines for the depiction or presentation of the Licensed Marks, as furnished
by Licensor. Prior to Licensee depicting or presenting any of the Licensed Marks
on any type of marketing, advertising or promotional materials, Licensee agrees
to submit samples of such materials to Licensor for approval. Licensor shall
have fourteen (14) days from the date Licensor receives such materials to
approve or object to any such materials submitted to Licensor for review. In the
event Licensor does not object to such materials within such fourteen (14) day
period, such materials shall be deemed approved by Licensor. Thereafter,
Licensee shall not be obligated to submit to Licensor materials prepared in
accordance with the samples previously approved by Licensor and the Trademark
and Service Mark Usage Guidelines; provided, however, Licensee shall, at the.
reasonable request of Licensor, continue to furnish samples of such marketing,
advertising and promotional materials to Licensor from time to time during the
term hereof at the request of Licensor.
Section 10.3. Use of Similar Trademarks and Service Marks. Licensee
agrees not to use (a) any trademark or service mark which is confusingly similar
to, or a colorable imitation of, the Licensed Marks or any part thereof, or (b)
any work, symbol, character, or set of words, symbols, or characters, which in
any language would be identified as the equivalent of the Licensed Marks or that
are otherwise confusingly similar to, or a colorable imitation of, the Licensed
Marks, whether during the term of this agreement or at any time following
termination of this agreement. Licensee shall not knowingly engage in any
conduct which may place the Sprint PCS Products and Services, the Licensed Marks
or Licensor in a negative light or context.
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Section 10.4. Services of Public Figures. Licensee agrees to obtain
Licensor's prior written approval (which approval will not be unreasonably
withheld) before engaging the services of any celebrity or publicly known
individual for endorsement of any Sprint PCS Products and Services or Premium
and Promotional Items.
ARTICLE 11
CONTROL OF BRAND IMAGE
Section 11.1. Exclusive Use of Licensed Marks. The Sprint PCS Products
and Services shall be marketed by Licensee solely under the Licensed Marks.
Section 11.2. Consistency With Brand Image and Principles. Licensee
shall use the Licensed Marks in a manner that is consistent with the brand image
and principles established by Licensor, and mechanics to ensure consistency will
be included in the Marketing Communications Guidelines.
Section 11.3. Management of Brand Image. Licensor shall be responsible
for the overall management of the brand image for the Licensed Marks. All
advertising, marketing and promotional materials using the Licensed Marks
prepared by Licensee shall, in addition to the provisions set forth in Section
11.2 above, comply with the Marketing Communications Guidelines to be furnished
by Licensor to Licensee as such Marketing Communications Guidelines may be
amended and updated by Licensor from time to time. Such Marketing Communications
Guidelines shall establish reasonable principles to be followed in the
development of advertising, marketing and promotional campaigns in order to
ensure a consistent and coherent brand image. All advertising, marketing and
promotional campaigns conducted by Licensee shall be conducted in a manner
consistent with the Marketing Communications Guidelines.
Section 11.4. Advertising Agencies. Promotions Licensee may select its
own advertising agencies for development of its advertising and promotional
campaigns; provided however, that all media buys shall be coordinated by
Licensee with the buying agency of Licensor. Licensee and Licensor shall conduct
ongoing reviews of upcoming advertising, marketing and promotional campaigns of
each party and shall use good faith efforts to coordinate their respective
campaigns in a manner that will maximize the advertising, marketing and
promotional efforts of the parties and be consistent with the Marketing
Communications Guidelines. Licensee shall not initiate any products or
promotions under names which are confusingly similar to any names of national
product offerings or promotions by Licensor. Neither Licensor nor any of its
Controlled Related Parties shall initiate any products or promotions under names
which are confusingly similar to any names of national product offerings or
promotions by Licensee. In addition, Licensor will use its commercially
reasonable efforts to ensure that no third party licensee under the Licensed
Marks initiates any products or promotions in the Service Area under names which
are confusingly similar to any names of national product offerings or promotions
by Licensee.
Section 11.5. Ownership of Advertising Materials. All agreements
entered into by Licensee with advertising agencies shall provide that Licensor
shall own all advertising materials (including concepts, themes, characters and
the like) created or developed thereunder. Subject to the terms and conditions
set forth herein, Licensee shall receive a perpetual, non-exclusive,
royalty-free license to use such materials in connection with advertising and
promotional materials developed by Licensee; provided, however, that the rights
granted under such perpetual license shall be limited solely to the use of such
materials and shall not extend the term of the license with respect to the
Licensed Marks provided for hereunder.
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ARTICLE 12
RELATIONSHIP OF PARTIES
Section 12.1. Relationship of Parties. It is the express intention of
the parties that Licensee is and shall be an independent contractor and no
partnership shall exist between Licensee and Licensor pursuant hereto. This
agreement shall not be construed to make Licensee the agent or legal
representative of Licensor for any purpose whatsoever (except as expressly
provided in Articles 7 and 8), and Licensee is not granted any right or
authority to assume or create any obligations for, on behalf of, or in the name
of Licensor (except as expressly provided in Articles 7 and 8). Licensee agrees,
and shall require its permitted sublicensees to agree, not to incur or contract
any debt or obligation on behalf of Licensor, or commit any act, make any
representation, or advertise in any manner that may adversely affect any right
of Licensor in or with respect to the Licensed Marks or be detrimental to
Licensor's image.
ARTICLE 13
TERM; TERMINATION; EFFECTS OF TERMINATION
Section 13.1. Term. This agreement commences on the date of execution
and continues until the Affiliation Agreement terminates, unless earlier
terminated in accordance with the terms set forth in this Article 13. This
agreement automatically terminates upon termination of the Affiliation
Agreement.
Section 13.2. Events of Termination. If any of the following events
shall occur with respect to Licensee, each such occurrence shall be deemed an
"Event of Termination":
(a) Bankruptcy. The occurrence of a "Bankruptcy" with respect to
Licensee.
(b) Breach of Agreements. Licensee fails to perform in accordance
with any of the material terms and conditions contained herein
in any material respect.
(c) Material Misrepresentation. Licensee breaches any material
representation or warranty of Licensee made in Section 4.2 or
Article 6 in any material respect.
(d) Termination of Affiliation Agreement. The termination of the
Affiliation Agreement, for whatever reason.
Section 13.3. Licensor's Right to Terminate Upon Event of Termination .
Licensor may, at its option, without prejudice to any other remedies it may
have, terminate this agreement by giving written notice of such termination to
Licensee as follows: (a) immediately, upon the occurrence of any Event of
Termination pursuant to Section 13.2(a) with respect to Licensee; or (b) after
the expiration of thirty (30) days from Licensee's receipt of written notice
from Licensor of the occurrence of any Event of Termination pursuant to Sections
13.2(b) or 13.2(c), if such failure to perform or breach is then still uncured;
or (c) immediately upon the repeated or continuing occurrence of Events of
Termination pursuant to Section 13.2(b) (regardless of whether such continuing
failures to perform or breaches have been cured by Licensee in accordance with
the provisions of clause (b) or this Section 13.3); or (d) immediately upon the
occurrence of a termination pursuant to Section 13.2(d).
Section 13.4. Licensee's Right to Terminate. Licensee may, at its
option, without prejudice to any other remedies it may have, terminate this
agreement by giving written notice of such termination to Licensor as follows:
(a) immediately, in the event that Licensor abandons the Licensed Marks or
otherwise ceases to
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support the Licensed Marks in Licensor's business; or (b) immediately in the
event of the occurrence of a Bankruptcy with respect to Licensor; or (c)
immediately in the event of an occurrence of termination pursuant to Section
13.2(d).
Section 13.5. Effects of Termination. Upon the termination of this
agreement for any reason, all rights of Licensee in and to the Licensed Marks in
the Service Area shall cease within thirty (30) days following the date on which
this agreement terminates (except in the case of a termination resulting from an
Event of Termination described in Section 13.2(b), (c) or (d), in which case
such rights to use the Licensed Marks will terminate immediately upon the date
of termination); provided, however, that Licensee may thereafter sell, transfer
or otherwise dispose of any Related Equipment and Premium and Promotional Items
that are then in Licensee's inventory (or which Licensee has purchased or is
then legally obligated to purchase) for an. additional reasonable period not to
exceed three (3) months. Licensee's right of disposal under this Section 13.5
shall not prohibit Licensor from granting to third parties during the disposal
period licenses and other rights with respect to the Licensed Marks. The
provisions of Articles 3, 4, 5, 6 and 8 will survive any termination of this
agreement.
ARTICLE 14
ASSIGNMENT; SUBLICENSING
Section 14.1. Licensee Right to Assign. Licensee, without the prior
written consent of Licensor (in its sole discretion), shall have no right to
assign any of its rights or obligations hereunder.
Section 14.2. Licensor Right to Assign the Licensed Marks. Nothing
herein shall be construed to limit the right of the Licensor to transfer or
assign its interests in the Licensed Marks, subject to the agreement of the
assignee to be bound by the terms and conditions of this agreement.
Section 14.3. Licenses to Additional Licensees; Sublicenses: Licenses
to Additional Licensees. Licensee shall not sublicense (or attempt to
sublicense) any of its rights hereunder without the prior written consent of
Licensor, in the sole discretion of Licensor.
ARTICLE 15
MISCELLANEOUS
Section 15.1. Notices. Any notice, payment, demand, or communication
required or permitted to be given by any provision of this agreement shall be in
writing and mailed (certified or registered mail, postage prepaid, return
receipt requested) or sent by hand or overnight courier, or by facsimile (with
acknowledgment received), charges prepaid and addressed as described on the
Notice Address Schedule attached to the Master Signature Page, or to such other
address or number as such party may from time to time specify by written notice
to the other party. All notices and other communications given to a party in
accordance with the provisions of this agreement shall be deemed to have been
given and received (i) four,(4) Business Days after the same are sent by
certified or registered mail, postage prepaid, return receipt requested, (ii)
when delivered by hand or transmitted by facsimile (with acknowledgment received
and, in the case of a facsimile only, a copy of such notice is sent no later
than the next Business Day by a reliable overnight courier service, with
acknowledgment of receipt) or (iii) one (1) Business Day after the same are sent
by a reliable overnight courier service, with acknowledgment of receipt.
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Section 15.2. Binding Effect. Except as otherwise provided in this
agreement, this agreement shall be binding upon and inure to the benefit of the
parties and their respective successors, transferees, and assigns.
Section 15.3. Construction. This agreement shall be construed simply
according to its fair meaning and not strictly for or against any party.
Section 15.4. Time. Time is of the essence with respect to this
agreement.
Section 15.5. Table of Contents; Headings. The table of contents and
section and other headings contained in this agreement are for reference
purposes only and are not intended to describe, interpret, define or limit the
scope, extent or intent of this agreement.
Section 15.6. Severability. Every provision of this agreement is
intended to be severable. If any term or provision hereof is illegal, invalid or
unenforceable for any reason whatsoever, that term or provision will be enforced
to the maximum extent permissible so as to effect the intent of the parties, and
such illegality, invalidity or unenforceability shall not affect the validity or
legality of the remainder of this agreement. If necessary to effect the intent
of the parties, the parties will negotiate in good faith to amend this agreement
to replace the unenforceable language with enforceable language which as closely
as possible reflects such intent.
Section 15.7. Further Action. Each party, upon the reasonable request
of the other party, agrees to perform all further acts and execute, acknowledge,
and deliver any documents which may be reasonably necessary, appropriate, or
desirable to carry out the intent and purposes of this agreement.
Section 15.8. Governing Law. The internal laws of the State of Missouri
(without regard to principles of conflict of law) shall govern the validity of
this agreement, the construction of its terms, and the interpretation of the
rights and duties of the parties.
Section 15.9. Specific Performance. Each party agrees with the other
party that the other party would be irreparably damaged if any of the provisions
of this agreement are not performed in accordance with their specific terms and
that monetary damages would not provide an adequate remedy in such event.
Accordingly, in addition to any other remedy to which the nonbreaching party may
be entitled, at law or in equity, the nonbreaching party shall be entitled to
injunctive relief to prevent breaches of this agreement and specifically to
enforce the terms and provisions hereof
Section 15.10. Entire Agreement. The provisions of this agreement set
forth the entire agreement and understanding between the parties as to the
subject matter hereof and supersede all prior agreements, oral or written, and
other communications between the parties relating to the subject matter hereof.
Section 15.11. Limitation on Rights of Others. Nothing in this
agreement, whether express or implied, shall be construed to give any party
other than the parties any legal or equitable right, remedy or claim under or in
respect of this agreement.
Section 15.12. Waivers; Remedies. The observance of any term of this
agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively) by the party or parties entitled to enforce such
term, but any such waiver shall be effective only if in writing signed by the
party or parties against which such waiver is to be asserted. Except as
otherwise provided herein, no failure or delay
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of any party in exercising any power or right under this agreement shall operate
as a waiver thereof, nor shall any single or partial exercise of any such right
or power, or any abandonment or discontinuance of steps to enforce such right or
power, preclude any other further exercise thereof or the exercise of any other
right or power.
Section 15.13. Jurisdiction; Consent to Service of Process.
(a) Each party hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of
any Missouri State court sitting in the County of Jackson or
any Federal court of the United States of America sitting in
the Western District of Missouri, and any appellate court from
any such court, in any suit action or proceeding arising out
of or relating to this agreement, or for recognition or
enforcement of any judgment, and each party hereby irrevocably
and unconditionally agrees that all claims in respect of any
such suit, action or proceeding may be heard and determined in
such Missouri State Court or, to the extent permitted by law,
in such Federal court.
(b) Each party hereby irrevocably and unconditionally waives, to
the fullest extent it may legally do so, any objection which
it may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this
agreement in Missouri State court sitting in the County of
Jackson or any Federal court sitting in the Western District
of Missouri. Each party hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such suit, action or
proceeding in any such court and further waives the right to
object, with respect to such suit, action or proceeding, that
such court does not have jurisdiction over such party.
(c) Each party irrevocably consents to service of process in the
manner provided for the giving of notices pursuant to this
agreement, provided that such service shall be deemed to have
been given only when actually received by such party. Nothing
in this agreement shall affect the right of a party to serve
process in another manner permitted by law.
Section 15.14. Waiver of Jury Trial. Each party waives, to the fullest
extent permitted by applicable law, any right it may have to a trial by jury in
respect of any action, suit or proceeding arising out of or relating to this
agreement.
Section 15.15. Consents. Whenever this agreement requires or permits
consent by or on behalf of a party, such consent shall be given in writing in a
manner consistent with the requirements for a waiver of compliance as set forth
in Section 15.13, with appropriate notice in accordance with Section 15.1 of
this agreement.
Section 15.16. Master Signature Page. Each party agrees that it will
execute the Master Signature Page that evidences such party's agreement to
execute, become a party to and be bound by this agreement, which document is
incorporated herein by this reference.
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Sprint Proprietary Information - RESTRICTED
16
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EXHIBIT 10.8
SPRINT SPECTRUM TRADEMARK AND
SERVICE MARK LICENSE AGREEMENT
THIS AGREEMENT is made as of the 17th day of July, 1998, by and between
Sprint Spectrum L.P., a Delaware limited partnership, as licensor ("Licensor"),
and ALAMOSA PCS LLC, a Texas limited liability company, as licensee
("Licensee"). The definitions for this agreement are set forth on the attached
"Schedule of Definitions."
RECITALS:
WHEREAS, Licensor is the owner of the U.S. trademarks and service marks
"THE CLEAR ALTERNATIVE TO CELLULAR"'and "EXPERIENCE THE CLEAR ALTERNATIVE TO
CELLULAR TODAY" and such other marks as may be adopted and established from time
to time and the goodwill of the business symbolized thereby; and
WHEREAS, Licensee desires to use the trademarks and service marks in
commerce;
NOW, THEREFORE, the parties, in consideration of the mutual agreements
herein contained and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, do hereby agree as follows:
ARTICLE 1
GRANT OF TRADEMARK AND SERVICE MARK RIGHTS; EXCLUSIVITY
Section 1.1. License.
(a) Grant of License. Subject to the terms and conditions hereof,
Licensor hereby grants to Licensee, and Licensee hereby
accepts from Licensor, for the term of this agreement, a
non-transferable, royalty-free license to use the Licensed
Marks solely for and in connection with the marketing,
promotion, advertisement, distribution, lease or sale of
Sprint PCS Products and Services and Premium and Promotional
Items in the Service Area.
(b) Related Equipment. The rights granted hereunder to Licensee
shall not include the right to manufacture equipment under the
Licensed Marks. However, subject to the terms and conditions
hereof, Licensor hereby grants to Licensee, and Licensee
hereby accepts from Licensor, for the term of this agreement,
a non-transferable, royalty-free license to market, promote,
advertise, distribute and resell and lease Related Equipment
in connection with the marketing, promotion, advertisement,
distribution, lease or sale by Licensee of Sprint PCS Products
and Services, and to furnish services relating to such Related
Equipment (including installation, repair and maintenance of
Related Equipment), under the Licensed Marks.
ARTICLE 2
QUALITY STANDARDS, MAINTENANCE
Section 2.1. Maintenance of Quality.
(a) Adherence to Quality Standards. In the course of marketing,
promoting, advertising, distributing, leasing and selling
Sprint PCS Products and Services and Premium and
<PAGE> 2
Promotional Items under the Licensed Marks, Licensee shall
maintain and adhere to standards of quality and specifications
that conform to or exceed those quality standards and
technical and operational specifications adopted and/or
amended in the manner provided below ("Quality Standards") and
those imposed by Law. Such Quality Standards are designed to
ensure that the quality of the Sprint PCS Products and
Services and Premium and Promotional Items marketed, promoted,
advertised, distributed, leased and sold under the Licensed
Marks are consistent with the high reputation of the Licensed
Marks and are in conformity with applicable Laws.
(b) Establishment of Quality Standards. The parties acknowledge
that the initial Quality Standards for the Sprint PCS Products
and Services and Premium and Promotional Items are attached to
the Management Agreement as Exhibits 4.1, 4.2, 4.3, 7.2, and
8.1. The Quality Standards shall (i) be consistent with the
reputation for quality associated with the Licensed Marks and
(ii) be commensurate with a high level of quality (taking into
account Licensee's fundamental underlying technology and
standards), consistent with the level of quality being offered
in the market for products and services of the same kind as
the Sprint PCS Products and Services.
(c) Changes in Quality Standards. In the event that Licensor
wishes to change the Quality Standards, it will notify
Licensee in writing of such proposed amendments, and will
afford Licensee a reasonable time period in which to adopt
such changes as may be required in order for Licensee to
conform to the amended Quality Standards.
Section 2.2. Rights of Inspection. In order to ensure that the Quality
Standards are maintained, Licensor and its authorized agents and representatives
shall have the right, but not the obligation, with prior notice to Licensee, to
enter upon the premises of any office or facility operated by or for Licensee
with respect to Sprint PCS Products and Services and Premium and Promotional
Items at a reasonable times. to inspect, monitor and test in a reasonable manner
facilities and equipment used to furnish Sprint PCS Products and Services and
Premium and Promotional Items and, with prior written notice to Licensee, to
inspect the books and records of Licensee in a manner that does not unreasonably
interfere with the business and affairs of Licensee, all as they relate to the
compliance with the Quality Standards maintained hereunder.
Section 2.3. Marking; Compliance with Trademark Laws. Licensee shall
cause the appropriate designation "(TM)" or "(sm)" or the registration symbol
"(R)" to be placed adjacent to the Licensed Marks in connection with the use
thereof and to indicate such additional information as Licensor shall reasonably
specify from time to time concerning the license rights under which Licensee
uses the Licensed Marks. Licensee shall place the following notice on all
printed or electronic materials on which the Licensed Marks appear: "THE CLEAR
ALTERNATIVE TO CELLULAR", "EXPERIENCE THE CLEAR ALTERNATIVE TO CELLULAR TODAY",
and such other marks as may be adopted and established from time to time, are
trademarks and/or service marks of Sprint Spectrum L.P., "used under license" or
such other notice as Licensor may specify from time to time.
Section 2.4. Other Use Restrictions. Licensee shall not use the
Licensed Marks in any manner that would reflect adversely on the image of
quality symbolized by the Licensed Marks.
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ARTICLE 3
CONFIDENTIAL INFORMATION
Section 3.1. Maintenance of Confidentiality. Each of Licensor and
Licensee and their respective Controlled Related Parties (each a "Restricted
Party") shall cause their respective officers and directors (in their capacity
as such) to, and shall take all reasonable measures to cause their respective
employees, attorneys, accountants, consultants and other agents and advisors
(collectively, and together with their respective officers and directors,
"Agent") to, keep secret and maintain in confidence the terms of this agreement
and all confidential and proprietary information and data of the other party or
its Related Parties disclosed to it (in each case, a "Receiving Party") in
connection with the performance of its obligations under this agreement (the
"Confidential Information") and shall not, and shall cause their respective
officers and directors not to, and shall take all reasonable measures to cause
their respective other Agents not to, disclose Confidential Information to any
Person other than the parties, their Controlled Related Parties and their
respective Agents that need to know such Confidential Information. Each party
further agrees that it shall not use the Confidential Information for any
purpose other than determining and performing its obligations and exercising its
rights under this agreement. Each party shall take all reasonable measures
necessary to prevent any unauthorized disclosure of the Confidential Information
by any of their respective Controlled Related Parties or any of their respective
Agents. The measures taken by a Restricted Party to protect Confidential
Information shall be not deemed unreasonable if the measures taken are at least
as strong as the measures taken by the disclosing party to protect such
Confidential Information.
Section 3.2. Permitted Disclosures. Nothing herein shall prevent any
Restricted Party or its Agents from using, disclosing, or authorizing the
disclosure of Confidential Information it receives and which:
(i) has been published or is in the public domain, or which
subsequently comes into the public domain, through no fault of
the receiving party;
(ii) prior to receipt hereunder was property within the legitimate
possession of the Receiving Party or, subsequent to receipt
hereunder is lawfully received from a third party having
rights therein without restriction of the third party's right
to disseminate the Confidential Information and without notice
of any restriction against its further disclosure.
(iii) is independently developed by the Receiving Party through
Persons who have not had, either directly or indirectly,
access to or knowledge of such Confidential Information;
(iv) is disclosed to a third party with the written approval of the
party originally disclosing such information, provided that
such Confidential Information shall cease to be confidential
and proprietary information covered by this agreement only to
the extent of the disclosure so consented to;
(v) subject to the Receiving Party's compliance with Section 3.4
below, is required to be produced under order of a court of
competent jurisdiction or other similar requirements of a
governmental agency, provided that such Confidential
Information to the extent covered by a protective order or its
equivalent shall otherwise continue to be Confidential
Information required to be held confidential for purpose of
this agreement; or
(vi) subject to the Receiving Party's compliance with Section 3.4
below, is required to be disclosed by applicable Law or a
stock exchange or association on which such Receiving Party's
securities (or those of its Related Party) are listed.
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Section 3.3. Financial Institutions. Notwithstanding this Article 3,
any party may provide Confidential Information to any financial institution in
connection with borrowings from such financial institution by such party or any
of its Controlled Related Parties, so long as prior to any such disclosure such
financial institution executes a confidentiality agreement that provides
protection substantially equivalent to the protection provided the parties in
this Article 3.
Section 3.4. Procedures. In the event that any Receiving Party (i) must
disclose Confidential Information in order to comply with applicable Law or the
requirements of a stock exchange or association on which such Receiving Party's
securities or those of its Related Parties are listed or (ii) becomes legally
compelled (by oral questions, interrogatories, requests for information or
documents, subpoenas, civil investigative demand or otherwise) to disclose any
Confidential Information, the Receiving Party shall provide the disclosing party
with prompt written notice so that in the case of clause (i), the disclosing
party can work with the Receiving Party to limit the disclosure to the greatest
extent possible consistent with legal obligations or in the case of clause (ii),
the disclosing party may seek a protective order or other appropriate remedy or
waive compliance with the provisions of this agreement. In the case of a clause
(ii), (A) if the disclosing party is unable to obtain a protective order or
other appropriate remedy, or if the disclosing party so directs, the Receiving
Party shall, and shall cause its employees to, exercise all commercially
reasonable efforts to obtain a protective order or other appropriate remedy at
the disclosing party's reasonable expense, and (B) failing the entry of a
protective order or other appropriate remedy or receipt of a waiver hereunder,
the Receiving Party shall furnish only that portion of the Confidential
Information which it is advised by opinion of its counsel is legally required to
be furnished and shall exercise all commercially reasonable efforts to obtain
reliable assurance that confidential treatment shall be accorded such
Confidential Information, it being understood that such reasonable efforts shall
be at the cost and expense of the disclosing party whose Confidential
Information has been sought.
Section 3.5. Survival. The obligations under this Article 3 shall
survive, as to any party, until two (2) years following the date of termination
of this agreement, and, as to any Controlled Related Party of a party, until two
(2) years following the earlier to occur of (A) the date that such Person is no
longer a Controlled Related Party of a party, or (B) the date of the termination
of this agreement; provided that such obligations shall continue indefinitely
with respect to any trade secret or similar information which is proprietary to
a party or its Controlled Related Parties and provides such party or its
Controlled Related Parties with an advantage over its competitors.
ARTICLE 4
REPRESENTATIONS, WARRANTIES AND COVENANTS OF LICENSEE
Section 4.1. Licensor's Ownership. Licensee acknowledges Licensor's
exclusive right, title and interest in and to the Licensed Marks and
acknowledges that nothing herein shall be construed to accord to Licensee any
rights in the Service Area in the Licensed Marks except as expressly provided,
herein. Licensee acknowledges that its use in the Service Area of the Licensed
Marks shall not create in Licensee any right, title or interest in the Service
Area in the Licensed Marks and that all use in the Service Area of the Licensed
Marks and the goodwill symbolized by and connected with such use of the Licensed
Marks will inure solely to the benefit of the Licensor.
Section 4.2. No Challenge by Licensee. Licensee covenants that (i)
Licensee will not at any time challenge Licensor's rights, title or interest in
the Licensed Marks (other than to assert the specific rights granted to Licensee
under this agreement), (ii) Licensee will not do or cause to be done or omit to
do anything, the doing, causing or omitting of which would contest or in any way
impair or tend to impair the
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rights of Licensor in the Licensed Marks, and (iii) Licensee will not represent
to any third party that Licensee has any ownership or rights in the Service Area
with respect to the Licensed Marks other than the specific rights conferred by
this agreement.
ARTICLE 5
REPRESENTATIONS WARRANTIES AND COVENANTS OF LICENSOR
Section 5.1. Title to the Licensed Marks. Licensor represents and
warrants that:
(a) Licensor has good title to the Licensed Marks and has the
right to grant the licenses provided for hereunder in
accordance with the terms and conditions hereof, free of any
liabilities, charges, liens, pledges, mortgages, restrictions,
adverse claims, security interests, rights of others, and
encumbrances of any kind (collectively, "Encumbrances"), other
than Encumbrances which will not restrict or interfere in any
material respect with the exercise by Licensee of the rights
granted to Licensee hereunder.
(b) There is no claim, action, proceeding or other litigation
pending or, to the knowledge of Licensor, threatened with
respect to Licensor's ownership of the Licensed Marks or
which, if adversely determined, would restrict or otherwise
interfere in any material respect with the exercise by
Licensee of the rights purported to be granted to Licensee
hereunder.
Except as expressly provided above in this Section 5.1, Licensor makes
no representation or warranty of any kind or nature whether express or implied
with respect to the Licensed Marks (including freedom from third party
infringement of the Licensed Marks).
The representations and warranties provided for in this Section 5.1
shall survive the execution and delivery of this agreement.
Section 5.2. Other Licensees. In the event Licensor grants to any third
party any licenses or rights with respect to the Licensed Marks, Licensor shall
not, in connection with the grant of any such license or rights, take any
actions, or suffer any omission that would adversely affect the existence or
validity of the Licensed Marks or conflict with the rights granted to Licensee
hereunder.
Section 5.3. Abandonment. Licensor covenants and agrees that, during
the term of this agreement, it will not abandon the Licensed Marks.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF BOTH PARTIES
Section 6.1. Representations and Warranties. Each party hereby
represents and warrants to the other party as follows:
(a) Due Incorporation or Formation; Authorization of Agreement.
Such party is a corporation duly organized, a limited
liability company duly organized or a partnership duly formed,
validly existing and, if applicable, in good standing under
the laws of the jurisdiction of its incorporation or formation
and has the corporate, company or partnership power and
authority to own its property and carry on its business as
owned and carried on at the date hereof and as contemplated
hereby. Such party is duly licensed or qualified to do
business
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and, if applicable, is in good standing in each of the
jurisdictions in which the failure to be so licensed or
qualified would have a material adverse effect on its
financial condition or its ability to perform its obligations
hereunder. Such party has the corporate, company or
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 corporate, company or
partnership action. Assuming the due execution and delivery by
the other party hereto, this agreement constitutes the legal,
valid and binding obligation of such party enforceable against
such party 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.
(b) No Conflict with Restrictions: No Default Neither the
execution, delivery and performance of this agreement nor the
consummation by such party of the transactions contemplated
hereby (i) will conflict with, violate or result in a breach
of any of the terms, conditions or provisions of 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 such party or any of its Controlled Related
Parties, (ii) will conflict with, violate, result in a breach
of or constitute a default under any of the terms, conditions
or provisions of the articles of incorporation, articles of
organization or certificate of formation, bylaws, operating
agreement or limited liability company agreement, or
partnership agreement of such party or any of its Controlled
Related Parties or of any material agreement or instrument to
which such party or any of its Controlled Related Parties is a
party or by which such party or any of its Controlled Related
Parties is or may be bound or to which any of its material
properties or assets is subject (other than any such conflict,
violation, breach or default that has been validly and
unconditionally waived), (iii) will conflict with, violate,
result in 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 material interests or rights or require any
consent, authorization or approval under any indenture,
mortgage, lease agreement or instrument to which such party or
any of its Controlled Related Parties is a party or by which
such party or any of its Controlled Related Parties is or may
be bound, or (iv) will result in the creation or imposition of
any lien upon any of the material properties or assets of such
party or any of its Controlled Related Parties, which in any
such case could reasonably be expected to materially impair
such party's ability to perform its obligations under this
agreement or to have a material adverse effect on the
consolidated financial condition of each party or its Parent.
(c) Governmental Authorizations. 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 such party in connection with the valid execution,
delivery, acceptance and performance by such party under this
agreement or the consummation by such party of any transaction
contemplated hereby has been completed, made or obtained, as
the case may be.
(d) Litigation. There are no actions, suits, proceedings or
investigations pending or, to the knowledge of such party,
threatened against or affecting such party or any of its
Controlled Related Parties or any of their properties, assets
or businesses in any court or before or by any governmental
department, board, agency or instrumentality, domestic or
foreign, or any
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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 materially impair such party's ability to
perform its obligations under this agreement or to have a
material adverse effect on the consolidated financial
condition of such party or its parent; and such party or any
of its Controlled Related Parties has not received any
currently effective notice of any default, and such party or
any of its Controlled Related Parties is not in default, under
any applicable order, writ, injunction, decree, permit,
determination or award of any court, any governmental
department, board, agency or instrumentality, domestic or
foreign, or any arbitrator, which default could reasonably be
expected to materially impair such party's ability to perform
its obligations under this agreement or to have a material
adverse effect on the consolidated financial condition of such
party or its Parent
Section 6.2. Survival. The representations and warranties provided for
under this Article 6 will survive the execution and delivery of this agreement.
ARTICLE 7
PROSECUTION OF INFRINGEMENT CLAIMS
Section 7.1. Notice and Prosecution of Infringement. Licensee agrees to
notify Licensor promptly, in writing, of any alleged, actual or threatened
infringement of any of the Licensed Marks within the Service Area of which
Licensee becomes aware. Licensor has the sole right to determine whether or not
to take any action on such infringements. Licensor has the sole right to employ
counsel of its choosing and to direct any litigation and settlement of
infringement actions. Any recoveries, damages and costs recovered through such
proceedings shall belong exclusively to Licensor, and Licensor shall be solely
responsible for all costs and expenses (including attorney fees) of prosecuting
such actions. Licensee agrees to provide Licensor with all reasonably requested
assistance in connection with such proceedings.
ARTICLE 8
LICENSEE DEFENSE AND INDEMNIFICATION OF LICENSOR
Section 8.1. Indemnification. (a) Each party hereby agrees to indemnify
the other party against and agrees to hold it harmless from any Loss incurred or
suffered by such other party arising out of or in connection with:
(i) the material breach of any representation or warranty
made by such party in this agreement; and
(ii) the material breach of any covenant or agreement by
such party contained in this agreement.
(b) In addition to the indemnification provided for in Section 8.1
(a), Licensee agrees to indemnify Licensor against and hold it
harmless from any Loss suffered or incurred by Licensor or its
Controlled Related Parties by reason of a third party claim
arising out of or relating to (i) the use of the Licensed
Marks by Licensee; or (ii) the marketing, promotion,
advertisement, distribution, lease or sale by Licensee ( or
any permitted sublicensee) or by any additional Licensee (or
any permitted sublicensee) of any Sprint PCS Products and
Services, Related Equipment or Premium and Promotional Item
under the Licensed Marks
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pursuant to this agreement, including unfair or fraudulent
advertising claims, warranty claims and product defect or
liability claims, pertaining to the Sprint PCS Products and
Services, Related Equipment or Premium and Promotional Items.
Notwithstanding the foregoing, Licensee will not be required
under this paragraph (b) to indemnify any Loss arising solely
out of Licensee's use of the Licensed Marks in compliance with
the terms of the Trademark and Service Mark Usage Guidelines;
provided that Licensor shall have no obligation to indemnify
for third-party claims alleged to arise from the specifics of
uses of third party trademarks or service marks, or the
specifics of claims made, in marketing materials prepared by
or for Licensee, which marketing materials have not been
approved by Licensor prior to the publication out of which
such claims are alleged to have arisen.
ARTICLE 9
OBLIGATIONS/SETOFF
Section 9.1. Obligations/Setoff. The obligations of the parties as set
forth in this agreement shall be unconditional and irrevocable, and shall not be
subject to any defense or be released, discharged or otherwise affected by any
matter, including impossibility, illegality, impracticality, frustration of
purpose, force majeure, act of government, the bankruptcy or insolvency of any
party hereto, and the obligations of each party shall not be subject to any
right of setoff or recoupment which such party may not or hereafter have against
the other party.
ARTICLE 10
LIMITATION ON USE OF LICENSED MARKS
Section 10.1. Restrictions on Use. Licensee is not permitted to make
any use of the Licensed Marks in connection with products or services other than
the Sprint PCS Products and Services, and as specifically authorized in Sections
1.1(b) above with respect to Related Equipment and Premium and Promotional
Items, nor to make any use of the Licensed Marks directed outside of the Service
Area.
Section 10.2. Adherence to Trademark and Service Mark Usage Guidelines.
Licensee agrees to comply with and adhere to Trademark and Service Mark Usage
Guidelines for the depiction or presentation of the Licensed Marks, as furnished
by Licensor. Prior to Licensee depicting or presenting any of the Licensed Marks
on any type of marketing, advertising or promotional materials, Licensee agrees
to submit samples of such materials to Licensor for approval. Licensor shall
have fourteen (14) days from the date Licensor receives such materials to
approve or object to any such materials submitted to Licensor for review. In the
event Licensor does not object to such materials within such fourteen (14) day
period, such materials shall be deemed approved by Licensor. Thereafter,
Licensee shall not be obligated to submit to Licensor materials prepared in
accordance with the samples previously approved by Licensor and the Trademark
and Service Mark Usage Guidelines; provided, however, Licensee shall, at the
reasonable request of Licensor, continue to furnish samples of such marketing,
advertising and promotional materials to Licensor from time to time during the
term hereof at the request of Licensor.
Section 10.3. Use of Similar Trademarks and Service Marks. Licensee
agrees not to use (a) any trademark or service mark which is confusingly similar
to, or a colorable imitation of, the Licensed Marks or any part thereof, or (b)
any work, symbol, character, or set of words, symbols, or characters, which in
any language would be identified as the equivalent of the Licensed Marks or that
are otherwise confusingly similar to, or a colorable imitation of, the Licensed
Marks, whether during the term of this agreement or at any time following
termination of this agreement. Licensee shall not knowingly engage in any
conduct
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which may place the Sprint PCS Products and Services, the Licensed Marks or
Licensor in a negative light or context.
Section 10.4. Services of Public Figures. Licensee agrees to obtain
Licensor's prior written approval (which approval will not be unreasonably
withheld) before engaging the services of any celebrity or publicly known
individual for endorsement of any Sprint PCS Products and Services or Premium
and Promotional Items.
ARTICLE 11
CONTROL OF BRAND IMAGE
Section 11.1. Exclusive Use of Licensed Marks. The Sprint PCS Products
and Services shall be marketed by Licensee solely under the Licensed Marks.
Section 11.2. Consistency With Brand Image and Principles. Licensee
shall use the Licensed Marks in a manner that is consistent with the brand image
and principles established by Licensor, and mechanics to ensure consistency will
be included in the Marketing Communications Guidelines.
Section 11.3. Management of Brand Image. Licensor shall be responsible
for the overall management of the brand image for the Licensed Marks. All
advertising, marketing and promotional materials using the Licensed Marks
prepared by Licensee shall, in addition to the provisions set forth in Section
11.2 above, comply with the Marketing Communications Guidelines to be furnished
by Licensor to Licensee as such Marketing Communications Guidelines may be
amended and updated by Licensor from time to time. Such Marketing Communications
Guidelines shall establish reasonable principles to be followed in the
development of advertising, marketing and promotional campaigns in order to
ensure a consistent and coherent brand image. All advertising, marketing and
promotional campaigns conducted by Licensee shall be conducted in a manner
consistent with the Marketing Communications Guidelines.
Section 11.4. Advertising Agencies; Promotions. Licensee may select its
own advertising agencies for development of its advertising and promotional
campaigns; provided, however, that a media buys shall be coordinated by Licensee
with the buying agency of Licensor. Licensee and Licensor shall conduct ongoing
reviews of upcoming advertising, marketing and promotional campaigns of each
party and shall use good faith efforts to coordinate their respective campaigns
in a manner that will maximize the advertising, marketing and promotional
efforts of the parties and be consistent with the Marketing Communications
Guidelines. Licensee shall not initiate any products or promotions under names
which are confusingly similar to any names of national product offerings or
promotions by Licensor. Neither Licensor nor any of its Controlled Related
Parties shall initiate any products or promotions under names which are
confusingly similar to any names of national product offerings or promotions by
Licensee. In addition, Licensor will use its commercially reasonable efforts to
ensure that no third party licensee under the Licensed Marks initiates any
products or promotions in the Service Area under names which are confusingly
similar to any names of national product offerings or promotions by Licensee.
Section 11.5. Ownership of Advertising Materials. All agreements
entered into by Licensee with advertising agencies shall provide that Licensor
shall own all advertising materials (including concepts, themes, characters and
the like) created or developed thereunder. Subject to the terms and conditions
set forth herein, Licensee shall receive a perpetual, non-exclusive,
royalty-free license to use such materials in connection with advertising and
promotional materials developed by Licensee; provided, however, that the
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rights granted under such perpetual license shall be limited solely to the use
of such materials and shall not extend the term of the license with respect to
the Licensed Marks provided for hereunder.
ARTICLE 12
RELATIONSHIP OF PARTIES
Section 12.1. Relationship of Parties. It is the express intention of
the parties that Licensee is and shall be an independent contractor and no
partnership shall exist between Licensee and Licensor pursuant hereto. This
agreement shall not be construed to make Licensee the agent or legal
representative of Licensor for any purpose whatsoever (except as expressly
provided in Articles 7 and 9), and Licensee is not granted any right or
authority to assume or create any obligations for, on behalf of, or in the name
of Licensor (except as expressly provided in Articles 7 and 8). Licensee agrees,
and shall require its permitted sublicensees to agree, not to incur or contract
any debt or obligation on behalf of Licensor, or commit any act, make any
representation, or advertise in any manner that may adversely affect any right
of Licensor in or with respect to the Licensed Marks or be detrimental to
Licensor's image.
ARTICLE 13
TERM; TERMINATION; EFFECTS OF TERMINATION
Section 13.1. Term. This agreement commences on the date of execution
and continues until the Management Agreement terminates, unless earlier
terminated in accordance with the terms set forth in this Article 13. This
agreement automatically terminates upon termination of the Management Agreement.
Section 13.2. Events of Termination. If any of the following events
shall occur with respect to Licensee, each such occurrence shall be deemed an
"Event of Termination":
(a) Bankruptcy. The occurrence of a "Bankruptcy" with respect to
Licensee.
(b) Breach of Agreements. Licensee fails to perform in accordance
with any of the material terms and conditions contained herein
in any material respect.
(c) Material Misrepresentation. Licensee breaches any material
representation or warranty of Licensee made in Section 4.2 or
Article 6 in any material respect.
(d) Termination of Management Agreement. The termination of the
Management Agreement, for whatever reason.
Section 13.3. Licensor's Right to Terminate Upon Event of Termination.
Licensor may, at its option, without prejudice to any other remedies it may
have, terminate this agreement by giving written notice of such termination to
Licensee as follows: (a) immediately, upon the occurrence of any Event of
Termination pursuant to Section 13.2(a) with respect to Licensee; or (b) after
the expiration of thirty (30) days from Licensee's receipt of written notice
from Licensor of the occurrence of any Event of Termination pursuant to Sections
13.2(b) or 13.2(c), if such failure to perform or breach is then still uncured;
or (c) immediately upon the repeated or continuing occurrence of Events of
Termination pursuant to Section 13.2(b) (regardless of whether such continuing
failures to perform or breaches have been cured by Licensee in accordance with
the provisions of clause (b) or this Section 13.3); or (d) immediately upon the
occurrence of a termination pursuant to Section 13.2(d).
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Section 13.4. Licensee's Right to Terminate. Licensee may, at its
option, without prejudice to any other remedies it may have, terminate this
agreement by giving written notice of such termination to Licensor as follows:
(a) immediately, in the event that Licensor abandons the Licensed Marks or
otherwise ceases to support the Licensed Marks in Licensor's business; or (b)
immediately in the event of the occurrence of a Bankruptcy with respect to
Licensor; or (c) immediately in the event of an occurrence of termination
pursuant to Section 13.2(d).
Section 13.5. Effects of Termination. Upon the termination of this
agreement for any reason, all rights of Licensee in and to the Licensed Marks in
the Service Area shall cease within thirty (30) days following the date on which
this agreement terminates (except in the case of a termination resulting from an
Event of Termination described in Section 13.2(b), (c) or (d), in which case
such rights to use the Licensed Marks will terminate immediately upon the date
of termination); provided, however, that Licensee may thereafter sell, transfer
or otherwise dispose of any Related Equipment and Premium and Promotional Items
that are then in Licensee's inventory (or which Licensee has purchased or is
then legally obligated to purchase) for an additional reasonable period not to
exceed three (3) months. Licensee's right of disposal under this Section 13.5
shall not prohibit Licensor from granting to third parties during the disposal
period licenses and other rights with respect to the Licensed Marks. The
provisions of Articles 3, 4, 5, 6 and 8 will survive any termination of this
agreement.
ARTICLE 14
ASSIGNMENT; SUBLICENSING
Section 14.1. Licensee Right to Assign. Licensee, without the prior
written consent of Licensor (in its sole discretion), shall have no right to
assign any of its rights or obligations hereunder.
Section 14.2. Licensor Right to Assign the Licensed Marks. Nothing
herein shall be construed to limit the right of the Licensor to transfer or
assign its interests in the Licensed Marks, subject to the agreement of the
assignee to be bound by the terms and conditions of this agreement.
Section 14.3. Licenses to Additional Licensees; Sublicenses; Licenses
to Additional Licensees. Licensee shall not sublicense (or attempt to
sublicense) any of its rights hereunder without the prior written consent of
Licensor, in the sole discretion of Licensor.
ARTICLE 15
MISCELLANEOUS
Section 15.1. Notices. Any notice, payment, demand, or communication
required or permitted to be given by any provision of this agreement shall be in
writing and mailed (certified or registered mail, postage prepaid, return
receipt requested) or sent by hand or overnight courier, or by facsimile (with
acknowledgment received), charges prepaid and addressed as described on the
Notice Address Schedule attached to the Master Signature Page, or to such other
address or number as such party may from time to time specify by written notice
to the other party in accordance with the provisions of this Section 15.1. All
notices and other communications given to a party in accordance with the
provisions of this agreement shall be deemed to have been given and received (i)
four (4) Business Days after the same are sent by certified or registered mail,
postage prepaid, return receipt requested, (ii) when delivered by hand or
transmitted by facsimile (with acknowledgment received and, in the case of a
facsimile only, a copy of such notice is sent no later than the next Business
Day by a reliable overnight courier service, with acknowledgment of receipt)
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or (iii) one (1) Business Day after the same are sent by a reliable overnight
courier service, with acknowledgment of receipt.
Section 15.2. Binding Effect. Except as otherwise provided in this
agreement, this agreement shall be binding upon and inure to the benefit of the
parties and their respective successors, transferees, and assigns.
Section 15.3. Construction. This agreement shall be construed simply
according to its fair meaning and not strictly for or against any party.
Section 15.4. Time. Time is of the essence with respect to this
agreement.
Section 15.5. Table of Contents; Headings. The table of contents and
section and other headings contained in this agreement are for reference
purposes only and are not intended to describe, interpret, define or limit the
scope, extent or intent of this agreement.
Section 15.6. Severability. Every provision of this agreement is
intended to be severable. If any term or provision hereof is illegal, invalid or
unenforceable for any reason whatsoever, that term or provision will be enforced
to the maximum extent permissible so as to effect the intent of the parties, and
such illegality, invalidity or unenforceability shall not affect the validity or
legality of the remainder of this agreement. If necessary to effect the intent
of the parties, the parties will negotiate in good faith to amend this agreement
to replace the unenforceable language with enforceable language which as closely
as possible reflects such intent.
Section 15.7. Further Action. Each party, upon the reasonable request
of the other party, agrees to perform all further acts and execute, acknowledge,
and deliver any documents which may be reasonably necessary, appropriate, or
desirable to carry out the intent and purposes of this agreement.
Section 15.8. Governing Law. The internal laws of the State of Missouri
(without regard to principles of conflict of law) shall govern the validity of
this agreement, the construction of its terms, and the interpretation of the
rights and duties of the parties.
Section 15.9. Specific Performance. Each party agrees with the other
party that the other party would be irreparably damaged if any of the provisions
of this agreement are not performed in accordance with their specific terms and
that monetary damages would not provide an adequate remedy in such event.
Accordingly, in addition to any other remedy to which the nonbreaching party may
be entitled at law or in equity, the nonbreaching party shall be entitled to
injunctive relief to prevent breaches of this agreement and specifically to
enforce the terms and provisions hereof.
Section 15.10. Entire Agreement. The provisions of this agreement set
forth the entire agreement and understanding between the parties as to the
subject matter hereof and supersede all prior agreements, oral or written, and
other communications between the parties relating to the subject matter hereof.
Section 15.11. Limitation on Rights of Others. Nothing in this
agreement, whether express or implied, shall be construed to give any party
other than the parties any legal or equitable right, remedy or claim under or in
respect of this agreement.
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Section 15.12. Waivers; Remedies. The observance of any term of this
agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively) by the party or parties entitled to enforce such
term, but any such waiver shall be effective only if in writing signed by the
party or parties against which such waiver is to be asserted. Except as
otherwise provided herein, no failure or delay of any party in exercising any
power or right under this agreement shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such right or power, preclude any other
further exercise thereof or the exercise of any other right or power.
Section 15.13. Jurisdiction; Consent to Service of Process.
(a) Each party hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of
any Missouri State court sitting in the County of Jackson or
any Federal court of the United States of America sitting in
the Western District of Missouri, and any appellate court from
any such court, in any suit action or proceeding arising out
of or relating to this agreement, or for recognition or
enforcement of any judgment, and each party hereby irrevocably
and unconditionally agrees that all claims in respect of any
such suit, action or proceeding may be heard and determined in
such Missouri State Court or, to the extent permitted by law,
in such Federal court.
(b) Each party hereby irrevocably and unconditionally waives, to
the fullest extent it may legally do so, any objection which
it may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this
agreement in Missouri State court sitting in the County of
Jackson or any Federal court sitting in the Western District
of Missouri. Each party hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such suit, action or
proceeding in any such court and further waives the right to
object, with respect to such suit, action or proceeding, that
such court does not have jurisdiction over such party.
(c) Each party irrevocably consents to service of process in the
manner provided for the giving of notices pursuant to this
agreement, provided that such service shall be deemed to have
been given only when actually received by such party. Nothing
in this agreement shall affect the right of a party to serve
process in another manner permitted by law.
Section 15.14. Waiver of Jury Trial. Each party waives, to the fullest
extent permitted by applicable law, any right it may have to a trial by jury in
respect of any action, suit or proceeding arising out of or relating to this
agreement.
Section 15.15. Consents. Whenever this agreement requires or permits
consent by or on behalf of a party, such consent shall be given in writing in a
manner consistent with the requirements for a waiver of compliance as set forth
in Section 15.13, with appropriate notice in accordance with Section 15.1 of
this agreement.
Section 15.16. Master Signature Page. Each party agrees that it will
execute the Master Signature Page that evidences such party's agreement to
execute, become a party to and be bound by this agreement, which document in
incorporated herein by this reference.
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EXHIBIT 10.9
CONSENT AND AGREEMENT
(Nortel / Alamosa PCS)
This Consent and Agreement is entered into as of June 10, 1999 (this
"Consent and Agreement"), between SPRINT SPECTRUM L.P., a Delaware limited
partnership ("Sprint Spectrum"), SPRINTCOM, INC., a Kansas corporation
("SprintCom"), SPRINT COMMUNICATIONS COMPANY, L.P., a Delaware limited
partnership ("Sprint Communications"), WIRELESSCO, L.P., a Delaware limited
partnership ("WirelessCo" and together with Sprint Spectrum, SprintCom and
Sprint Communications, the "Sprint Parties"), and NORTEL NETWORKS INC., a
Delaware corporation, as administrative agent (together with any successors
thereof in accordance with the Credit Agreement, the "Administrative Agent")
for the lenders under that certain Credit Agreement among ALAMOSA PCS, LLC, a
Texas limited liability company (the "Affiliate"), the Administrative Agent and
the lenders from time to time party thereto (the "Lenders").
Affiliate has entered into the Sprint PCS Management Agreement dated
and effective as of July 17, 1998 (as it may be amended, modified, or
supplemented from time to time, the "Management Agreement") with Sprint
Spectrum providing for the design, construction and management of the Service
Area Network. Affiliate has also entered into the Sprint PCS Services Agreement
(the "Services Agreement") and the Sprint Trademark and Service Mark License
Agreement and the Sprint Spectrum Trademark and Service Mark License Agreement
(together, the "License Agreements") (together, the Management Agreement, the
Services Agreement and the License Agreements and all other agreements between
Affiliate or its subsidiaries, on the one hand and the Sprint Parties or any
subsidiary of Sprint Corporation on the other hand (whether entered into prior
to, on, or after the date hereof), shall be collectively referred to as the
"Sprint Agreements").
Affiliate has entered into or concurrently herewith is entering into
that certain Credit Agreement dated as of June 10, 1999, with the
Administrative Agent and the Lenders (such Credit Agreement, as it may be
amended, supplemented, restated, replaced or otherwise modified from time to
time, is referred to as the "Credit Agreement"), to provide financing for a
portion of the costs of the design and construction of the Service Area Network
and for certain other purposes. The Credit Agreement and each note, security
agreement, pledge agreement, guaranty and any and all other agreements,
documents or instruments entered into in connection with any of the foregoing,
as the same may from time to time be amended, supplemented, restated, replaced
or otherwise modified from time to time, shall collectively be referred to as
the "Loan Documents."
As a condition to the availability of credit to Affiliate under the
Credit Agreement, the Administrative Agent and the Lenders have required the
execution and delivery of this Consent and Agreement by the Sprint Parties and
have required that Affiliate acknowledge, consent and agree to all terms and
provisions of this Consent and Agreement.
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Sprint Spectrum and SprintCom hold, directly or indirectly, the
licenses for the service areas managed by Affiliate as contemplated in the
Management Agreement. As used in this Consent and Agreement, the term "Sprint
PCS" shall refer in each particular instance or application to Sprint Spectrum
and/or SprintCom, based on which of the two entities owns the License in that
portion of the Service Area to which the subject of the instance or application
applies.
All capitalized terms in this Consent and Agreement shall have the
same meanings ascribed to them in the Management Agreement unless otherwise
provided in this Consent and Agreement; provided, that the terms "Default",
"Event of Default" and "Obligations" shall have the meanings ascribed to them
in the Credit Agreement.
Accordingly, each Sprint Party and the Administrative Agent hereby
agrees as follows:
SECTION 1. Consent to Security Interest. In connection with the
transactions contemplated by the Credit Agreement and the other Loan Documents,
Affiliate has granted or will grant to the Administrative Agent, for the
benefit of the Lenders, a first priority security interest in and lien upon
substantially all of its assets and property, tangible and intangible, whether
now owned or hereafter acquired or arising, and all proceeds and products
thereof and accessions thereto, including without limitation the rights of
Affiliate in, to and under the Sprint Agreements, and a first priority security
interest in and pledge of all capital stock, membership interests, partnership
interests or other equity interests in Affiliate and its subsidiaries (the
foregoing security interests, liens and pledges are referred to collectively as
the "Security Interests" and the foregoing assets and property in which the
Administrative Agent, for the benefit of the Lenders, has been or will be
granted a first priority security interest in and lien are referred to
collectively as the "Collateral"). Each Sprint Party (i) acknowledges notice of
the Credit Agreement, (ii) consents to the granting of the Security Interests
in the Collateral to the Administrative Agent, for the benefit of the Lenders,
and (iii) agrees that (a) neither it nor any subsidiary of Sprint Corporation
will challenge or contest that the Security Interests are valid, enforceable
and duly perfected first priority security interests and liens in and to the
Collateral and (b) neither it nor any subsidiary of Sprint Corporation will
argue that any such Security Interest is subject to avoidance, limitation or
subordination under any legal or equitable theory or cause of action.
Each Sprint Party acknowledges and agrees that (i) Sections 17.15.1
and 17.15.2 of the Management Agreement do not apply to the assignment of
Affiliate's rights under the Sprint Agreements to the Administrative Agent or
the Lenders under the Loan Documents or in connection with a transaction
permitted pursuant to this Consent and Agreement to any other Person pursuant
to the Loan Documents or to any other assignment in connection with any
transaction permitted pursuant to this Consent and Agreement and (ii) Section
17.15.3 of the Management Agreement shall not apply to any Change of Control of
Affiliate in connection with the exercise by the Administrative Agent of any of
its rights or remedies under the Loan Documents, including without limitation
in connection with the sale of the membership interests of Affiliate to any
Person or to any other Change of Control of Affiliate; provided, however,
Section 17.15.3 of the Management Agreement shall apply to any such transaction
if such transaction is not with the Administrative Agent or the Lenders or is
not a transaction permitted pursuant to this Consent and Agreement. It
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is understood that any assignment described in this Section 1 to the
Administrative Agent or the Lenders is hereby consented to by the Sprint
Parties; provided, that any subsequent assignment by the Administrative Agent
or the Lenders shall be in accordance with the terms of this Consent and
Agreement.
SECTION 2. Payments. Upon receipt of the Administrative Agent's
written instructions, each Sprint Party agrees to make all payments (if any) to
be made by it under the Sprint Agreements, subject to its rights of setoff or
recoupment with respect to such payments as permitted under Section 10.6 of the
Management Agreement, to Affiliate directly to the Administrative Agent, or
otherwise as the Administrative Agent shall direct; provided, that during the
period that Sprint PCS is making such payments directly to the Administrative
Agent or its designee pursuant to this Section 2, Sprint PCS' setoff and
recoupment rights under such Section 10.6 shall not be limited to undisputed
amounts. The Administrative Agent hereby agrees that the Administrative Agent
will not give any such written instructions for it to receive such payments
directly from a Sprint Party unless an Event of Default has occurred under the
Credit Agreement and is continuing. Such written instructions to make payments
directly to the Administrative Agent shall be effective only so long as an
Event of Default is continuing, and the Administrative Agent will revoke such
instructions promptly following the cure of such Event of Default. Any payments
made by any Sprint Party directly to, or at the direction of, the
Administrative Agent shall fully satisfy any obligation of such Sprint Party to
make payments to Affiliate under the Sprint Agreements to the extent of such
payments.
SECTION 3. Notice and Effect of Event of Default, Management Agreement
Breach and Event of Termination. The Administrative Agent agrees to provide to
Sprint PCS a copy of any written notice that Administrative Agent sends to
Affiliate, promptly after sending such notice, that a Default or an Event of
Default has occurred and is continuing, and Sprint PCS agrees to provide to the
Administrative Agent a copy of any written notice that Sprint PCS sends to
Affiliate, promptly after sending such notice, that an Event of Termination or
an event that if not cured, or if notice is provided, will constitute an Event
of Termination (each of an Event of Termination and an event that if not cured
would constitute an Event of Termination, a "Management Agreement Breach") has
occurred. Sprint Spectrum and SprintCom acknowledge that the Administrative
Agent has informed them that an Event of Termination constitutes an Event of
Default under the Loan Documents, and Sprint Spectrum and SprintCom further
acknowledge that the Management Agreement does not prohibit Affiliate from
curing such an Event of Default.
SECTION 4. Event of Default without a Management Agreement Breach.
(a) Affiliate Remains as Manager or Interim Manager
Appointed. Upon and during the continuation of an Event of Default
when no Management Agreement Breach exists on the original date of
occurrence of such Event of Default, the Administrative Agent may (i)
allow Affiliate to continue to act as the Manager under the Sprint
Agreements, (ii) after (A) Acceleration (as defined in Section 6(a))
of the Obligations under the Credit Agreement, (B) the "Maturity Date"
(as defined in the Credit Agreement) in the event the Obligations have
not been paid in full as of such date, or (C) the occurrence of an
Event of
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Default set forth in Section 11.1(e) or 11.1(f) of the Credit
Agreement (each of such occurrences identified in this Section
4(a)(ii), an "IM Appointment Triggering Event"), appoint Sprint
Spectrum to act as "Interim Manager" under the Sprint Agreements, or
(iii) after an IM Appointment Triggering Event, appoint a Person other
than Sprint Spectrum to act as Interim Manager under the Sprint
Agreements. If the Administrative Agent initially allows Affiliate to
continue to act as the Manager under the Sprint Agreements, the
Administrative Agent may later, during a continuation of an Event of
Default and after an IM Appointment Triggering Event, remove the
Affiliate as Manager and take the action described above in clauses
(ii) and (iii). The date on which a Person begins serving as Interim
Manager shall be the "Commencement Date."
(b) Sprint Spectrum or Sprint Spectrum Designee as Interim
Manager. If the Administrative Agent appoints Sprint Spectrum as
Interim Manager, within 14 days after its appointment Sprint Spectrum
shall accept the position or designate another Person (a "Sprint
Spectrum Designee") to act as Interim Manager under the Sprint
Agreements. The Administrative Agent shall accept Sprint Spectrum and
any Sprint Spectrum Designee that is then acting as an Other Manager
(other than Affiliate) to act as Interim Manager under the Sprint
Agreements. Any Sprint Spectrum Designee that is not an Other Manager
must be acceptable to the Administrative Agent, which acceptance will
not be unreasonably withheld. If, within 30 days after the
Administrative Agent gives Sprint Spectrum notice of its appointment
as Interim Manager, Sprint Spectrum or a Sprint Spectrum Designee does
not agree to act as Interim Manager, then the Administrative Agent
shall have the right to appoint an Administrative Agent Designee as
Interim Manager in accordance with Section 4(c). At the discretion of
the Administrative Agent, Sprint Spectrum or the Sprint Spectrum
Designee shall serve as Interim Manager for up to six months from the
Commencement Date.
Upon the expiration of its initial six-month period as
Interim Manager under the Sprint Agreements, Sprint Spectrum or the
Sprint Spectrum Designee will agree to serve as Interim Manager for up
to six months from such expiration date until the Administrative Agent
gives Sprint Spectrum or the Sprint Spectrum Designee at least 30 days
written notice of its desire to terminate the relationship; provided,
that the extended period will be for 12 months rather than six months
(for a complete term of 18 months) in the event, as of the date of the
initial appointment, the aggregate number of pops that Affiliate and
all Other Managers have the right to serve under their respective
management agreements with the Sprint Parties is less than 40 million.
If Sprint Spectrum's or the Sprint Spectrum Designee's term as Interim
Manager is extended, then the Administrative Agent agrees that Sprint
Spectrum or the Sprint Spectrum Designee shall be reimbursed promptly
for all amounts previously expended by Sprint Spectrum or the Sprint
Spectrum Designee under Section 11.6.3 of the Management Agreement
(which expenditures were incurred in accordance with Section 9 of this
Consent and Agreement), and Sprint Spectrum or the Sprint Spectrum
Designee shall continue to be reimbursed for any expenses it incurs
pursuant to its rights under Section 11.6.3 of the Management
Agreement as provided in the Management Agreement (which expenditures
were incurred in accordance with Section 9 of this Consent
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and Agreement); provided, that the Administrative Agent shall only be
required to reimburse Sprint Spectrum or the Sprint Spectrum Designee
for amounts expended under Section 11.6.3 of the Management Agreement
in an aggregate amount equal to 5% of Affiliate's shareholder's equity
or capital account plus Affiliate's long-term debt (i.e., notes that
on their face are scheduled to mature more than one year from the date
issued), as reflected on Affiliate's books (the "Reimbursement
Limit"). If it becomes necessary for Sprint Spectrum or the Sprint
Spectrum Designee to expend an amount that exceeds the Reimbursement
Limit, Sprint Spectrum or the Sprint Spectrum Designee is not required
to incur such expense.
Upon the termination or expiration of the term of Sprint
Spectrum or the Sprint Spectrum Designee as Interim Manager, the
Administrative Agent shall have the right to appoint a successor
Interim Manager in accordance with Section 4(c).
(c) Administrative Agent Designee as Interim Manager. If the
Administrative Agent elects to appoint a Person other than Sprint
Spectrum to act as Interim Manager under the Sprint Agreements (an
"Administrative Agent Designee") as permitted under Sections 4(a)(iii)
and 4(b), such Administrative Agent Designee must (i) agree to serve
as Interim Manager for six months unless terminated earlier by Sprint
PCS for cause or by the Administrative Agent, (ii) meet the "Successor
Manager Requirements" set forth below in Section 13, and (iii) agree
to comply with the terms of the Sprint Agreements but will not be
required to assume the existing liabilities of Affiliate. In the case
of a proposed Interim Manager, Sprint PCS shall provide to the
Administrative Agent, within 10 Business Days after the request
therefor, a detailed description of all information reasonably
requested by Sprint PCS to enable Sprint PCS to determine if it
believes that a proposed Interim Manager satisfies the Successor
Manager Requirements. Sprint PCS agrees to inform Administrative Agent
within 20 days after it receives such information respecting such
proposed Administrative Agent Designee from the Administrative Agent
whether Sprint PCS believes such designee satisfies the Successor
Manager Requirements. If Sprint PCS does not so inform the
Administrative Agent within such 20-day period, then Sprint PCS shall
be deemed to agree, for all purposes of this Consent and Agreement,
that such proposed designee satisfies the Successor Manager
Requirements. A Person that satisfies the Successor Manager
Requirements qualifies under the Management Agreement to become a
Successor Manager, unless the Administrative Agent Designee materially
breaches the terms of a Sprint Agreement while acting as Interim
Manager or no longer meets the Successor Manager Requirements. The
Interim Manager may continue to serve as Interim Manager after the
initial six-month period at the Administrative Agent's discretion, so
long as the Interim Manager continues to satisfy the Successor Manager
Requirements and no Management Agreement Breach exists. If the
Administrative Agent Designee materially breaches any Sprint Agreement
while acting as Interim Manager, then Sprint PCS and the
Administrative Agent have the rights set forth in Section 5; provided,
that Sprint PCS may not allow Affiliate to act as the Manager of the
Sprint Agreements without the Administrative Agent's consent.
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SECTION 5. Event of Default Created by a Management Agreement Breach.
(a) Affiliate Remains as Manager or Interim Manager
Appointed. Upon an Event of Default created by a Management Agreement
Breach (so long as at such time an Event of Default not created by a
Management Agreement Breach is not in existence), Sprint PCS may (i)
allow Affiliate to continue to act as the Manager under the Sprint
Agreements if approved by the Administrative Agent, (ii) act as
Interim Manager under the Sprint Agreements (in the case of Sprint
Spectrum) or appoint Sprint Spectrum as Interim Manager (in the case
of SprintCom), or (iii) appoint a Sprint Spectrum Designee to act as
Interim Manager under the Sprint Agreements. If Sprint PCS initially
allows Affiliate to continue to act as the Manager under the Sprint
Agreements, Sprint PCS may later remove the Affiliate as Manager and
take the action described above in clauses (ii) and (iii). The
Administrative Agent shall have no right to appoint an Interim Manager
when an Event of Default is caused by a Management Agreement Breach
(unless an Event of Default not created by a Management Agreement
Breach is in existence), unless Sprint PCS elects not to act as
Interim Manager or to appoint a Sprint Spectrum Designee.
(b) Sprint Spectrum or Sprint Spectrum Designee as Interim
Manager. If Sprint Spectrum acts as Interim Manager or designates a
Sprint Spectrum Designee to act as Interim Manager under the Sprint
Agreements, the Interim Manager shall serve as Interim Manager for up
to six months from the Commencement Date, at the discretion of Sprint
Spectrum. The Administrative Agent shall accept Sprint Spectrum and
any Sprint Spectrum Designee that is then acting as an Other Manager
(other than Affiliate) to act as Interim Manager under the Sprint
Agreements. Any Sprint Spectrum Designee that is not then acting as an
Other Manager must be acceptable to the Administrative Agent, which
acceptance will not be unreasonably withheld.
Upon the expiration of its initial six-month period as
Interim Manager under the Sprint Agreements, Sprint Spectrum or the
Sprint Spectrum Designee will agree to serve as Interim Manager for an
extended period of up to six months from such expiration date until
the Administrative Agent gives Sprint Spectrum or the Sprint Spectrum
Designee at least 30 days written notice of its desire to terminate
the relationship; provided, that the extended period will be for 12
months rather than six months (for a complete term of 18 months) in
the event, as of the date of the initial appointment, the aggregate
number of pops that Affiliate and all Other Managers have the right to
serve under their respective management agreements with the Sprint
Parties is less than 40 million. If Sprint Spectrum's or the Sprint
Spectrum Designee's term as Interim Manager is extended, then the
Administrative Agent agrees that Sprint Spectrum or the Sprint
Spectrum Designee shall be reimbursed promptly for all amounts
previously expended by Sprint Spectrum or the Sprint Spectrum Designee
under Section 11.6.3 of the Management Agreement (which expenditures
were incurred in accordance with Section 9 of this Consent and
Agreement), and Sprint Spectrum or the Sprint Spectrum Designee shall
continue to be reimbursed for any expenses it incurs pursuant to its
rights under Section 11.6.3 of the Management Agreement as provided in
the Management Agreement (which expenditures were incurred in
accordance with Section 9
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of this Consent and Agreement); provided, that the Administrative
Agent shall only be required to reimburse Sprint Spectrum or the
Sprint Spectrum Designee for amounts expended under Section 11.6.3 of
the Management Agreement in an aggregate amount equal to the
Reimbursement Limit. If it becomes necessary for Sprint Spectrum or
the Sprint Spectrum Designee to expend an amount that exceeds the
Reimbursement Limit, Sprint Spectrum or the Sprint Spectrum Designee
is not required to incur such expense.
Upon the termination or expiration of the term of Sprint
Spectrum or the Sprint Spectrum Designee as Interim Manager and with
the consent of the Administrative Agent (which consent shall not be
unreasonably withheld or delayed), Sprint Spectrum shall have the
right to appoint a successor Interim Manager in accordance with
Section 5(a).
(c) Administrative Agent Designee as Interim Manager. If,
after Acceleration and within 30 days after Sprint PCS gives the
Administrative Agent notice of a Management Agreement Breach, Sprint
Spectrum does not agree to act as Interim Manager or does not obtain
the consent of a Sprint Spectrum Designee to act as Interim Manager
under the Sprint Agreements, or if Sprint Spectrum or the Sprint
Spectrum Designee gives the Administrative Agent notice of its
resignation as Interim Manager and Sprint Spectrum fails to appoint a
successor in accordance with Section 5(b) within 30 days after such
resignation, the Administrative Agent may appoint an Administrative
Agent Designee to act as Interim Manager. Such Administrative Agent
Designee must (i) agree to serve as Interim Manager for six months
unless terminated earlier by Sprint PCS for cause or by the
Administrative Agent, (ii) meet the Successor Manager Requirements,
and (iii) agree to comply with the terms of the Sprint Agreements. In
the case of a proposed Administrative Agent Designee, Sprint PCS shall
provide to the Administrative Agent, within 10 Business Days after the
request therefor, a detailed description of all information reasonably
requested by Sprint PCS to enable Sprint PCS to determine if it
believes that a proposed Administrative Agent Designee satisfies the
Successor Manager Requirements. Sprint PCS agrees to inform
Administrative Agent within 20 days after it receives such information
respecting such proposed Administrative Agent Designee from the
Administrative Agent whether Sprint PCS believes such designee
satisfies the Successor Manager Requirements. If Sprint PCS does not
so inform the Administrative Agent within such 20-day period, then
Sprint PCS shall be deemed to agree, for all purposes of this Consent
and Agreement, that such proposed designee satisfies the Successor
Manager Requirements. A Person that satisfies the Successor Manager
Requirements qualifies under the Management Agreement to become a
Successor Manager, unless the Administrative Agent Designee materially
breaches the terms of a Sprint Agreement while acting as Interim
Manager or no longer meets the Successor Manager Requirements. The
Interim Manager may continue to serve as Interim Manager after the
initial six-month period at the Administrative Agent's discretion, so
long as the Interim Manager continues to satisfy the Successor Manager
Requirements and no Management Agreement Breach exists.
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SECTION 6. Purchase and Sale of the Operating Assets. Upon the
occurrence and during the continuation of an Event of Default, the following
provisions shall govern the purchase and sale of the Operating Assets:
(a) Acceleration of the Obligations Under the Loan Documents.
In the event the Lenders accelerate the maturity of the Obligations
under the Loan Documents (an "Acceleration" and the date thereof, an
"Acceleration Date"), the Administrative Agent shall give written
notice thereof to Sprint PCS. Upon receipt of notice of Acceleration,
Sprint PCS shall have the right to purchase the Operating Assets from
Affiliate for an amount equal to the greater of (i) 72% of the Entire
Business Value (as defined in the Management Agreement) of Affiliate,
valued in accordance with the procedure set forth in Section 11.7 of
the Management Agreement, and (ii) the aggregate amount of the
Obligations. Sprint PCS shall, within 60 days of receipt of notice of
Acceleration, give Affiliate and the Administrative Agent notice of
its intent to exercise the purchase right. In the event Sprint PCS
gives the Administrative Agent written notice of its intent to
purchase the Operating Assets, the Administrative Agent agrees that it
shall not enforce its Security Interests in the Collateral until the
earlier to occur of (i) expiration of the period consisting of 120
days after the notice of Acceleration (or such later date that shall
be provided for in the purchase agreement and acceptable to the
Administrative Agent to close the purchase of the Operating Assets) or
(ii) receipt by Administrative Agent and Affiliate from Sprint PCS of
written notice that Sprint PCS has determined not to proceed with the
closing of the purchase of the Operating Assets. If after the 120-day
period after the Acceleration Date the Affiliate receives any purchase
offer for the Operating Assets or the membership interests of
Affiliate that is confirmed in writing by Affiliate to be acceptable
to Affiliate, Sprint PCS shall have the right to purchase the
Operating Assets or the membership interests of Affiliate, as the case
may be, on terms and conditions at least as favorable to the Affiliate
as the terms and conditions proposed in such offer so long as within
14 Business Days after Sprint PCS's receipt of such other offer Sprint
PCS offers to purchase the Operating Assets or the membership
interests of Affiliate and so long as the conditions of Sprint PCS's
offer and the amount of time it will take Sprint PCS to effect such
purchase is acceptable to the Affiliate. Any such offer shall be
confirmed in writing by the third party offeror. In the event Sprint
PCS exercises its rights under this Section 6(a), (i) the Affiliate
shall sell the Operating Assets to Sprint PCS, and (ii) the
Administrative Agent and the Lenders shall consent to such purchase
and sale provided that the proceeds thereof shall be sufficient to
repay the aggregate amount of the Obligations. The purchase right of
the Sprint Parties under this Section 6(a) shall be in addition to the
purchase rights of the Sprint Parties under Section 11.6.1 of the
Management Agreement. If Sprint PCS purchases the Operating Assets or
the membership interests of Affiliate as permitted under this Section
6(a), the Administrative Agent will release the Security Interests in
the Collateral upon payment in full of the aggregate amount of the
Obligations.
(b) Sale of Operating Assets to Third Parties. If the Sprint
Parties do not purchase the Operating Assets from Affiliate after an
Acceleration as described above in Section 6(a), the Collateral may be
sold as follows:
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(i) Sale to Successor Manager. The Collateral may be
sold by the Administrative Agent (in its sole discretion) in the
exercise of certain of its rights and remedies as a secured party
under the Loan Documents to a person that satisfies the Successor
Manager Requirements. Sprint PCS shall provide to the Administrative
Agent, with a copy to Affiliate, within 10 Business Days after the
request therefor, a detailed description of all information reasonably
requested by Sprint PCS to enable Sprint PCS to determine if it
believes that a proposed buyer satisfies the Successor Manager
Requirements. Sprint PCS agrees to inform the Administrative Agent and
Affiliate within 20 days after it receives such information respecting
such proposed buyer from the Administrative Agent whether Sprint PCS
believes such designee satisfies the Successor Manager Requirements.
If Sprint PCS does not so inform the Administrative Agent within such
20-day period, then Sprint PCS shall be deemed to agree, for all
purposes of this Consent and Agreement, that such proposed designee
satisfies the Successor Manager Requirements. If the proposed buyer
satisfies the Successor Manager Requirements (or is deemed to satisfy
such requirements) and wishes to become a Successor Manager, the buyer
must agree to be bound by the Sprint Agreements; provided, that buyer
shall have no responsibility or liability for any liability to any
Person other than a Sprint Party and Related Party of Sprint PCS
arising out of Affiliate's operations prior to the date buyer becomes
bound by the Sprint Agreements. In such case the Sprint Agreements
shall remain in full force and effect with the buyer as Successor
Manager and this Consent and Agreement shall remain in full force and
effect for the benefit of the Successor Manager and any Person
providing senior secured debt financing to such Successor Manager if
required by such Person. Sprint PCS agrees, with respect to any past
failure of Affiliate to perform any obligation under the Sprint
Agreements, that the Successor Manager shall have the same amount of
time to perform such obligation that Affiliate had under the Sprint
Agreements, with the performance period commencing on the date on
which the buyer becomes a Successor Manager. Sprint PCS shall permit
the performance period set forth in the Management Agreement to be
extended for such period of time that Sprint PCS believes is
reasonable to allow Successor Manager to perform such unperformed
obligations.
(ii) Sale to Other than Successor Manager. The
Collateral may be sold (subject to requirements of applicable law) to
a person that does not satisfy the Successor Manager Requirements or
to a person that does not wish to become a Successor Manager, but only
under the following conditions:
(A) the Sprint Parties may terminate the
Sprint Agreements with such buyer following the closing of such
purchase (and the Administrative Agent and the buyer shall have no
rights thereto or thereunder with respect to events occurring after
the closing of such purchase);
(B) the buyer may purchase the Disaggregated
License (with the amount of PCS described below in Section 6(b)(iv)
and with the Disaggregated License having the characteristics
described in the definition thereof) for a price equal to the sum of
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(1) the original cost of the License to Sprint PCS pro rated on a pops
and spectrum basis, plus (2) the microwave relocation costs paid by
Sprint PCS pro rated on a pops basis, plus (3) the amount of carrying
costs to Sprint PCS attributable to such original cost and microwave
relocation costs from the date of this Consent and Agreement to and
including the date on which the Disaggregated License is transferred
to the buyer, based on a rate of 12 percent per annum; and
(C) the purchase agreement with the buyer
contains the requirements set forth in Section 6(c).
(iii) Confidentiality Agreement. Before any
potential buyer is provided Confidential Information respecting the
potential purchase of any of the Operating Assets or the Pledged
Equity (which buyer shall be entitled to receive), the potential buyer
shall execute a confidentiality agreement in the form attached as
Exhibit A with such changes thereto as may be reasonably requested by
the parties to the agreement; provided, however, in the event the
potential buyer does not satisfy the Successor Manager Requirements or
has notified the Affiliate, Sprint PCS or the Administrative Agent
that it does not intend to be a Successor Manager, Confidential
Information that constitutes or relates to any technical, marketing,
financial, strategic or other information concerning any of the Sprint
Parties and that does not pertain to the business of Affiliate shall
not be permitted to be provided to such potential buyer.
(iv) Amount of Spectrum Sold. WirelessCo will sell
Spectrum as follows when required under Section 6(b)(ii)(B):
(A) If the buyer, an entity with respect to
which such buyer directly or indirectly through one or more persons
owns the total voting power or at least 50% of the total voting power
or at least 50% of the total equity (a "controlled entity"), an entity
that directly or indirectly through one or more persons has a parent
entity that owns at least 50% of the voting power or at least 50% of
the total equity of both the buyer and the common controlled entity (a
"common controlled entity"), or any successor of such buyer, such
controlled entity or such common controlled entity, owns a license to
provide wireless service to at least 50% of the Pops in a BTA with
respect to which such buyer proposes to purchase Spectrum (each a
"Restricted Party" with respect to such BTA), the buyer may buy only 5
MHz of Spectrum for such BTA.
(B) If the buyer is not a Restricted Party
for a BTA with respect to which such buyer proposes to purchase
Spectrum, and either does not satisfy the Successor Manager
Requirements (other than those set forth in Section 13(b)) or does not
wish to be a Successor Manager, then the buyer may buy 5 MHz, 7.5 MHz
or 10 MHz as the buyer determines in its sole discretion.
(c) No Direct Solicitation of Customers. Upon the sale of the
Operating Assets or the Disaggregated License in accordance with this
Consent and Agreement in accordance with Section 6(b)(ii), then the
Sprint Parties agree to transfer to the purchaser thereof the
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customers with a MIN assigned to the Service Area covered by the
purchased Spectrum, but Sprint PCS shall retain the customers of a
national account and any resellers who are then party to a resale
agreement with Sprint PCS. Each Sprint Party agrees to take all
actions reasonably requested by the purchaser of the Operating Assets
or the Disaggregated License to fully transfer to such purchaser such
customers. Each Sprint Party agrees that neither it nor any of its
Related Parties will directly or indirectly solicit, for six months
after the date of transfer, the customers with a MIN assigned to the
Service Area covered by the Disaggregated License; provided, that
Sprint PCS retains the customers of a national account and any
resellers that have entered into a resale agreement with Sprint PCS,
Sprint PCS may advertise nationally, regionally and locally, and
engage direct marketing firms to solicit customers generally. If the
buyer continues to operate the purchased assets as a wireless network
in the same geographic area on a network that is technologically
compatible with Sprint PCS's network, the buyer and Sprint PCS shall
each agree to provide roaming services to the other (in the case of
Sprint PCS the roaming services shall be provided to those customers
of buyer in the geographic area serviced by the Disaggregated License
and in the case of buyer the roaming services shall be provided to
those customers of Sprint PCS roaming in the geographic area serviced
by the Disaggregated License) pursuant to a roaming agreement to be
entered into between buyer and Sprint PCS and to be mutually agreed
upon so long as such agreement is based on Sprint PCS's then standard
roaming agreement used by Sprint PCS in the industry and the price
that each party shall pay the other party for roaming services
provided to the first party shall be a price equal to the lesser of:
(1) MFN Pricing provided by buyer to third parties roaming in the
geographic area serviced by the Disaggregated License; and (2) the
national average paid by Sprint PCS to third parties for Sprint PCS's
customers to roam in such third parties' geographic areas (including
Other Managers). The buyer shall agree in writing that if it continues
to operate the purchased assets as a wireless network in the same
geographic area on a network that is technologically compatible with
Sprint PCS's network, the buyer shall, to the extent required by law,
provide resale to Sprint PCS in the geographic area serviced by the
Disaggregated License at the MFN Pricing that buyer charges third
parties who purchase resale from buyer; provided, however, if buyer is
not offering resale to any other customers then pricing of resale
provided to Sprint PCS shall be as mutually agreed; and provided,
further, however, whether or not buyer is required by law to offer
such resale, buyer shall offer such resale (on the terms described in
this sentence) to national customers of Sprint PCS.
SECTION 7. No Limits on Remedies. Nothing contained in this Consent
and Agreement shall limit any rights of the Administrative Agent or Lenders to
accelerate the amount owed by Affiliate under the Loan Documents. Except as
expressly provided herein, nothing contained in this Consent and Agreement
shall limit any rights or remedies that the Administrative Agent or the Lenders
may have under the Loan Documents or applicable law. The Administrative Agent
may not sell, lease, assign, convey or otherwise dispose of the Collateral
other than as permitted under this Consent and Agreement.
SECTION 8. Rights and Obligations of Interim Manager. The Interim
Manager may collect a reasonable management fee for its services; provided,
that if Sprint Spectrum or a
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Related Party of Sprint PCS acts as Interim Manager, such management fee shall
not exceed the direct expenses relating to Sprint Spectrum or such Related
Party employees for the actual time spent by such employees when performing the
function of Interim Manager and Sprint Spectrum's or such Related Party's
out-of-pocket expenses. Such direct expenses shall include such employees'
salaries and benefits, and the out-of-pocket and accrued expenses allocated to
such employees. If Sprint Spectrum is the Interim Manager, the management fee
will be paid out of the 92% Management Fee that Sprint PCS pays under the
Management Agreement, and will be in addition to the fees it receives under the
Services Agreement. Sprint PCS shall collect such management fee by setoff
against the fees and any other amounts payable to Affiliate under the Sprint
Agreements. The Interim Manager will be required to operate the Service Area
Network in accordance with the terms of the Sprint Agreements and will be
subject to all of the requirements and obligations of such agreements, but will
not be required to assume the existing liabilities of Affiliate.
SECTION 9. Rights to Cure. Neither the provisions of this Consent and
Agreement nor any action of either Administrative Agent or Sprint PCS shall
require either Administrative Agent, any Lender or Sprint PCS to cure any
default of Affiliate under the Sprint Agreements or to perform under the Sprint
Agreements, but shall only give it the option to do so except to the extent
otherwise required by this Consent and Agreement. Sprint PCS may exercise its
rights under Section 11.6.3 of the Management Agreement upon an Event of
Termination, whether such situation arises while Affiliate, Sprint Spectrum, an
Administrative Agent Designee or a Sprint Spectrum Designee is acting as
Interim Manager and notwithstanding any other provision of this Consent and
Agreement; provided, that the right to reimbursement for any expenses incurred
in connection with such cure shall be unsecured and until such time as the
Obligations have been paid in full in cash and all commitments to advance
credit under the Credit Agreement have terminated or expired, the Person or
Persons entitled thereto shall not receive such reimbursement, except as
specifically provided in Section 4(b) or Section 5(b) of this Consent and
Agreement. Sprint PCS shall not be permitted to deduct from its payments to
Affiliate any such amounts it is not entitled to receive under this Section and
shall not take any action of any type to attempt to collect such reimbursement
and the failure to be so reimbursed shall not constitute a Management Agreement
Breach. In the event that Sprint PCS receives any payments or distributions
that it is not entitled to receive under this Section, such payments shall be
held in trust for, and promptly turned over to, the parties entitled thereto.
If Sprint PCS has designated a third party to take action under Section 11.6.3
of the Management Agreement, before taking any such action such third party
shall enter into an agreement with Administrative Agent providing that such
third party agrees to the provisions of this Section 9 as if it were a party
hereto. Until such time as the Obligations have been paid in full in cash and
all commitments to advance credit under the Credit Agreement have terminated or
expired, Sprint PCS shall not be entitled to exercise any other remedies under
the Sprint Agreements, including, without limitation, the remedy of terminating
the Sprint Agreements (except to the extent permitted under Section 6(b)(ii) of
this Consent and Agreement) or the remedy of withholding any payment set forth
in Section 10 of the Management Agreement (subject to Sprint PCS's rights of
setoff or recoupment of expenses with respect to such payments as permitted
under Sections 2, 4(b) and 5(b) of this Consent and Agreement). Until such time
as the Obligations have been paid in full in cash and all commitments to
advance credit under the Credit Agreement have terminated or expired,
notwithstanding anything to the contrary contained in Section 2.3 of the
Management Agreement,
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in no event shall any Person other than Affiliate or a Successor Manager be a
manager or operator for Sprint PCS with respect to the Service Area and neither
Sprint PCS nor any of its Related Parties shall own, operate, build or manage
another wireless mobility communications network in the Service Area, except to
the extent provided in Sections 2.3(a), (b), (c) or (d) of the Management
Agreement and except to the extent that the Sprint Agreements are terminated in
accordance with Section 6(b)(ii)(A) of this Agreement. The Administrative Agent
acknowledges and agrees that Sprint PCS shall also have the right to cure an
Event of Default or to assist Affiliate in curing an Event of Default but only
to the extent Affiliate has the right to so cure under the Loan Documents, as
applicable (it being understood that the act of Sprint PCS curing an Event of
Default shall not constitute an independent Event of Default unless the act
itself would otherwise constitute a Default (e.g. a sale of assets not
otherwise permitted by the Loan Documents)), including but not limited to
Sprint PCS's providing Affiliate the funds necessary to operate or meet certain
financial covenants in the Loan Documents. The Administrative Agent shall have
the right to cure any Management Agreement Breach.
SECTION 10. Sprint PCS's Right to Purchase Obligations, Operating
Assets or Pledged Equity. (a) Following the Acceleration Date and until the
60-day anniversary of the filing of a bankruptcy petition by or with respect to
Affiliate, Sprint PCS shall have the right to purchase the Obligations under,
and as defined in, the Credit Agreement, by repaying the Obligations in full in
cash. In the event that Sprint PCS purchases the Obligations within 60 days
immediately following the earlier of (i) the Acceleration Date and (ii) the
date of the filing of a bankruptcy petition by or with respect to Affiliate,
Sprint PCS may in lieu of purchasing the total amount of the Obligations,
purchase all Obligations other than the accrued interest with respect thereto
for a purchase price equal to the amount of the Obligations other than such
accrued interest and any fees and expenses that are unreasonable, in which
case, such accrued interest and unreasonable fees and expenses shall remain due
and owing by Affiliate to the Lenders.
(b) In the event that the Administrative Agent acquires the
Operating Assets or the membership interests of Affiliate, Sprint PCS shall
have the right to purchase the Operating Assets or the membership interests of
Affiliate from the Administrative Agent during the limited period of time
provided in and otherwise in accordance with this Section 10(b) by paying to
the Administrative Agent in cash an amount equal to the sum of the aggregate
amount paid (by credit against the Obligations or otherwise) by the
Administrative Agent or the Lenders for the Operating Assets plus the aggregate
amount of any remaining unpaid Obligations. Administrative Agent shall give
Sprint PCS notice of any acquisition of the Operating Assets or the membership
interests of Affiliate by the Administrative Agent promptly following the date
of final consummation of such acquisition (the "Acquisition Notice"). Sprint
PCS shall, within 60 days of receipt of a valid Acquisition Notice, give the
Administrative Agent (and Affiliate, in the case of a purchase of the
membership interest in Affiliate) notice of its intent to exercise its purchase
right under this Section 10(b). In the event Sprint PCS gives the
Administrative Agent written notice of its intent to purchase the Operating
Assets or the membership interests of Affiliate, the Administrative Agent
agrees that it shall provide Sprint PCS the right to purchase the Operating
Assets until the earlier to occur of (i) expiration of the period consisting of
120 days after Sprint PCS' receipt of a valid Acquisition Notice (or such later
date that shall be provided for in the purchase agreement and acceptable to the
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Administrative Agent to close the purchase of the Operating Assets or
membership interests of Affiliate) or (ii) receipt by Administrative Agent from
Sprint PCS of written notice that Sprint PCS has determined not to proceed with
the closing of the purchase of the Operating Assets or the membership interests
of Affiliate. If Sprint PCS at any time purchases the Operating Assets or the
membership interests of Affiliate as permitted under this Section 10, the
Administrative Agent will release the Security Interests in the Collateral upon
payment in full of the aggregate amount of the Obligations. Notwithstanding the
foregoing, in the event that a bankruptcy petition is filed by or with respect
to Affiliate, Sprint PCS shall again have the right to purchase the Operating
Assets or the membership interests of Affiliate from the Administrative Agent
by repaying the Obligations in full in cash, by giving the Administrative Agent
notice of its intent to exercise such purchase right no later than 60 days
following the date of filing of such bankruptcy petition.
(c) If at any time during the period described in Section
10(a) or 10(b) above or thereafter the Administrative Agent receives any
purchase offer for the Operating Assets, the membership interests of Affiliate
or the Obligations, as applicable, that is acceptable to the Administrative
Agent, the Administrative Agent shall exercise reasonable efforts to obtain the
consent of the offeror to deliver a copy of such offer to Sprint PCS and Sprint
PCS shall have the right to purchase the Operating Assets, the membership
interests of Affiliate or the Obligations, as applicable, on terms and
conditions at least as favorable to the Administrative Agent as the terms and
conditions proposed in such offer so long as within 14 Business Days after
Sprint PCS's receipt of such other offer Sprint PCS offers to purchase the
Operating Assets, the membership interests of Affiliate or the Obligations, as
applicable, and so long as the conditions of Sprint PCS's offer and the amount
of time it will take Sprint PCS to effect such purchase is acceptable to the
Administrative Agent and the Lenders.
(d) If Sprint PCS at any time purchases the entirety of the
Obligations as provided in this Section 10, the Administrative Agent shall
assign and transfer or cause the Lenders to assign and transfer to Sprint PCS
all rights and interests in, to and under all of the Loan Documents, including
but not limited to all security interests, liens, financing statements,
guaranties and other credit enhancements related to such Loan Documents, and
all rights and claims thereunder (collectively referred to as the "Loan
Document Rights"). If Sprint PCS purchases less than all the Obligations (as
permitted in the second sentence of Section 10(a) above), then the
Administrative Agent shall assign and transfer or cause the Lenders to assign
and transfer to Sprint PCS all Loan Document Rights, except that the
Administrative Agent shall retain the unsecured right to collect the amount of
the Obligations not purchased by Sprint PCS.
SECTION 11. Foreclosure. Upon the Administrative Agent or any Lender
or any other Person that meets the Successor Manager Requirements acquiring the
Operating Assets and the Sprint Agreements, then such Person shall be entitled
to exercise any and all rights of Affiliate under the Sprint Agreements in
accordance with the terms of the Sprint Agreements and each Sprint Party will
thereupon comply in all respects with such exercise by such Person and perform
its obligations under the Sprint Agreements and this Consent and Agreement for
the benefit of such Person. Each Sprint Party agrees that the Administrative
Agent or any Lender may (but shall not be obligated to), subject to and in
accordance with the terms of this Consent and Agreement assign
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its rights and interests acquired in the Operating Assets and the Sprint
Agreements to any buyer or transferee thereof and, in the event the buyer
wishes to become a party to the Sprint Agreements and such buyer satisfies the
Successor Manager Requirements, such buyer shall be bound by the Sprint
Agreements; provided, that buyer shall have no responsibility or liability to
any Person other than a Sprint Party and a Related Party of a Sprint Party
arising out of Affiliate's operations prior to the date buyer becomes bound by
the Sprint Agreements. In such case the Sprint Agreements shall remain in full
force and effect with the buyer as Successor Manager and this Consent and
Agreement shall remain in full force and effect for the benefit of the
Successor Manager and any Person providing senior secured debt financing to
such Successor Manager if required by such Person. Sprint PCS agrees, with
respect to any past failure of Affiliate to perform any obligation under the
Sprint Agreements, that the Successor Manager shall have the same amount of
time to perform such obligation that Affiliate had under the Sprint Agreements,
with the performance period commencing on the date on which the buyer becomes a
Successor Manager. Sprint PCS shall permit the performance period set forth in
the Management Agreement to be extended for such period of time that Sprint PCS
believes is reasonable to allow Successor Manager to perform such unperformed
obligations.
SECTION 12. Trademarks and Service Marks. In the event the
Administrative Agent forecloses on its security interest in the License
Agreements and transfers the License Agreements to a Person who does not meet
the Successor Manager Requirements, then Sprint PCS shall have the right to
terminate the License Agreements and cause the Administrative Agent to release
its security interest in the License Agreements immediately prior to such
transfer.
SECTION 13. Interim Manager and Successor Manager Requirements. To
qualify as an Interim Manager or a Successor Manager, the Person must satisfy
each of the following "Successor Manager Requirements":
(a) The Person must not during the three-year period
immediately preceding the date of determination have materially
breached any material agreement with Sprint Spectrum or its Related
Parties that resulted in the exercise of a termination right or in the
initiation of judicial or arbitration proceedings;
(b) The Person must not be one of the Persons identified on
Schedule 13 (a "Schedule 13 Person"); provided, that no Other Manager
under any Sprint PCS Management Agreement may be identified on
Schedule 13;
(c) In the case of a Successor Manager, the Person must meet
a reasonable Person's credit criteria (taking into consideration the
circumstances), it being understood that such criteria is satisfied if
the financial projections contained in the business plan such Person
submits to Sprint PCS shows the ability to service its indebtedness
and meet the build-out requirements contained in the Build-out Plan;
and
(d) The Person must agree to be bound by the terms of the
Sprint Agreements as if an original party thereto; provided, in the
case of an Interim Manager, the Person must also
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execute a separate confidentiality agreement in the form attached as
Exhibit A with such changes thereto as may be reasonably requested by
the parties to the agreement, but the Person is not required to assume
the existing liabilities of the Affiliate.
Except as provided in Schedule 13, the Administrative Agent,
each Lender and each Secured Creditor and each of their wholly-owned
subsidiaries or entities who wholly-own such entities shall be deemed to
satisfy Sections 13(a), (b) and (c) of the preceding "Successor Management
Requirements".
SECTION 14. Management Agreement. Sprint PCS agrees that it will not
exercise its right under the Management Agreement to purchase the Operating
Assets or to sell the Disaggregated License to Affiliate if before, or after
giving effect to such exercise, there would exist a Default or Event of Default
under the Credit Agreement, unless Sprint PCS pays the aggregate amount of the
Obligations as a condition of the exercise of such right and the Credit
Agreement shall have been terminated in connection with such payment. Sprint
PCS agrees that until the Obligations have been paid in full in cash and all
commitments to advance credit under the Credit Agreement have terminated or
expired, a failure to pay any amount by any Related Party of the Affiliate
under any agreement with Sprint PCS or any of its Related Parties shall not
constitute a Management Agreement Breach for any purpose. Subject to regulatory
approval in connection with any such sale, Sprint PCS agrees that it shall
always maintain the ability to sell the Disaggregated License in accordance
with this Consent and Agreement. Sprint PCS shall own at least 10 MHz of
Spectrum in the Service Area until the first to occur of the following events:
(i) the Obligations have been paid in full in cash and all commitments to
advance credit under the Credit Agreement have terminated or expired, (ii) the
sale by Sprint PCS of the Spectrum pursuant to this Consent and Agreement shall
be effected, and (iii) the sale of the Operating Assets pursuant to this
Consent and Agreement. Sprint PCS acknowledges that the financing provided
pursuant to the Loan Documents complies with Section 1.7 of the Management
Agreement and Section 11.3.6 of the Management Agreement shall no longer be
applicable with respect to such financing. Notwithstanding anything to the
contrary contained in Section 12.2 of the Management Agreement, the
Administrative Agent, the Lenders, and any Successor Manager or buyer of the
Operating Assets or Disaggregated License shall be permitted to disclose
Confidential Information (as defined in the Management Agreement) (i) to the
extent required by law, rule or regulation, (ii) to any regulator or any
regulatory body regulating such entity, (iii) to any rating agency in
connection with requirements applicable to such Person and (iv) to the lawyers
and accountants for any such Persons.
SECTION 15. Administrative Agent and Eligible Assignees.
(a) The Administrative Agent and each Lender and Secured
Creditor must be an Eligible Assignee. "Eligible Assignee" shall mean
and include a commercial bank, financial institution, other
"accredited investor" (as defined in Regulation D of the Securities
Act) other than individuals, or a "qualified institutional buyer" as
defined in rule 144A of the Securities Act; provided, that prior to
the 61st day after the filing of a bankruptcy petition by or with
respect to Affiliate in no event may any Person that is engaged in or
that controls, is controlled by or is under common control with any
Person engaged in, the
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telecommunications service business in the United States (other than
Sprint Corporation and its subsidiaries), be an Eligible Assignee, it
being understood that no small business investment corporation that is
ultimately owned by an Eligible Assignee that is subject to Regulation
Y shall be deemed to be controlled by or under common control with
such Eligible Assignee; and provided further, that after the filing of
such bankruptcy petition in no event may a Schedule 13 Person be an
Eligible Assignee.
(b) If (i) the Administrative Agent or any Lender or Secured
Party becomes a Schedule 13 Person and (ii) a new Administrative Agent
or Lender or Secured Party (as applicable) commits to purchase all
interests of such Administrative Agent, Lender or Secured Party in the
Obligations and the Loan Documents and assume all commitments and
obligations of such Administrative Agent, Lender or Secured Party
under the Loan Documents, in each case within such three months as
described in clause (A) below, for the aggregate amount of the unpaid
Obligations of such Administrative Agent, Lender or Secured Party,
then such Administrative Agent, Lender or Secured Party shall (A)
assuming such purchaser does not breach its commitment to so purchase,
divest itself of all interests in the Obligations and the Loan
Documents within three (3) months after such Administrative Agent,
Lender or Secured Party becomes a Schedule 13 Person by selling such
interests in consideration of the payment of such aggregate amount and
the assumption of such commitments and obligations, and (B) promptly
upon the consummation of such sale, no longer be given or be entitled
to receive any Confidential Information. In no event shall the
Administrative Agent or any Lender or Secured Party be obligated or
responsible to find or obtain a purchaser to purchase any Obligations
or Loan Documents or to assume any commitments or obligations.
SECTION 16. Sprint Party Representations. Each Sprint Party represents
and warrants to the Administrative Agent, as of the Closing Date (a) its
execution, delivery and performance of this Consent and Agreement has been duly
authorized by all necessary partnership action, and does not and will not
require any further consents or approvals that have not been obtained, or
violate any provision of any law, regulation, order, judgment, injunction or
similar matters or materially breach any agreement presently in effect with
respect to or binding on it; provided, that the transfer of Spectrum as
contemplated under this Consent and Agreement will require regulatory approval
(which each Sprint Party agrees to use its commercially reasonable efforts to
obtain); (b) this Consent and Agreement is a legal, valid and binding
obligation of such Person enforceable against it in accordance with its terms,
except that (i) such enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws
affecting the enforcement of creditors' rights generally, and (ii) the remedy
of specific performance and injunctive and other forms of equitable relief may
be limited by equitable defenses and by the discretion of the court before
which any proceeding may be brought; (c) the Sprint Agreements are in full
force and effect and have not been amended, supplemented or modified; (d) as of
the date of execution hereof, to the knowledge of the Sprint Parties, no Event
of Termination has occurred and is continuing (without regard to any
requirement of the delivery of written notice necessary to the occurrence of an
Event of Termination under Section 11.3 of the Management Agreement); (e) on
the date the Management Agreement was executed Sprint PCS owned, and on
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the date hereof Sprint PCS owns, 10 MHz or more of Spectrum in the Service
Area; and (f) the only existing agreements or arrangements between Affiliate,
on the one hand, and Sprint Corporation or any of its subsidiaries, on the
other hand, are the Management Agreement, the Services Agreement and the
License Agreements.
SECTION 17. Administrative Agent Representations. The Administrative
Agent represents and warrants to Sprint PCS, as of the Closing Date (a) its
execution, delivery and performance of this Consent and Agreement has been duly
authorized by all necessary corporate action, and does not and will not require
any further consents or approvals that have not been obtained, or violate any
provision of any law, regulation, order, judgment, injunction or similar
matters or materially breach any agreement presently in effect with respect to
or binding on it; (b) this Consent and Agreement is a legal, valid and binding
obligation of the Administrative Agent enforceable against it in accordance
with its terms, except that (i) such enforceability may be limited by
applicable bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws affecting the enforcement of creditors' rights
generally, and (ii) the remedy of specific performance and injunctive and other
forms of equitable relief may be limited by equitable defenses and by the
discretion of the court before which any proceeding may be brought; (c) at the
time of the execution hereof, Nortel Networks Inc. is the only Lender; and (d)
as of the date of execution hereof, to the knowledge of the Administrative
Agent, no Event of Default has occurred and is continuing.
SECTION 18. Successors and Assigns. This Consent and Agreement shall
be binding upon the successors and assigns of the parties hereto and shall
inure, together with the rights and remedies of the parties hereunder, to the
benefit of their respective successors and assigns. In the event the Sprint PCS
Network is sold in accordance with the Management Agreement, the buyer thereof
will assume the obligations of the Sprint Parties hereunder and under all the
other Sprint Agreements other than the Sprint Trademark and Service Mark
License Agreement; provided, however, the buyer of the Sprint PCS Network shall
enter into an agreement with Affiliate on substantially the same terms as the
Sprint Trademark and Service Mark License Agreement with respect to such
buyers' trademarks, service marks, brands, etc. In the event a Successor
Manager becomes a party to the Sprint Agreements as provided in this Agreement,
this Consent and Agreement shall remain in full force and effect for the
benefit of the Successor Manager and any Person providing senior secured debt
financing to such Successor Manager if required by such Person.
SECTION 19. Amendment. Neither this Consent and Agreement nor any
provision herein may be waived except pursuant to an agreement or agreements in
writing entered into by Sprint PCS, the Administrative Agent and Affiliate, and
neither this Consent and Agreement nor any provision herein may be amended or
modified except pursuant to an agreement or agreements in writing entered into
by Sprint PCS, the Administrative Agent and Affiliate. The Administrative Agent
and each Lender (and its successors and assigns) shall be bound by any
modification or amendment authorized by this Section 19. No amendment or waiver
or effective amendment or waiver entered into in violation of this Section 19
shall be valid; provided, however, that no consent of Affiliate shall be
necessary for any amendment or modification to this Consent and Agreement
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made pursuant to and in accordance with Section 24 hereof, unless such
amendment or modification could reasonably be expected to be materially adverse
to Affiliate.
SECTION 20. APPLICABLE LAW. THIS CONSENT AND AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
SECTION 21. Notices. Notices and other communications provided for in
this Consent and Agreement shall be in writing and shall be delivered by hand
or overnight courier service, mailed or sent by telecopy, as follows:
(a) if to Sprint Spectrum, to it at:
Sprint Spectrum L.P.
4900 Main, 12th Floor
Kansas City, Missouri, 64112
Telephone No.: (816) 559-1000
Telecopier No.: (816) 559-1290
Attention: Chief Executive Officer
with a copy to:
4900 Main, 11th Floor
Kansas City, Missouri, 64112
Telephone No.: (816) 559-1000
Telecopier No.: (816) 559-2591
Attention: General Counsel
(b) if to the Administrative Agent, to it at:
Nortel Networks Inc.
GMS 991 16 A20
2221 Lakeside Blvd.
Richardson, Texas 75082-4399
Telephone No.: (972) 684-8202
Telecopier No.: (972) 684-3929
Attention: Vice President - Finance
Wireless Networks
Nortel Networks Inc.
GMC 991 15 A40
2221 Lakeside Blvd.
Richardson, Texas 75082-4399
Telephone No.: (972) 684-2271
Telecopier No.: (972) 684-3679
Attention: Vice President,
Customer Finance North America
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Nortel Networks Inc.
P. O. Box 833858
Richardson, Texas 75083-3858
Mail Stop 04D/02/A40
Telephone No.: 972) 684-7687
Telecopier No.: (972) 684-3808
Attention: Kimberly Poe, Loan Administration
with a copy to:
Jenkens & Gilchrist
1445 Ross Avenue
Suite 3200
Dallas, Texas 75202
Telephone No.: (214) 855-4500
Telecopier No.: (214) 855-4300
Attention: Ronald D. Rosener
(c) if to Affiliate, to it at:
Alamosa PCS LLC
4403 Brownfield Highway
Lubbock, Texas 79407-
Telephone No.: (806) 722-1111
Telecopier No.: (806) 791-1120
Attention: David E. Sharbutt
Chairman of the Board of Managers
with a copy to:
Crenshaw, Dupree & Martin
P.O. Box 1499
Lubbock, TX 79408
Telephone No.: (806) 762-5221
Telecopier No.: (806) 762-3510
Attention: Jack McCutchin Jr.
All notices and other communications given to any party hereto in accordance
with the provisions of this Consent and Agreement shall be deemed to have been
given on the date of receipt if delivered by hand or overnight courier service
or sent by telecopy, or on the date five (5) business days after dispatch by
certified or registered mail if mailed, in each case delivered, sent or mailed
(properly
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addressed) to such party as provided in this Section 21 or in accordance with
the latest unrevoked direction from such party given in accordance with this
Section 21.
SECTION 22. Counterparts. This Consent and Agreement may be executed
in two or more counterparts, each of which shall constitute an original but all
of which when taken together shall constitute but one contract.
SECTION 23. Severability. Any provision of this Consent and Agreement
that 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. The parties
shall endeavor in good faith negotiations to replace the invalid, illegal or
unenforceable provision with valid provisions the economic effect of which is
as close as possible to that of the invalid, illegal or unenforceable
provision.
SECTION 24. Amendments to Form Consent and Agreement. As of the date
this Consent and Agreement is executed, it contains provisions substantially
similar to the provisions of every other executed Consent and Agreement. If
Sprint PCS modifies or amends the form of Consent and Agreement it enters into
with another lender, then Sprint PCS agrees to give the Administrative Agent
written notice of such modifications and amendments and to amend this Consent
and Agreement in the same manner; provided, that: (a) Sprint PCS will not
modify this Consent and Agreement to incorporate changes made for the benefit
of a lender because of circumstances related to a particular Other Manager,
subject to the limitations set forth below; (b) the Administrative Agent must
agree to make all (or none) of the changes made for the other lender and the
Other Manager, unless Sprint PCS agrees to allow the Administrative Agent to
make only some of the changes; (c) if such amendment to this Consent and
Agreement could reasonably be expected to be materially adverse to Affiliate,
such amendment shall not be made without the prior written consent of Affiliate
(although the Affiliate's withholding of such consent will result in none of
the changes being made to this Consent and Agreement because of the requirement
of clause (b) above); and (d) Sprint PCS is only required to make changes to
this Consent and Agreement based on changes made to the form of Consent and
Agreement executed in connection with loans to Other Managers that are
syndicated or intended to be syndicated (i.e., loans sold or participated, or
intended to be sold or participated, in whole or in part to at least three
financial institutions or investment funds) (a "Syndication Consent") until the
later to occur of: (i) five Syndication Consents are executed, and (ii) loans
to Other Managers are syndicated where the pops in the Service Areas of such
Other Managers, in the aggregate, exceed 10 million; provided, however, that in
the event any Syndicated Consent executed after such later date relates to a
transaction where the pops in the Service Area of the Other Manager exceed 5
million, Sprint PCS agrees to give the Administrative Agent the right to amend
this Consent and Agreement in the same manner as described above in clauses (a)
and (b).
For purposes of subsection (a) in the preceding paragraph, Sprint PCS
will not deem the following changes to be made because of circumstances related
to a particular Other Manager: (i)
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any form of recourse to Sprint PCS or other similar form of credit enhancement;
(ii) any change in Sprint PCS's right to purchase Operating Assets or
Obligations; (iii) any change in the ownership status, terms of usage or amount
of Disaggregated License utilized by Affiliate; (iv) any material change in the
flow of revenues between Sprint Spectrum and Affiliate excluding changes
related to the pricing of direct or indirect fees, but including any
subordination of direct or indirect fees to Sprint PCS; (v) any change to
obligations required to be assumed by, or qualifications for, any Interim or
Successor Manager, including changes in the time period Sprint PCS agrees to
remain as Interim Manager; (vi) any changes in confidentiality, non-compete or
Eligible Assignee language, including changes to Schedule 13; (vii) any
clarifications of FCC compliance issues or (viii) the issuance of legal
opinions.
[The remainder of this page is intentionally left blank.]
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IN WITNESS WHEREOF, the parties hereto have caused this Consent and
Agreement to be executed by their respective authorized officers as of the date
and year first above written.
SPRINT SPECTRUM L.P.
a Delaware limited partnership
By: /s/ BERNARD BIANCHINO
-------------------------------------
Bernard A. Bianchino
Chief Business Development Officer
SPRINTCOM, INC.
a Kansas corporation
By: /s/ BERNARD BIANCHINO
-------------------------------------
Bernard A. Bianchino
Vice President
SPRINT COMMUNICATIONS COMPANY, L.P.
a Delaware limited partnership
By: /s/ THOMAS WEIGMAN
-------------------------------------
Name: Thomas E. Weigman
---------------------------------------
Title: SVP, Consumer Market Strategy and
Communication
WIRELESSCO, L.P.
a Delaware limited partnership
By: /s/ BERNARD BIANCHINO
-------------------------------------
Bernard A. Bianchino
Chief Business Development Officer
NORTEL NETWORKS INC.
for itself and as Administrative Agent
By: /s/ MICHAEL W. MCCORKLE
-------------------------------------
Name: Michael W. McCorkle
Title: Director, Customer Finance
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Acknowledgment, Consent and Agreement of Affiliate
The undersigned Affiliate (i) has reviewed this Consent and Agreement,
(ii) acknowledges, consents and agrees to the terms and provisions of this
Consent and Agreement, and (iii) agrees to be bound by the terms and provisions
of this Consent and Agreement, including, without limitation, such terms and
provisions that affect Affiliate or its rights under the Management Agreement.
Without limiting the generality of the foregoing: (i) Affiliate acknowledges
and agrees that the right to appoint an Interim Manager is intended to allow
the right and ability to preserve and/or protect the Collateral or its value
and the Service Area Network or its value and (ii) Affiliate acknowledges and
agrees that in the event of the sale of the Collateral by the Administrative
Agent, the value of the Collateral may be dependent on the right of the Person
purchasing the Collateral to assume or be a party to the Sprint Agreements and
acknowledges that any sale of the Collateral in accordance with Sections 6 and
10 hereof, the other provisions of this Consent and Agreement and, to the
extent not inconsistent with this Consent and Agreement, the Loan Documents is
agreed to be a commercially reasonable disposition of the Collateral by
Administrative Agent.
ALAMOSA PCS LLC
a Texas limited liability company
By: /s/ DAVID E. SHARBUTT
---------------------------------------
David E. Sharbutt,
Chairman of the Board of Managers
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<PAGE> 1
EXHIBIT 10.10
THIS AGREEMENT HAS CONFIDENTIAL PORTIONS OMITTED, WHICH PORTIONS HAVE BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS
ARE INDICATED IN THIS AGREEMENT WITH "[TEXT OMITTED - CONFIDENTIAL TREATMENT
REQUESTED]"
SPRINT PCS MANAGEMENT AGREEMENT
This SPRINT PCS MANAGEMENT AGREEMENT is made as of December 06, 1999,
between Sprint Spectrum L.P., a Delaware limited partnership, WirelessCo, L.P.,
a Delaware limited partnership, and Alamosa PCS, LLC, a Delaware limited
liability company (but not any Related Party) ("Manager"). The definitions for
this agreement are set forth on the "Schedule of Definitions".
RECITALS
A. Sprint Spectrum L.P., a Delaware limited partnership, WirelessCo,
L.P., a Delaware limited partnership, SprintCom, Inc., a Kansas corporation,
American PCS Communications, LLC, a Delaware limited liability company, APC PCS,
LLC, a Delaware limited liability company, PhillieCo Partners I, L.P., a
Delaware limited partnership, PhillieCo, L.P., a Delaware limited partnership,
Cox Communications PCS, L.P., a Delaware limited partnership, and Cox PCS
License, L.L.C., a Delaware limited liability company, hold and exercise,
directly or indirectly, control over licenses to operate wireless services
networks.
B. The entity or entities named in Recital A that execute this
agreement hold, directly or indirectly, the Licenses for the areas identified on
the Service Area Exhibit and are referred to in this agreement as "Sprint PCS."
Because this agreement addresses the rights and obligations of each license
holder with respect to each of its Licenses, each reference in this agreement to
"Sprint PCS" refers to the entity that owns, directly or indirectly, the License
referred to in that particular instance or application of the provision of this
agreement. If Sprint Spectrum does not own the License, it will provide on
behalf of Sprint PCS most or all of the services required under this agreement
to be provided by Sprint PCS.
C. The Sprint PCS business was established to use the Sprint PCS
Network, a nationwide wireless services network, to offer seamless, integrated
voice and data services using wireless technology. The Sprint PCS Network offers
the services to customers under the Brands.
D. This agreement, therefore, includes provisions defining Manager's
obligations with respect to:
o The design, construction and management of the Service Area
Network;
o Offering and promoting products and services designated by
Sprint PCS as the Sprint PCS Products and Services of the
Sprint PCS Network;
o Adherence to Program Requirements established by Sprint PCS to
ensure seamless interoperability throughout the Sprint PCS
Network and uniform and consistent quality of product and
service offerings;
o Adherence to Customer Service Program Requirements established
by Sprint PCS to ensure consistency in interactions with
customers (including billing, customer care, etc.); and
o Adherence to Program Requirements relating to the marketing,
promotion and distribution of Sprint PCS Products and
Services.
<PAGE> 2
E. The Sprint PCS Network is expanding with the assistance of
"managers" (companies such as Manager that manage Service Area Networks that
offer Sprint PCS Products and Services under a license owned by Sprint PCS or
one of the entities named in Recital A) and "affiliates" (companies that manage
Service Area Networks that offer Sprint PCS Products and Services under a
license owned by the affiliate).
F. Manager wishes to enter into this agreement to help construct,
operate, manage and maintain for Sprint PCS a portion of the Sprint PCS Network
in the Service Area. Sprint PCS has determined that permitting Manager to manage
a portion of the Sprint PCS Network in accordance with the terms of this
agreement will facilitate Sprint PCS' expansion of fully digital, wireless
coverage under the License and will enhance the wireless service for customers
of Sprint PCS.
G. All managers of a portion of the business of Sprint PCS, including
Manager, must construct facilities and operate in accordance with Program
Requirements established by Sprint PCS with respect to certain aspects of the
development and offering of wireless products and services and the presentation
of the products and services to customers, to establish and operate the Sprint
PCS Network successfully by providing seamless, integrated voice and data
services, using wireless technology.
AGREEMENT
In consideration of the recitals and mutual covenants and agreements
contained in this agreement, the sufficiency of which are hereby acknowledged,
the parties, intending to be bound, agree as follows:
1. MANAGER
1.1 HIRING OF MANAGER. Sprint PCS hires Manager:
(a) to construct and manage the Service Area Network in
compliance with the License and in accordance with the terms of this agreement;
(b) to distribute continuously during the Term the Sprint PCS
Products and Services and to establish distribution channels in the Service
Area;
(c) to conduct continually during the Term advertising and
promotion activities in the Service Area (including mutual decisions to "go
dark", with respect to advertising and promotion activities, for reasonable
periods of time); and
(d) to manage that portion of the customer base of Sprint PCS
that has the NPA-NXXs assigned to the Service Area Network.
Sprint PCS has the right to unfettered access to the Service Area
Network to be constructed by Manager under this agreement. The fee to be paid to
Manager by Sprint PCS under Section 10 is for all obligations of Manager under
this agreement.
1.2 PROGRAM REQUIREMENTS. Manager must adhere to the Program
Requirements established by Sprint PCS and as modified from time to time, to
ensure uniform and consistent operation of all wireless systems within the
Sprint PCS Network and to present the Sprint PCS Products and Services to
customers in a uniform and consistent manner under the Brands.
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1.3 VENDOR PURCHASE AGREEMENTS. Manager may participate in discounted
volume-based pricing on wireless-related products and services and in the
warranties Sprint PCS receives from its vendors, as is commercially reasonable
and to the extent permitted by applicable procurement agreements (e.g.,
agreements related to network infrastructure equipment, subscriber equipment,
interconnection, and collocation). Sprint PCS will use commercially reasonable
efforts to obtain for managers the same price Sprint PCS receives from vendors;
this does not prohibit Sprint PCS from entering into procurement agreements that
do not provide managers with the Sprint PCS prices.
Manager must purchase subscriber and infrastructure equipment from a
Sprint PCS approved list of products, which will include a selection from a
variety of manufacturers. Where required, the products must include proprietary
software developed by the manufacturers for Sprint PCS or by Sprint PCS to allow
seamless interoperability in the Sprint PCS Network. Sprint PCS or the vendor
may require Manager to execute a separate license agreement for the software
prior to Manager's use of the software.
Manager may only make purchases under this Section 1.3 for items to be
used exclusively in the Service Area (e.g., Manager may not purchase base
stations under a Sprint PCS contract for use in a system not affiliated with
Sprint PCS).
1.4 INTERCONNECTION. If Manager desires to interconnect a portion of
the Service Area Network with another carrier and Sprint PCS can interconnect
with that carrier at a lower rate, then to the extent permitted by applicable
laws, tariffs and contracts, Sprint PCS may arrange for the interconnection
under its agreements with the carrier and if it does so, Sprint PCS will bill
the interconnection fees to Manager.
1.5 SEAMLESSNESS. Manager will design and operate its systems,
platforms, products and services in the Service Area and the Service Area
Network so as to seamlessly interface them into the Sprint PCS Network.
1.6 FORECASTING. Manager and Sprint PCS will work cooperatively to
generate mutually acceptable forecasts of important business metrics including
traffic volumes, handset sales, subscribers and Collected Revenues for the
Sprint PCS Products and Services. The forecasts are for planning purposes only
and do not constitute Manager's obligation to meet the quantities forecast.
1.7 FINANCING. The construction and operation of the Service Area
Network requires a substantial financial commitment by Manager. The manner in
which Manager will finance the build-out of the Service Area Network and provide
the necessary working capital to operate the business is described in detail on
Exhibit 1.7. Manager will allow Sprint PCS an opportunity to review before
filing any registration statement or prospectus or any amendment or supplement
thereto before distributing any offering memorandum or amendment or supplement
thereto, and agrees not to file or distribute any such document if Sprint PCS
reasonably objects in writing on a timely basis to any portion of the document
that refers to Sprint PCS, its Related Parties, their respective businesses,
this agreement or the Services Agreement.
1.8 ETHICAL CONDUCT AND RELATED COVENANTS. Each party must perform its
obligations under this agreement in a diligent, legal, ethical, and professional
manner.
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2. BUILD-OUT OF NETWORK
2.1 BUILD-OUT PLAN. Manager will build-out the Service Area Network in
the Service Area in accordance with a Build-out Plan. Sprint PCS and Manager
will jointly develop each Build-out Plan, except the initial Build-out Plan and
any modifications, additions or expansions of the Build-out Plan will be subject
to prior written approval by Sprint PCS. Manager will report to Sprint PCS its
performance regarding the critical milestones included in the Build-out Plan on
a periodic basis as mutually agreed to by the parties, but no less frequently
than quarterly. The Build-out Plan and the Service Area Network as built must
comply with Sprint PCS Program Requirements and federal and local regulatory
requirements.
Sprint PCS approves the Build-out Plan in effect as of the date of this
agreement, which Build-out Plan is attached as Exhibit 2.1. Each new or amended
Build-out Plan will also become part of Exhibit 2.1.
2.2 COMPLIANCE WITH REGULATORY RULES. During the build-out of the
Service Area Network, Sprint PCS authorizes Manager to make all filings with
regulatory authorities regarding the build-out, including filings with the
Federal Aviation Administration, environmental authorities, and historical
districts. Manager may further delegate its duty under this Section 2.2 to a
qualified site acquisition company. Manager must ensure that a copy of every
filing is given to Sprint PCS. Manager must ensure that Sprint PCS is notified
in writing of any contact by a regulatory agency including the FCC with Manager
or Manager's site acquisition company regarding any filing. Sprint PCS has the
right to direct any proceeding, inquiry, dispute, appeal or other activity with
a regulatory or judicial authority regarding any filing made on behalf of Sprint
PCS. Manager will amend, modify, withdraw, refile and otherwise change any
filing as Sprint PCS requires. Notwithstanding the preceding sentences in this
Section 2.2, and in conjunction with Section 16, Sprint PCS is solely
responsible for making any and all filings with the FCC regarding the build-out.
Manager will notify Sprint PCS of any activity, event or condition related to
the build-out that might require an FCC filing.
2.3 EXCLUSIVITY OF SERVICE AREA. Manager will be the only person or
entity that is a manager or operator for Sprint PCS with respect to the Service
Area and neither Sprint PCS nor any of its Related Parties will own, operate,
build or manage another wireless mobility communications network in the Service
Area so long as this agreement remains in full force and effect and there is no
Event of Termination that has occurred giving Sprint PCS the right to terminate
this agreement, except that:
(a) Sprint PCS may cause Sprint PCS Products and Services to
be sold in the Service Area through the Sprint PCS National Accounts Program
Requirements and Sprint PCS National or Regional Distribution Program
Requirements;
(b) A reseller of Sprint PCS Products and Services may sell
its products and services in the Service Area so long as such resale is not
contrary to the terms and conditions of this agreement; and
(c) Sprint PCS and its Related Parties may engage in the
activities described in Sections 2.4(a) and 2.4(b) with Manager in the
geographic areas within the Service Area in which Sprint PCS or any of its
Related Parties owns an incumbent local exchange carrier as of the date of this
agreement.
2.4 RESTRICTION. In geographic areas within the Service Area in which
Sprint PCS or any of its Related Parties owns an incumbent local exchange
carrier as of the date of this agreement, Manager must not offer any Sprint PCS
Products or Services specifically designed for the competitive local exchange
market ("fixed wireless local loop"), except that:
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(a) Manager may designate the local exchange carrier that is a
Related Party of Sprint PCS to be the exclusive distributor of the fixed
wireless local loop product in the territory served by the local exchange
carrier, even if a portion of its territory is within the Service Area; or
(b) Manager may sell the fixed wireless local loop product
under the terms and conditions specified by Sprint PCS (e.g., including
designation by Sprint PCS of an exclusive distribution agent for the territory).
This restriction exists with respect to a particular geographic area only so
long as Sprint PCS or its Related Party owns such incumbent local exchange
carrier.
Nothing in this Section 2.4 prohibits Manager from offering Sprint PCS
Products and Services primarily designed for mobile functionality. The
restricted markets as of the date of this agreement are set forth on Exhibit
2.4.
2.5 COVERAGE ENHANCEMENT. Sprint PCS and Manager agree that maintaining
a high standard of customer satisfaction regarding network capacity and
footprint is a required element of the manager and affiliate programs. Sprint
PCS intends to expand network coverage to build all cells that cover at least
5,000 pops and all interstate and major highways in the areas not operated by
Manager or Other Managers. Accordingly, Manager agrees to build-out New Coverage
when directed by Sprint PCS as set forth in this Section 2.5. Sprint PCS agrees
not to require any New Coverage build-out during the first two years of this
Agreement, nor any New Coverage that exceeds the capacity and footprint
parameters that Sprint PCS has adopted for all of its comparable markets.
Sprint PCS will give to Manager a written notice of any New Coverage
within the Service Area that Sprint PCS decides should be built-out. Such notice
will include an analysis completed by Sprint PCS demonstrating that such
required build-out should be economically advantageous to Manager. Such analysis
will be generated in good faith and will be based on then-currently available
information, however Sprint PCS makes no warranties or representations regarding
the accuracy of, nor will Sprint PCS be bound by, or guarantee the accuracy of,
such analysis. Manager must confirm to Sprint PCS within 90 days after receipt
of the notice that Manager will build-out the New Coverage and deliver to Sprint
PCS with such confirmation Manager's proposed amendment to the Build-out Plan
and a description of the manner and timing in which it will finance such
build-out.
If Manager confirms, within such 90-day period, its intention to
build-out the New Coverage, then Manager and Sprint PCS will diligently finalize
an amendment to the Build-out Plan and proceed as set forth in Sections 2.1 and
2.2. The amended Build-out Plan will contain critical milestones that provide
Manager a commercially reasonable period in which to construct and implement the
New Coverage. In determining what constitutes a "commercially reasonable period"
as used in this paragraph, the parties will consider several factors, including
local zoning processes and other legal requirements, weather conditions,
equipment delivery schedules, the need to arrange additional financing, and
other construction already in progress by Manager. Manager will construct and
operate the New Coverage in accordance with the terms of this Agreement, and the
New Coverage will be included in the Service Area Network for purposes of this
agreement.
If Manager fails to confirm, within such 90-day period, its intention
to build-out the New Coverage, declines to complete such build-out, or fails to
complete such build-out in accordance with the amended Build- out Plan, then an
Event of Termination will be deemed to have occurred under Section 11.3.3,
Manager will
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not have a right to cure such breach, and Sprint PCS may exercise its rights and
remedies under Section 11.2.2.1.
Notwithstanding the preceding paragraphs in this Section 2.5, the
capacity and footprint parameters contained in the amended Build-out Plan will
not be required to exceed the parameters adopted by Sprint PCS in building out
all of its comparable service areas, unless such build-out relates to an
obligation regarding the Service Area Network mandated by law. When necessary
for reasons related to new technical standards, new equipment or strategic
reasons, Sprint PCS can require Manager to build-out the New Coverage
concurrently with Sprint PCS' build-out, in which case Sprint PCS will reimburse
Manager for its costs and expenses if Sprint PCS discontinues its related
build-out.
If Sprint PCS requires build-out of New Coverage that will:
(a) cause the Manager to spend an additional amount greater
than 5% of Manager's shareholder's equity or capital account plus Manager's
long-term debt (i.e., notes that mature more than one year from the date
issued), as reflected on Manager's books; or
(b) cause the long-term operating expenses of Manager on a per
unit basis using a 10-year time frame to increase by more than 10% on a net
present value basis,
then Manager may give Sprint PCS a written notice requesting Sprint PCS to
reconsider the required New Coverage.
The Sprint PCS Vice President or the designee of the Sprint PCS Chief
Officer in charge of the group that manages the Sprint PCS relationship with
Manager will review Manager's request and render a decision regarding the New
Coverage. If after the review and decision by the Vice President or designee,
Manager is still dissatisfied, then Manager may ask that the Chief Officer to
whom the Vice President or designee reports review the matter. If Sprint PCS
still requires Manager to complete the New Coverage following, the Chief
Officer's review, then if Manager and Sprint PCS fail to agree to an amended
Build-out Plan within 15 days after completion of the reconsideration process
described above in this paragraph or the end of the 90-day period described in
the second paragraph of this Section 2.5, whichever occurs first, then an Event
of Termination will be deemed to have occurred under Section 11.3.3, Manager
will not have a right to cure such breach, and Sprint PCS may exercise its
rights and remedies under Section 11.2.2.1.
2.6 PURCHASE OF ASSETS BY MANAGER. If Sprint PCS has assets located in
the Service Area that Manager could reasonably use in its construction of the
Service Area Network and if Sprint PCS is willing to sell such assets, then
Manager agrees to purchase from Sprint PCS and Sprint PCS agrees to sell to
Manager the assets in accordance with the terms and conditions of the asset
purchase agreement attached as Exhibit 2.6.
2.7 MICROWAVE RELOCATION. Sprint PCS will relocate interfering
microwave sources in the spectrum in the Service Area to the extent necessary to
permit the Service Area Network to carry the anticipated call volume as set out
in the Build-out Plan. If the spectrum cleared is not sufficient to carry the
actual call volume then Sprint PCS will clear additional spectrum of its
choosing to accommodate the call volume. Sprint PCS may choose to clear spectrum
one carrier at a time. The parties will share equally all costs associated with
clearing spectrum under this Section 2.7.
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2.8 DETERMINATION OF POPS. If any provision in this agreement requires
the determination of pops in a given area, then the pops will be determined
using the census block group pop forecast then used by Sprint PCS, except that a
different forecast will be used for any FCC filing and in preparing the
Build-out Plan if required by the FCC. Sprint PCS presently uses the forecast of
Equifax/NDS, but it may choose in its sole discretion to use another service
that provides comparable data.
3. PRODUCTS AND SERVICES; IXC SERVICES
3.1 SPRINT PCS PRODUCTS AND SERVICES. Manager must offer for sale,
promote and support all Sprint PCS Products and Services within the Service
Area, unless the parties otherwise agree in advance in writing. Within the
Service Area, Manager may only sell, promote and support wireless products and
services that are Sprint PCS Products and Services or are other products and
services authorized under Section 3.2. The Sprint PCS Products and Services as
of the date of this agreement are attached as Exhibit 3.1. Sprint PCS may modify
the Sprint PCS Products and Services from time to time in its sole discretion by
delivering, to Manager a new Exhibit 3.1. If Sprint PCS begins offering
nationally a Sprint PCS Product or Service that is a Manager's Product or
Service, such Manager's Product or Service will become a Sprint PCS Product or
Service under this agreement.
3.2 OTHER PRODUCTS AND SERVICES. Manager may offer wireless products
and services that are not Sprint PCS Products and Services, on the terms Manager
determines, if the offer of the additional products and services:
(a) does not violate the obligations of Manager under this
agreement;
(b) does not cause distribution channel conflict with or
consumer confusion regarding Sprint PCS' regional and national
offerings of Sprint PCS Products and Services;
(c) complies with the Trademark License Agreements; and
(d) does not materially impede the development of the Sprint
PCS Network.
Manager will not offer any products or services under this Section 3.2
that are confusingly similar to Sprint PCS Products and Services. Manager must
request that Sprint PCS determine whether Sprint PCS considers a product or
service to be confusingly similar to any Sprint PCS Products and Services by
providing advance written notice to Sprint PCS that describes those products and
services that could be interpreted to be confusingly similar to Sprint PCS
Products and Services. If Sprint PCS fails to provide a response to Manager
within 30 days after receiving the notice, then the products and services are
deemed to create confusion with the Sprint PCS Products and Services and the
request therefore rejected. In rejecting any request Sprint PCS must provide the
reasons for the rejection. If the rejection is based on Sprint PCS' failure to
respond within 30 days and Manager requests an explanation for the deemed
rejection, then Sprint PCS must provide within 30 days the reasons for the
rejection.
3.3 CROSS-SELLING WITH SPRINT. Manager and Sprint and Sprint's Related
Parties may enter into arrangements to sell Sprint's services, including long
distance service (except those long distance services governed by Section 3.4),
Internet access, customer premise equipment, prepaid phone cards, and any other
services that Sprint or its Related Parties make available from time to time.
Sprint's services may be packaged with the Sprint PCS Products and Services.
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If Manager chooses to resell the long distance services, Internet
access or competitive local telephone services including prepaid phone cards, of
third parties (other than Manager's Related Parties), Manager will give Sprint
the right of last offer to provide those services on the same terms and
conditions as the offer to which Manager is prepared to agree, subject to the
terms of any existing agreements Manager was subject to prior to execution of
this agreement.
If Sprint sells Sprint PCS Products and Services in the Service Area,
Manager will provide such Sprint PCS Products and Services to such customers in
accordance with the terms and conditions of the Sprint PCS National or Regional
Distribution Program Requirements.
3.4 IXC SERVICES. Manager must purchase from Sprint long distance
telephony services for the Sprint PCS Products and Services at wholesale rates.
Long distance telephone calls are those calls between the local calling area for
the Service Area Network and areas outside the local calling area. The local
calling area will be defined by mutual agreement of Sprint PCS and Manager. If
the parties cannot agree on the extent of the local calling area they will
resolve the matter through the dispute resolution process in Section 14. Any
arrangement must have terms at least as favorable to Manager (in all material
respects) as those offered by Sprint to any wholesale customer of Sprint in
comparable circumstances (taking into consideration volume, traffic patterns,
etc.). If Manager is bound by an agreement for these services and the agreement
was not made in anticipation of this agreement, then the requirements of this
Section 3.4 do not apply during the term of the other agreement. If the other
agreement terminates for any reason then the requirements of this Section 3.4 do
apply.
3.5 RESALE OF PRODUCTS AND SERVICES.
3.5.1 MANDATORY RESALE OF PRODUCTS AND SERVICES. Sprint PCS is
subject to FCC rules that require it to allow its service plans to be resold by
a purchaser of the service plan. Sprint PCS will not grant the purchaser of a
service plan the right to use any of the support services offered by Sprint PCS,
including customer care, billing, collection, and advertising, nor the right to
use the Brands. The reseller only has the right to use the service purchased.
Consequently, Manager agrees not to interfere with any purchaser of the Sprint
PCS Products or Services who resells the service plans in accordance with this
agreement and applicable law. Manager will notify purchaser that the purchaser
does not have a right to use the Brands or Sprint PCS' support services. In
addition, Manager will notify Sprint PCS if it reasonably believes a reseller of
retail service plans is using the support services or Brands.
3.5.2 VOLUNTARY RESALE OF PRODUCTS AND SERVICES. Sprint PCS
may choose to offer a resale product under which resellers will resell Sprint
PCS Products and Services under brand names other than the Brands, except Sprint
PCS may permit the resellers to use the Brands for limited purposes related to
the resale of Sprint PCS Products and Services (e.g., to notify people that the
handsets of the resellers will operate on the Sprint PCS Network). The resellers
may also provide their own support services (e.g., customer care and billing) or
may purchase the support services from Sprint PCS.
If Sprint PCS chooses to offer a voluntary resale product, it will
adopt a program that will be a Program Requirement under this agreement and that
addresses the manner in which Manager and Other Managers interact with the
resellers. Manager must agree to comply with the terms of the program, including
its pricing provisions, if Manager wants handsets of subscribers of resellers
with NPA-NXXs of Manager to be activated. Usage of telecommunications services
while in the Service Area by subscribers of resellers with
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NPA-NXXs from outside the Service Area will be subject to the pricing provisions
of the Sprint PCS Roaming and Inter Service Area Program for roaming and inter
service area pricing between Manager and Sprint PCS unless Manager agrees in
writing to different pricing.
Except as required under the regulations and rules concerning mandatory
resale, Manager may not sell Sprint PCS Products and Services for resale unless
Sprint PCS consents to such sales in advance in writing.
3.6 NON-COMPETITION. Neither Manager nor any of its Related Parties may
offer Sprint PCS Products and Services outside of the Service Area without the
prior written approval of Sprint PCS.
Within the Service Area, Manager and Manager's Related Parties may
offer, market or promote telecommunications products or services only under the
following brands:
(a) products or services with the Brands;
(b) other products and services approved under Section 3.2;
(c) products or services with Manager's brand; or
(d) products or services with the brands of Manager's Related
Parties,
except no brand of a significant competitor of Sprint PCS or its Related Parties
in the telecommunications business may be used by Manager or Manager's Related
Parties on these products and services.
If Manager or any of its Related Parties has licenses to provide
broadband personal communication services outside the Service Area, neither
Manager nor such Related Party may utilize the spectrum to offer Sprint PCS
Products and Services without prior written consent from Sprint PCS.
Additionally, when Manager's customers from inside the Service Area travel or
roam to other geographic areas, Manager will route the customers' calls, both
incoming and outgoing, according to the Sprint PCS Network Roaming and Inter
Service Area Program Requirements, without regard to any wireless networks
operated by Manager or its Related Parties. For example, Manager will program
the preferred roaming list for handsets sold in the Service Area to match the
Sprint PCS preferred roaming list.
3.7 RIGHT OF LAST OFFER. Manager will offer to Sprint the right to make
to Manager the last offer to provide backhaul and transport services for call
transport for the Service Area Network, if Manager decides to use third parties
for backhaul and transport services rather than self-provisioning the services
or purchasing the services from Related Parties of Manager. Sprint will have a
reasonable time to respond to Manager's request for last offer to provide
backhaul and transport pricing and services, which will be no greater than 5
Business Days after receipt of the request for the services and pricing from
Manager.
If Manager has an agreement in effect as of the date of this agreement
for these services and the agreement was not made in anticipation of this
agreement, then the requirements of this Section 3.7 do not apply during the
term of the other agreement. If the other agreement terminates for any reason
then the requirements of this Section 3.7 do apply.
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4. MARKETING AND SALES ACTIVITIES
4.1 SPRINT PCS NATIONAL OR REGIONAL DISTRIBUTION PROGRAM REQUIREMENTS.
During the term of this agreement, Manager must participate in any Sprint PCS
National or Regional Distribution Program (as in effect from time to time), and
will pay or receive compensation for its participation in accordance with the
terms and conditions of that program. The Sprint PCS National or Regional
Distribution Program Requirements in effect as of the date of this agreement are
attached as Exhibit 4.1.
4.1.1 TERRITORIAL LIMITATIONS ON MANAGER'S DISTRIBUTION
ACTIVITIES. Neither Manager nor any of its Related Parties will market, sell or
distribute Sprint PCS Products and Services outside of the Service Area, except:
(a) as otherwise agreed upon by the parties in advance in
writing; or
(b) Manager may place advertising in media that has
distribution outside of the Service Area, so long as that advertising is
intended by Manager to reach primarily potential customers within the Service
Area.
4.1.2 SETTLEMENT OF EQUIPMENT SALES. Sprint PCS will establish
a settlement policy and process that will be included in the Sprint PCS National
or Regional Distribution Program Requirements to:
(a) reconcile sales of subscriber equipment made in the
service areas of Sprint PCS or Other Managers of Sprint PCS, that result in
activations in the Service Area; and
(b) reconcile sales of subscriber equipment made in the
Service Area that result in activations in service areas of Sprint PCS or Other
Managers.
In general, the policy will provide that the party in whose service
area the subscriber equipment is activated will be responsible for the payment
of any subsidy (i.e., the difference between the price paid to the manufacturer
and the suggested retail price for direct channels or the difference between the
price paid to the manufacturer and the wholesale price for third party
retailers) and for other costs associated with the sale, including logistics,
inventory carrying costs, direct channel commissions and other retailer
compensation.
4.1.3 USE OF THIRD-PARTY DISTRIBUTORS.
(a) Manager may request that Sprint PCS and a local
distributor enter into Sprint PCS' standard distribution agreement regarding the
purchase from Sprint PCS of handsets and accessories. Sprint PCS will use
commercially reasonable efforts to reach agreement with the local distributor.
Sprint PCS may refuse to enter into a distribution agreement with a distributor
for any reasonable reason, including that the distributor fails to pass Sprint
PCS' then current credit and background checks or the distributor fails to agree
to the standard terms of the Sprint PCS distribution agreement. Any local
distributor will be subject to the terms of the Trademark License Agreements or
their equivalent. Manager will report to Sprint PCS the activities of any local
distributor that Manager believes to be in violation of the distribution
agreement.
(b) Manager may establish direct local distribution programs
in accordance with the Sprint PCS National or Regional Distribution Program
Requirements, subject to the terms and conditions of the Trademark License
Agreements and the non-competition and other provisions contained in this
agreement. If Manager sells Sprint PCS handsets and accessories directly to a
local distributor:
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(i) Sprint PCS has the right to approve or disapprove
a particular distributor,
(ii) Manager is responsible for such distributor's
compliance with the terms of the Trademark License Agreements and the
other provisions contained in this agreement, and
(iii) Manager must retain the right to terminate the
distribution rights of the local distributor when so instructed by
Sprint PCS (even if Sprint PCS initially approved or did not exercise
its right to review the distributor).
4.2 SPRINT PCS NATIONAL ACCOUNTS PROGRAM REQUIREMENTS. During the term
of this agreement, Manager must participate in the Sprint PCS National Accounts
Program (as in effect from time to time), and will be entitled to compensation
for its participation and will be required to pay the expenses of the program in
accordance with the terms and conditions of that program. The Sprint PCS
National Accounts Program Requirements in effect as of the date of this
agreement are attached as Exhibit 4.2.
4.3 SPRINT PCS ROAMING AND INTER SERVICE AREA PROGRAM REQUIREMENTS.
Manager will participate in the Sprint PCS Roaming and Inter Service Area
Program established and implemented by Sprint PCS, including roaming price plans
and inter-carrier settlements. The Sprint PCS Roaming and Inter Service Area
Program Requirements in effect as of the date of this agreement are attached as
Exhibit 4.3.
As part of the Sprint PCS Roaming and Inter Service Area Program
Requirements, Sprint PCS will establish a settlement policy and process to
equitably distribute between the members making up the Sprint PCS Network (i.e.,
Sprint PCS, Manager and all Other Managers) the revenues received by one member
for services used by its customers when they travel into other members' service
areas.
4.4 PRICING. Manager will offer and support all Sprint PCS pricing
plans designated for regional or national offerings of Sprint PCS Products and
Services (e.g., national inter service area rates, regional home rates, and
local price points). The Sprint PCS pricing plans as of the date of this
agreement are attached as Exhibit 4.3. Sprint PCS may modify the Sprint PCS
pricing plans from time to time in its sole discretion by delivering to Manager
a new Exhibit 4.4.
Additionally, with prior approval from Sprint PCS, which approval will
not be unreasonably withheld, Manager may establish price plans for Sprint PCS
Products and Services that are only offered in its local market, subject to:
(a) the non-competition and other provisions
contained in this agreement;
(b) consistency with regional and national pricing
plans;
(c) regulatory requirements; and
(d) capability and cost of implementing rate plans in
Sprint PCS systems (if used).
Manager must provide advance written notice to Sprint PCS with details
of any pricing proposal for Sprint PCS Products or Services in the Service Area.
If Sprint PCS fails to. respond to Manager within 10 Business Days after
receiving such notice, then the price proposed for those Sprint PCS Products or
Services is deemed approved.
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At the time Sprint PCS approves a pricing proposal submitted by
Manager, Sprint PCS will provide Manager an estimate of the costs and expenses
and applicable time frames required for Sprint PCS to implement the proposed
pricing plan. Manager agrees to promptly reimburse Sprint PCS for any cost or
expense incurred by Sprint PCS to implement such a pricing plan, which will not
exceed the amount estimated by Sprint PCS if Manager waited for Sprint PCS'
response to Manager's proposal.
4.5 HOME SERVICE AREA. Sprint PCS and Manager will agree to the initial
home service area for each base station in the Service Area Network prior to the
date the Service Area Network goes into commercial operation. If the parties
cannot agree to the home service area for each base station in the Service Area
Network, then the parties will use the dispute resolution process in Section 14
of this agreement to assign each base station to a home service area.
5. USE OF BRANDS
5.1 USE OF BRANDS.
(a) Manager must enter into the Trademark License Agreements
on or before the date of this agreement.
(b) Manager must use the Brands exclusively in the marketing,
promotion, advertisement, distribution, lease or sale of any Sprint PCS Products
and Services within the Service Area, except Manager may use other brands to the
extent permitted by the Trademark License Agreements and not inconsistent with
the terms of this agreement.
(c) Neither Manager nor any of its Related Parties may market,
promote, advertise, distribute, lease or sell any of the Sprint PCS Products and
Services or Manager's Products and Services on a non-branded, "private label"
basis or under any brand, trademark, trade name or trade dress other than the
Brands, except (i) for sales to resellers required under this agreement, or (ii)
as permitted under the Trademark License Agreements.
(d) The provisions of this Section 5.1 do not prohibit Manager
from including Sprint PCS Products and Services under the Brands within the
Service Area as part of a package with its other products and services that bear
a different brand or trademark. The provisions of this Section 5.1 do not apply
to the extent that they are inconsistent with applicable law or in conflict with
the Trademark License Agreements.
5.2 CONFORMANCE TO MARKETING COMMUNICATIONS GUIDELINES. Manager must
conform to the Marketing Communications Guidelines in connection with the
marketing, promotion, advertisement, distribution, lease and sale of any of the
Sprint PCS Products and Services. The Marketing Communications Guidelines in
effect as of the date of this agreement are attached as Exhibit 5.2. Sprint and
Sprint Spectrum may amend the Marketing Communications Guidelines from time to
time in accordance with the terms of the Trademark License Agreements.
5.3 JOINT MARKETING WITH THIRD PARTIES.
(a) Manager may engage in various joint marketing activities
(e.g., promotions with sports teams and entertainment providers or tournament
sponsorships) with third parties in the Service Area from time
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to time during the term of this agreement with respect to the Sprint PCS
Products and Services, except that Manager may engage in the joint marketing
activities only if the joint marketing activities:
(i) are conducted in accordance with the terms and
conditions of the Trademark License Agreements and the Marketing
Communications Guidelines;
(ii) do not violate the terms of this agreement;
(iii) are not likely (as determined by Sprint PCS, in
its sole discretion) to cause confusion between the Brands and any
other trademark or service mark used in connection with the activities;
(iv) are not likely (as determined by Sprint, in its
sole discretion) to cause confusion between the Sprint Brands and any
other trademark or service mark used in connection with the activities;
and
(v) are not likely (as determined by Sprint PCS, in
its sole discretion) to give rise to the perception that the Sprint PCS
Products and Services are being advertised, marketed or promoted under
any trademark or service mark other than the Brands, except as provided
in the Trademark License Agreements. Manager will not engage in any
activity that includes co-branding involving use of the Brands (that
is, the marketing, promotion, advertisement, distribution, lease or
sale of any of the Sprint PCS Products and Services under the Brands
and any other trademark or service mark), except as provided in the
Trademark License Agreements.
(b) Manager must provide advance written notice to Sprint PCS
describing any joint marketing activities that may:
(i) cause confusion between the Brands and any other
trademark or service mark used in connection with the proposed
activities; or
(ii) give rise to the perception that the Sprint PCS
Products and Services are being advertised, marketed or promoted under
any trademark or service mark other than the Brands, except as provided
in the Trademark License Agreements.
(c) If Sprint PCS fails to provide a response to Manager
within 20 days after receiving such notice, then the proposed activities are
deemed, as the case may be:
(i) not to create confusion between the Brands and
any other trademark or service mark; or
(ii) not to give rise to the perception that
Manager's products and services are being advertised, marketed or
promoted under any trademark or service mark other than the Brands,
except as provided in the Trademark License Agreements.
5.4 PRIOR APPROVAL OF USE OF BRANDS. Manager must obtain advance
written approval from Sprint for use of the Sprint Brands to the extent required
by the Sprint Trademark and Service Mark License Agreement and from Sprint PCS
for use of the Sprint PCS Brands to the extent required by the Sprint
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Spectrum Trademark and Service Mark License Agreement. Sprint PCS will use
commercially reasonable efforts to facilitate any review of Manager's use of the
Brands, if Sprint PCS is included in the review process.
5.5 DURATION OF USE OF BRAND. Manager is entitled to use the Brands
only during the term of the Trademark License Agreements and any transition
period during which Manager is authorized to use the Brands following the
termination of the Trademark License Agreements.
6. ADVERTISING AND PROMOTION
6.1 NATIONAL ADVERTISING AND PROMOTION. Sprint PCS is responsible for
(a) all national advertising and promotion of the Sprint PCS Products and
Services, including the costs and expenses related to national advertising and
promotions, and (b) all advertising and promotion of the Sprint PCS Products and
Services in the markets where Sprint PCS operates without the use of an Other
Manager.
6.2 IN-TERRITORY ADVERTISING AND PROMOTION. Manager must advertise and
promote the Sprint PCS Products and Services in the Service Area (and may do so
in the areas adjacent to the Service Area so long as Manager intends that such
advertising, or promotion primarily reach potential customers within the Service
Area). Manager must advertise and promote the Sprint PCS Products and Services
in accordance with the terms and conditions of this agreement, the Trademark
License Agreements and the Marketing Communication Guidelines. Manager is
responsible for the costs and expenses incurred by Manager with respect to
Manager's advertising and promotion activities in the Service Area.
Manager will be responsible for a portion of the cost of any promotion
or advertising done by third party retailers in the Service Area (e.g., Best
Buy) in accordance with any cooperative advertising arrangements based on per
unit handset sales.
Sprint PCS has the right to use in any promotion or advertising done by
Sprint PCS any promotion or advertising materials developed by Manager from time
to time with respect to the Sprint PCS Products and Services. Sprint PCS will
reimburse Manager for the reproduction costs related to such use.
Sprint PCS will make available to Manager the promotion or advertising
materials developed by Sprint PCS from time to time with respect to Sprint PCS
Products and Services in current use by Sprint PCS (e.g., radio ads, television
ads, design of print ads, design of point of sale materials, retail store
concepts and designs, design of collateral). Manager will bear the cost of using
such materials (e.g., cost of local radio and television ad placements, cost of
printing collateral in quantity, and building out and finishing retail stores).
6.3 REVIEW OF ADVERTISING AND PROMOTION CAMPAIGNS. Sprint PCS and
Manager will jointly review the upcoming marketing and promotion campaigns of
Manager with respect to Sprint PCS Products and Services (including advertising
and promotion expense budgets) and will use good faith efforts to coordinate
Manager's campaign with Sprint PCS' campaign to maximize the market results of
both parties. Sprint PCS and Manager may engage in cooperative advertising or
promotional activities during the term of this agreement as the parties may
agree in writing.
6.4 PUBLIC RELATIONS. If Manager conducts local public relations
efforts, then Manager must conduct the local public relations efforts consistent
with the Sprint PCS Communications Policies. The Sprint PCS Communications
Policies as of the date of this agreement are attached as Exhibit 6.4. Sprint
PCS may modify the Sprint PCS Communications Policies from time to time by
delivering to Manager a new Exhibit 6.4.
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7. SPRINT PCS TECHNICAL PROGRAM REQUIREMENTS
7.1 CONFORMANCE TO SPRINT PCS TECHNICAL PROGRAM REQUIREMENTS.
(a) Manager must meet or exceed the Sprint PCS Technical
Program Requirements established by Sprint PCS from time to time for the Sprint
PCS Network Manager will be deemed to meet the Sprint PCS Technical Program
Requirements if:
(i) Manager operates the Service Area Network at a
level equal to or better than the lower of the Operational Level of
Sprint PCS or the operational level contemplated by the Sprint PCS
Technical Program Requirements; or
(ii) Sprint PCS is responsible under the Services
Agreement to ensure the Service Area Network complies with the Sprint
PCS Technical Program Requirements.
(b) Manager must demonstrate to Sprint PCS that Manager has
complied with the Sprint PCS Technical Program Requirements prior to connecting
the Service Area Network to the rest of the Sprint PCS Network. Once the Service
Area Network is connected to the Sprint PCS Network, Manager must continue to
comply with the Sprint PCS Technical Program Requirements. Sprint PCS agrees
that the Sprint PCS Technical Program Requirements adopted for Manager will be
the same Sprint PCS Technical Program Requirements applied by Sprint PCS to the
Sprint PCS Network.
7.2 ESTABLISHMENT OF SPRINT PCS TECHNICAL PROGRAM REQUIREMENTS. Sprint
PCS has delivered to Manager a copy of the current Sprint PCS Technical Program
Requirements, attached as Exhibit 7.2. Sprint PCS drafted the Sprint PCS
Technical Program Requirements to ensure a minimum, base-line level of quality
for the Sprint PCS Network. The Sprint PCS Technical Program Requirements
include standards relating to voice quality, interoperability, consistency
(seamlessness) of coverage, RF design parameters, system design, capacity, and
call blocking ratio. Sprint PCS has selected code division multiple access as
the initial air interface technology for the Sprint PCS Network (subject to
change in accordance with Section 9.1).
7.3 HANDOFF TO ADJACENT NETWORKS. If technically feasible and
commercially reasonable, Manager will operate the Service Area Network in a
manner that permits a seamless handoff of a call initiated on the Service Area
Network to any adjacent PCS network that is part of the Sprint PCS Network, as
specified in the Sprint PCS Technical Program Requirements. Sprint PCS agrees
that the terms and conditions for seamless handoffs adopted for the Service Area
Network will be the same as the terms Sprint PCS applies to the other parts of
the Sprint PCS Network for similar configurations of equipment.
8. SPRINT PCS CUSTOMER SERVICE PROGRAM REQUIREMENTS
8.1 COMPLIANCE WITH SPRINT PCS CUSTOMER SERVICE PROGRAM REQUIREMENTS.
Manager must comply with the Sprint PCS Customer Service Program Requirements in
providing the Sprint PCS Products and Services to any customer of Manager,
Sprint PCS or any Sprint PCS Related Party. Manager will be deemed to meet the
standards if:
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(a) Manager operates the Service Area Network at a level equal
to or better than the lower of the Operational Level of Sprint PCS or the
operational level contemplated by the Program Requirements; or
(b) Manager has delegated to Sprint PCS under the Services
Agreement responsibility to ensure the Service Area Network complies with the
Sprint PCS Customer Service Standards.
Sprint PCS has delivered to Manager a copy of the Sprint PCS Customer
Service Standards, which are attached as Exhibit 8.1.
9. SPRINT PCS PROGRAM REQUIREMENTS
9.1 PROGRAM REQUIREMENTS GENERALLY. This agreement contains numerous
references to Sprint PCS National and Regional Distribution Program
Requirements, Sprint PCS National Accounts Program Requirements, Sprint PCS
Roaming and Inter Service Area Program Requirements, Sprint PCS Technical
Program Requirements and Sprint PCS Customer Service Program Requirements. This
agreement also provides under Section 3.5.2 for the offering by Sprint PCS of a
voluntary resale product through a program, which program, if adopted, will be a
Program Requirement under this agreement. Sprint PCS may unilaterally amend from
time to time in the manner described in Section 9.2 all Program Requirements
mentioned in this agreement. The most current version of the Program
Requirements mentioned in the first sentence of this Section 9.1 have been
provided to Manager. Manager has reviewed the Program Requirements and adopts
them for application in the Service Area.
9.2 AMENDMENTS TO PROGRAM REQUIREMENTS. Sprint PCS may amend any of the
Program Requirements, subject to the following conditions:
(a) The applicable Program Requirements, as amended, will
apply equally to Manager, Sprint PCS and each Other Manager, except if Manager
and Sprint PCS agree otherwise or if Sprint PCS grants a waiver to Manager.
Sprint PCS may grant waivers to Other Managers without affecting Manager's
obligation to comply with the Program Requirements;
(b) Each amendment will be reasonably required to fulfill the
purposes set forth in Section 1.2 with respect to uniform and consistent
operations of the Sprint PCS Network and the presentation of Sprint PCS Products
and Services to customers in a uniform and consistent manner;
(c) Each amendment will otherwise be on terms and conditions
that are commercially reasonable with respect to the construction, operation and
management of the Sprint PCS Network. With respect to any amendment to the
Program Requirements, Sprint PCS will provide for reasonable transition periods
and, where appropriate, may provide for grandfathering provisions for existing
activities by Manager that were permitted under the applicable Program
Requirements before the amendment;
(d) Sprint PCS must give Manager reasonable, written notice of
the amendment, but in any event the notice will be given at least 30 days prior
to the effective date of the amendment; and
(e) Manager must implement any changes in the Program
Requirements within a commercially reasonable period of time unless otherwise
consented to by Sprint PCS. Sprint PCS will determine what constitutes a
commercially reasonable period of time taking into consideration relevant
business
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factors, including the strategic significance of the changes to the Sprint PCS
Network, the relationship of the changes to the yearly marketing cycle, and the
financial demands on and capacity generally of Other Managers. Notwithstanding
the preceding two sentences, Manager will not be required to implement any
change in the Service Area Network or the business of Manager required by an
amendment to a Program Requirement until Sprint PCS has implemented the required
changes in substantially all of that portion of the Sprint PCS Network that
Sprint PCS operates without the use of a manager or affiliate, unless the
amendment to the Program Requirement relates to an obligation regarding the
Service Area Network mandated by law. When necessary for reasons related to new
technical standards, new equipment or strategic reasons, Sprint PCS can require
Manager to implement the changes in the Service Area Network or Manager's
business concurrently with Sprint PCS, in which case Sprint PCS will reimburse
Manager for its costs and expenses if Sprint PCS discontinues the Program
Requirement changes prior to implementation.
Sprint PCS may grant Manager appropriate waivers and variances from the
requirements of any Program Requirements. Sprint PCS has the right to adopt any
Program Requirements that implement any obligation regarding the Service Area
Network mandated by law.
Any costs and expenses incurred by Manager in connection with
conforming to any change to the Program Requirements during the term of this
agreement are the responsibility of Manager.
9.3 MANAGER'S RIGHT TO REQUEST REVIEW OF CHANGES. If Sprint PCS
announces a change to a Program Requirement that will:
(a) cause the Manager to spend an additional amount greater
than 5% of Manager's shareholder's equity or capital account plus Manager's
long-term debt (i.e., notes that mature more than one year from the date
issued), as reflected on Manager's books; or
(b) cause the long term operating expenses of Manager on a per
unit basis using a 10-year time frame to increase by more than 10% on a net
present value basis,
then Manager may give Sprint PCS a written notice requesting Sprint PCS to
reconsider the change.
The Sprint PCS Vice President or the designee of the Sprint PCS Chief
Officer in charge of the group that manages the Sprint PCS relationship with
Manager will review Manager's request and render a decision regarding the
change. If after the review and decision by the Vice President or designee,
Manager is still dissatisfied, then Manager may ask that the Chief Officer to
whom the Vice President or designee reports review the matter. If Sprint PCS
still requires Manager to implement the change to the Program Requirement
following, the Chief Officer's review, then upon Manager's failure to implement
the change an Event of Termination will be deemed to have occurred under Section
11.3.3, Manager will not have a right to cure such breach, and Sprint PCS may
exercise its rights and remedies under Section 11.6.
9.4 SPRINT PCS' RIGHT TO IMPLEMENT CHANGES. If Manager requests Sprint
PCS to reconsider a change to a Program Requirement as permitted under Section
9.3 and Sprint PCS decides it will not require Manager to make the change,
Sprint PCS may, but is not required to, implement the change at Sprint PCS'
expense, in which event Manager will be required to operate the Service Area
Network, as changed, but Sprint PCS will be entitled to any revenue derived from
the change.
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9.5 RIGHTS OF INSPECTION. Sprint PCS and its authorized agents and
representatives may enter upon the premises of any office or facility operated
by or for Manager at any time, with reasonable advance notice to Manager if
possible, to inspect, monitor and test in a reasonable manner the Service Area
Network, including the facilities, equipment, books and records of Manager, to
ensure that Manager has complied or is in compliance with all covenants and
obligations of Manager under this agreement, including Manager's obligation to
conform to the Program Requirements. The inspection, monitoring and testing may
not disrupt the operations of the office or facility, nor impede Manager's
access to the Service Area Network.
9.6 MANAGER'S RESPONSIBILITY TO INTERFACE WITH SPRINT PCS. Manager will
use platforms fully capable of interfacing with the Sprint PCS platforms in
operating the Service Area Network and in providing Sprint PCS Products and
Services. Manager will pay the expense of making its platforms fully capable of
interfacing with Sprint PCS, including paying for the following:
(i) connectivity;
(ii) any changes that Manager requests Sprint PCS to
make to Sprint PCS systems to interconnect with Manager's systems that
Sprint PCS, in its sole discretion, agrees to make;
(iii) equipment to run Manager's software;
(iv) license fees for Manager's software; and
(v) Manager's upgrades or changes to its platforms.
10. FEES
10.1 FEES AND PAYMENTS.
10.1.1 FEE BASED ON COLLECTED REVENUES. Sprint PCS will pay to
Manager a weekly fee equal to 92% of Collected Revenues for the week for all
obligations of Manager under this Agreement. The fee will be due on Thursday of
the week following the week for which the fee is calculated.
10.1.2 PAYMENT OF UNIVERSAL SERVICE FUNDS. Sprint PCS and
Manager will share any federal and state subsidy funds (e.g., payments by a
state of universal service fund subsidies to Sprint PCS or Manager), if any,
received by Sprint PCS or Manager for customers who reside in the portion of the
Service Area served by the Service Area Network. Manager is entitled to 92% of
any amount received by either party and Sprint PCS is entitled to 8% of such
amounts.
10.1.3 INTER SERVICE AREA FEES. Sprint PCS will pay to Manager
monthly a fee as set out in the Sprint PCS Roaming and Inter Service Area
Program, for each minute of use that a customer of Sprint PCS or one of the
Other Managers whose NPA-NXX is not assigned to the Service Area Network uses
the Service Area Network. Manager will pay to Sprint PCS a fee, as set out in
the Sprint PCS Roaming and Inter Service Area Program, for each minute of use
that a customer whose NPA-NXX is assigned to the Service Area Network uses a
portion of the Sprint PCS Network other than the Service Area Network. Manager
acknowledges that the manner in which the NPA-NXX is utilized could change,
which will require a modification in the manner in which the inter service area
fees, if any, will be calculated.
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10.1.4 INTERCONNECT FEES. Manager will pay to Sprint PCS (or
to other carriers as appropriate) monthly the interconnect fees, if any, as
provided under Section 1.4.
10.1.5 OUTBOUND ROAMING FEES. If not otherwise provided under
any Program Requirement:
(a) Sprint PCS will pay to Manager monthly the amount of
Outbound Roaming fees that Sprint PCS collects for the month from end users
whose NPA-NXX is assigned to the Service Area; and
(b) Manager will pay to Sprint PCS (or to a clearinghouse or
other carrier as appropriate) the direct cost of providing the capability for
the Outbound Roaming, including any amounts payable to the carrier that handled
the roaming call and the clearinghouse operator.
10.1.6 REIMBURSEMENTS. Manager will pay to or reimburse Sprint
PCS for any amounts that Sprint PCS is required to pay to a third party (e.g., a
telecommunications carrier) to the extent Sprint PCS already paid such amount to
Manager under this Section 10.
10.2 MONTHLY TRUE UP. Manager will report to Sprint PCS monthly the
amount of Collected Revenues received directly by the Manager (e.g., customer
mails payment to the business address of Manager rather than to the lockbox or a
customer pays a direct sales force representative in cash). Sprint PCS will on a
monthly basis true up the fees and payments due under Section 10.1 against the
actual payments made by Sprint PCS to Manager. Sprint PCS will provide to
Manager a true up report each month showing the true up and the net amount due
from one party to the other, if any. If the weekly payments made to Manager
exceed the actual fees and payments due to Manager, then Manager will remit the
amount of the overpayment to Sprint PCS within 5 Business Days after receiving
the true up report from Sprint PCS. If the weekly payments made to Manager are
less than the actual fees and payments due to Manager, then Sprint PCS will
remit the shortfall to Manager within 5 Business Days after sending the true up
report to Manager.
If a party disputes any amount on the true up report, the disputing
party must give the other party written notice of the disputed amount and the
reason for the dispute within 90 days after it receives the true up report. The
dispute will be resolved through the dispute resolution process in Section 14.
The parties must continue to pay to the other party any undisputed amounts owed
under this agreement during the dispute resolution process. The dispute of an
item does not stay or diminish a party's other rights and remedies under this
agreement.
10.3 TAXES. Manager will pay or reimburse Sprint PCS for any sales,
use, gross receipts or similar tax, administrative fee, telecommunications fee
or surcharge for taxes or fees levied by a governmental authority on the fees
and charges payable by Sprint PCS to Manager.
Manager will report all taxable property to the appropriate taxing
authority for ad valorem tax purposes. Manager will pay as and when due all
taxes, assessments, liens, encumbrances, levies, and other charges against the
real estate and personal property owned by Manager or used by Manager in
fulfilling its obligations under this agreement.
Manager is responsible for paying all sales, use, or similar taxes on
the purchase and use of its equipment, advertising, and other goods or services
in connection with this agreement.
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10.4 COLLECTED REVENUES DEFINITION. "Collected Revenues" means actual
payments received by or on behalf of Sprint PCS or Manager for Sprint PCS
Products and Services from others, including the customers, whose NPA-NXX is the
same as that for the portion of the Service Area served by the Service Area
Network. In determining Collected Revenues the following principles will apply.
(a) The following items will be treated as follows:
(i) Collected Revenues do not include revenues from
federal and state subsidy funds; they are handled separately as noted
in Section 10.1.2;
(ii) Collected Revenues do include any amounts
received for the payment of Inbound Roaming charges and interconnect
fees when calls are carried on the Service Area Network; and
(iii) Collected Revenues do not include any amounts
received with respect to any changes made by Sprint PCS under Section
9.4.
(b) The following items are not Collected Revenues; Sprint PCS
is obligated to remit the amounts received with respect to such items, if any,
to Manager, as follows:
(i) inter service area payments will be paid as
provided under Section 10.1.3;
(ii) Outbound Roaming and related charges will be
paid as provided under Section 10.1.5;
(iii) proceeds from the sale or lease of subscriber
equipment and accessories will be paid to Manager, subject to the
equipment settlement process in Section 4.1.2;
(iv) proceeds from sales not in the ordinary course
of business (e.g., sales of switches, cell sites, computers, vehicles
or other fixed assets);
(v) any amounts collected with respect to sales and
use taxes, gross receipts taxes, transfer taxes, and similar taxes,
administrative fees, telecommunications fees, and surcharges for taxes
and fees that are collected by a carrier for the benefit of a
governmental authority, subject to Manager's obligation under Section
10.3; and
(vi) Manager will be entitled to 100% of all revenues
received by Sprint PCS with respect to sales of Manager's Products and
Services.
(c) The following items are not Collected Revenues; neither
party is obligated to remit any amounts respecting, such items:
(i) reasonable adjustments of a customer's account
(e.g., if Sprint PCS or Manager reduces a customer's bill, then the
amount of the adjustment is not Collected Revenues); and
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(ii) amount of bad debt and fraud associated with
customers whose NPA-NXX is assigned to the Service Area (e.g., if
Sprint PCS or Manager writes off a customer's bill as a bad debt, there
are no Collected Revenues on which a fee is due to Manager).
10.5 LATE PAYMENTS. Any amount due under this Section 10 that is not
paid by one party to the other party in accordance with the terms of this
agreement will bear interest at the Default Rate beginning (and including) the
3rd day after the due date until (and including) the date paid.
10.6 SETOFF RIGHT IF FAILURE TO PAY AMOUNTS DUE. If Manager fails to
pay any undisputed amount due Sprint PCS or a Related Party of Sprint PCS under
this agreement, the Services Agreement, or any other agreement with Sprint PCS
or a Related Party of Sprint PCS, then Sprint PCS may setoff against its
payments to Manager under this Section 10, the following amounts:
(a) any amount that Manager owes to Sprint PCS or a Related
Party of Sprint PCS, including amounts due under the Services Agreement; and
(b) any amount that Sprint PCS reasonably estimates will be
due to Sprint PCS for the current month under the Services Agreement (e.g., if
under the Services Agreement customer care calls are billed monthly, Sprint PCS
can deduct from the weekly payment to Manager an amount Sprint PCS reasonably
estimates will be due Sprint PCS on account of such customer care calls under
the Services Agreement).
On a monthly basis Sprint PCS will true up the estimated amounts deducted
against the actual amounts due Sprint PCS and Sprint PCS' Related Parties. If
the estimated amounts deducted by Sprint PCS exceed the actual amounts due to
Sprint PCS and Sprint PCS' Related Parties, then Sprint PCS will remit the
excess to Manager with the next weekly payment. If the estimated amounts
deducted are less than the actual amounts due to Sprint PCS and its Related
Parties, then Sprint PCS may continue to setoff the payments to Manager against
the amounts due to Sprint PCS and Sprint PCS' Related Parties. This right of
setoff is in addition to any other right that Sprint PCS may have under this
agreement.
11. TERM; TERMINATION; EFFECT OF TERMINATION
11.1 INITIAL TERM. This agreement commences on the date of execution
and, unless terminated earlier in accordance with the provisions of this Section
11, continues for a period of 20 years (the "Initial Term").
11.2 RENEWAL TERMS. Following expiration of the Initial Term, this
agreement will automatically renew for 3 successive 10-year renewal periods (for
a maximum of 50 years including the Initial Term), unless at least 2 years prior
to the commencement of any renewal period either party notifies the other party
in writing that it does not wish to renew this agreement.
11.2.1 NON-RENEWAL RIGHTS OF MANAGER. If this agreement will
terminate because Sprint PCS gives Manager timely written notice of non-renewal
of this agreement, then Manager may exercise its rights under Section 11.2.1.1
or, if applicable, its rights under Section 11.2.1.2.
11.2.1.1 Manager's Put Right. Manager may within 30 days after
the date Sprint PCS gives notice of non-renewal put to Sprint PCS all
of the Operating Assets. Sprint PCS will pay to Manager for the
Operating Assets an amount equal to 80% of the Entire Business Value.
The closing of the
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purchase of the Operating Assets will occur within 20 days after the
later of (a) the receipt by Sprint PCS of the written notice of
determination of the Entire Business Value provided by the appraisers
under Section 11.7 or (b) the receipt of all materials required to be
delivered to Sprint PCS under Section 11.8. Upon closing the purchase
of the Operating Assets this agreement will be deemed terminated. The
exercise of the put, the determination of the Operating Assets, the
representations and warranties made by Manager with respect to the
Operating Assets and the business, and the process for closing the
purchase will be subject to the terms and conditions set forth in
Section 11.8.
11.2.1.2 Manager's Purchase Right.
(a) If Sprint PCS owns 20 MHz or more of PCS spectrum
in the Service Area under the License on the date this
agreement is executed, then Manager may within 30 days after
the date Sprint PCS gives notice of nonrenewal declare its
intent to purchase the Disaggregated License. Subject to
receipt of FCC approval of the necessary disaggregation and
partition, Manager may purchase from Sprint PCS the
Disaggregated License for an amount equal to the greater of
(1) the original cost of the License to Sprint PCS (pro rated
on a pops and spectrum basis) plus the microwave relocation
costs paid by Sprint PCS or (2) 10% of the Entire Business
Value.
(b) Upon closing the purchase of the spectrum this
agreement will be deemed terminated. The closing of the
purchase of the Disaggregated License will occur within the
later of:
(1) 20 days after the receipt by Manager of
the written notice of determination of the Entire
Business Value by the appraisers under Section 11.7;
or
(2) 10 days after the approval of the sale
of the Disaggregated License by the FCC.
(c) The exercise of the purchase right, the
determination of the geographic extent of the Disaggregated
License coverage, the representations and warranties made by
Sprint PCS with respect to the Disaggregated License, and the
process for closing the purchase will be subject to the terms
and conditions set forth in Section 11.8.
(d) After the closing of the purchase Manager will
allow:
(1) subscribers of Sprint PCS to roam on
Manager's network; and
(2) Sprint PCS to resell Manager's Products
and Services.
Manager will charge Sprint PCS a MFN price in either case.
11.2.2 NON-RENEWAL RIGHTS OF SPRINT PCS. If this agreement
will terminate because of any of the following five (5) events, then Sprint PCS
may exercise its rights under Section 11.2.2.1 or, if applicable, its rights
under Section 11.2.2.2:
(a) Manager gives Sprint PCS timely written notice of
nonrenewal of this agreement;
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(b) both parties give timely written notices of non-renewal;
(c) this agreement expires with neither party giving a written
notice of non-renewal;
(d) either party elects to terminate this agreement under
Section 11.3.4(a); or
(e) Manager elects to terminate this agreement under Section
11.3.4(b).
11.2.2.1 Sprint PCS' Purchase Right. Sprint PCS may purchase
from Manager all of the Operating Assets. Sprint PCS will pay to
Manager an amount equal to 80% of the Entire Business Value. The
closing of the purchase of the Operating Assets will occur within 20
days after the later of (a) the receipt by Sprint PCS of the written
notice of determination of the Entire Business Value provided by the
appraisers under Section 11.7 or (b) the receipt of all materials
required to be delivered to Sprint PCS under Section 11.8. Upon closing
the purchase of the Operating Assets this agreement will be deemed
terminated. The exercise of the purchase right, the determination of
the Operating Assets, the representations and warranties made by
Manager with respect to the Operating Assets and the business, and the
process for closing the purchase will be subject to the terms and
conditions set forth in Section 11.8.
11.2.2.2 Sprint PCS' Put Right.
(a) Sprint PCS may, subject to receipt of FCC
approval, put to Manager the Disaggregated License for a
purchase price equal to the greater of (1) the original cost
of the License to Sprint PCS (pro rated on a pops and spectrum
basis) plus the microwave relocation costs paid by Sprint PCS
or (2) 10% of the Entire Business Value.
(b) Upon closing the purchase of the Disaggregated
License this agreement will be deemed terminated. The closing
of the purchase of the Disaggregated License will occur within
the later of:
(1) 20 days after the receipt by Sprint PCS
of the written notice of determination of the Entire
Business Value by the appraisers under Section 11.7;
or
(2) 10 days after the approval of the sale
of the Disaggregated License by the FCC.
(c) The exercise of the put, the determination of the
geographic extent of the Disaggregated License coverage, the
representations and warranties made by Sprint PCS with respect
to the Disaggregated License, and the process for closing the
purchase will be subject to the terms and conditions set forth
in Section 11.8.
(d) Manager may, within 10 days after it receives
notice of Sprint PCS' exercise of its put, advise Sprint PCS
of the amount of spectrum (not to exceed 10 MHz) it wishes to
purchase. After the purchase Manager will allow:
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(1) subscribers of Sprint PCS to roam on
Manager's network; and
(2) Sprint PCS to resell Manager's Products
and Services.
Manager will charge Sprint PCS a MFN price in either case.
11.2.3 EXTENDED TERM AWAITING FCC APPROVAL. If Manager is
buying the Disaggregated License as permitted or required under Sections
11.2.1.2 or 11.2.2.2, then the Term of this agreement will extend beyond the
original expiration date until the closing of the purchase of the Disaggregated
License. The parties agree to exercise their respective commercially reasonable
efforts to obtain FCC approval of the transfer of the Disaggregated License.
11.3 EVENTS OF TERMINATION. An "Event of Termination" is deemed to
occur when a party gives written notice to the other party of the Event of
Termination as permitted below:
11.3.1 TERMINATION OF LICENSE.
(a) At the election of either party this agreement may be
terminated at the time the FCC revokes or fails to renew the License. Unless
Manager has the right to terminate this agreement under Section 11.3.1(b),
neither party has any claim against the other party if the FCC revokes or fails
to renew the License, even if circumstances would otherwise permit one party to
terminate this agreement based on a different Event of Termination, except that
the parties will have the right to pursue claims against each other as permitted
under Section 11.4(b).
(b) If the FCC revokes or fails to renew the License because
of a breach of this agreement by Sprint PCS, then Manager has the right to
terminate this agreement under Section 11.3.3 and not this Section 11.3.1.
11.3.2 BREACH OF AGREEMENT: PAYMENT OF MONEY TERMS. At the
election of the non- breaching party this agreement may be terminated upon the
failure by the breaching party to pay any amount due under this agreement or any
other agreement between the parties or their respective Related Parties, if the
breach is not cured within 30 days after the breaching party's receipt of
written notice of the nonpayment from the non-breaching party.
11.3.3 BREACH OF AGREEMENT: OTHER TERMS. At the election of
the nonbreaching party this agreement may be terminated upon the material breach
by the breaching party of any material term contained in this agreement that
does not regard the payment of money, if the breach is not cured within 30 days
after the breaching party's receipt of written notice of the breach from the
non-breaching party, except the cure period will continue for a reasonable
period beyond the 30-day period, but will under no circumstances exceed 180 days
after the breaching party's receipt of written notice of the breach, if it is
unreasonable to cure the breach within the 30-day period, and the breaching
party takes action prior to the end of the 30-day period that is reasonably
likely to cure the breach and continues to diligently take action necessary to
cure the breach.
11.3.4 REGULATORY CONSIDERATIONS.
(a) At the election of either party this agreement may be
terminated if this agreement violates any applicable law in any material respect
where such violation (i) is classified as a felony or (ii)
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subjects either party to substantial monetary fines or other substantial
damages, except that before causing any termination the parties must use best
efforts to modify this agreement, as necessary to cause this agreement (as
modified) to comply with applicable law and to preserve to the extent possible
the economic arrangements set forth in this agreement.
(b) At the election of Manager this agreement may be
terminated if the regulatory action described under 11.3.4(a) is the result of a
deemed change of control of the License and the parties are unable to agree upon
a satisfactory resolution of the matter with the regulatory authority without a
complete termination of this agreement.
11.3.5 TERMINATION OF TRADEMARK LICENSE AGREEMENTS. If either
Trademark License Agreement terminates under its terms, then:
(a) Manager may terminate this agreement if the Trademark
License Agreement terminated because of a breach of the Trademark License
Agreement by Sprint PCS or Sprint; and
(b) Sprint PCS may terminate this agreement if the Trademark
License Agreement terminated because of a breach of the Trademark License
Agreement by Manager.
11.3.6 FINANCING CONSIDERATIONS. At the election of Sprint PCS
this agreement may be terminated upon the failure of Manager to obtain the
financing described in Exhibit 1.7 by the deadline(s) set forth on such Exhibit.
11.3.7 BANKRUPTCY OF A PARTY. At the election of the
non-bankrupt party, this agreement may be terminated upon the occurrence of a
Voluntary Bankruptcy or an Involuntary Bankruptcy of the other party.
"Voluntary Bankruptcy" means:
(a) the inability of a party generally to pay its
debts as the debts become due, or an admission in writing by a
party of its inability to pay its debts generally or a general
assignment by a party for the benefit of creditors;
(b) the filing of any petition or answer by a party
seeking to adjudicate itself a bankrupt or insolvent, or
seeking any liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition
for itself or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking,
consenting to, or acquiescing in the entry of an order for
relief or the appointment of a receiver, trustee, custodian or
other similar official for itself or for substantially all of
its property; or
(c) any action taken by a party to authorize any of
the actions set forth above.
"Involuntary Bankruptcy" means, without the consent
or acquiescence of a party:
(a) the entering of an order for relief or approving
a petition for relief or reorganization;
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(b) any petition seeking any reorganization,
arrangement, composition, readjustment, liquidation,
dissolution or other similar relief under any present or
future bankruptcy, insolvency or similar statute, law or
regulation;
(c) the filing of any petition against a party, which
petition is not dismissed within 90 days; or
(d) without the consent or acquiescence of a party,
the entering of an order appointing a trustee, custodian,
receiver or liquidator of party or of all or any substantial
part of the property of the party, which order is not
dismissed within 90 days.
11.4 EFFECT OF AN EVENT OF TERMINATION.
(a) Upon the occurrence of an Event of Termination, the party
with the right to terminate this agreement or to elect the remedy upon the Event
of Termination, as the case may be, may:
(i) in the case of an Event of Termination under
Sections 11.3.1(a) or 11.3.7, give the other party written notice that
the agreement is terminated effective as of the date of the notice, in
which case neither party will have any other remedy or claim for
damages (except any claim the non-bankrupt party has against the
bankrupt party and any claims permitted under Section 11.4(b)); or
(ii) in the case of an Event of Termination other
than under Section 11.3.1(a), give the other party written notice that
the party is exercising one of its rights, if any, under Section 11.5
or Section 11.6.
(b) If the party terminates this agreement under Section
11.4(a)(i) then all rights and obligations of each party under this agreement
will immediately cease, except that:
(i) any rights arising out of a breach of any terms
of this agreement will survive any termination of this agreement;
(ii) the provisions described in Section 17.23 will
survive any termination of this agreement;
(iii) the payment obligations under Section 10 will
survive any termination of this agreement if, and to the extent, any
costs or fees have accrued or are otherwise due and owing as of the
date of termination of this agreement from Manager to Sprint PCS or any
Sprint PCS Related Party or from Sprint PCS to Manager or any Manager
Related Party;
(iv) either party may terminate this agreement in
accordance with the terms of this agreement without any liability for
any loss or damage arising out of or related to such termination,
including any loss or damage arising out of the exercise by Sprint PCS
of its rights under Section 11.6.3;
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(v) Manager will use all commercially reasonable
efforts to cease immediately all of their respective efforts to market,
sell, promote or distribute the Sprint PCS Products and Services;
(vi) Sprint PCS has the option to buy from Manager
any new unsold subscriber equipment and accessories, at the prices
charged to Manager;
(vii) the parties will immediately stop making any
statements or taking any action that might cause third parties to infer
that any business relationship continues to exist between the parties,
and where necessary or advisable, the parties will inform third parties
that the parties no longer have a business relationship; and
(viii) if subscriber equipment and accessories are in
transit when this agreement is terminated, Sprint PCS may, but does not
have the obligation to, cause the freight carrier to not deliver the
subscriber equipment and accessories to Manager but rather to deliver
the subscriber equipment and accessories to Sprint PCS.
(c) If the party exercises its rights under Section
11.4(a)(ii), this agreement will continue in full force and effect until
otherwise terminated.
(d) If this agreement terminates for any reason other than
Manager's purchase of the Disaggregated License, Manager will not, for 3 years
after the date of termination compile, create, or use for the purpose of selling
merchandise or services similar to any Sprint PCS Products and Services, or
sell, transfer or otherwise convey to a third party, a list of customers who
purchased, leased or used any Sprint PCS Products and Services. Manager may use
such a list for its own internal analysis of its business practices and
operations. If this agreement terminates because of Manager's purchase of the
Disaggregated License, then Sprint PCS will transfer to Manager the Sprint PCS
customers with a MIN assigned to the Service Area covered by the Disaggregated
License, but Sprint PCS retains the customers of a national account and any
resellers who have entered into a resale agreement with Sprint PCS. Manager
agrees not to solicit, directly or indirectly, any customers of Sprint PCS not
transferred to Manager under this Section 11.4(d) for 2 years after the
termination of this agreement, except that Manager's advertising through mass
media will not be considered a solicitation of Sprint PCS customers.
11.5 MANAGER'S EVENT OF TERMINATION RIGHTS AND REMEDIES. In addition to
any other right or remedy that Manager may have under this agreement, the
parties agree that Manager will have the rights and remedies set forth in this
Section 11.5 and that such rights and remedies will survive the termination of
this agreement. If Manager has a right to terminate this agreement as the result
of the occurrence of an Event of Termination under Sections 11.3.2, 11.3.3,
11.3.5 or 11.3.7 (if Manager is the non-bankrupt party), then Manager has the
right to elect one of the following three (3) remedies, except Manager cannot
elect its remedies under Sections 11.5.1 or 11.5.2 during the first 2 years of
the Initial Term with respect to an Event of Termination under Section 11.3.3.
11.5.1 MANAGER'S PUT RIGHT. Manager may put to Sprint PCS
within 30 days after the Event of Termination all of the Operating Assets.
Sprint PCS will pay to Manager an amount equal to 80% of the Entire Business
Value. The closing of the purchase of the Operating Assets will occur within 20
days after the later of:
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(a) the receipt by Sprint PCS of the written notice of
determination of the Entire Business Value by the appraisers under Section 11.7;
or
(b) the receipt of all materials required to be delivered to
Sprint PCS under Section 11.8.
Upon closing the purchase of the Operating Assets this agreement will
be deemed terminated. The exercise of the put, the determination of the
Operating Assets, the representations and warranties made by the Manager with
respect to the Operating Assets and the business, and the process for closing
the purchase will be subject to the terms and conditions set forth in Section
11.8.
11.5.2 MANAGER'S PURCHASE RIGHT.
(a) If Sprint PCS owns 20 MHz or more of PCS spectrum in the
Service Area under the License on the date this agreement is executed, then
Manager may, subject to receipt of FCC approval, purchase from Sprint PCS the
Disaggregated License for the greater of (1) the original cost of the License to
Sprint PCS (pro rated on a pops and spectrum basis) plus the microwave
relocation costs paid by Sprint PCS or (2) 9% (10% minus a 10% penalty) of the
Entire Business Value.
(b) Upon closing the purchase of the Disaggregated License
this agreement will be deemed terminated. The closing of the purchase of the
Disaggregated License will occur within the later of:
(1) 20 days after the receipt by Manager of
the written notice of determination of the Entire
Business Value by the appraisers under Section 11.7;
or
(2) 10 days after the approval of the sale
of the Disaggregated License by the FCC.
The exercise of the purchase right, the determination of the geographic extent
of the Disaggregated License coverage, the representations and warranties made
by Sprint PCS with respect to the Disaggregated License, and the process for
closing the purchase will be subject to the terms and conditions set forth in
Section 11.8.
(c) After the closing of the purchase Manager will allow:
(1) subscribers of Sprint PCS to roam on
Manager's network; and
(2) Sprint PCS to resell Manager's Product
and Services.
Manager will charge Sprint PCS a MFN price in either case.
11.5.3 MANAGER'S ACTION FOR DAMAGES OR OTHER RELIEF. Manager,
in accordance with the dispute resolution process in Section 14, may seek
damages or other appropriate relief.
11.6 SPRINT PCS' EVENT OF TERMINATION RIGHTS AND REMEDIES. In addition
to any other right or remedy that Sprint PCS may have under this agreement, the
parties agree that Sprint PCS will have the rights and remedies set forth in
this Section 11.6 and that such rights and remedies will survive the termination
of this agreement. If Sprint PCS has a right to terminate this agreement as the
result of the occurrence of an Event of Termination under Sections 11.3.2,
11.3.3, 11.3.5, 11.3.6 or 11.3.7 (if Sprint PCS is the non-bankrupt party),
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then Sprint PCS has the right to elect one of the following four (4) remedies,
except that (i) if Sprint PCS elects the remedies under Sections 11.6.1, 11.6.2
or 11.6.4, Sprint PCS may pursue its rights under Section 11.6.3 concurrently
with its pursuit of one of the other three remedies, (ii) Sprint PCS cannot
elect its remedies under Sections 11. 6. 1 or 11. 6.2 during the first 2 years
of the Initial Term with respect to an Event of Termination under Section 11.3.3
(unless the Event of Termination is caused by a breach related to the Build-out
Plan or the build-out of the Service Area Network), and (iii) Sprint PCS cannot
elect its remedy under Section 11. 6.2 during the first 2 years of the Initial
Term with respect to an Event of Termination under Section 11.3.6.
11.6.1 SPRINT PCS' PURCHASE RIGHT. Sprint PCS may purchase
from Manager all of the Operating Assets. Sprint PCS will pay to Manager an
amount equal to 72% (80% minus a 10% penalty) of the Entire Business Value. The
closing of the purchase of the Operating Assets will occur within 20 days after
the later of:
(a) the receipt by Sprint PCS of the written notice of
determination of the Entire Business Value by the appraisers pursuant to Section
11.7; or
(b) the receipt of all materials required to be delivered to
Sprint PCS under Section 11.8.
Upon closing the purchase of the Operating Assets this agreement will
be deemed terminated. The exercise of the purchase right, the determination of
the Operating Assets, the representations and warranties made by Manager with
respect to the Operating Assets and the business, and the process for closing
the purchase will be subject to the terms and conditions set forth in Section
11.8.
11.6.2 SPRINT PCS' PUT RIGHT.
(a) Sprint PCS may, subject to receipt of FCC approval, put to
Manager the Disaggregated License for a purchase price equal to the greater of
(1) the original cost of the License to Sprint PCS (pro rated on a pops and
spectrum basis) plus the microwave relocation costs paid by Sprint PCS or (2)
10% of the Entire Business Value.
(b) Upon closing the purchase of the Disaggregated License
this agreement will be deemed terminated. The closing of the purchase of the
Disaggregated License will occur within the later of:
(1) 20 days after the receipt by Sprint PCS
of the written notice of determination of the Entire
Business Value by the appraisers under Section 11.7;
or
(2) 10 days after the approval of the sale
of the Disaggregated License by the FCC.
(c) The exercise of the put, the determination of the
geographic extent of the Disaggregated License coverage, the representations and
warranties made by Sprint PCS with respect to the Disaggregated License, and the
process for closing the purchase will be subject to the terms and conditions set
forth in Section 11.8.
(d) Manager may, within 10 days after it receives notice of
Sprint PCS' exercise of its put, advise Sprint PCS of the amount of spectrum
(not to exceed 10 MHz) it wishes to purchase. After the closing of the purchase
Manager will allow:
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(1) subscribers of Sprint PCS to roam on
Manager's network; and
(2) Sprint PCS to resell Manager's Products
and Services.
Manager will charge Sprint PCS a MFN price in either case.
11.6.3 SPRINT PCS' RIGHT TO CAUSE A CURE.
(a) Sprint PCS' Right. Sprint PCS may, but is not obligated
to, take such action as it deems necessary to cure Manager's breach of this
agreement, including assuming operational responsibility for the Service Area
Network to complete construction, continue operation, complete any necessary
repairs, implement changes necessary to comply with the Program Requirements and
terms of this agreement, or take such other steps as are appropriate under the
circumstances, or Sprint PCS may designate a third party or parties to do the
same, to assure uninterrupted availability and deliverability of Sprint PCS
Products and Services in the Service Area, or to complete the build-out of the
Service Area Network in accordance with the terms of this agreement. In the
event that Sprint PCS elects to exercise its right under this Section 11.6.3,
Sprint PCS will give Manager written notice of such election. Upon giving such
notice:
(1) Manager will collect and make available
at a convenient, central location at its principal
place of business, all documents, books, manuals,
reports and records related to the Build-out Plan and
required to operate and maintain the Service Area
Network; and
(2) Sprint PCS, its employees, contractors
and designated third parties will have the
unrestricted right to enter the facilities and
offices of Manager for the purpose of curing the
breach and, if Sprint PCS deems necessary, operate
the Service Area Network.
Manager agrees to cooperate with and assist Sprint PCS to the extent requested
by Sprint PCS to enable Sprint PCS to exercise its rights under this Section
11.6.3.
(b) Liability. Sprint PCS' exercise of its rights under this
Section 11.6.3 will not be deemed an assumption by Sprint PCS of any liability
attributable to Manager or any other party, except that, without limiting the
provisions of Section 13, during the period that Sprint PCS is curing a breach
under this agreement or operating any portion of the Service Area Network
pursuant to this Section 11.6.3, Sprint PCS will indemnify and defend Manager
and its directors, partners, officers, employees and agents from and against,
and reimburse and pay for, all claims, demands, damages, losses, judgments,
awards, liabilities, costs and expenses (including reasonable attorneys' fees,
court costs and other expenses of litigation), whether or not arising out of
third party claims, in connection with any suit, claim, action or other legal
proceeding relating to the bodily injury, sickness or death of persons or the
damage to or destruction of property, real or personal, resulting from or
arising out of Sprint PCS' negligence or willful misconduct in curing the breach
or in the operation of the Service Area Network. Sprint PCS' obligation under
this Section 11.6.3(b) will not apply to the extent of any claims, demands,
damages, losses, judgments, awards, liabilities, costs and expenses resulting
from the negligence or willful misconduct of Manager or arising from any
contractual obligation of Manager.
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(c) Costs and Payments. During the period that Sprint PCS is
curing a breach or operating the Service Area Network under this Section 11.6.3,
Sprint PCS and Manager will continue to make any and all payments due to the
other party and to third parties under this agreement, the Services Agreement
and any other agreements to which such party is bound, except that Sprint PCS
may deduct from its payments to Manager all reasonable costs and expenses
incurred by Sprint PCS in connection with the exercise of its right under this
Section 11.6.3. Sprint PCS' operation of the Service Area Network pursuant to
this Section 11.6.3 is not a substitution for Manager's performance of its
obligations under this agreement and does not relieve Manager of its other
obligations under this agreement.
(d) Length of Right. Sprint PCS may continue to operate the
Service Area Network in accordance with Section 11.6.3 until (i) Sprint PCS
cures all breaches by Manager under this agreement; (ii) Manager cures all
breaches and demonstrates to Sprint PCS' satisfaction that it is financially and
operationally willing, ready and able to perform in accordance with this
agreement and resumes such performance; (iii) Sprint PCS consummates the
purchase of the Operating Assets under Section 11.6.1 or the sale of the
Disaggregated License under Section 11.6.2; or (iv) Sprint PCS terminates this
agreement.
(e) Not Under Services Agreement. The exercise by Sprint PCS
of its right under this Section 11.6.3 does not represent services rendered
under the Services Agreement, and therefore it does not allow Manager to be
deemed in compliance with the Program Requirements under Sections 7.1(a)(ii),
8.1(b).
11.6.4 SPRINT PCS' ACTION FOR DAMAGES OR OTHER RELIEF. Sprint
PCS, in accordance with the dispute resolution process in Section 14, may seek
damages or other appropriate relief.
11.7 DETERMINATION OF ENTIRE BUSINESS VALUE.
11.7.1 APPOINTMENT OF APPRAISERS. Sprint PCS and Manager must
each designate an independent appraiser within 30 days after giving the Purchase
Notice under Exhibit 11.8. Sprint PCS and Manager will direct the two appraisers
to jointly select a third appraiser within 15 days after the day the last of
them is appointed. Each appraiser must be an expert in the valuation of wireless
telecommunications businesses. Sprint PCS and Manager must direct the three
appraisers to each determine, within 45 days after the appointment of the last
appraiser, the Entire Business Value. Sprint PCS and Manager will each bear the
costs of the appraiser appointed by it, and they will share equally the costs of
the third appraiser.
11.7.2 MANAGER'S OPERATING ASSETS. The following assets are
included in the Operating Assets (as defined in the Schedule of Definitions):
(a) network assets, including all personal property, real
property interests in cell sites and switch sites, leasehold interests,
collocation agreements, easements, and rights-of-way;
(b) all of the real, personal, tangible and intangible
property and contract rights that Manager owns and uses in conducting , the
business of providing the Sprint PCS Products and Services, including the
goodwill resulting from Manager's customer base;
(c) sale and distribution assets primarily dedicated (i.e., at
least 80% of their revenue is derived from the sale of Sprint PCS Products and
Services) to the sale by Manager of Sprint PCS Products and Services. For
example, a retail store that derives at least 80% of its revenue from the sale
of Sprint PCS
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Products and Services is an Operating Asset. A store that derives 65 % of its
revenue from Sprint PCS Products and Services is not an Operating Asset;
(d) customers, if any, that use both the other products and
services approved under Section 3.2 and the Sprint PCS Products and Services;
(e) handset inventory;
(f) books and records of the wireless business, including all
engineering drawings and designs and financial records; and
(g) all contracts used by Manager in operating the wireless
business including T1 service agreements, service contracts, interconnection
agreements, distribution agreements, software license agreements, equipment
maintenance agreements, sales agency agreements and contracts with all equipment
suppliers.
11.7.3 ENTIRE BUSINESS VALUE. Utilizing the valuation
principles set forth below and in Section 11.7.4, "Entire Business Value" means
the fair market value of Manager's wireless business in the Service Area, valued
on a going concern basis.
(a) The fair market value is based on the price a willing
buyer would pay a willing seller for the entire on-going business.
(b) The appraisers will use the then-current customary means
of valuing a wireless telecommunications business.
(c) The business is conducted under the Brands and existing
agreements between the parties and their respective Related Parties.
(d) Manager owns the Disaggregated License (in the case where
Manager will be buying the Disaggregated License under Sections 11.2.1.2,
11.2.2.2, 11.5.2 or 11.6.2) or Manager owns the spectrum and the frequencies
actually used by Manager under this agreement (in the case where Sprint PCS will
be buying the Operating Assets under Sections 11.2.1.1, 11.2.2.1, 11.5.1 or
11.6.1).
(e) The valuation will not include any value for the business
represented by Manager's Products and Services or any business not directly
related to Sprint PCS Products and Services.
11.7.4 CALCULATION OF ENTIRE BUSINESS VALUE. The Entire
Business Value to be used to determine the purchase price of the Operating
Assets or the Disaggregated License under this agreement is as follows:
(a) If the highest fair market value determined by the
appraisers is within 10% of the lowest fair market value, then the Entire
Business Value used to determine the purchase price under this agreement will be
the arithmetic mean of the three appraised fair market values.
(b) If two of the fair market values determined by the
appraisers are within 10% of one another, and the third value is not within 10%
of the other fair market values, then the Entire Business Value
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used to determine the purchase price under this agreement will be the arithmetic
mean of the two more closely aligned fair market values.
(c) If none of the fair market values is within 10% of the
other two fair market values, then the Entire Business Value used to determine
the purchase price under this agreement will be the middle value of the three
fair market values.
11.8 CLOSING TERMS AND CONDITIONS. The closing terms and conditions for
the transactions contemplated in this Section 11 are attached as Exhibit 11.8.
11.9 CONTEMPORANEOUS AND IDENTICAL APPLICATION. The parties agree that
any action regarding renewal or non-renewal and any Event of Termination will
occur contemporaneously and identically with respect to all Licenses. For
example, if Manager exercises its purchase right under Section 11.5.2, it must
exercise such right with respect to all of the Licenses under this agreement.
The Term of this agreement will be the same for all Licenses; Manager will not
be permitted to operate a portion of the Service Area Network with fewer than
all of the Licenses.
12. BOOKS AND RECORDS; CONFIDENTIAL INFORMATION; INSURANCE
12.1 BOOKS AND RECORDS.
12.1.1 GENERAL. Each party must keep and maintain books and
records to support and document any fees, costs, expenses or other charges due
in connection with the provisions set forth in this agreement. The records must
be retained for a period of at least 3 years after the fees, costs, expenses or
other charges to which the records relate have accrued and have been paid, or
such other period as may be required by law.
12.1.2 AUDIT. On reasonable advance notice, each party must
provide access to appropriate records to the independent auditors selected by
the other party for purposes of auditing the amount of fees, costs, expenses or
other charges payable in connection with the Service Area with respect to the
period audited. The auditing party will conduct the audit no more frequently
than annually. If the audit shows that Sprint PCS was underpaid then, unless the
amount is contested, Manager will pay to Sprint PCS the amount of the
underpayment within 10 Business Days after Sprint PCS gives Manager written
notice of the determination of the underpayment. If the audit determines that
Sprint PCS was overpaid then, unless the amount is contested, Sprint PCS will
pay to Manager the amount of the overpayment within 10 Business Days after
Sprint PCS determines Sprint PCS was overpaid. The auditing party will pay all
costs and expenses related to the audit unless the amount owed to the audited
party is reduced by more than 10% or the amount owed by the audited party is
increased by more than 10%, in which case the costs and expenses related to the
audit will be paid by the audited party.
Notwithstanding the above provisions of this Section 12.1.2, rather
than allow Manager's independent auditors access to Sprint PCS' records, Sprint
PCS may provide a report issued in conformity with Statement of Auditing
Standard No. 70 "Reports on the Processing of Transactions by Service
Organizations" ("Type II Report" or "Manager Management Report"). Such report
will be prepared by independent auditors and will provide an opinion on the
controls placed in operation and tests of operating effectiveness of those
controls in effect at Sprint PCS over the Manager Management Processes. "Manager
Management Processes" include
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those services generally provided within the Management Agreement, primarily
billing and collection of Collected Revenues.
12.1.3 CONTESTING AN AUDIT. If the party that did not select
the independent auditor does not agree with the findings of the audit, then such
party can contest the findings by providing notice of such disagreement to the
other party (the "Dispute Notice"). The date of delivery of such notice is the
"Dispute Notice Date." If the parties are unable to resolve the disagreement
within 10 Business Days after the Dispute Notice Date, they will resolve the
disagreement in accordance with the following procedures.
The two parties and the auditor that conducted the audit will all agree
on an independent certified public accountant with a regional or national
accounting practice in the wireless telecommunications industry (the "Arbiter")
within 15 Business Days after the Dispute Notice Date. If, within 15 Business
Days after the Dispute Notice Date, the three parties fail to agree on the
Arbiter, then at the request of either party to this agreement, the Arbiter will
be selected pursuant to the rules then in effect of the American Arbitration
Association. Each party will submit to the Arbiter within 5 Business Days after
its selection and engagement all information reasonably requested by the Arbiter
to enable the Arbiter to independently resolve the issue that is the subject of
the Dispute Notice. The Arbiter will make its own determination of the amount of
fees, costs, expenses or other charges payable under this agreement with respect
to the period audited. The Arbiter will issue a written report of its
determination in reasonable detail and will deliver a copy of the report to the
parties within 10 Business Days after the Arbiter receives all of the
information reasonably requested. The determination made by the Arbiter will be
final and binding and may be enforced by any court having jurisdiction. The
parties will cooperate fully in assisting the Arbiter and will take such actions
as are necessary to expedite the completion of and to cause the Arbiter to
expedite its assignment.
If the amount owed by a contesting party is reduced by more than 10% or
the amount owed to a contesting party is increased by more than 10% then the
non-contesting party will pay the costs and expenses of the Arbiter, otherwise
the contesting party will pay the costs and expenses of the Arbiter.
12.2 CONFIDENTIAL INFORMATION.
(a) Except as specifically authorized by this agreement, each
of the parties must, for the Term and 3 years after the date of termination of
this agreement, keep confidential, not disclose to others and use only for the
purposes authorized in this agreement, all Confidential Information disclosed by
the other party to the party in connection with this agreement, except that the
foregoing obligation will not apply to the extent that any Confidential
Information:
(i) is or becomes, after disclosure to a party,
publicly known by any means other than through unauthorized acts or
omissions of the party or its agents; or
(ii) is disclosed in good faith to a party by a third
party entitled to make the disclosure.
(b) Notwithstanding the foregoing, a party may use, disclose
or authorize the disclosure of Confidential Information that it receives that:
(i) has been published or is in the public domain, or
that subsequently comes into the public domain, through no fault of the
receiving party;
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(ii) prior to the effective date of this agreement
was properly within the legitimate possession of the receiving party,
or subsequent to the effective date of this agreement, is lawfully
received from a third party having rights to publicly disseminate the
Confidential Information without any restriction and without notice to
the recipient of any restriction against its further disclosure;
(iii) is independently developed by the receiving
party through persons or entities who have not had, either directly or
indirectly, access to or knowledge of the Confidential Information;
(iv) is disclosed to a third party consistent with
the terms of the written approval of the party originally disclosing
the information;
(v) is required by the receiving party to be produced
under order of a court of competent jurisdiction or other similar
requirements of a governmental agency, and the Confidential Information
will otherwise continue to be Confidential Information required to be
held confidential for purposes of this agreement;
(vi) is required by the receiving party to be
disclosed by applicable law or a stock exchange or association on which
the receiving party's securities (or those of its Related Parties) are
or may become listed; or
(vii) is disclosed by the receiving party to a
financial institution or accredited investor (as that term is defined
in Rule 501(a) under the Securities Act of 1933) that is considering
providing financing to the receiving party and which financial
institution or accredited investor has agreed to keep the Confidential
Information confidential in accordance with an agreement at least as
restrictive as this Section 12.2.
(c) Notwithstanding the foregoing, Manager and Sprint PCS
authorize each other to disclose to the public in regulatory filings the other's
identity and the Service Area to be developed and managed by Manager, and
Manager authorizes Sprint PCS to mention Manager and the Service Area in public
relations announcements.
(d) The party making a disclosure under Sections 12.2(b)(v),
12.2(b)(vi) or 12.2(b)(vii) must inform the disclosing party as promptly as is
reasonably necessary to enable the disclosing party to take action to, and use
the party's reasonable best efforts to, limit the disclosure and maintain
confidentiality to the extent practicable.
(e) Manager will not except when serving in the capacity of
Manager under this agreement, use any Confidential Information of any kind that
it receives under or in connection with this agreement. For example, if Manager
operates a wireless company in a different license area, Manager may not use any
of the Confidential Information received under or in connection with this
agreement in operating the other wireless business.
12.3 INSURANCE.
12.3.1 GENERAL. During the term of this agreement, Manager
must obtain and maintain, and will cause any subcontractors to obtain and
maintain, with financially reputable insurers licensed to do business
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in all jurisdictions where any work is performed under this agreement and who
are reasonably acceptable to Sprint PCS, the insurance described in the Sprint
PCS Insurance Requirements. The Sprint PCS Insurance Requirements as of the date
of this agreement are attached as Exhibit 12.3. Sprint PCS may modify the Sprint
PCS Insurance Requirements as is commercially reasonable from time to time by
delivering to Manager a new Exhibit 12.3.
12.3.2 WAIVER OF SUBROGATION. Manager must look first to any
insurance in its favor before making any claim against Sprint PCS or Sprint, and
their respective directors, officers, employees, agents or representatives for
recovery resulting from injury to any person (including Manager's or its
subcontractor's employees) or damage to any property arising from any cause,
regardless of negligence. Manager does hereby release and waive to the fullest
extent permitted by law, and will cause its respective insurers to waive, all
rights of recovery by subrogation against Sprint PCS or Sprint, and their
respective directors, officers, employees, agents or representatives.
12.3.3 CERTIFICATES OF INSURANCE. Manager and all of its
subcontractors, if any, must, as a material condition of this agreement and
prior to the commencement of any work under and any renewal of this agreement,
deliver to Sprint PCS a certificate of insurance, satisfactory in form and
content to Sprint PCS, evidencing that the above insurance, including waiver of
subrogation, is in force and will not be canceled or materially altered without
first giving Sprint PCS at least 30 days prior written notice and that all
coverages are primary to any insurance carried by Sprint PCS, its directors,
officers, employees, agents or representatives.
Nothing contained in this Section 12.3.3 will limit Manager's liability
to Sprint PCS, its directors, officers, employees, agents or representatives to
the limits of insurance certified or carried.
13. INDEMNIFICATION
13.1 INDEMNIFICATION BY SPRINT PCS. Sprint PCS agrees to indemnify,
defend and hold harmless Manager, its directors, managers, officers, employees,
agents and representatives from and against any and all claims, demands, causes
of action, losses, actions, damages, liability and expense, including costs and
reasonable attorneys' fees, against Manager, its directors, managers, officers,
employees, agents and representatives arising from or relating to the violation
by Sprint PCS of any law, regulation or ordinance applicable to Sprint PCS or by
Sprint PCS' breach of any representation, warranty or covenant contained in this
agreement or any other agreement between Sprint PCS or Sprint PCS' Related
Parties and Manager or Manager's Related Parties except where and to the extent
the claim, demand, cause of action, loss, action, damage, liability and/or
expense results solely from the negligence or willful misconduct of Manager.
13.2 INDEMNIFICATION BY MANAGER. Manager agrees to indemnify, defend
and hold harmless Sprint PCS and Sprint, and their respective directors,
managers, officers, employees, agents and representatives from and against any
and all claims, demands, causes of action, losses, actions, damages, liability
and expense, including costs and reasonable attorneys' fees, against Sprint PCS
or Sprint, and their respective directors, managers, officers, employees, agents
and representatives arising from or relating to Manager's violation of any law,
regulation or ordinance applicable to Manager, Manager's breach of any
representation, warranty or covenant contained in this agreement or any other
agreement between Manager or Manager's Related Parties and Sprint PCS and Sprint
PCS' Related Parties, Manager's ownership of the Operating Assets or the
operation of the Service Area Network, or the actions or failure to act of any
of Manager's contractors, subcontractors, agents, directors, managers, officers,
employees and representatives of any of them in the
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performance of any work under this agreement, except where and to the extent the
claim, demand, cause of action, loss, action, damage, liability and expense
results solely from the negligence or willful misconduct of Sprint PCS or
Sprint, as the case may be.
13.3 PROCEDURE.
13.3.1 NOTICE. Any party being indemnified ("Indemnitee") will
give the party making the indemnification ("Indemnitor") written notice as soon
as practicable but no later than 5 Business Days after the party becomes aware
of the facts, conditions or events that give rise to the claim for
indemnification if:
(a) any claim or demand is made or liability is asserted
against Indemnitee; or
(b) any suit, action, or administrative or legal proceeding is
instituted or commenced in which Indemnitee is involved or is named as a
defendant either individually or with others.
Failure to give notice as described in this Section 13.3.1 does not
modify the indemnification obligations of this provision, except if Indemnitee
is harmed by failure to provide timely notice to Indemnitor, then Indemnitor
does not have to indemnify Indemnitee for the harm caused by the failure to give
the timely notice.
13.3.2 DEFENSE BY INDEMNITOR. If within 30 days after giving
notice Indemnitee receives written notice from Indemnitor stating that
Indemnitor disputes or intends to defend against the claim, demand, liability,
suit, action or proceeding, then Indemnitor will have the right to select
counsel of its choice and to dispute or defend against the claim, demand,
liability, suit, action or proceeding, at its expense.
Indemnitee will fully cooperate with Indemnitor in the dispute or
defense so long as Indemnitor is conducting the dispute or defense diligently
and in good faith. Indemnitor is not permitted to settle the dispute or claim
without the prior written approval of Indemnitee, which approval will not be
unreasonably withheld. Even though Indemnitor selects counsel of its choice,
Indemnitee has the right to retain additional representation by counsel of its
choice to participate in the defense at Indemnitee's sole cost and expense.
13.3.3 DEFENSE BY INDEMNITEE. If no notice of intent to
dispute or defend is received by Indemnitee within the 30-day period, or if a
diligent and good faith defense is not being or ceases to be conducted,
Indemnitee has the right to dispute and defend against the claim, demand or
other liability at the sole cost and expense of Indemnitor and to settle the
claim, demand or other liability, and in either event to be indemnified as
provided in this Section 13.3.3. Indemnitee is not permitted to settle the
dispute or claim without the prior written approval of Indemnitor, which
approval will not be unreasonably withheld.
13.3.4 COSTS. Indemnitor's indemnity obligation includes
reasonable attorneys' fees, investigation costs, and all other reasonable costs
and expenses incurred by Indemnitee from the first notice that any claim or
demand has been made or may be made, and is not limited in any way by any
limitation on the amount or type of damages, compensation, or benefits payable
under applicable workers' compensation acts, disability benefit acts, or other
employee benefit acts.
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14. DISPUTE RESOLUTION
14.1 NEGOTIATION. The parties will attempt in good faith to resolve any
dispute arising out of or relating to this agreement promptly by negotiation
between or among representatives who have authority to settle the controversy.
Either party may escalate any dispute not resolved in the normal course of
business to the appropriate (as determined by the party) officers of the parties
by providing written notice to the other party.
Within 10 Business Days after delivery of the notice, the appropriate
officers of each party will meet at a mutually acceptable time and place, and
thereafter as often as they deem reasonably necessary, to exchange relevant
information and to attempt to resolve the dispute.
Either party may elect, by giving written notice to the other party, to
escalate any dispute arising out of or relating to the determination of fees
that is not resolved in the normal course of business or by the audit process
set forth in Sections 12.1.2 and 12.1.3, first to the appropriate financial or
accounting officers to be designated by each party. The designated officers will
meet in the manner described in the preceding paragraph. If the matter has not
been resolved by the designated officers within 30 days after the notifying
party's notice, either party may elect to escalate the dispute to the
appropriate (as determined by the party) officers in accordance with the prior
paragraphs of this Section 14.1.
14.2 UNABLE TO RESOLVE. If a dispute has not been resolved within 60
days after the notifying party's notice, either party may continue to operate
under this agreement and sue the other party for damages or seek other
appropriate remedies as provided in this agreement. If, and only if, this
agreement does not provide a remedy (as in the case of Sections 3.4 and 4.5,
where the parties are supposed to reach an agreement), then either party may
give the other party written notice that it wishes to resolve the dispute or
claim arising out of the parties' inability to agree under such Sections of this
agreement by using the arbitration procedure set forth in this Section 14.2.
Such arbitration will occur in Kansas City, Missouri, unless the parties
otherwise mutually agree, with the precise location being as agreed upon by the
parties or, absent such agreement, at a location in Kansas City, Missouri
selected by Sprint PCS. Such arbitration will be conducted pursuant to the
procedures prescribed by the Missouri Uniform Arbitration Act, as amended from
time to time, or, if none, pursuant to the rules then in effect of the American
Arbitration Association (or at any other place and by any other form of
arbitration mutually acceptable to the parties). Any award rendered in such
arbitration will be confidential and will be final and conclusive upon the
parties, and a judgment on the award may be entered in any court of the forum,
state or federal, having jurisdiction. The expenses of the arbitration will be
borne equally by the parties to the arbitration, except that each party must pay
for and bear the cost of its own experts, evidence, and attorneys' fees.
The parties must each, within 30 days after either party gives notice
to the other party of the notifying party's desire to resolve a dispute or claim
under the arbitration procedure in this Section 14.2, designate an independent
arbitrator, who is knowledgeable with regard to the wireless telecommunications
industry, to participate in the arbitration hearing. The two arbitrators thus
selected will select a third independent arbitrator, who is knowledgeable with
regard to the wireless telecommunications industry, who will act as chairperson
of the board of arbitration. If, within 15 days after the day the last of the
two named arbitrators is appointed, the two named arbitrators fail to agree upon
the third, then at the request of either party, the third arbitrator shall be
selected pursuant to the rules then in effect of the American Arbitration
Association. The three independent arbitrators will comprise the board of
arbitration, which will preside over the arbitration hearing and will render all
decisions by majority vote. If either party refuses or neglects to appoint an
independent arbitrator within such 30-day period, the independent arbitrator who
has been appointed as of the 31st day after the notifying party's notice will be
the sole independent arbitrator and will solely preside over the arbitration
hearing. The
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arbitration hearing will commence no sooner than 30 days after the date the last
arbitrator is appointed and no later than 60 days after such date. The
arbitration hearing will be conducted during normal working hours on Business
Days without interruption or adjournment of more than 2 Business Days at any one
time or 6 Business Days in the aggregate.
The arbitrators will deliver their decision to the parties in writing
within 10 days after the conclusion of the arbitration hearing. The arbitration
award will be accompanied by findings of fact and a statement of reasons for the
decision. There will be no appeal from the written decision, except as permitted
by applicable law. The arbitration proceedings, the arbitrators' decision, the
arbitration award, and any other aspect, matter, or issue of or relating to the
arbitration are confidential, and disclosure of such confidential information is
an actionable breach of this agreement.
Notwithstanding any other provision of this agreement, arbitration will
not be required of any issue for which injunctive relief is properly sought by
either party.
14.3 ATTORNEYS AND INTENT. If an officer intends to be accompanied at a
meeting by an attorney, the other party's officer will be given at least 3
Business Days prior notice of the intention and may also be accompanied by an
attorney. All negotiations under Section 14.1 are confidential and will be
treated as compromise and settlement negotiations for purposes of the Federal
Rules of Civil Procedure and state rules of evidence and civil procedure.
14.4 TOLLING OF CURE PERIODS. Any cure period under Section 11.3 that
is less than 90 days will be tolled during the pendency of the dispute
resolution process. Any cure period under Section 11.3 that is 90 days or longer
will not be tolled during the pendency of the dispute resolution process.
15. REPRESENTATIONS AND WARRANTIES
Each party for itself makes the following representations and
warranties to the other party:
15.1 DUE INCORPORATION OR FORMATION; AUTHORIZATION OF AGREEMENTS. The
party is either a corporation, limited liability company, or limited partnership
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization. Manager is qualified to do business and in
good standing in every jurisdiction in which the Service Area is located. The
party has the full power and authority to execute and deliver this agreement and
to perform its obligations under this agreement.
15.2 VALID AND BINDING OBLIGATION. This agreement constitutes the valid
and binding obligation of the party, enforceable in accordance with its terms,
except as may be limited by principles of equity or by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally.
15.3 NO CONFLICT; NO DEFAULT. Neither the execution, delivery and
performance of this agreement nor the consummation by the party of the
transactions contemplated in this agreement will conflict with, violate or
result in a breach of (a) any law, regulation, order, writ, injunction, decree,
determination or award of any governmental authority or any arbitrator,
applicable to such party, (b) any term, condition or provision of the articles
of incorporation, certificate of limited partnership, certificate of
organization, bylaws, partnership agreement or limited liability company
agreement (or other governing documents) of such party or of any
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material agreement or instrument to which such party is or may be bound or to
which any of its material properties or assets is subject.
15.4 LITIGATION. No action, suit, proceeding or investigation is
pending or, to the knowledge of the party, threatened against or affecting the
party or any of its properties, assets or businesses in any court or before or
by any governmental agency that could, if adversely determined, reasonably be
expected to have a material adverse effect on the party's ability to perform its
obligations under this agreement. The party has not received any currently
effective notice of any default that could reasonably be expected to result in a
breach of the preceding sentence.
16. REGULATORY COMPLIANCE
16.1 REGULATORY COMPLIANCE. Manager will construct, operate, and manage
the Service Area Network in compliance with applicable federal, state, and local
laws and regulations, including Siting Regulations. Nothing in this Section 16.1
will limit Manager's obligations under Section 2.2 and the remainder of this
Section 16. Manager acknowledges that failure to comply with applicable federal,
state, and local laws and regulations in its construction, operation, and
management of the Service Area Network may subject the parties and the License
to legal and administrative agency actions, including forfeiture penalties and
actions that affect the License, such as license suspension and revocation, and
accordingly, Manager agrees that it will cooperate with Sprint PCS to maintain
the License in full force and effect.
Manager will write and implement practices and procedures governing
construction and management of the Service Area Network in compliance with
Siting Regulations. Manager will make its Siting Regulations practices and
procedures available upon request to Sprint PCS in the manner specified by
Sprint PCS for its inspection and review, and Manager will modify those Siting
Regulations practices and procedures as may be requested by Sprint PCS. Every
six months, and at the request of Sprint PCS, Manager will provide a written
certification from one of Manager's chief officers that Manager's Service Area
Network complies with Siting Regulations. Manager's first certification of
compliance with Siting Regulations will be provided to Sprint PCS six months
after the date of this agreement.
Manager will conduct an audit and physical inspection of its Service
Area Network at the request of Sprint PCS to confirm compliance with Siting
Regulations, and Manager will report the results of the audit and physical
inspection to Sprint PCS in the form requested by Sprint PCS. Manager will bear
the cost of Siting Regulations compliance audits and physical inspections
requested by Sprint PCS.
Manager will retain for 3 years records demonstrating compliance with
Siting Regulations, including compliance audit and inspection records. Manager
will make those records available upon request to Sprint PCS for production,
inspection, and copying in the manner specified by Sprint PCS. Sprint PCS will
bear the cost of production, inspection, and copying.
16.2 FCC COMPLIANCE. The parties agree to comply with all applicable
FCC rules governing the License or the Service Area Network and specifically
agree as follows:
(a) The party billing a customer will advise the customer that
service is provided over spectrum licensed to Sprint PCS. Neither Manager nor
Sprint PCS will represent itself as the legal representative of the other before
the FCC or any other third party, but will cooperate with each other with
respect to FCC matters concerning the License or the Service Area Network.
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(b) Sprint PCS will use commercially reasonable efforts to
maintain the License in accordance with the terms of the License and all
applicable laws, policies and regulations and to comply in all material respects
with all other legal requirements applicable to the operation of the Sprint PCS
Network and its business. Sprint PCS has sole responsibility, except as
specifically provided otherwise in Section 2.2, for keeping the License in full
force and effect and for preparing submissions to the FCC or any other relevant
federal, state or local authority of all reports, applications, interconnection
agreements, renewals, or other filings or documents. Manager must cooperate and
coordinate with Sprint PCS' actions to comply with regulatory requirements,
which cooperation and coordination must include, without limitation, the
provision to Sprint PCS of all information that Sprint PCS deems necessary to
comply with the regulatory requirements. Manager must refrain from taking any
action that could impede Sprint PCS from fulfilling its obligations under the
preceding sentence, and must not take any action that could cause Sprint PCS to
forfeit or cancel the License.
(c) Sprint PCS and Manager are familiar with Sprint PCS'
responsibility under the Communications Act of 1934, as amended, and applicable
FCC rules. Nothing in this agreement is intended to diminish or restrict Sprint
PCS' obligations as an FCC Licensee and both parties desire that this agreement
and each party's obligations under this agreement be in compliance with the FCC
rules.
(d) Nothing in this agreement will preclude Sprint PCS from
permitting or facilitating resale of Sprint PCS Products and Services to the
extent required or elected under applicable FCC regulations. Manager will take
the actions necessary to facilitate Sprint PCS' compliance with FCC regulations.
To the extent permitted by applicable regulations, Sprint PCS will not authorize
a reseller that desires to sell services and products in only the Service Area
to resell Sprint PCS wholesale products and services, unless Manager agrees in
advance to such sales.
(e) If a change in FCC policy or rules makes it necessary to
obtain FCC consent for the implementation, continuation or further effectuation
of any term or provision of this agreement, Sprint PCS will use all commercially
reasonable efforts diligently to prepare, file and prosecute before the FCC all
petitions, waivers, applications, amendments, rulemaking comments and other
related documents necessary to secure and/or retain FCC approval of all aspects
of this agreement. Manager will use commercially reasonable efforts to provide
to Sprint PCS any information that Sprint PCS may request from Manager with
respect to any matter involving Sprint PCS, the FCC, the License, the Sprint PCS
Products and Services or any other products and services approved under Section
3.2. Each party will bear its own costs of preparation of the documents and
prosecution of the actions.
(f) If the FCC determines that this agreement is inconsistent
with the terms and conditions of the License or is otherwise contrary to FCC
policies, rules and regulations, or if regulatory or legislative action
subsequent to the date of this agreement alters the permissibility of this
agreement under the FCC's rules or other applicable law, rules or regulations,
then the parties must use best efforts to modify this agreement as necessary to
cause this agreement (as modified) to comply with the FCC policies, rules,
regulations and applicable law and to preserve to the extent possible the
economic arrangements set forth in this agreement.
(g) Manager warrants and represents to Sprint PCS that Manager
is and at all times during the Term of this agreement will be in compliance with
FCC rules and regulations regarding limits on classes and amounts of spectrum
that may be owned by Manager. Manager agrees that in the event that Manager is
or at any time becomes in violation of such rules and regulations, Manager will
promptly take all
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action necessary and appropriate (other than terminating this agreement) to cure
such violation and comply with such rules and regulations, including without
limitation disposing of its direct or indirect interests in cellular licenses.
16.3 MARKING AND LIGHTING. Manager will conform to applicable FAA
standards when Siting Regulations require marking and lighting of Manager's
Service Area Network cell sites. Manager will cooperate with Sprint PCS in
reporting lighting malfunctions as required by Siting Regulations.
16.4 REGULATORY NOTICES. Manager will, within 2 Business Days after its
receipt, give Sprint PCS written notice of all oral and written communications
it receives from regulatory authorities (including but not limited to the FCC,
the FAA, state public service commissions, environmental authorities, and
historic preservation authorities) and complaints respecting Manager's
construction, operation, and management of the Service Area Network that could
result in actions affecting the License as well as written notice of the details
respecting such communications and complaints, including a copy of any written
material received in connection with such communications and complaints. Manager
will cooperate with Sprint PCS in responding to such communications and
complaints received by Manager. Sprint PCS has the right to respond to all such
communications and complaints, with counsel and consultants of its own choice.
If Sprint PCS chooses to respond to such communications and complaints, Manager
will not respond to them without the consent of Sprint PCS, and Manager will pay
the costs of Sprint PCS' responding to such communications and complaints,
including reasonable attorneys' and consultants' fees, investigation costs, and
all other reasonable costs and expenses incurred by Sprint PCS.
16.5 REGULATORY POLICY-SETTING PROCEEDINGS. Manager will not intervene
in or otherwise participate in a rulemaking, investigation, inquiry, contested
case, or similar regulatory policy setting proceedings before a regulatory
authority concerning the License or construction, operation, and management of
the Service Area Network and the Sprint PCS business operated using the Service
Area Network.
17. GENERAL PROVISIONS
17.1 NOTICES. Any notice, payment, demand, or communication required or
permitted to be given by any provision of this agreement must be in writing and
mailed (certified or registered mail, postage prepaid, return receipt
requested), sent by hand or overnight courier, or sent by facsimile (with
acknowledgment received and a copy sent by overnight courier), charges prepaid
and addressed as described on the Notice Address Schedule attached to the Master
Signature Page, or to any other address or number as the person or entity may
from time to time specify by written notice to the other parties.
All notices and other communications given to a party in accordance
with the provisions of this agreement will be deemed to have been given when
received.
17.2 CONSTRUCTION. This agreement will be construed simply according to
its fair meaning and not strictly for or against either party.
17.3 HEADINGS. The table of contents, section and other headings
contained in this agreement are for reference purposes only and are not intended
to describe, interpret, define, limit or expand the scope, extent or intent of
this agreement.
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17.4 FURTHER ACTION. Each party agrees to perform all further acts and
execute, acknowledge, and deliver any documents that may be reasonably
necessary, appropriate, or desirable to carry out the intent and purposes of
this agreement.
17.5 COUNTERPART EXECUTION. This agreement will be executed by affixing
the parties' signatures to the Master Signature Page, which Master Signature
Page, and thus this agreement, may be executed in any number of counterparts
with the same effect as if both parties had signed the same document. All
counterparts will be construed together and will constitute one agreement.
17.6 SPECIFIC PERFORMANCE. Each party agrees with the other party that
the party would be irreparably damaged if any of the provisions of this
agreement were not performed in accordance with their specific terms and that
monetary damages alone would not provide an adequate remedy. Accordingly, in
addition to any other remedy to which the non-breaching party may be entitled,
at law or in equity, the non- breaching party will be entitled to injunctive
relief to prevent breaches of this agreement and specifically to enforce the
terms and provisions of this agreement.
17.7 ENTIRE AGREEMENT; AMENDMENTS. The provisions of this agreement,
the Services Agreement and the Trademark License Agreements (including the
exhibits to those agreements) set forth the entire agreement and understanding
between the parties as to the subject matter of this agreement and supersede all
prior agreements, oral or written, and other communications between the parties
relating to the subject matter of this agreement. Except for Sprint PCS' right
to amend the Program Requirements in accordance with Section 9.2 and its right
to unilaterally modify and amend certain other provisions as expressly provided
in this agreement, this agreement may be modified or amended only by a written
amendment signed by persons or entities authorized to bind each party and, with
respect to the sections set forth for Sprint on the Master Signature Page, the
persons or entities authorized to bind Sprint.
17.8 LIMITATION ON RIGHTS OF OTHERS. Except as set forth on the Master
Signature Page for Sprint, nothing in this agreement, whether express or
implied, will be construed to give any person or entity other than the parties
any legal or equitable right, remedy or claim under or in respect of this
agreement.
17.9 WAIVERS.
17.9.1 WAIVERS-GENERAL. The observance of any term of this
agreement may be waived (whether generally or in a particular instance and
either retroactively or prospectively) by the party entitled to enforce the
term, but any waiver is effective only if in a writing signed by the party
against which the waiver is to be asserted. Except as otherwise provided in this
agreement, no failure or delay of either party in exercising any power or right
under this agreement will operate as a waiver of the power or right, nor will
any single or partial exercise of any right or power preclude any other or
further exercise of the right or power or the exercise of any other right or
power.
17.9.2 WAIVERS-MANAGER. Manager is not in breach of any
covenant in this agreement and no Event of Termination will have occurred as a
result of the occurrence of any event, if Manager had delegated to Sprint
Spectrum under the Services Agreement (or any successor to that agreement)
responsibility for taking any action necessary to ensure compliance with the
covenant or to prevent the occurrence of the event.
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17.9.3 FORCE MAJEURE. Neither Manager nor Sprint PCS, as the
case may be, is in breach of any covenant in this agreement and no Event of
Termination will occur as a result of the failure of such party to comply with
such covenant, if such party's noncompliance with the covenant results primarily
from:
(i) any FCC order or any other injunction issued by
any governmental authority impeding the party's ability to comply with
the covenant;
(ii) the failure of any governmental authority to
grant any consent, approval, waiver, or authorization or any delay on
the part of any governmental authority in granting any consent,
approval, waiver or authorization;
(iii) the failure of any vendor to deliver in a
timely manner any equipment or services; or
(iv) any act of God, act of war or insurrection,
riot, fire, accident, explosion, labor unrest, strike, civil unrest,
work stoppage, condemnation or any similar cause or event not
reasonably within the control of such party.
17.10 WAIVER OF JURY TRIAL. EACH PARTY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
17.11 BINDING EFFECT. Except as otherwise provided in this agreement,
this agreement is binding upon and inures to the benefit of the parties and
their respective and permitted successors, transferees, and assigns, including
any permitted successor, transferee or assignee of the Service Area Network or
of the License. The parties intend that this agreement bind only the party
signing this agreement and that the agreement is not binding on the Related
Parties of a party unless the agreement expressly provides that Related Parties
are bound.
17.12 GOVERNING LAW. The internal laws of the State of Missouri
(without regard to principles of conflicts of law) govern the validity of this
agreement, the construction of its terms, and the interpretation of the rights
and duties of the parties.
17.13 SEVERABILITY. The parties intend every provision of this
agreement to be severable. If any provision of this agreement is held to be
illegal, invalid, or unenforceable for any reason, the parties intend that a
court enforce the provision to the maximum extent permissible so as to effect
the intent of the parties (including the enforcement of the remaining
provisions). If necessary to effect the intent of the parties, the parties will
negotiate in good faith to amend this agreement to replace the unenforceable
provision with an enforceable provision that reflects the original intent of the
parties.
17.14 LIMITATION OF LIABILITY. NO PARTY WILL BE LIABLE TO THE OTHER
PARTY FOR SPECIAL, INDIRECT, INCIDENTAL, EXEMPLARY, CONSEQUENTIAL OR PUNITIVE
DAMAGES, OR LOSS OF PROFITS, ARISING FROM THE RELATIONSHIP OF THE PARTIES OR THE
CONDUCT OF BUSINESS UNDER, OR BREACH OF, THIS AGREEMENT, EXCEPT WHERE SUCH
DAMAGES OR LOSS OF PROFITS ARE CLAIMED BY OR AWARDED TO A THIRD PARTY IN A
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CLAIM OR ACTION AGAINST WHICH A PARTY TO THIS AGREEMENT HAS A SPECIFIC
OBLIGATION TO INDEMNIFY ANOTHER PARTY TO THIS AGREEMENT.
17.15 NO ASSIGNMENT; EXCEPTIONS.
17.15.1 GENERAL. Neither party will, directly or indirectly,
assign this agreement or any of the party's rights or obligations under this
agreement without the prior written consent of the other party, except as
otherwise specifically provided in this Section 17.15. Sprint PCS may deny its
consent to any assignment or transfer in its sole discretion except as otherwise
provided in this Section 17.15.
Any attempted assignment of this agreement in violation of this Section
17.15 will be void and of no effect.
A party may assign this agreement to a Related Party of the party,
except that Manager cannot assign this agreement to a Related Party that is a
significant competitor of Sprint, Sprint PCS or their respective Related Parties
in the telecommunications business. Except as provided in Section 17.15.5, an
assignment does not release the assignor from its obligations under this
agreement unless the other party to this agreement consents in writing in
advance to the assignment and expressly grants a release to the assignor.
Except as provided in Section 17.15.5, Sprint PCS must not assign this
agreement to any entity that does not also own the License covering the Service
Area directly or indirectly through a Related Party. Manager must not assign
this agreement to any entity (including a Related Party), unless such entity
assumes all rights and obligations under the Services Agreement, the Trademark
License Agreements and any related agreements.
17.15.2 ASSIGNMENT RIGHT OF MANAGER TO FINANCIAL LENDER. If
Manager is no longer able to satisfy its financial obligations and other duties,
then Manager has the right to assign its obligations and rights under this
agreement to its Financial Lender, if:
(a) Manager or Financial Lender provides Sprint PCS at least
10 days advance written notice of such assignment;
(b) Financial Lender cures or commits to cure any outstanding
material breach of this agreement by Manager prior to the end of any applicable
cure period. If Financial Lender fails to make a timely cure then Sprint PCS may
exercise its rights under Section 11;
(c) Financial Lender agrees to serve as an interim trustee for
the obligations and duties of Manager under this agreement for a period not to
exceed 180 days. During this interim period, Financial Lender must identify a
proposed successor to assume the obligations and rights of Manager under this
agreement;
(d) Financial Lender assumes all of Manager's rights and
obligations under the Services Agreement, the Trademark License Agreements and
any related agreements; and
(e) Financial Lender provides to Sprint PCS advance written
notice of the proposed successor to Manager that Financial Lender has identified
("Successor Notice"). Sprint PCS may give to Financial Lender written notice of
Sprint PCS' decision whether to consent to such proposed successor within
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30 days after Sprint PCS' receipt of the Successor Notice. Sprint PCS may not
unreasonably withhold such consent, except that Sprint PCS is not required to
consent to a proposed successor that:
(i) has, in the past, materially breached prior
agreements with Sprint PCS or its Related Parties;
(ii) is a significant competitor of Sprint PCS or its
Related Parties in the telecommunications business;
(iii) does not meet Sprint PCS' reasonable credit
criteria;
(iv) fails to execute an assignment of all relevant
documents related to this agreement including the Services Agreement
and the Trademark License Agreements; or
(v) refuses to assume the obligations of Manager
under this Agreement, the Services Agreement, the Trademark License
Agreements and any related agreements.
If Sprint PCS fails to provide a response to Financial Lender within 30
days after receiving the Successor Notice, then the proposed successor is deemed
rejected. Any Financial Lender disclosed on the Build-out Plan on Exhibit 2.1
is deemed acceptable to Sprint PCS.
17.15.3 CHANGE OF CONTROL RIGHTS. If there is a Change of
Control of Manager, then:
(a) Manager must provide to Sprint PCS advance written notice
detailing relevant and appropriate information about the new ownership interests
effecting the Change of Control of Manager.
(b) Sprint PCS must provide to Manager written notice of its
decision whether to consent to or reject the proposed Change of Control within
30 days after its receipt of such notice. Sprint PCS may not unreasonably
withhold such consent, except that Sprint PCS is not required to consent to a
Change of Control in which:
(i) the final controlling entity or any of its
Related Parties has in the past materially breached prior agreements
with Sprint PCS or its Related Parties;
(ii) the final controlling entity or any of its
Related Parties is a significant competitor of Sprint PCS or its
Related Parties in the telecommunications business;
(iii) the final controlling entity does not meet
Sprint PCS' reasonable credit criteria;
(iv) the final controlling entity fails to execute an
assignment of all relevant documents related to this agreement
including the Services Agreement and the Trademark License Agreements;
or
(v) the final controlling entity or its Related
Parties refuse to assume the obligations of Manager under this
agreement.
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(c) In the event that Sprint PCS provides notice that it does
not consent to the Change of Control, Manager is entitled to either:
(i) contest such determination pursuant to the
dispute resolution procedure in Section 14; or
(ii) abandon the proposed Change of Control.
(d) Nothing in this agreement requires Sprint PCS' consent to:
(i) a public offering of Manager that does not result
in a Change of Control (i.e., a shift from one party being in control
to no party being in control is not a Change of Control); or
(ii) a recapitalization or restructuring of the
ownership interests of Manager that Manager determines is necessary to:
(A) facilitate the acquisition of commercial
financing and lending arrangements that will support Manager's
operations and efforts to fulfill its obligations under this
agreement; and
(B) that does not constitute a Change of
Control.
(e) "Change of Control" means a situation where in any one
transaction or series of related transactions occurring during any 365-day
period, the ultimate parent entity of the Manager changes. The ultimate parent
entity is to be determined using the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 rules. A Change of Control does not occur if:
(i) a party changes the form of its organization
without materially changing their ultimate ownership (e.g., converting
from a limited partnership to a limited liability company); or
(ii) one of the owners of the party on the date of
this agreement or on the date of the closing of Manager's initial
equity offering for purposes of financing its obligations under this
agreement ultimately gains control over the party, unless such party is
a significant competitor of Sprint PCS or Sprint PCS' Related Parties
in the telecommunications business.
17.15.4 RIGHT OF FIRST REFUSAL. Notwithstanding any other
provision in this agreement, Manager grants Sprint PCS the right of first
refusal described below. If Manager determines it wishes to sell an Offered
Interest, upon receiving any Offer to purchase an Offered Interest, Manager
agrees to promptly deliver to Sprint PCS an Offer Notice. The Offer Notice is
deemed to constitute an offer to sell to Sprint PCS, on the terms set forth in
the Offer, all but not less than all of the Offered Interest. Sprint PCS will
have a period of 60 days from the date of the Offer Notice to notify Manager
that it agrees to purchase the Offered Interest on such terms. If Sprint PCS
timely agrees in writing to purchase the Offered Interest, the parties will
proceed to consummate such purchase not later than the 180th day after the date
of the Offer Notice. If Sprint PCS does not agree within the 60-day period to
purchase the Offered Interest, Manager will have the right, for a period of 120
days after such 60th day, subject to the restrictions set forth in this Section
17, to sell to the person or entity identified in the Offer Notice all of the
Offered Interest on terms and conditions no less favorable to Manager than those
set forth in the Offer. If Manager fails to sell the Offered
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Interest to such person or entity on such terms and conditions within such
120-day period, Manager will again be subject to the provisions of this Section
17.15.4 with respect to the Offered Interest.
17.15.5 TRANSFER OF SPRINT PCS NETWORK. Sprint PCS may sell,
transfer or assign the Sprint PCS Network or any of the Licenses, including its
rights and obligations under this agreement, the Services Agreement and any
related agreements, to a third party without Manager's consent so long as the
third party assumes the rights and obligations under this agreement and the
Services Agreement. Manager agrees that Sprint PCS and Sprint PCS' Related
Parties will be released from any and all obligations under and with respect to
any and all such agreements upon such sale, transfer or assignment in accordance
with this Section 17.15.5, without the need for Manager to execute any document
to effect such release.
17.16 PROVISION OF SERVICES BY SPRINT SPECTRUM. As described in the
Recitals, the party or parties to this agreement that own the Licenses are
referred to in this agreement as "Sprint PCS." Sprint Spectrum will provide most
or all of the services required to be provided by Sprint PCS under this
agreement on behalf of Sprint PCS, other than the services to be rendered by
Manager. For example, Sprint Spectrum is the party to the contracts relating to
the national distribution network, the roaming and long distance services, and
the procurement arrangements. Accordingly, Sprint PCS and Manager will deal with
Sprint Spectrum to provide many of the attributes of the Sprint PCS Network.
17.17 NUMBER PORTABILITY. Manager understands that the manner in which
customers are assigned to the Service Area Network could change as telephone
numbers become portable without any relation to the service area in which they
are initially activated. To the extent the relationship between NPA-NXX and the
Service Area changes, Sprint PCS will develop an alternative system to attempt
to assign customers who primarily live and work in the Service Area to the
Service Area. The terms of this agreement will be deemed to be amended to
reflect the new system that Sprint PCS develops.
17.18 DISCLAIMER OF AGENCY. Neither party by this agreement makes the
other party a legal representative or agent of the party, nor does either party
have the right to obligate the other party in any manner, except if the other
party expressly permits the obligation by the party or except for provisions in
this agreement expressly authorizing one party to obligate the other.
17.19 INDEPENDENT CONTRACTORS. The parties do not intend to create any
partnership, joint venture or other profit-sharing arrangement, landlord-tenant
or lessor-lessee relationship, employer-employee relationship, or any other
relationship other than that expressly provided in this agreement. Neither party
to this agreement has any fiduciary duty to the other party.
17.20 EXPENSE. Each party bears the expense of complying with this
agreement except as otherwise expressly provided in this agreement. The parties
must not allocate any employee cost or other cost to the other party, except as
otherwise provided in the Program Requirements or to the extent the parties
expressly agree in advance to the allocation.
17.21 GENERAL TERMS.
(a) This agreement is to be interpreted in accordance with the
following rules of construction:
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(i) The definitions in this agreement apply equally
to both the singular and plural forms of the terms defined unless the
context otherwise requires.
(ii) The words "include," "includes" and "including"
are deemed to be followed by the phrase "without limitation".
(iii) All references in this agreement to Sections
and Exhibits are references to Sections of, and Exhibits to, this
agreement, unless otherwise specified; and
(iv) All references to any agreement or other
instrument or statute or regulation are to it as amended and
supplemented from time to time (and, in the case of a statute or
regulation, to any corresponding provisions of successor statutes or
regulations), unless the context otherwise requires.
(b) Any reference in this agreement to a "day" or number of
"days" (without the explicit qualification of "Business") is a reference to a
calendar day or number of calendar days. If any action or notice is to be taken
or given on or by a particular calendar day, and the calendar day is not a
Business Day, then the action or notice may be taken or given on the next
Business Day.
17.22 CONFLICTS WITH OTHER AGREEMENTS. The provisions of this
Management Agreement govern over those of the Services Agreement if the
provisions contained in this agreement conflict with analogous provisions in the
Services Agreement. The provisions of each Trademark License Agreement governs
over those of this agreement if the provisions contained in this agreement
conflict with analogous provisions in a Trademark License Agreement.
17.23 SURVIVAL UPON TERMINATION. The provisions of Sections 10, 11.4,
11.5, 11.6, 12.2, 13, 14, 16 and 17 of this agreement will survive any
termination of this agreement.
17.24 ANNOUNCED TRANSACTION. Sprint Enterprises, L.P., TCI Telephony
Services, Inc., Comcast Telephony Services and Cox Telephony Partnership have
executed a Restructuring and Merger Agreement and related agreements that
provide for restructuring the ownership of Sprint Spectrum L.P., SprintCom,
Inc., PhillieCo Partners I, L.P., and Cox Communications PCS, L.P. Upon
consummation of the transactions contemplated by those agreements, Sprint would
control each of the four entities. While Sprint and Sprint PCS anticipate the
proposed transactions will be consummated, there can be no assurances.
17.25 ADDITIONAL TERMS AND PROVISIONS. Certain additional and
supplemental terms and provisions of this agreement, if any, are set forth in
the Addendum to Sprint PCS Management Agreement attached hereto and incorporated
herein by this reference. Manager represents and warrants that the Addendum also
describes all existing contracts and arrangements (written or verbal) that
relate to or affect the rights of Sprint PCS or Sprint under this agreement
(e.g., agreements relating to long distance telephone services (Section 3.4) or
backhaul and transport services (Section 3.7)).
17.26 MASTER SIGNATURE PAGE. Each party agrees that it will execute the
Master Signature Page that evidences such party's agreement to execute, become a
party to and be bound by this agreement, which document is incorporated herein
by this reference.
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17.27 AGENT AUTHORIZATION. Because of the close operational
relationship between the parties listed together below, each entity authorizes
the other entity to act on its behalf in every capacity under this agreement:
(a) WirelessCo, L.P. and Sprint Spectrum L.P.; (b) Cox PCS License, L.L.C. and
Cox Communications PCS, L.P.; (c) APC PCS, LLC and American PCS Communications,
LLC; and (d) PhillieCo, L.P. and PhillieCo Partners I, L.P.
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SPRINT PCS/ALAMOSA PCS LLC
MASTER SIGNATURE PAGE
This Master Signature Page is dated and effective as of December 06,
1999 (the "Effective Date"). This document provides the means by which each of
the undersigned entities executes and becomes a party to and bound by, to the
extent set forth above such party's signature, the Management Agreement,
Services Agreement, Sprint Trademark and Service Mark License Agreement, Sprint
Spectrum Trademark and Service Mark License Agreement, and Addendum I to the
Management Agreement. This document may be executed in one or more counterparts.
The Notice Address Schedule attached to this document sets forth the addresses
to which notices should be sent under the agreements.
THE MANAGEMENT AGREEMENT AND THE SERVICES AGREEMENT
CONTAIN BINDING ARBITRATION PROVISIONS THAT MAY BE
ENFORCED BY THE PARTIES TO THOSE AGREEMENTS
SPRINT SPECTRUM L.P.
For and in consideration of the covenants contained in the Management
Agreement, Services Agreement, Sprint Spectrum Trademark and Service Mark
License Agreement, and Addendum I to the Management Agreement (collectively, the
"Executed Agreements"), and for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Sprint Spectrum L.P. executes,
becomes a party to, and agrees to be bound by and to perform its obligations
under each of the Executed Agreements as of the Effective Date. The execution by
Sprint Spectrum L.P. of this Master Signature Page has the same force and effect
as if Sprint Spectrum L.P. executed individually each of the Executed
Agreements.
SPRINT SPECTRUM L.P.
By: /s/ Bernard A. Bianchino
Bernard A. Bianchino
Chief Business Development Officer
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WIRELESSCO, L.P.
For and in consideration of the covenants contained in the Management
Agreement and Addendum I to the Management (collectively, the "Executed
Agreements"), and for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, WirelessCo, L.P. executes, becomes
a party to, and agrees to be bound by and to perform its obligations under each
of the Executed Agreements as of the Effective Date. The execution by
WirelessCo, L.P. of this Master Signature Page has the same force and effect as
if WirelessCo, L.P. executed individually each of the Executed Agreements.
WIRELESSCO, L.P.
By: /s/ Bernard A. Bianchino
Bernard A. Bianchino
Senior Vice President and
Chief Business Development Officer
SPRINT COMMUNICATIONS COMPANY, L.P.
For and in consideration of the covenants contained in the Management
Agreement, Sprint Trademark and Service Mark License Agreement, and Addendum I
to the Management Agreement (collectively, the "Executed Agreements"), and for
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Sprint Communications Company, L.P. executes, becomes a party to,
and agrees to be bound by and to perform its obligations under each of the
Executed Agreements as of the Effective Date; provided, that Sprint
Communications Company, L.P. only agrees to be bound by and perform its
obligations under, and will enjoy the benefits given to it under the Management
Agreement, with respect to only those provisions that expressly apply to Sprint
Communications Company, L.P., including its obligations and benefits under
Sections 2, 3 and 10. The execution by Sprint Communications Company, L.P. of
this Master Signature Page has the same force and effect as if Sprint
Communications Company, L.P. executed individually each of the Executed
Agreements.
SPRINT COMMUNICATIONS COMPANY, L.P.
By: /s/ Thomas E. Weigman
Thomas E. Weigman
Senior Vice President - Consumer Market
Strategy and Communications
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ALAMOSA WISCONSIN LIMITED PARTNERSHIP
For and in consideration of the covenants contained in the Management
Agreement, Services Agreement, Sprint Trademark and Service Mark License
Agreement, Sprint Spectrum Trademark and Service Mark License Agreement, and
Addendum I to the Management Agreement (collectively, the "Executed
Agreements"), and for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Alamosa Wisconsin Limited
Partnership executes, becomes a party to, and agrees to be bound by and to
perform its obligations under each of the Executed Agreements as of the
Effective Date. ne execution by Alamosa Wisconsin Limited Partnership of this
Master Signature Page has the same force and effect as if Alamosa Wisconsin
Limited Partnership executed individually each of the Executed Agreements.
ALAMOSA WISCONSIN LIMITED PARTNERSHIP
By: /s/ David Sharbutt
David Sharbutt
Chairman
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<PAGE> 54
NOTICE ADDRESS SCHEDULE
The addresses to which notice is to be sent pursuant to Section 17.1 of
the Management Agreement, Section 9.1 of the Services Agreement, Section 15.1 of
the Sprint Trademark and Service Mark License Agreement, or Section 15.1 of the
Sprint Spectrum Trademark and Service Mark License Agreement are as follows:
SPRINT SPECTRUM L.P. AND WIRELESSCO., L.P.
4900 Main, 12th Floor with a copy to: 4900 Main, 11th Floor
Kansas City, Missouri 64112 Kansas City, Missouri 64112
Telephone: (916) 559-1000 Telephone: (916) 559-1000
Telecopier: (816) 559-1290 Telecopier: (816) 559-1290
Attention: Chief Executive Officer Attention: General Counsel
SPRINT COMMUNICATIONS COMPANY, L.P. (and notices regarding the Sprint Brands)
c/o Sprint Corporation
2330 Shawnee Mission Parkway
Westwood, Kansas 66205
Telephone: 913-624-3326
Telecopier: 913-624-8233
Attention: Corporate Secretary
Mail Stop: KSWESA0110
ALAMOSA WISCONSIN LIMITED PARTNERSHIP
4747 South Loop 289
Lubbock, TX 79464
Telephone: (806) 791-7700
Telecopier: (806) 791-7711
Attn: Chairman
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SCHEDULE OF DEFINITIONS
This Schedule of Definitions is the "SCHEDULE OF DEFINITIONS" referred
to in and incorporated by reference under the Management Agreement, Services
Agreement, and Trademark License Agreements (as such agreements are defined
below). Whenever the phrase "this agreement" is used below, such phrase refers
to the particular agreement under whose terms this Schedule of Definitions is
being applied in that instance. If citations to sections or exhibits of
different agreements are included in a definition, the citation to the
particular agreement under whose terms this Schedule of Definitions is being
applied controls to the exclusion of the citations to different agreements.
The following words and phrases used in this agreement have the
following meanings:
"ADDENDUM" means any addendum attached to this agreement that contains
the amendments to this agreement; such Addendum is expressly incorporated as a
part of this agreement.
"AFFILIATION AGREEMENT" means any and all of the agreements, known as
Sprint PCS Affiliation Agreements, whereby an affiliate and Sprint PCS and/or
one or more of Sprint PCS' Related Parties agree to the terms and conditions
under which such affiliate will manage the Service Area Network identified in
such agreement, using such Affiliate's own PCS license issued by the FCC and any
documents incorporated by reference in such agreement.
"AGENT" has the meaning set forth in Section 3.1 of the Sprint Spectrum
Trademark and Service Mark License Agreement or Section 3.1 of the Sprint
Trademark and Service Mark License Agreement.
"ARBITER" has the meaning set forth in Section 12.1.3 of the Management
Agreement or Section 5.1.3 of the Services Agreement.
"AVAILABLE SERVICES" means those categories of services listed on
Exhibit 2.1.1 to the Services Agreement (as the same may be amended from time to
time by Sprint Spectrum and made available to Manager under the terms of the
Services Agreement).
"AVAILABLE SERVICES AND FEES SCHEDULE" means that schedule set forth on
Exhibit 2.1.1 to the Services Agreement, which sets forth the Available Services
offered from time to time and the fees charged for such Available Services.
"BANKRUPTCY" means, for the purposes of the Trademark License
Agreements, either a Voluntary Bankruptcy or an Involuntary Bankruptcy.
"BRANDS" means the Sprint PCS Brands and the Sprint Brands.
"BTA" means a Basic Trading Area for which a Basic Trading Area (BTA)
license is issued by the FCC.
"BUILD-OUT PLAN" means the plan agreed upon by Manager and Sprint PCS,
along with any modifications and updates to the plan, respecting the
construction and design of the Service Area Network, a copy of which is attached
as Exhibit 2.1 to the Management Agreement.
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"BUSINESS DAY" means a day of the year that banks are not required or
authorized to close in the State of New York.
"CANCELLED SERVICE" has the meaning set forth in Section 3.2 of the
Services Agreement.
"CDMA" means code division multiple access.
"CHANGE OF CONTROL" has the meaning set forth in Section 17.15.3 of the
Management Agreement.
"COLLECTED REVENUES" has the meaning, set forth in Section 10.4 of the
Management Agreement.
"CONFIDENTIAL INFORMATION" means all Program Requirements, guidelines,
standards, and programs, the technical, marketing, financial, strategic and
other information provided by each party under the Management Agreement,
Services Agreement, and Trademark License Agreements, and any other information
disclosed by one party to the other party pursuant to the Management Agreement,
Services Agreement, and Trademark License Agreements that is not specifically
excluded by Section 12.2 of the Management Agreement. In addition to the
preceding sentence, "Confidential Information" has the meaning set forth in
Section 3.1 of the Sprint Spectrum Trademark and Service Mark License Agreement
or Section 3.1 of the Sprint Trademark and Service Mark License Agreement.
"CONTROLLED RELATED PARTY" means the Parent of any Person and each
Subsidiary of such Parent. As used in Section 1.2 and Article 3 of the Sprint
Spectrum Trademark and Service Mark License Agreement or Section 1.2 and Article
3 of the Sprint Trademark and Service Mark License Agreement, the term
"Controlled Related Party" will also include any Related Party of a Person that
such Person or its Parent can directly or indirectly unilaterally cause to take
or refrain from taking any of the actions required, prohibited or otherwise
restricted by such Section, whether through ownership of voting securities,
contractually or otherwise.
"DEFAULT RATE" means the rate per annum (computed on the basis of the
actual number of days elapsed in a year of 365 or 366 days, as applicable),
compounded monthly, equal to the Prime Rate (adjusted as and when changes in the
Prime Rate occur) plus five percent (5%).
"DISAGGREGATED LICENSE" means that portion of the License that Manager
may or is required to purchase under Section 11 of the Management Agreement from
Sprint PCS under certain circumstances, after Sprint PCS' receipt of FCC
approval of the necessary disaggregation and partition, which portion comprises
no less than the amount of spectrum sufficient to operate one duplex CDMA
carrier (including the required guard bands) within the PCS Spectrum, and no
more than 10 MHz of the Spectrum (at Manager's designation) covering the Service
Area, and which includes the frequencies then in use in the Service Area Network
and, if applicable, adjacent frequencies, so long as such frequencies in the
aggregate do not exceed 10 MHz.
"DISPUTE NOTICE" has the meaning set forth in Section 12.1.3 of the
Management Agreement or Section 5.1.3 of the Services Agreement.
"DISPUTE NOTICE DATE" has the meaning set forth in Section 12.1.3 of
the Management Agreement or Section 5.1.3 of the Services Agreement.
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"ENCUMBRANCES" has the meaning set forth in Section 5.1 (a) of the
Sprint Spectrum Trademark and Service Mark License Agreement or Section 5.1 (a)
of the Sprint Trademark and Service Mark License Agreement.
"ENTIRE BUSINESS VALUE" has the meaning set forth in Section 11.7.3 of
the Management Agreement.
"EVENT OF TERMINATION" means any of the events described in Section
11.3 of the Management Agreement. For the purposes of the Sprint Spectrum
Trademark and Service Mark License Agreement only, "Event of Termination" has
the meaning set forth in Section 13.2 of that agreement. For the purposes of the
Sprint Trademark and Service Mark License Agreement only, "Event of Termination"
has the meaning set forth in Section 13.2 of that agreement.
"FAA" means the Federal Aviation Administration.
"FCC" means the Federal Communications Commission.
"FINANCIAL LENDER" means any and all of those commercial and financial
institutions that provide material credit to Manager for the purpose of
assisting Manager with the fulfillment of its obligations and duties under this
agreement.
"FIXED WIRELESS LOCAL LOOP" has the meaning set forth in Section 2.4 of
the Management Agreement.
"HOME SERVICE AREA" means the geographic area within which a customer
can make a local call on the customer's PCS phone (i.e., the customer does not
incur an extra charge).
"INBOUND ROAMING" means calls placed by a non-Sprint PCS Network
customer on the Sprint PCS Network.
"INDEMNITEE" and "INDEMNITOR" have the meanings set forth in Section
13.3.1 of the Management Agreement or Section 6.3.1 of the Services Agreement.
"INITIAL TERM" has the meaning set forth in Section 11. 1 of the
Management Agreement.
"INVOLUNTARY BANKRUPTCY" has the meaning set forth in Section 11.3.7 of
the Management Agreement.
"LAW" means all laws (statutory or otherwise), ordinances, rules,
regulations, bylaws, Orders and codes of all governmental and regulatory
authorities, whether United States Federal, state or local, which are applicable
to the Sprint PCS Products and Services.
"LICENSE" means the PCS license(s) issued by the FCC described on the
Service Area Exhibit to the Management Agreement.
"LICENSED MARKS" means the trademarks and service marks referred to in
the Recitals section of the Trademark License Agreement under whose terms this
definition is being applied, and such other marks as may be adopted and
established under said agreement from time to time.
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"LICENSEE" has the meaning set forth in the introductory paragraph to
the particular agreement under whose terms this definition is being applied.
"LICENSOR" has the meaning set forth in the introductory paragraph to
the particular agreement under whose terms this definition is being applied.
"LOCAL CALLING AREA" means the geographic area within which a customer
can make a local call on the customer's PCS handset without incurring a long
distance charge.
"LOSS" means any and all damage, loss, liability, claim, out-of-pocket
cost and expense, including reasonable expenses of investigation and reasonable
attorneys' fees and expenses, but excluding consequential or special damages.
"MANAGEMENT AGREEMENT" means that certain Sprint PCS Management
Agreement executed by Manager and Sprint PCS and any documents incorporated by
reference in said agreement.
"MANAGER" means the party to this agreement as indicated in the
introductory paragraph of this agreement.
"MANAGER MANAGEMENT REPORT" has the meaning set forth in Section 12.1.2
of the Management Agreement.
"MANAGER'S PRODUCTS AND SERVICES" means all types and categories of
wireless communications services and associated products that are offered by
Manager in the Service Area under Section 3.2 of the Management Agreement.
"MARKETING COMMUNICATIONS GUIDELINES" means the guidelines issued by
Sprint or Sprint PCS in accordance with Section 5.2 of the Management Agreement
with respect to the marketing, promotion, advertising, distribution, lease and
sale of Sprint PCS Products and Services, as they may be amended from time to
time by Sprint or Sprint PCS in accordance with the terms of the Trademark
License Agreements.
"MASTER SIGNATURE PAGE" means the document that the parties to the
Management Agreement, Services Agreement and/or one or more of the Trademark
License Agreements sign to evidence their agreement to execute, become a party
to and be bound by each of the agreements, or parts thereof, listed above the
particular party's signature on such Master Signature Page.
"MFN PRICE" or "MOST FAVORED NATION PRICE" means, with respect to
resale, the best local market price offered to any third party for the purchase
of air time on Manager's network including but not limited to any third party
who may use the air time for its own wireless communications services or resell
the air time, and, with respect to roaming, the lowest roaming charge of Manager
to other wireless carriers when their customers roam on the Service Area
Network.
"MIN" means the 24-bit mobile identification number corresponding to
the 7-digit telephone number assigned to the handset, used for both billing and
receiving calls.
"MTA" means a Major Trading Area for which a MTA license is issued by
the FCC.
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"NEW COVERAGE" means the build-out in the Service Area that is in
addition to the build-out required under the then-existing Build-out Plan, which
build-out Sprint PCS or Manager decides should be built-out.
"NOTICE ADDRESS SCHEDULE" means the schedule attached to the Master
Signature Page that provides the mailing and courier delivery addresses, and the
facsimile number, for giving notices to each of the parties signing the Master
Signature Page. The Notice Address Schedule may include supplemental addresses
that serve as additional or alternate notice addresses for use by the parties in
specifically prescribed situations.
"NPA-NXX" means as follows: "NPA" means numbering plan area, which is
the area code for a telephone number. "NXX" refers to the first three digits of
a telephone number, which identify the specific telephone company central office
that serves that number.
"OFFER" means an offer received by Manager to sell substantially all of
the assets comprising or used in connection with the operation and management of
the Service Area Network or any portion of the Service Area Network.
"OFFER NOTICE" means a written notice given by Manager to Sprint PCS
that sets forth in detail the terms and conditions of an Offer and the name and
address of the person or entity making the Offer.
"OFFERED INTEREST" means the assets that Manager proposes to sell
pursuant to an Offer.
"OPERATING ASSETS" means the assets Manager or its Related Parties owns
and uses in connection with the operation of the Service Area Network, at the
time of termination, to provide the Sprint PCS Products and Services. Operating
Assets does not include items such as furniture, fixtures and buildings that
Manager or its Related Parties use in connection with other businesses. Examples
of Operating Assets include without limitation: switches, towers, cell sites,
systems, records and retail stores.
"OPERATIONAL LEVEL OF SPRINT PCS" means the average operational level
of all the service area networks operated by Sprint PCS and its Related Parties
without the use of a manager or affiliate, as measured by Sprint PCS, unless the
operational level, as measured by Sprint PCS, of all of the service area
networks operated by Sprint PCS and its Related Parties without the use of a
manager or affiliate that are contiguous to the Service Area are below the
national average, in which case "Operational Level of Sprint PCS" means the
average operational level of those contiguous service area networks.
"ORDER" means any order, writ, injunction, decree, judgment, award or
determination of any court or governmental or regulatory authority.
"OTHER MANAGERS" means any person or entity with which Sprint PCS has
entered into an agreement similar to this agreement or an Affiliation Agreement,
including without limitation an affiliate under an Affiliation Agreement or a
manager under another Management Agreement, under which the person or entity
designs, constructs and manages a service area network and offers and promotes
Sprint PCS Products or Services.
"OUTBOUND ROAMING" means calls placed by a Sprint PCS Network customer
on a non-Sprint PCS network.
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<PAGE> 60
"PARENT" means, with respect to any Person, the ultimate parent entity
(as determined in accordance with the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 and the rules and regulations promulgated thereunder) of such
Person; except that if such ultimate parent entity is an individual, the Parent
will be the highest entity in the ownership chain from the ultimate parent
entity to and including such Person that is not an individual.
"PARTIES" means, with respect to the Management Agreement, Sprint PCS
and Manager. For the purpose of the services Agreement only, "parties" means
Sprint Spectrum and Manager. Sprint is not a party to the Management Agreement,
except to the limited extent described on the signature page executed on behalf
of Sprint. For the purpose of the Trademark License Agreements only, "parties"
means Licensor and Licensee.
"PCS" means a radio communication system authorized under the rules for
broadband personal communications services designated as Subpart E of Part 24 of
the FCC's rules, including the network, marketing, distribution, sales, customer
interface and operations functions relating thereto.
"PCS SPECTRUM" means the range of frequencies that Sprint PCS is
authorized to use under the License.
"PERMITTED ASSIGNEE" means any assignee of the rights and obligations
of Licensee pursuant to an assignment consented to in writing by Licensor, in
its sole discretion, in accordance with Section 14.1 of the Sprint Spectrum
Trademark and Service Mark License Agreement or Section 14.1 of the Sprint
Trademark and Service Mark License Agreement, or any subsequent permitted
assignee of any such permitted assignee.
"PERSON" means any individual, partnership, limited partnership,
limited liability company, corporation, trust, other business association or
business entity, estate, or other entity.
"POPS" means the population covered by a license or group of licenses.
Unless otherwise noted, as used in the Management Agreement, pops means the most
recent Rand-McNally Population Survey estimate of the population of a geographic
area.
"PREMIUM AND PROMOTIONAL ITEMS" means all items, including clothing,
memorabilia and novelties, used to display the Licensed Marks for the purpose of
promoting the awareness, sale or image of the Sprint PCS Products and Services;
provided, however, that Premium and Promotional Items does not include marketing
and advertising materials prepared by Licensee that are subject to the Marketing
Communications Guidelines (e.g. printed materials such as bill stuffers,
brochures and similar materials).
"PRIME RATE" means the rate announced from time to time by The Chase
Manhattan Bank, or its successor(s), as its prime rate.
"PROGRAM REQUIREMENTS" means the standards, guidelines, plans, policies
and programs established by Sprint PCS from time to time regarding the operation
and management of the Service Area Network and the Sprint PCS business operated
using the Service Area Network, including the Program Requirements set forth in
Sections 4.1, 4.2, 4.3, 7.2 and 8.1 of the Management Agreement. Sprint PCS may
also implement Program Requirements respecting a voluntary resale program, as
defined in Section 3.5.2 of the Management Agreement.
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"PURCHASE NOTICE" has the meaning set forth in Section 1.2 of Exhibit
11.8 to the Management Agreement.
"QUALITY STANDARDS" has the meaning set forth in Section 2.1 (a) of the
Sprint Spectrum Trademark and Service Mark License Agreement or Section 2.1 (a)
of the Sprint Trademark and Service Mark License Agreement.
"RAND-MCNALLY POPULATION SURVEY" means the most recent population
survey published by Rand- McNally or, if Rand-McNally no longer publishes the
surveys, then the most recent population survey published by any successor
organization to Rand-McNally or, if no such organization exists, an organization
selected by Sprint PCS that provides surveys similar to the Rand-McNally
surveys.
"RECEIVING PARTY" has the meaning, set forth in Section 3. 1 of the
Sprint Spectrum Trademark and Service Mark License Agreement or Section 3.1 of
the Sprint Trademark and Service Mark License Agreement.
"RELATED EQUIPMENT" means customer-controlled equipment for use in
connection with the Sprint PCS Products and Services including telephones,
wireless handsets and related accessories, PCMCIA cards, "smart" cards, PDA's,
PBX's, set-top boxes and data terminals.
"RELATED PARTY" means, with respect to any Person, any other Person
that directly or indirectly through one or more intermediaries controls, is
controlled by, or is under common control with the Person. For purposes of the
Management Agreement, Sprint Spectrum, SprintCom, American PCS Communications,
LLC, PhillieCo Partners I, L.P., and Cox Communications PCS, L.P. will be deemed
to be Related Parties. For purposes of this definition, the term "controls"
(including its correlative meanings "controlled by" and "under common control
with") means the possession, direct or indirect, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"RESTRICTED PARTY" has the meaning set forth in Section 3.1 of the
Sprint Spectrum Trademark and Service Mark License Agreement or Section 3.1 of
the Sprint Trademark and Service Mark License Agreement.
"SELECTED SERVICES" means those Available Services selected by Manager
to be provided by Sprint Spectrum under Section 2.1 of the Services Agreement.
An Available Service will not be treated as a Selected Service until Sprint
Spectrum begins providing that service.
"SERVICE AREA" means the geographic area described on the Service Area
Exhibit to the Management Agreement.
"SERVICE AREA NETWORK" means the network and business activities
managed by Manager under the Management Agreement in the Service Area under the
License.
"SERVICES AGREEMENT" means that certain Sprint PCS Services Agreement
executed by Manager and Sprint Spectrum and any documents incorporated by
reference in said agreement, whereby Manager may delegate the performance of
certain services to Sprint PCS for fees that represent an adjustment of the fees
paid by Sprint PCS to Manager under Section 10 of the Management Agreement.
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"SITING REGULATIONS" means:
(1) FCC regulations governing tower siting, lighting, marking
monitoring, and reporting of lighting malfunctions as set forth in 47
CFR Sections 17.1 through 17.58, and as may be amended;
(2) FAA regulations governing tower siting, lighting, marking,
monitoring, and reporting of lighting malfunctions as set forth in 14
CFR Sections 77.1 through 77.75, and as may be amended;
(3) FCC land use regulations as set forth in 47 CFR Sections
1.1301 through 1.1319, and as may be amended; and
(4) FCC radio frequency exposure regulations as set forth in
47 CFR Sections 1. 1301 through 1. 1319, and as may be amended.
"SPECTRUM" has the same meaning as PCS Spectrum.
"SPRINT" means Sprint Communications Company, L.P., a Delaware limited
partnership.
"SPRINT BRANDS" means the "Licensed Marks" as that term is defined
under the Sprint Trademark and Service Mark License Agreement.
"SPRINT PCS" means any or all of the following Related Parties who are
License holders and signatories to the Management Agreement: Sprint Spectrum
L.P., a Delaware limited partnership, SprintCom, Inc., a Kansas corporation,
PhillieCo Partners I, L.P., a Delaware limited partnership, Cox Communications
PCS, L.P., a Delaware limited partnership, and American PCS Communications, LLC,
a Delaware limited liability company. Each entity listed above is a Related
Party to each of the other listed entities.
"SPRINT PCS AFFILIATION AGREEMENT" has the same meaning as Affiliation
Agreement.
"SPRINT PCS BRANDS" means the "Licensed Marks" as that term is defined
under the Sprint Spectrum Trademark and Service Mark License Agreement.
"SPRINT PCS COMMUNICATIONS POLICIES" means the policies established in
accordance with Section 6.4 of the Management Agreement with respect to public
relations development, maintenance and management, as they may be amended from
time to time by Sprint PCS in accordance with the terms of the Management
Agreement.
"SPRINT PCS CUSTOMER SERVICE PROGRAM REQUIREMENTS" means the program
and requirements established in accordance with Section 8.1 of the Management
Agreement with respect to customer service development, maintenance and
management, as it may be amended from time to time by Sprint PCS in accordance
with the terms of the Management Agreement.
"SPRINT PCS CUSTOMER SERVICE STANDARDS" means those customer service
standards developed by Sprint PCS with respect to customer service and
maintenance as described in Section 8.1 of the Management
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Agreement, as it may be amended from time to time by Sprint PCS in accordance
with the terms of the Management Agreement.
"SPRINT PCS INSURANCE REQUIREMENTS" means the insurance requirements
developed by Sprint PCS as described in Section 12.3 of the Management
Agreement, as they may be amended from time to time by Sprint PCS in accordance
with the terms of the Management Agreement.
"SPRINT PCS MANAGEMENT AGREEMENT" has the same meaning as Management
Agreement.
"SPRINT PCS NATIONAL ACCOUNTS PROGRAM REQUIREMENTS" means the program
and requirements established in accordance with Section 4.2 of the Management
Agreement with respect to national accounts development, maintenance and
management, as it may be amended from time to time by Sprint PCS in accordance
with the terms of the Management Agreement.
"SPRINT PCS NATIONAL OR REGIONAL DISTRIBUTION PROGRAM REQUIREMENTS"
means any distribution program and requirements established in accordance with
Section 4.1 of the Management Agreement, as it may be amended from time to time
by Sprint PCS in accordance with the terms of the Management Agreement, and
entered into by Sprint PCS or its Related Parties and a third-party distributor
(for example, a national chain of retail electronics stores) from time to time,
under which the third party will distribute, lease, or sell Sprint PCS Products
and Services on a national or regional basis. The term "distributor" means a
reseller of Sprint PCS Products and Services, or an agent of Sprint PCS
authorized to sell Sprint PCS Products and Services on behalf of Sprint PCS, or
a person engaged in any other means of wholesale or retail distribution of
Sprint PCS Products and Services.
"SPRINT PCS NETWORK" means the national wireless network and business
activities to be developed by Sprint PCS, Manager and Other Managers in the
United States and certain of its territories and possessions, which network
includes the Service Area Network.
"SPRINT PCS PRODUCTS AND SERVICES" means all types and categories of
wireless communications services and associated products that are designated by
Sprint PCS (whether now existing or developed and implemented in the future) as
products and services to be offered by Sprint PCS, Manager and all Other
Managers as the products and services of the Sprint PCS Network for fixed and
mobile voice, short message and other data services under the FCC's rules for
broadband personal communications services, including all local area service
plans. Sprint PCS Products and Services do not include wireline products or
services, including local exchange service, wireline long distance service, and
wireline based Internet access.
"SPRINT PCS ROAMING AND INTER SERVICE AREA PROGRAM REQUIREMENTS" means:
(i) the roaming program and requirements established in
accordance with Section 4.3 of the Management Agreement, as amended from time to
time by Sprint PCS in accordance with the terms of the Management Agreement, to
provide for customers from a carrier not associated with the Sprint PCS Network
to operate the customer's handset on the Sprint PCS Network and for customers
from the Sprint PCS Network (whether customers of Sprint PCS, Manager or an
Other Manager) to operate the customer's handset on a network of a carrier not
associated with the Sprint PCS Network, and
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(ii) the program established in accordance with Section 4.3 of
the Management Agreement, as amended from time to time by Sprint PCS in
accordance with the terms of the Management Agreement, to provide for customers
from one Service Area on the Sprint PCS Network, whether managed by Sprint PCS,
Manager, or an Other Manager, to operate the customer's handsets and otherwise
receive seamless service, regardless of whether the customer makes its call to
or from the Sprint PCS Network and regardless of whether the customer is a
customer of Sprint PCS, Manager or an Other Manager.
"SPRINT PCS TECHNICAL PROGRAM REQUIREMENTS" means the operating and
technical performance standards established by Sprint PCS, in accordance with
Section 7.2 of the Management Agreement, as amended from time to time by Sprint
PCS in accordance with the terms of the Management Agreement, for the Sprint PCS
Network as they may be amended from time to time by Sprint PCS in accordance
with the terms of the Management Agreement.
"SPRINT SPECTRUM" means Sprint Spectrum L.P., a Delaware limited
partnership.
"SPRINT SPECTRUM BRANDS" means the "Licensed Marks" as that term is
defined under the Sprint Spectrum Trademark and Service Mark License Agreement.
"SPRINT SPECTRUM TRADEMARK AND SERVICE MARK LICENSE AGREEMENT" means
that certain Sprint Spectrum Trademark and Service Mark License Agreement
executed by Manager and Sprint Spectrum and any documents incorporated by
reference in said agreement.
"SPRINT TRADEMARK AND SERVICE MARK LICENSE AGREEMENT" means that
certain Sprint Trademark and Service Mark License Agreement executed by Manager
and Sprint and any documents incorporated by reference in said agreement.
"SPRINTCOM" means SprintCom, Inc., a Kansas corporation.
"SUBSIDIARY" of any Person as of any relevant date means a corporation,
company or other entity (i) more than 50% of whose outstanding shares or equity
securities are, as of such date, owned or controlled, directly or indirectly
through one or more Subsidiaries, by such Person, and the shares or securities
so owned entitle such Person and/or Subsidiaries to elect at least a majority of
the members of the board of directors or other managing authority of such
corporation, company or other entity notwithstanding the vote of the holders of
the remaining shares or equity securities so entitled to vote or (ii) which does
not have outstanding shares or securities, as may be the case in a partnership,
joint venture or unincorporated association, but more than 50% of whose
ownership interest is, as of such date, owned or controlled, directly or
indirectly through one or more Subsidiaries, by such Person, and in which the
ownership interest so owned entitles such Person and/or Subsidiaries to make the
decisions for such corporation, company or other entity.
"SUCCESSOR NOTICE" has the meaning set forth in Section 17.15.2(e) of
the Management Agreement.
"TERM" means during the term of the Management Agreement, including the
Initial Term and any renewal terms.
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"TRADEMARK AND SERVICE MARK USAGE GUIDELINES" means the rules governing
the depiction and presentation of the Licensed Marks then generally in use by
Licensor, to be furnished by Licensor to Licensee, as the same may be amended
and updated from time to time by Licensor.
"TRADEMARK LICENSE AGREEMENTS" means the Sprint Trademark and Service
Mark License Agreement and the Sprint Spectrum Trademark and Service Mark
License Agreement.
"TYPE II REPORT" has the meaning set forth in Section 12.1.2 of the
Management Agreement.
"VOLUNTARY BANKRUPTCY" has the meaning set forth in Section 11.3.7 of
the Management Agreement.
"WIRELESS MOBILITY COMMUNICATIONS NETWORK" means a radio communications
system operating in the 1900 MHz spectrum range under the rules designated as
Subpart E of Part 24 of the FCC's rules.
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THIS AGREEMENT HAS CONFIDENTIAL PORTIONS OMITTED, WHICH PORTIONS HAVE BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS
ARE INDICATED IN THIS AGREEMENT WITH "[TEXT OMITTED - CONFIDENTIAL TREATMENT
REQUESTED]"
ADDENDUM I
TO
SPRINT PCS MANAGEMENT AGREEMENT
(WISCONSIN)
MANAGER: ALAMOSA WISCONSIN LIMITED PARTNERSHIP
SERVICE AREA:
o Appleton-0shkosh BTA 18,
o Eau Claire BTA 123,
o Fond du Lac BTA 148,
o Green Bay BTA 173,
o La Crosse-Winona BTA 234,
o Madison BTA 272 (Only Columbia, Juneau, Marquette, Sauk Counties and those
portions of Dane County where Manager will meet Sprint PCS coverage along
Highway 151 and I-90/94 north of Madison),
o Manitowoc BTA 276,
o Milwaukee BTA 297 (Only those portions of Dodge County not currently
covered by Sprint PCS along Highway 41 and the City of Watertown),
o Minneapolis-St. Paul BTA 298 (Only Barron County and those portions of Polk
County not currently covered by Sprint PCS along Highway 8 near the city of
St. Croix Falls),
o Sheboygan BTA 417,
o Stevens Point-Marshfield-Wisconsin Rapids BTA 432,
o Wausau-Rhinelander BTA 466.
This Addendum contains certain additional and supplemental terms and
provisions of that certain Sprint PCS Management Agreement (the "Management
Agreement") entered into contemporaneously with and by the same parties as the
Addendum to the Management Agreement. The terms and provisions of this Addendum
control supersede and amend any conflicting terms and provisions contained in
the Management Agreement. Except for express modifications made in this
Addendum, the Management Agreement continues in full force and effect.
Capitalized terms used and not otherwise defined in this Addendum have
the meanings ascribed to them in that certain Schedule of Definitions. Section
and Exhibit references are to Sections and Exhibits of the Management Agreement
unless otherwise noted.
The Management Agreement is modified as follows:
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1. COVERAGE ENHANCEMENT. "[TEXT OMITTED - CONFIDENTIAL TREATMENT
REQUESTED]"
2. REGULATORY NOTICES (COSTS). The following two sentences replace the
last sentence of Section 16.4: "If Sprint PCS chooses to respond to such
communications and complaints, Manager will not respond to them without the
consent of Sprint PCS. Sprint PCS will bear the cost of responding to any such
communications and complaints unless (1) such response is primarily the result
of Manager's acts or omissions that constitute negligence, willful misconduct,
or breach of any provision of this agreement (in which case Manager will pay the
costs of Sprint PCS' response), or (2) Manager's response is not requested by
Sprint PCS."
3. COMPLIANCE. Sprint PCS acknowledges that smaller population centers
within the Service Area may merit an adjusted application of Sprint PCS' Retail
Store requirements and its Customer Service requirements in order to preserve
the economic benefits of this agreement for Manager and Sprint PCS. Accordingly,
with respect to cities located within the Service Area having a population of
less than 100,000 according to the most recently completed United States
government census), Sprint PCS will exercise commercial reasonableness with
respect to its Retail Store requirements and its Customer Service requirements.
4. VOLUNTARY RESALE OF PRODUCTS AND SERVICES. Section 3.5.2 is modified
by amending the second sentence of the second paragraph in its entirety to read
as follows: "If Manager wants handsets of subscribers of resellers with NPA-NXXs
of Manager to be activated, Manager must agree to comply with the terms of the
program, including its pricing provisions."
5. FINANCING. (a) The word "and" is inserted between the words
"thereto" and "before" in the last sentence of Section 1.7.
(b) The following paragraph is added at the end of Section 1.7:
Sprint PCS agrees to propose modifications to the Management
Agreement, and perhaps to the Schedule of Definitions, the Services
Agreement, the Sprint Trademark and Service Mark License Agreement, and
the Sprint Spectrum Trademark and Service Mark License Agreement, that
will enhance Manager's ability to obtain financing for the Service Area
Network. Sprint PCS will not be required to offer the Manager
subsequent modifications offered or agreed to with Other Managers
subsequent to the initial set of modifications.
6. LONG-DISTANCE PRICING. (a) The first sentence of Section 3.4 is
deleted in its entirety and replaced by the following language:
Manager must purchase long-distance telephony services from
Sprint through Sprint PCS both (i) to provide long-distance telephony
service to users of the Sprint PCS Network and (ii) to connect the
Service Area Network with the national platforms used by Sprint PCS to
provide services to Manager under the agreement and/or the Services
Agreement. Sprint will bill Sprint PCS for such services rendered to
Sprint PCS, Manager and all Other Managers, and in turn, Sprint PCS
will bill Manager for the services used by Manager. Manager will be
charged the same price for such long-distance service as Sprint PCS is
charged by Sprint (excluding interservice area long-distance travel
rates) plus an additional administrative fee to cover Sprint PCS'
processing costs.
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(b) The following sentence is added as a second paragraph in Section
3.4: "Manager may not resell the long-distance telephony services acquired from
Sprint under this Section 3.4."
7. RIGHT OF LAST OFFER. Section 3.7 is modified by adding the following
language: "(other than backhaul services relating to national platform and IT
application connections, which Manager must purchase from Sprint)" both between
(i) "Service Area Network" and "if Manager decides to use" in the first sentence
of the first paragraph and (ii) "for these services" and "and the agreement was
not made" in the first sentence of the second paragraph.
8. NON-TERMINATION OF AGREEMENT. The following language is added at the
end of Section 11.5.3 and Section 11.6.4: "but such action does not terminate
this agreement."
9. ANNOUNCED TRANSACTIONS. Section 17.24 is deleted in its entirety.
10. ADDITIONAL TERMS AND PROVISIONS. The phrase "the Addendum also
describes" is deleted from the second sentence of Section 17.25, and the
following language is inserted at the end of that second sentence: "are
described on Exhibit 17.25, and photocopies of any such written agreements have
been delivered to Sprint PCS".
11. FEDERAL CONTRACTOR COMPLIANCE. A new Section 17.28, the text of
which is attached as Exhibit A " is added and incorporated by this reference.
When and to the extent required by applicable law, Manager will comply with the
requirement of this Section 17.28.
12. YEAR 2000 COMPLIANCE. The following Section 17.29 is added:
17.29 YEAR 2000 COMPLIANCE. Sprint PCS and Manager each
separately represents and warrants that any system or equipment
acquired, operated or designated by it for use in the Service Area
Network or for use to support the Service Area Network, including
(without limitation) billing, ordering and customer service systems,
will be capable of correctly processing and receiving date data, as
well as properly exchanging date data with all products (for example,
hardware, software and firmware) with which the Service Area Network is
designed to be used, and will not malfunction or fail to function due
to an inability to process correctly date data in conformance with
Sprint PCS requirements for "Year 2000 Compliance." If the Service Area
Network or any system used to support the Service Area Network fails to
operate as warranted due to defects or failures in any system or
equipment selected by Manager (including systems or equipment of third
party vendors and subcontractors selected by Manager rather than by
Sprint PCS) Manager will, at its own expense, make the repairs,
replacements or upgrades necessary to correct the failure and provide a
Year 2000 Compliant Service Area Network. If the Service Area Network
or any system used to support the Service Area Network fails to operate
as warranted due to defects or failures in any systems or equipment
selected by Sprint PCS (including systems or equipment of third party
vendors and subcontractors that Sprint PCS selects and requires Manager
to use), Sprint PCS will, at its own expense, make the repairs,
replacements or upgrades necessary to correct the failure and provide a
Year 2000 Compliant Service Area Network.
"Year 2000 Compliance" means the functions, calculations, and
other computing processes of the Service Area Network (collectively
"Processes") that perform and otherwise process, date- arithmetic,
display, print or pass date/time data in a consistent manner,
regardless of the date in time
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on which the Processes are actually performed or the dates used in such
data or the nature of the date/time data input, whether before, during
or after January 1, 2000 and whether or not the date/time data is
affected by leap years. To the extent any part of the Service Area
Network is intended to be used in combination with other software,
hardware or firmware, it will properly exchange date/time data with
such software, hardware or firmware. The Service Area Network will
accept and respond to two-digit year-date input, correcting or
supplementing as necessary, and store, print, display or pass date/time
data in a manner that is unambiguous as to century. No date/time data
will cause any part of the Service Area Network to perform an
abnormally ending routine or function within the Processes or generate
incorrect final values or invalid results.
13. PAYMENT OF FEES UNDER SERVICES AGREEMENT. The second sentence of
Section 3.1 of the Services Agreement is deleted in its entirety and replaced by
the following two sentences:
Except with respect to fees paid for billing-related services,
the monthly charge for any fees based on the number of subscribers of
the Service Area Network will be determined based on the number of
subscribers as of the 15th day of the month for which the charge is
being calculated. With respect to fees paid for billing-related
services, the monthly charge for any fees based on the number of
subscribers will be based on the number of gross activations in the
month for which the charge is being calculated plus the number of
subscribers of the Service Area Network on the last day of the prior
calendar month.
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EXHIBIT 10.11
SPRINT PCS
SERVICES AGREEMENT
Between
SPRINT SPECTRUM L.P.
and
ALAMOSA PCS, LLC
December 6, 1999
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
1. ENGAGEMENT OF SPRINT SPECTRUM.................................................................................1
1.1 Engagement of Sprint Spectrum...................................................................1
1.2 Reliance on Manager.............................................................................1
1.3 Non-exclusive Service...........................................................................1
1.4 Manager's Use of Services.......................................................................2
2. SERVICES......................................................................................................2
2.1 Available Services; Selected Services...........................................................2
2.1.1 Available Services.....................................................................2
2.1.2 Selected Services......................................................................2
2.1.3 Changes to Selected Services...........................................................2
2.1.4 Performance of Selected Services.......................................................3
2.2 Third Party Vendors.............................................................................3
2.3 Contracts.......................................................................................3
3. FEES FOR SELECTED SERVICES....................................................................................3
3.1 Payment of Fees.................................................................................3
3.2 Adjustment of Fees..............................................................................3
3.3 Late Payments...................................................................................4
3.4 Taxes...........................................................................................4
4. TERM; TERMINATION; EFFECT OF TERMINATION......................................................................4
4.1 Term............................................................................................4
4.2 Effect of Termination...........................................................................4
5. BOOKS AND RECORDS; CONFIDENTIAL INFORMATION...................................................................4
5.1 Books and Records...............................................................................4
5.1.1 General................................................................................4
5.1.2 Audit..................................................................................4
5.1.3 Contesting an Audit....................................................................5
5.2 Confidential Information........................................................................5
6. INDEMNIFICATION...............................................................................................6
6.1 Indemnification by Sprint Spectrum..............................................................6
6.2 Indemnification by Manager......................................................................7
6.3 Procedure.......................................................................................7
6.3.1 Notice.................................................................................7
6.3.2 Defense by Indemnitor..................................................................7
6.3.3 Defense by Indemnitee..................................................................8
6.3.4 Costs..................................................................................8
7. DISPUTE RESOLUTION............................................................................................8
</TABLE>
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<TABLE>
<S> <C> <C>
7.1 Negotiation.....................................................................................8
7.2 Unable to Resolve...............................................................................8
7.3 Attorneys and Intent............................................................................8
8. REPRESENTATIONS AND WARRANTIES................................................................................8
8.1 Due Incorporation or Formation; Authorization of Agreements.....................................9
8.2 Valid and Binding Obligation....................................................................9
8.3 No Conflict; No Default.........................................................................9
8.4 Litigation......................................................................................9
9. GENERAL PROVISIONS............................................................................................9
9.1 Notices.........................................................................................9
9.2 Construction....................................................................................9
9.3 Headings........................................................................................9
9.4 Further Action.................................................................................10
9.5 Specific Performance...........................................................................10
9.6 Entire Agreement; Amendments...................................................................10
9.7 Limitation on Rights of Others.................................................................10
9.8 Waivers; Remedies..............................................................................10
9.9 Waiver of Jury Trial...........................................................................11
9.10 Binding Effect.................................................................................11
9.11 Governing Law..................................................................................11
9.12 Severability...................................................................................11
9.13 Limitation of Liability........................................................................11
9.14 No Assignment; Exceptions......................................................................11
9.15 Disclaimer of Agency...........................................................................11
9.16 Independent Contractors........................................................................11
9.17 Expense........................................................................................12
9.18 General Terms..................................................................................12
9.19 Conflicts with Management Agreement............................................................12
9.20 Master Signature Page..........................................................................12
</TABLE>
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SPRINT PCS SERVICES AGREEMENT
This SERVICES AGREEMENT is made as of December 06,1999, by and between
SPRINT SPECTRUM L.P., a Delaware limited partnership ("SPRINT SPECTRUM"), and
ALAMOSA PCS, LLC, a Delaware limited liability company (but not any Related
Party) ("MANAGER"). THE DEFINITIONS FOR THIS AGREEMENT ARE SET FORTH ON THE
"SCHEDULE OF DEFINITIONS."
RECITALS
A. Manager and the holder of the License ("Sprint PCS') are
entering into a Management Agreement contemporaneously with the execution of
this agreement, under which Manager will design, construct, operate, manage and
maintain a wireless services network in the Service Area in accordance with
Sprint PCS standards and will offer and promote Sprint PCS Products and Services
that operate on the Sprint PCS Network.
B. Manager desires to enter into this agreement with Sprint
Spectrum, under which Sprint Spectrum may furnish certain services to Manager to
assist Manager to build out, operate, manage and maintain the Service Area
Network under the License.
AGREEMENT
In consideration of the recitals and mutual covenants and agreements
contained in this agreement, the sufficiency of which are hereby acknowledged,
the parties, intending to be bound, agree as follows:
1. ENGAGEMENT OF SPRINT SPECTRUM
1.1 ENGAGEMENT OF SPRINT SPECTRUM. Manager engages Sprint Spectrum
to assist Manager with certain specified services in connection with the
operations of Manager and in building out, operating, managing and maintaining
the Service Area Network, subject to the terms and conditions of this agreement.
Sprint Spectrum accepts the engagement and will use the same effort and
demonstrate the same care in performing its obligations under this agreement as
it uses in conducting its own business. Manager will use the efforts and
demonstrate the care necessary for Sprint Spectrum to meet its obligations under
this agreement. When providing the Selected Services, Sprint Spectrum will
provide those services to Manager in the same manner it provides those services
to its own business, including the use of third party vendors to provide certain
Selected Services.
1.2 RELIANCE ON MANAGER. Manager understands that Sprint
Spectrum's ability to provide the Selected Services will depend largely on
Manager's compliance with the Sprint PCS Program Requirements under the
Management Agreement and cooperation with Sprint Spectrum. Manager agrees to
comply with such requirements and to cooperate with Sprint Spectrum to enable
Sprint Spectrum to perform its obligations under this agreement.
1.3 NON-EXCLUSIVE SERVICE. Nothing contained in this agreement
confers upon Manager an exclusive right to any of the Available Services. Sprint
Spectrum may contract with others to provide expertise and services identical or
similar to those to be made available or provided to Manager under this
agreement.
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1.4 MANAGER'S USE OF SERVICES. Manager agrees it will only use the
Selected Services in connection with its Service Area Network. Manager will not
use the Selected Services outside the Service Area or in connection with any
other business.
2. SERVICES
2.1 AVAILABLE SERVICES; SELECTED SERVICES.
2.1.1 AVAILABLE SERVICES. Subject to the terms of this
agreement, Manager may obtain any of the Available Services from Sprint Spectrum
in accordance with the provisions of this Section 2.1. The Available Services
offered from time to time and the fees charged for such Available Services will
be set forth on the then current Exhibit 2.1.1 (the "Available Services and Fees
Schedule"). If Sprint Spectrum offers any new Available Service, it will deliver
a new Exhibit 2.1.1 indicating the new service and the fee for the new service.
Manager may select one or more of the categories of Available
Services. If Manager selects a particular category of services it must take and
pay for all of the services under the category selected; Manager may not select
only particular services within that category.
If Sprint Spectrum determines to no longer offer an Available
Service and the service is not a Selected Service, then Sprint Spectrum may give
Manager written notice at any time during the term of this agreement that Sprint
Spectrum no longer offers the Available Service.
Sprint Spectrum may modify Exhibit 2.1.1 from time to time.
Exhibit 2.1.1 will be deemed amended upon delivery of the new Exhibit 2.1.1 to
Manager.
2.1.2 SELECTED SERVICES. During the term of this agreement,
and subject to the terms of this agreement, Manager has selected, and Sprint
Spectrum has agreed to furnish or cause to be furnished to Manager, the
Available Services listed on EXHIBIT 2.1.2 (which listed services will be the
Selected Services). Sprint Spectrum may require from time to time that certain
Available Services be Selected Services where necessary to comply with legal or
regulatory requirements (e.g., mandatory provision of emergency 911 service) or
applicable operating constraints (e.g., delivery of merchandise to the regional
distribution centers of national retail distributors).
2.1.3 CHANGES TO SELECTED SERVICES. If Manager determines
it no longer requires a Selected Service, then Manager must give Sprint Spectrum
written notice at least 3 months prior to the date on which Manager wishes to
discontinue its use of such Selected Service.
If Sprint Spectrum determines to no longer offer an Available
Service and such service is one of Manager's Selected Services, then Sprint
Spectrum must give Manager written notice at least 9 months prior to its
discontinuance of such Available Service that Sprint Spectrum will no longer
offer such Available Service. If the Available Service to be discontinued is
required by Sprint Spectrum to be a Selected Service, then Sprint Spectrum will
use commercially reasonable efforts to (a) help Manager provide the service
itself or find another vendor to provide the service, and (b) facilitate
Manager's transition to the new service provider.
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2.1.4 PERFORMANCE OF SELECTED SERVICES. Sprint Spectrum may
select the method, location and means of providing the Selected Services. If
Sprint Spectrum wishes to use Manager's facilities to provide the Selected
Services, Sprint Spectrum must obtain Manager's prior written consent.
2.2 THIRD PARTY VENDORS. Some of the Available Services might be
provided by third party vendors under arrangements between Sprint Spectrum and
the third party vendors. In some instances, Manager may receive Available
Services from a third party vendor under the same terms and conditions that
Sprint Spectrum receives such services. In other instances, Manager may receive
Available Services under the terms and conditions set forth in an agreement
between Manager and the third party vendor. If Manager wishes to engage a third
party vendor to provide Available Services, Selected Services, or Available
Services that Sprint Spectrum will no longer offer, Manager must first obtain
Sprint Spectrum's prior written consent, which consent will not be unreasonably
withheld. Before Manager may obtain from the third party vendor any Available
Services, Selected Services, or Available Services that Sprint Spectrum will no
longer offer, such vendor must execute an agreement prepared by Sprint Spectrum
that obligates the vendor to maintain the confidentiality of any proprietary
information and that prohibits the vendor from using any proprietary technology,
information or methods for its benefit or the benefit of any other person or
entity. Manager's use of a third party vendor that is not providing Available
Services to Manager on behalf of Sprint PCS under the Management Agreement will
not qualify for assumed compliance with the Program Requirements under Sections
7.1 (a)(ii) or 8.1(b) of the Management Agreement.
2.3 CONTRACTS. Manager will notify Sprint Spectrum of any contract
or other arrangement Manager has with any other party that will affect how
Sprint Spectrum is to provide the Selected Services.
3. FEES FOR SELECTED SERVICES
3.1 PAYMENT OF FEES. Sprint Spectrum and Manager agree that the
fees for the Available Services will initially be those set forth on Exhibit
2.1.1, which fees represent an adjustment to any fees paid by Sprint PCS to
Manager under Section 10 of the Management Agreement. The monthly charge for any
fees based on the number of subscribers of the Service Area Network will be
determined based on the number of subscribers as of the 15th day of the month
for which the charge is being calculated. Manager agrees to pay the fees to
Sprint Spectrum within 20 days after the date of the invoice. If Manager enters
into an agreement with a third party vendor under Section 2.2, Manager agrees to
pay the fees for the services rendered by the third party vendor in accordance
with the terms and conditions of such agreement.
3.2 ADJUSTMENT OF FEES. Sprint Spectrum may change the fee for any
service it provides once during any 12-month period by delivering a new Exhibit
2.1.1 to Manager. Exhibit 2.1.1 will be deemed amended on the effective date
noted on the new Exhibit 2.1.1, which will be at least 30 days after delivering
the new Exhibit 2.1.1. Manager must notify Sprint Spectrum in writing before the
effective date of the new Exhibit 2.1.1 if Manager wishes to discontinue a
Selected Service for which the price is being increased (a "CANCELLED SERVICE").
If Manager discontinues a Selected Service under this Section 3.2, Sprint
Spectrum will, at Manager's option, continue to provide the Cancelled Service
and to charge Manager the current fee (i.e., the fee under the Exhibit 2.1.1 in
effect on the date Manager gives its cancellation notice to Sprint Spectrum) for
the Cancelled Service for up to 9 months from the date Sprint Spectrum gives
Manager notice of the price change or until Manager no longer needs the
Cancelled Service, whichever occurs first. If Sprint Spectrum continues to
provide the Cancelled Service after the 9-month period, Sprint Spectrum will
apply the new fee, under the new Exhibit 2.1.1, and such fee will be applied
retroactively as of the effective date of the
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new schedule. Manager agrees to pay such retroactive charge within 10 days after
the date of the invoice for such charge.
3.3 LATE PAYMENTS. Any payment due under this Section 3 that is
not paid by Manager to Sprint Spectrum in accordance with the terms of this
agreement will bear interest at the Default Rate beginning (and including) the
6th day after the due date until (and including) the date on which such payment
is made.
3.4 TAXES. Manager will pay or reimburse Sprint Spectrum for any
sales, use, gross receipts or similar tax, administrative fee,
telecommunications fee or surcharge for taxes or fees levied by a governmental
authority on the fees and charges payable to Sprint Spectrum by Manager.
4. TERM; TERMINATION; EFFECT OF TERMINATION
4.1 TERM. This agreement commences on the date of execution and
continues until the Management Agreement terminates. This agreement
automatically terminates upon termination of the Management Agreement. Neither
party may terminate this agreement for any reason other than the termination of
the Management Agreement.
4.2 EFFECT OF TERMINATION. Upon the termination of this agreement,
all rights and obligations of each party under this agreement will immediately
cease, except that:
(a) Any rights arising out of a breach of any terms of
this agreement will survive any termination of this agreement;
(b) The provisions of this Section 4.2 and Sections 5.2,
6, 7, and 9 will survive any termination of this agreement; and
(c) The payment obligations under Section 3 will survive
any termination of this agreement if, and to the extent, any fees have accrued
or are otherwise due and owing from Manager to Sprint Spectrum or any Sprint
Spectrum Related Party as of the date of termination of this agreement.
5. BOOKS AND RECORDS; CONFIDENTIAL INFORMATION
5.1 BOOKS AND RECORDS.
5.1.1 GENERAL. Each party must keep and maintain books and
records to support and document any fees, costs, expenses or other charges due
in connection with the provisions set forth in this agreement. The records must
be retained for a period of at least 3 years after the fees, costs, expenses or
other charges to which the records relate have accrued and have been paid, or
such other period as may be required by law.
5.1.2 AUDIT. On reasonable advance written notice by the
Manager, but no more frequently than annually, Sprint PCS will provide a report
issued in conformity with Statement of Auditing Standard No. 70 "Reports on the
Processing of Transactions by Service Organizations" ("TYPE II REPORT" or
"MANAGER MANAGEMENT REPORT"). Such report will be prepared by independent
auditors and will provide an opinion on the controls placed in operation and
tests of operating effectiveness of those controls in effect at Sprint PCS over
the Manager Management Processes. "Manager Management Processes" include those
services generally
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provided within the Management Agreement, primarily billing and collection of
Collected Revenues. The Manager is responsible for costs incurred attributable
to such requested procedures with respect to the services provided under this
agreement, including without limitation discussion of the billing and collection
of Collected Revenues. This report will be made available to the other party
upon such other party's request.
5.1.3 CONTESTING AN AUDIT. If the party that did not select
the independent auditor does not agree with the findings of the audit, then such
party can contest the findings by providing notice of such disagreement to the
other party (the "DISPUTE NOTICE"). The date of delivery of such notice is the
"DISPUTE NOTICE DATE." If the parties are unable to resolve the disagreement
within 10 Business Days after the Dispute Notice Date, they will resolve the
disagreement in accordance with the following procedures.
The two parties and the auditor that conducted the audit will all agree
on an independent certified public accountant with a regional or national
accounting practice in the wireless telecommunications industry (the "ARBITER")
within 15 Business Days after the Dispute Notice Date. If, within 15 Business
Days after the Dispute Notice Date, the three parties fail to agree on the
Arbiter, then at the request of either party to this agreement, the Arbiter will
be selected pursuant to the rules then in effect of the American Arbitration
Association. Each party will submit to the Arbiter within 5 Business Days after
its selection and engagement all information reasonably requested by the Arbiter
to enable the Arbiter to independently resolve the issue that is the subject of
the Dispute Notice. The Arbiter will make its own determination of the amount of
fees, costs, expenses or other charges payable under this agreement with respect
to the period audited. The Arbiter will issue a written report of its
determination in reasonable detail and will deliver a copy of the report to the
parties within 10 Business Days after the Arbiter receives all of the
information reasonably requested. The determination made by the Arbiter will be
final and binding and may be enforced by any court having jurisdiction. The
parties will cooperate fully in assisting the Arbiter and will take such actions
as are necessary to expedite the completion of and to cause the Arbiter to
expedite its assignment.
If the amount owed by a contesting party is reduced by more than 10% or
the amount owed to a contesting party is increased by more than 10% then the
noncontesting party will pay the costs and expenses of the Arbiter, otherwise
the contesting party will pay the costs and expenses of the Arbiter.
5.2 CONFIDENTIAL INFORMATION.
(a) Except as specifically authorized by this agreement,
each of the parties must, for the term of this agreement and 3 years after the
date of termination of this agreement, keep confidential, not disclose to others
and use only for the purposes authorized in this agreement, all Confidential
Information disclosed by the other party to the party in connection with this
agreement, except that the foregoing obligation will not apply to the extent
that any Confidential Information:
(i) is or becomes, after disclosure to a party,
publicly known by any means other than through unauthorized acts or
omissions of the party or its agents; or
(ii) is disclosed in good faith to a party by a
third party entitled to make the disclosure.
(b) Notwithstanding the foregoing, a party may use, disclose or
authorize the disclosure of Confidential Information that it receives that:
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(i) has been published or is in the public
domain, or that subsequently comes into the public domain, through no
fault of the receiving party;
(ii) prior to the effective date of this
agreement was properly within the legitimate possession of the
receiving party, or subsequent to the effective date of this agreement,
is lawfully received from a third party having rights to publicly
disseminate the Confidential Information without any restriction and
without notice to the recipient of any restriction against its further
disclosure;
(iii) is independently developed by the receiving
party through persons or entities who have not had, either directly or
indirectly, access to or knowledge of the Confidential Information;
(iv) is disclosed to a third party consistent
with the terms of the written approval of the party originally
disclosing the information;
(v) is required by the receiving party to be
produced under order of a court of competent jurisdiction or other
similar requirements of a governmental agency, and the Confidential
Information will otherwise continue to be Confidential Information
required to be held confidential for purposes of this agreement;
(vi) is required by the receiving party to be
disclosed by applicable law or a stock exchange or association on which
the receiving party's securities (or those of its Related Parties) are
or may become listed; or
(vii) is disclosed by the receiving party to a
financial institution or accredited investor (as that term is defined
in Rule 501 (a) under the Securities Act of 1933) that is considering
providing financing to the receiving party and which financial
institution or accredited investor has agreed to keep the Confidential
Information confidential in accordance with an agreement at least as
restrictive as this Section 5.
(c) The party making a disclosure under Sections 5.2(b)(v),
5.2(b)(vi) or 5.2(b)(vii) must inform the non-disclosing party as promptly as is
reasonably necessary to enable the non-disclosing party to take action to, and
use the disclosing party's reasonable best efforts to, limit the disclosure and
maintain confidentiality to the extent practicable.
(d) Manager will not, except when serving in the capacity of
Manager under this agreement, use any Confidential Information of any kind that
it receives under or in connection with this agreement. For example, if Manager
operates a wireless company in a different licensed area, Manager may not use
any of the Confidential Information received under or in connection with this
agreement in operating its other wireless business.
6. INDEMNIFICATION
6.1 INDEMNIFICATION BY SPRINT SPECTRUM. Sprint Spectrum agrees to
indemnify, defend and hold harmless Manager, its directors, managers, officers
and employees from and against any and all claims, demands, causes of action,
losses, actions, damages, liability and expense, including costs and reasonable
attorneys' fees, against Manager, its directors, managers, officers and
employees arising from or relating to the violation by Sprint Spectrum, its
directors, officers, employees, contractors, subcontractors, agents or
6
<PAGE> 10
representatives of any law, regulation or ordinance applicable to Sprint
Spectrum in its performance of the Selected Services, or by Sprint Spectrum's,
or its directors', officers', employees', contractors', subcontractors', agents'
or representatives' breach of any representation, warranty or covenant contained
in this agreement, except where and to the extent the claim, demand, cause of
action, loss, action, damage, liability and expense results from the negligence
or willful misconduct of Manager, its directors, managers, officers, employees,
agents or representatives. Sprint Spectrum's indemnification obligations under
this Section 6.1 do not apply to any third party vendors that provide services
(including Selected Services) directly to Manager or Manager's Related Parties
under a separate agreement.
6.2 INDEMNIFICATION BY MANAGER. Manager agrees to indemnify,
defend and hold harmless Sprint Spectrum, its directors, officers and employees
from and against any and all claims, demands, causes of action, losses, actions,
damages, liability and expense, including costs and reasonable attorneys' fees,
against Sprint Spectrum, its directors, officers and employees arising from or
relating to Manager's, or its directors', managers', officers', employees',
contractors', subcontractors', agents' or representatives' violation of any law,
regulation or ordinance applicable to Manager, or by Manager's, or its
directors', managers', officers', employees', contractors', subcontractors',
agents' or representatives' breach of any representation, warranty or covenant
contained in this agreement, Manager's ownership of the Operating Assets or the
operation of the Service Area Network, except where and to the extent the claim,
demand, cause of action, loss, action, damage, liability and expense results
from the negligence or willful misconduct of Sprint Spectrum, its directors,
officers, employees, contractors, subcontractors, agents or representatives.
6.3 PROCEDURE.
6.3.1 NOTICE. Any party being indemnified ("INDEMNITEE")
will give the party making the indemnification ("INDEMNITOR") written notice as
soon as practicable but no later than 5 Business Days after the party becomes
aware of the facts, conditions or events that give rise to the claim for
indemnification if:
(1) any claim or demand is made or liability is
asserted against Indemnitee; or
(2) any suit, action, or administrative or legal
proceeding is instituted or commenced in which Indemnitee is involved
or is named as a defendant either individually or with others.
Failure to give notice as described in this Section 6.3.1 does not
modify the indemnification obligations of this provision, except if Indemnitor
is harmed by failure to provide timely notice to Indemnitor, then Indemnitor
does not have to indemnify Indemnitee for the harm caused by the failure to give
the timely notice.
6.3.2 DEFENSE BY INDEMNITOR. If within 30 days after giving notice
Indemnitee receives written notice from Indemnitor stating that Indemnitor
disputes or intends to defend against the claim, demand, liability, suit, action
or proceeding, then Indemnitor will have the right to select counsel of its
choice and to dispute or defend against the claim, demand, liability, suit,
action or proceeding, at its expense.
Indemnitee will fully cooperate with Indemnitor in the dispute or
defense so long as Indemnitor is conducting the dispute or defense diligently
and in good faith. Indemnitor is not permitted to settle the dispute or claim
without the prior written approval of Indemnitee, which approval will not be
unreasonably withheld. Even though Indemnitor selects counsel of its choice,
Indemnitee has the right to retain additional representation by counsel of its
choice to participate in the defense at Indemnitee's sole cost and expense.
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<PAGE> 11
6.3.3 DEFENSE BY INDEMNITEE. If no notice of intent to
dispute or defend is received by Indemnitee within the 30-day period, or if a
diligent and good faith defense is not being or ceases to be conducted,
Indemnitee has the right to dispute and defend against the claim, demand or
other liability at the sole cost and expense of Indemnitor and to settle the
claim, demand or other liability, and in either event to be indemnified as
provided in this Section 6. Indemnitee is not permitted to settle the dispute or
claim without the prior written approval of Indemnitor, which approval will not
be unreasonably withheld.
6.3.4 COSTS. Indemnitor's indemnity obligation includes
reasonable attorneys' fees, investigation costs, and all other reasonable costs
and expenses incurred by Indemnitee from the first notice that any claim or
demand has been made or may be made, and is not limited in any way by any
limitation on the amount or type of damages, compensation, or benefits payable
under applicable workers' compensation acts, disability benefit acts, or other
employee benefit acts.
7. DISPUTE RESOLUTION
7.1 NEGOTIATION. The parties will attempt in good faith to resolve
any dispute arising out of or relating to this agreement promptly by negotiation
between or among representatives who have authority to settle the controversy.
Either party may escalate any dispute not resolved in the normal course of
business to the appropriate (as determined by the party) officers of the parties
by providing written notice to the other party.
Within 10 Business Days after delivery of the notice, the appropriate
officers of each party will meet at a mutually acceptable time and place, and
thereafter as often as they deem reasonably necessary, to exchange relevant
information and to attempt to resolve the dispute.
Either party may elect, by giving written notice to the other party, to
escalate any dispute arising out of or relating: to the determination of fees
that is not resolved in the normal course of business or by the audit process
set forth in Sections 5.1.2 and 5.1.3, first to the appropriate financial or
accounting officers to be designated by each party. The designated officers will
meet in the manner described in the preceding paragraph. If the matter has not
been resolved by the designated officers within 30 days after the notifying
party's notice, either party may elect to escalate the dispute to the
appropriate (as determined by the party) officers in accordance with the prior
paragraphs of this Section 7.1.
7.2 UNABLE TO RESOLVE. If a dispute has not been resolved within
60 days after the notifying party's notice, the parties will continue to operate
under this agreement and sue the other party for damages or seek other
appropriate remedies as provided in this agreement, except neither party may
bring a suit for damages based on an event that occurs during the first two
years of this agreement.
7.3 ATTORNEYS AND INTENT. If an officer intends to be accompanied
at a meeting by an attorney, the other party's officer will be given at least 3
Business Days prior notice of the intention and may also be accompanied by an
attorney. All negotiations under this Section 7 are confidential and will be
treated as compromise and settlement negotiations for purposes of the Federal
Rules of Civil Procedure and state rules of evidence and civil procedure.
8. REPRESENTATIONS AND WARRANTIES
Each party for itself makes the following representations and
warranties to the other party:
8
<PAGE> 12
8.1 DUE INCORPORATION OR FORMATION; AUTHORIZATION OF AGREEMENTS.
The party is either a corporation, limited liability company, or limited
partnership duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization. Manager is qualified to do business and
in good standing in every jurisdiction in which the Service Area is located. The
party has the full power and authority to execute and deliver this agreement and
to perform its obligations under this agreement.
8.2 VALID AND BINDING OBLIGATION. This agreement constitutes the
valid and binding obligation of the party, enforceable in accordance with its
terms, except as may be limited by principles of equity or by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally.
8.3 NO CONFLICT; NO DEFAULT. Neither the execution, delivery and
performance of this agreement nor the consummation by the party of the
transactions contemplated in this agreement will conflict with, violate or
result in a breach of (a) any law, regulation, order, writ, injunction, decree,
determination or award of any governmental authority or any arbitrator,
applicable to such party, or (b) any term, condition or provision of the
articles of incorporation, certificate of limited partnership, certificate of
organization, bylaws, partnership agreement or limited liability company
agreement (or other governing documents) of such party or of any material
agreement or instrument to which such party is or may be bound or to which any
of its material properties or assets is subject.
8.4 LITIGATION. No action, suit, proceeding or investigation is
pending or, to the knowledge of the party, threatened against or affecting the
party or any of its properties, assets or businesses in any court or before or
by any governmental agency that could, if adversely determined, reasonably be
expected to have a material adverse effect on the party's ability to perform its
obligations under this agreement. The party has not received any currently
effective notice of any default that could reasonably be expected to result in a
breach of the preceding sentence.
9. GENERAL PROVISIONS
9.1 NOTICES. Any notice, payment, demand, or communication
required or permitted to be given by any provision of this agreement must be in
writing and mailed (certified or registered mail, postage prepaid, return
receipt requested), sent by hand or overnight courier, or sent by facsimile
(with acknowledgment received and a copy sent by overnight courier), charges
prepaid and addressed described on the Notice Address Schedule attached to the
Master Signature Page, or to any other address or number as the person or entity
may from time to time specify by written notice to the other parties.
All notices and other communications given to a party in accordance
with the provisions of this agreement will be deemed to have been given when
received.
9.2 CONSTRUCTION. This agreement will be construed simply
according to its fair meaning and not strictly for or against either party.
9.3 HEADINGS. The table of contents, section and other headings
contained in this agreement are for reference purposes only and are not intended
to describe, interpret, define, limit or expand the scope, extent or intent of
this agreement.
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<PAGE> 13
9.4 FURTHER ACTION. Each party agrees to perform all further acts
and execute, acknowledge, and deliver any documents that may be reasonably
necessary, appropriate, or desirable to carry out the intent and purposes of
this agreement.
9.5 SPECIFIC PERFORMANCE. Each party agrees with the other party
that the party would be irreparably damaged if any of the provisions of this
agreement were not performed in accordance with their specific terms and that
monetary damages alone would not provide an adequate remedy. Accordingly, in
addition to any other remedy to which the non-breaching party may be entitled,
at law or in equity, the non breaching party will be entitled to injunctive
relief to prevent breaches of this agreement and specifically to enforce the
terms and provisions of this agreement.
9.6 ENTIRE AGREEMENT; AMENDMENTS. The provisions of this agreement
and the Management Agreement (if Sprint Spectrum is a party to that agreement)
(including the exhibits to those agreements) set forth the entire agreement and
understanding between the parties as to the subject matter of this agreement and
supersede all prior agreements, oral or written, and other communications
between the parties relating to the subject matter of this agreement. Except for
Sprint Spectrum's right to amend the Available Services and the fees charged for
such services as shown on Exhibit 2.1.1, and Manager's right to amend the
Selected Services listed on Exhibit 2.1.2, this agreement may be modified or
amended only by a written amendment signed by persons or entities authorized to
bind each party.
9.7 LIMITATION ON RIGHTS OF OTHERS. Nothing in this agreement,
whether express or implied, will be construed to give any person or entity other
than the parties any legal or equitable right, remedy or claim under or in
respect of this agreement.
9.8 WAIVERS; REMEDIES. The observance of any term of this
agreement may be waived (whether generally or in a particular instance and
either retroactively or prospectively) by the party entitled to enforce the
term, but any waiver is effective only if in a writing signed by the party
against which the waiver is to be asserted. Except as otherwise provided in this
agreement, no failure or delay of either party in exercising any power or right
under this agreement will operate as a waiver of the power or right, nor will
any single or partial exercise of any right or power preclude any other or
further exercise of the right or power or the exercise of any other right or
power.
Sprint Spectrum is not in breach of any covenant in this agreement, if
failure of such party to comply with such covenant or Sprint Spectrum's
non-compliance with the covenant results primarily from:
(i) any FCC order or any other injunction issued
by any governmental authority impeding the ability to comply with the
covenant;
(ii) the failure of any governmental authority to
grant any consent, approval, waiver, or authorization or any delay on
the part of any governmental authority in granting any consent,
approval, waiver or authorization;
(iii) the failure of any vendor to deliver in a
timely manner any equipment or service; or
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<PAGE> 14
(iv) any act of God, act of war or insurrection,
riot, fire, accident, explosion, labor unrest, strike, civil unrest,
work stoppage, condemnation or any similar cause or event not
reasonably within the control of Sprint Spectrum.
9.9 WAIVER OF JURY TRIAL. EACH PARTY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
9.10 BINDING EFFECT. Except as otherwise provided in this
agreement, this agreement is binding upon and inures to the benefit of the
parties and their respective and permitted successors, transferees, and assigns,
including any permitted successor, transferee or assignee of the Management
Agreement. The parties intend that this agreement bind only the party signing
this agreement and that the agreement is not binding on the Related Parties of a
party unless the agreement provides that Related Parties are bound.
9.11 GOVERNING LAW. The internal laws of the State of Missouri
(without regard to principles of conflicts of law) govern the validity of this
agreement, the construction of its terms, and the interpretation of the rights
and duties of the parties.
9.12 SEVERABILITY. The parties intend every provision of this
agreement to be severable. If any provision of this agreement is held to be
illegal, invalid, or unenforceable for any reason, the parties intend that a
court enforce the provision to the maximum extent permissible so as to effect
the intent of the parties (including the enforcement of the remaining
provisions). If necessary to effect the intent of the parties, the parties will
negotiate in good faith to amend this agreement to replace the unenforceable
provision with an enforceable provision that reflects the original intent of the
parties.
9.13 LIMITATION OF LIABILITY. NO PARTY WILL BE LIABLE TO THE OTHER
PARTY FOR SPECIAL, INDIRECT, INCIDENTAL, EXEMPLARY, CONSEQUENTIAL OR PUNITIVE
DAMAGES, OR LOSS OF PROFITS, ARISING FROM THE RELATIONSHIP OF THE PARTIES OR THE
CONDUCT OF BUSINESS UNDER, OR BREACH OF, THIS AGREEMENT, EXCEPT WHERE SUCH
DAMAGES OR LOSS OF PROFITS ARE CLAIMED BY OR AWARDED TO A THIRD PARTY IN A CLAIM
OR ACTION AGAINST WHICH A PARTY TO THIS AGREEMENT HAS A SPECIFIC OBLIGATION TO
INDEMNIFY ANOTHER PARTY TO THIS AGREEMENT.
9.14 NO ASSIGNMENT; EXCEPTIONS. This agreement may only be assigned
in conjunction with and to the same party or parties to whom the Management
Agreement has been validly assigned under the Management Agreement's terms and
conditions.
9.15 DISCLAIMER OF AGENCY. Neither party by this agreement makes
the other party a legal representative or agent of the party, nor does either
party have the right to obligate the other party in any manner, except if the
other party expressly permits the obligation by the party or except for
provisions in this agreement expressly authorizing one party to obligate the
other.
9.16 INDEPENDENT CONTRACTORS. The parties do not intend to create
any partnership, joint venture or other profit-sharing arrangement,
landlord-tenant or lessor-lessee relationship, employer-employee
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relationship, or any other relationship other than that expressly provided in
this agreement. Neither party to this agreement has any fiduciary duty to the
other party.
9.17 EXPENSE. Each party bears the expense of complying with this
agreement except as otherwise expressly provided in this agreement.
9.18 GENERAL TERMS.
(a) This agreement, including the attached Schedule of
Definitions, is to be interpreted in accordance with the following rules of
construction:
(i) The definitions in this agreement apply
equally to both the singular and plural forms of the terms defined
unless the context otherwise requires;
(ii) The words "include," "includes" and
"including" are deemed to be followed by the phrase "without
limitation";
(iii) All references in this agreement to Sections
and Exhibits are references to Sections of, and Exhibits to, this
agreement, unless otherwise specified; and
(iv) All references to any agreement or other
instrument or statute or regulation are to it as amended and
supplemented from time to time (and, in the case of a statute or
regulation, to any corresponding provisions of successor statutes or
regulations), unless the context otherwise requires.
(b) Any reference in this agreement to a "day" or number
of "days" (without the explicit qualification of "BUSINESS") is a reference to a
calendar day or number of calendar days. If any action or notice is to be taken
or given on or by a particular calendar day, and the calendar day is not a
Business Day, then the action or notice may be taken or given on the next
Business Day.
9.19 CONFLICTS WITH MANAGEMENT AGREEMENT. The provisions of the
Management Agreement govern over those of this Services Agreement if the
provisions contained in this agreement conflict with analogous provisions in the
Management Agreement.
9.20 MASTER SIGNATURE PAGE. Each party agrees that it will execute
the Master Signature Page that evidences such party's agreement to execute,
become a party to and be bound by this agreement, which document is incorporated
herein by this reference.
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<PAGE> 1
EXHIBIT 10.12
SPRINT TRADEMARK
AND SERVICE MARK
LICENSE AGREEMENT
Between
SPRINT COMMUNICATIONS COMPANY, L.P.
and
ALAMOSA PCS, LLC
December 6, 1999
<PAGE> 2
SPRINT TRADEMARK AND
SERVICE MARK LICENSE AGREEMENT
THIS AGREEMENT is made as of the 6th day of December, 1999, by and
between SPRINT COMMUNICATIONS COMPANY, L.P., a Delaware limited partnership, as
licensor ("Licensor ), and ALAMOSA PCS, LLC, a Delaware limited liability
company, as licensee ("Licensee"). THE DEFINITIONS FOR THIS AGREEMENT ARE SET
FORTH ON THE "SCHEDULE OF DEFINITIONS."
RECITALS:
WHEREAS, Licensor is the owner of the U.S. trademarks and service marks
"Sprint", together with related "Diamond" logo, "Sprint PCS", "Sprint Personal
Communications Services" and the goodwill of the business symbolized thereby;
and
WHEREAS, Licensee desires to use the trademarks and service marks in
commerce;
NOW, THEREFORE, the parties, in consideration of the mutual agreements
herein contained and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, do hereby agree as follows:
ARTICLE 1
GRANT OF TRADEMARK AND SERVICE MARK RIGHTS; EXCLUSIVITY
Section 1.1. License.
(a) Grant of License. Subject to the terms and conditions hereof,
Licensor hereby grants to Licensee, and Licensee hereby
accepts from Licensor, for the term of this agreement, a
non-transferable, royalty-free license to use the Licensed
Marks solely for and in connection with the marketing,
promotion, advertisement, distribution, lease or sale of
Sprint PCS Products and Services and Premium and Promotional
Items in the Service Area.
(b) Related Equipment. The rights granted hereunder to Licensee
shall not include the right to manufacture equipment under the
Licensed Marks. However, subject to the terms and conditions
hereof, Licensor hereby grants to Licensee, and Licensee
hereby accepts from Licensor, for the term of this agreement,
a non-transferable, royalty-free license to market, promote,
advertise, distribute and resell and lease Related Equipment
in connection with the marketing, promotion, advertisement,
distribution, lease or sale by Licensee of Sprint PCS Products
and Services, and to furnish services relating to such Related
Equipment (including installation, repair and maintenance of
Related Equipment), under the Licensed Marks.
ARTICLE 2
QUALITY STANDARDS, MAINTENANCE
Section 2.1. Maintenance of Quality.
(a) Adherence to Quality Standards. In the course of marketing,
promoting, advertising, distributing, leasing and selling
Sprint PCS Products and Services and Premium and Promotional
Items under the Licensed Marks, Licensee shall maintain and
adhere to standards of quality and specifications that conform
to or exceed those quality standards and technical and
operational specifications adopted and/or amended in the
manner provided below
<PAGE> 3
("Quality Standards") and those imposed by Law. Such Quality
Standards are designed to ensure that the quality of the
Sprint PCS Products and Services and Premium and Promotional
Items marketed, promoted, advertised, distributed, leased and
sold under the Licensed Marks are consistent with the high
reputation of the Licensed Marks and are in conformity with
applicable Laws.
(b) Establishment of Quality Standards. The parties acknowledge
that the initial Quality Standards for the Sprint PCS Products
and Services and Premium and Promotional Items are attached to
the Affiliation Agreement as Exhibits 4.1, 4.2, 4.3, 7.2, and
8. 1. The Quality Standards shall (i) be consistent with the
reputation for quality associated with the Licensed Marks and
(ii) be commensurate with a high level of quality (taking into
account Licensee's fundamental underlying technology and
standards), consistent with the level of quality being offered
in the market for products and services of the same kind as
the Sprint PCS Products and Services.
(c) Changes in Quality Standards. In the event that Licensor
wishes to change the Quality Standards, it will notify
Licensee in writing of such proposed amendments, and will
afford Licensee a reasonable time period in which to adopt
such changes as may be required in order for Licensee to
conform to the amended Quality Standards.
Section 2.2. Rights of Inspection. In order to ensure that the Quality
Standards are maintained, Licensor and its authorized agents and representatives
shall have the right, but not the obligation, with prior notice to Licensee, to
enter upon the premises of any office or facility operated by or for Licensee
with respect to Sprint PCS Products and Services and Premium and Promotional
Items at all reasonable times, to inspect, monitor and test in a reasonable
manner facilities and equipment used to furnish Sprint PCS Products and Services
and Premium and Promotional Items and, with prior written notice to Licensee, to
inspect the books and records of Licensee in a manner that does not unreasonably
interfere with the business and affairs of Licensee, all as they relate to the
compliance with the Quality Standards maintained hereunder.
Section 2.3. Marking Compliance with Trademark Laws. Licensee shall
cause the appropriate designation "(TM)" or "(sm)" or the registration symbol
"(R)" to be placed adjacent to the Licensed Marks in connection with the use
thereof and to indicate such additional information as Licensor shall reasonably
specify from time to time concerning the license rights under which Licensee
uses the Licensed Marks. Licensee shall place the following notice on all
printed or electronic materials on which the Licensed Marks appear: "SPRINT",
the "DIAMOND" logo and "Sprint PCS", "Sprint Personal Communications Services"
are trademarks and/or service marks of Sprint Communications Company, L.P.,
"used under license" or such other notice as Licensor may specify from time to
time.
Section 2.4. Other Use Restrictions. Licensee shall not use the
Licensed Marks in any manner that would reflect adversely on the image of
quality symbolized by the Licensed Marks.
SPRINT PROPRIETARY INFORMATION - RESTRICTED
2
<PAGE> 4
ARTICLE 3
CONFIDENTIAL INFORMATION
Section 3.1. Maintenance of Confidentiality. Each of Licensor and
Licensee and their respective Controlled Related Parties (each a "Restricted
Party") shall cause their respective officers and directors (in their capacity
as such) to, and shall take all reasonable measures to cause their respective
employees, attorneys, accountants, consultants and other agents and advisors
(collectively, and together with their respective officers and directors,
"Agents") to keep secret and maintain in confidence the terms of this agreement
and all confidential and proprietary information and data of the other party or
its Related Parties disclosed to it (in each case, a "Receiving Party") in
connection with the performance of its obligations under this agreement (the
"Confidential Information") and shall not, and shall cause their respective
officers and directors not to, and shall take all reasonable measures to cause
their respective other Agents not to, disclose Confidential Information to any
Person other than the parties, their Controlled Related Parties and their
respective Agents that need to know such Confidential Information. Each party
further agrees that it shall not use the Confidential Information for any
purpose other than determining and performing its obligations and exercising its
rights under this agreement. Each party shall take all reasonable measures
necessary to prevent any unauthorized disclosure of the Confidential Information
by any of their respective Controlled Related Parties or any of their respective
Agents. The measures taken by a Restricted Party to protect Confidential
Information shall be not deemed unreasonable if the measures taken are at least
as strong as the measures taken by the disclosing party to protect such
Confidential Information.
Section 3.2. Permitted Disclosures. Nothing herein shall prevent any
Restricted Party or its Agents from using, disclosing, or authorizing the
disclosure of Confidential Information it receives and which:
(i) has been published or is in the public domain, or which
subsequently comes into the public domain, through no fault of
the receiving party;
(ii) prior to receipt hereunder was property within the legitimate
possession of the Receiving Party or, subsequent to receipt
hereunder is lawfully received from a third party having
rights therein without restriction of the third party's right
to disseminate the Confidential Information and without notice
of any restriction against its further disclosure.
(iii) is independently developed by the Receiving Party through
Persons who have not had, either directly or indirectly,
access to or knowledge of such Confidential Information;
(iv) is disclosed to a third party with the written approval of the
party originally disclosing such information, provided that
such Confidential Information shall cease to be confidential
and proprietary information covered by this agreement only to
the extent of the disclosure so consented to;
(v) subject to the Receiving Party's compliance with Section 3.4
below, is required to be produced under order of a court of
competent jurisdiction or other similar requirements of a
governmental agency, provided that such Confidential
Information to the extent covered by a protective order or its
equivalent shall otherwise continue to be Confidential
Information required to be held confidential for purpose of
this agreement; or
SPRINT PROPRIETARY INFORMATION - RESTRICTED
3
<PAGE> 5
(vi) subject to the Receiving Party's compliance with Section 3.4
below, is required to be disclosed by applicable Law or a
stock exchange or association on which such Receiving Party's
securities (or those of its Related Party) are listed.
Section 3.3. Financial Institutions. Notwithstanding this Article 3,
any party may provide Confidential Information to any financial institution in
connection with borrowings from such financial institution by such party or any
of its Controlled Related Parties, so long as prior to any such disclosure such
financial institution executes a confidentiality agreement that provides
protection substantially equivalent to the protection provided the parties in
this Article 3.
Section 3.4. Procedures. In the event that any Receiving Party (i) must
disclose Confidential Information in order to comply with applicable Law or the
requirements of a stock exchange or association on which such Receiving Party's
securities or those of its Related Parties are listed or (ii) becomes legally
compelled (by oral questions, interrogatories, requests for information or
documents, subpoenas, civil investigative demand or otherwise) to disclose any
Confidential Information, the Receiving Party shall provide the disclosing party
with prompt written notice so that in the case of clause (i), the disclosing
party can work with the Receiving Party to limit the disclosure to the greatest
extent possible consistent with legal obligations or in the case of clause (ii),
the disclosing party may seek a protective order or other appropriate remedy or
waive compliance with the provisions of this agreement. In the case of a clause
(ii), (A) if the disclosing party is unable to obtain a protective order or
other appropriate remedy, or if the disclosing party so directs, the Receiving
Party shall, and shall cause its employees to, exercise all commercially
reasonable efforts to obtain a protective order or other appropriate remedy at
the disclosing party's reasonable expense, and (B) failing the entry of a
protective order or other appropriate remedy or receipt of a waiver hereunder,
the Receiving Party shall furnish only that portion of the Confidential
Information which it is advised by opinion of its counsel is legally required to
be furnished and shall exercise all commercially reasonable efforts to obtain
reliable assurance that confidential treatment shall be accorded such
Confidential Information, it being understood that such reasonable efforts shall
be at the cost and expense of the disclosing party whose Confidential
Information has been sought.
Section 3.5. Survival. The obligations under this Article 3 shall
survive, as to any party, until two (2) years following the date of termination
of this agreement, and, as to any Controlled Related Party of a party, until two
(2) years following the earlier to occur of (A) the date that such Person is no
longer a Controlled Related Party of a party, or (B) the date of the termination
of this agreement; ]provided that such obligations shall continue indefinitely
with respect to any trade secret or similar information which is proprietary to
a party or its Controlled Related Parties and provides such party or its
Controlled Related Parties with an advantage over its competitors.
ARTICLE 4
REPRESENTATIONS, WARRANTIES AND COVENANTS OF LICENSEE
Section 4.1. Licensor's Ownership. Licensee acknowledges Licensor's
exclusive right, title and interest in and to the Licensed Marks and
acknowledges that nothing herein shall be construed to accord to Licensee any
rights in the Service Area in the Licensed Marks except as expressly provided,
herein. Licensee acknowledges that its use in the Service Area of the Licensed
Marks shall not create in Licensee any right, title or interest in the Service
Area in the Licensed Marks and that all use in the Service Area of the Licensed
Marks and the goodwill symbolized by and connected with such use of the Licensed
Marks will inure solely to the benefit of the Licensor.
SPRINT PROPRIETARY INFORMATION - RESTRICTED
4
<PAGE> 6
Section 4.2. No Challenge by Licensee. Licensee covenants that (i)
Licensee will not at any time challenge Licensor's rights, title or interest in
the Licensed Marks (other than to assert the specific rights granted to Licensee
under this agreement), (ii) Licensee will not do or cause to be done or omit to
do anything, the doing, causing or omitting of which would contest or in any way
impair or tend to impair the rights of Licensor in the Licensed Marks, and (iii)
Licensee will not represent to any third party that Licensee has any ownership
or rights in the Service Area with respect to the Licensed Marks other than the
specific rights conferred by this agreement.
ARTICLE 5
REPRESENTATIONS, WARRANTIES AND COVENANTS OF LICENSOR
Section 5.1. Title to the Licensed Marks. Licensor represents and
warrants that:
(a) Licensor has good title to the Licensed Marks and has the
right to grant the licenses provided for hereunder in
accordance with the terms and conditions hereof, free of any
liabilities, charges, liens, pledges, mortgages, restrictions,
adverse claims, security interests, rights of others, and
encumbrances of any kind (collectively, "Encumbrances"), other
than Encumbrances which will not restrict or interfere in any
material respect with the exercise by Licensee of the rights
granted to Licensee hereunder.
(b) There is no claim, action, proceeding or other litigation
pending or, to the knowledge of Licensor, threatened with
respect to Licensor's ownership of the Licensed Marks or
which, if adversely determined, would restrict or otherwise
interfere in any material respect with the exercise by
Licensee of the rights purported to be granted to Licensee
hereunder.
Except as expressly provided above in this Section 5.1, Licensor makes
no representation or warranty of any kind or nature whether express or implied
with respect to the Licensed Marks (including freedom from third party
infringement of the Licensed Marks).
The representations and warranties provided for in this Section 5.1
shall survive the execution and delivery of this agreement.
Section 5.2. Other Licensees. In the event Licensor grants to any third
party any licenses or rights with respect to the Licensed Marks, Licensor shall
not, in connection with the grant of any such license or rights, take any
actions, or suffer any omission that would adversely affect the existence or
validity of the Licensed Marks or conflict with the rights granted to Licensee
hereunder.
Section 5.3. Abandonment. Licensor covenants and agrees that, during
the term of this agreement, it will not abandon the Licensed Marks.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF BOTH PARTIES
Section 6.1. Representations and Warranties. Each party hereby
represents and warrants to the other party as follows:
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(a) Due Incorporation or Formation; Authorization of Agreement.
Such party is a corporation duly organized, a limited
liability company duly organized or a partnership duly formed,
validly existing and, if applicable, in good standing under
the laws of the jurisdiction of its incorporation or formation
and has the corporate, company or partnership power and
authority to own its property and carry on its business as
owned and carried on at the date hereof and as contemplated
hereby. Such party is duly licensed or qualified to do
business and, if applicable, is in good standing in each of
the jurisdictions in which the failure to be so licensed or
qualified would have a material adverse effect on its
financial condition or its ability to perform its obligations
hereunder. Such party has the corporate, company or
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 corporate, company or
partnership action. Assuming the due execution and delivery by
the other party hereto. this agreement constitutes the legal,
valid and binding obligation of such party enforceable against
such party in accordance with its terms, subject as to
enforceability to limits imposed by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and the 9
availability of equitable remedies.
(b) No Conflict with Restrictions; No Default. Neither the
execution, delivery and performance of this agreement nor the
consummation by such party of the transactions contemplated
hereby (i) will conflict with, violate or result in a breach
of any of the terms, conditions or provisions of 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 such party or any of its Controlled Related
Parties, (ii) will conflict with, violate, result in a breach
of or constitute a default under any of the terms, conditions
or provisions of the articles of incorporation, articles of
organization or certificate of formation, bylaws, operating
agreement or limited liability company agreement, or
partnership agreement of such party or any of its Controlled
Related Parties or of any material agreement or instrument to
which such party or any of its Controlled Related Parties is a
party or by which such party or any of its Controlled Related
Parties is or may be bound or to which any of its material
properties or assets is subject (other than any such conflict,
violation, breach or default that has been validly and
unconditionally waived), (iii) will conflict with, violate,
result in 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 material interests or rights or require any
consent, authorization or approval under any indenture,
mortgage, lease agreement or instrument to which such party or
any of its Controlled Related Parties is a party or by which
such party or any of its Controlled Related Parties is or may
be bound, or (iv) will result in the creation or imposition of
any lien upon any of the material properties or assets of such
party or any of its Controlled Related Parties, which in any
such case could reasonably be expected to materially impair
such party's ability to perform its obligations under this
agreement or to have a material adverse effect on the
consolidated financial condition of each party or its Parent.
(c) Governmental Authorizations. 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 such party in connection with the valid execution,
delivery, acceptance and performance by such party under this
agreement
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or the consummation by such party of any transaction
contemplated hereby has been completed, made or obtained, as
the case may be.
(d) Litigation. There are no actions, suits, proceedings or
investigations pending or, to the knowledge of such party,
threatened against or affecting such party or any of its
Controlled Related Parties or any of their 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 materially impair such
party's ability to perform its obligations under this
agreement or to have a material adverse effect on the
consolidated financial condition of such party or its parent;
and such party or any of its Controlled Related Parties has
not received any currently effective notice of any default,
and such party or any of its Controlled Related Parties is not
in default, under any applicable order, writ, injunction,
decree, permit, determination or award of any court, any
governmental department, board, agency or instrumentality,
domestic or foreign, or any arbitrator, which default could
reasonably be expected to materially impair such party's
ability to perform its obligations under this agreement or to
have a material adverse effect on the consolidated financial
condition of such party or its Parent.
Section 6.2. Survival. The representations and warranties provided for
under this Article 6 will survive the execution and delivery of this agreement.
ARTICLE 7
PROSECUTION OF INFRINGEMENT CLAIMS
Section 7.1. Notice and Prosecution of Infringement. Licensee agrees to
notify Licensor promptly, in writing, of any alleged, actual or threatened
infringement of any of the Licensed Marks within the Service Area of which
Licensee becomes aware. Licensor has the sole right to determine whether or not
to take any action on such infringements. Licensor has the sole right to employ
counsel of its choosing and to direct any litigation and settlement of
infringement actions. Any recoveries, damages and costs recovered through such
proceedings shall belong exclusively to Licensor, and Licensor shall be solely
responsible for all costs and expenses (including attorney fees) of prosecuting
such actions. Licensee agrees to provide Licensor with all reasonably requested
assistance in connection with such proceedings.
ARTICLE 8
LICENSEE DEFENSE AND INDEMNIFICATION OF LICENSOR
Section 8.1. Indemnification. (a) Each party hereby agrees to indemnify
the other party against and agrees to hold it harmless from any Loss incurred or
suffered by such other party, arising out of or in connection with:
(i) the material breach of any representation or warranty made by
such party in this agreement; and
(ii) the material breach of any covenant or agreement by such party
contained in this agreement.
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(b) In addition to the indemnification provided for in Section
8.1(a), Licensee agrees to indemnify Licensor against and hold
it harmless from any Loss suffered or incurred by Licensor or
its Controlled Related Parties by reason of a third party
claim arising out of or relating to (i) the use of the
Licensed Marks by Licensee; or (ii) the marketing, promotion,
advertisement, distribution, lease or sale by Licensee ( or
any permitted sublicensee) or by any additional Licensee (or
any permitted sublicensee) of any Sprint PCS Products and
Services, Related Equipment or Premium and Promotional Items
under the Licensed Marks pursuant to this agreement, including
unfair or fraudulent advertising claims, warranty claims and
product defect or liability claims, pertaining to the Sprint
PCS Products and Services, Related Equipment or Premium and
Promotional Items. Notwithstanding the foregoing, Licensee
will not be required under this paragraph (b) to indemnify any
Loss arising solely out of Licensee's use of the Licensed
Marks in compliance with the terms of the Trademark and
Service Mark Usage Guidelines; provided that Licensor shall
have no obligation to indemnify for third-party claims alleged
to arise from the specifics of uses of third party trademarks
or service marks, or the specifics of claims made, in
marketing materials prepared by or for Licensee, which
marketing materials have not been approved by Licensor prior
to the publication out of which such claims are alleged to
have arisen.
ARTICLE 9
OBLIGATIONS/SETOFF
Section 9.1. Obligations/Setoff. The obligations of the parties as set
forth in this agreement shall be unconditional and irrevocable, and shall not be
subject to any defense or be released, discharged or otherwise affected by any
matter, including impossibility, illegality, impracticality, frustration of
purpose, force majeure, act of government, the bankruptcy or insolvency of any
party hereto, and the obligations of each party shall not be subject to any
right of setoff or recoupment which such party may not or hereafter have against
the other party.
ARTICLE 10
LIMITATION ON USE OF LICENSED MARKS
Section 10.1. Restrictions on Use. Licensee is not permitted to make
any use of the Licensed Marks in connection with products or services other than
the Sprint PCS Products and Services, and as specifically authorized in Sections
1.1(b) above with respect to Related Equipment and Premium and Promotional
Items, nor to make any use of the Licensed Marks directed outside of the Service
Area.
Section 10.2. Adherence to Trademark and Service Mark Usage Guidelines.
Licensee agrees to comply with and adhere to Trademark and Service Mark Usage
Guidelines for the depiction or presentation of the Licensed Marks, as furnished
by Licensor. Prior to Licensee depicting or presenting any of the Licensed Marks
on any type of marketing, advertising or promotional materials, Licensee agrees
to submit samples of such materials to Licensor for approval. Licensor shall
have fourteen (14) days from the date Licensor receives such materials to
approve or object to any such materials submitted to Licensor for review. In the
event Licensor does not object to such materials within such fourteen (14) day
period, such materials shall be deemed approved by Licensor. Thereafter,
Licensee shall not be obligated to submit to Licensor materials prepared in
accordance with the samples previously approved by Licensor and the Trademark
and Service Mark Usage Guidelines; provided, however, Licensee shall, at the
reasonable request of Licensor, continue to furnish
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samples of such marketing, advertising and promotional materials to Licensor
from time to time during the term hereof at the request of Licensor.
Section 10.3. Use of Similar Trademarks and Service Marks. Licensee
agrees not to use (a) any trademark or service mark which is confusingly similar
to, or a colorable imitation of, the Licensed Marks or any part thereof, or (b)
any work, symbol, character, or set of words, symbols, or characters, which in
any language would be identified as the equivalent of the Licensed Marks or that
are otherwise confusingly similar to, or a colorable imitation of, the Licensed
Marks, whether during the term of this agreement or at any time following
termination of this agreement. Licensee shall not knowingly engage in any
conduct which may place the Sprint PCS Products and Services, the Licensed Marks
or Licensor in a negative light or context.
Section 10.4. Services of Public Figures. Licensee agrees to obtain
Licensor's prior written approval (which approval will not be unreasonably
withheld) before engaging the services of any celebrity or publicly known
individual for endorsement of any Sprint PCS Products and Services or Premium
and Promotional Items.
ARTICLE 11
CONTROL OF BRAND IMAGE
Section 11.1. Exclusive Use of Licensed Marks. The Sprint PCS Products
and Services shall be marketed by Licensee solely under the Licensed Marks.
Section 11.2. Consistency With Brand Image and Principles. Licensee
shall use the Licensed Marks in a manner that is consistent with the brand image
and principles established by Licensor, and mechanics to ensure consistency will
be included in the Marketing Communications Guidelines.
Section 11.3. Management of Brand Image. Licensor shall be responsible
for the overall management of the brand image for the Licensed Marks. All
advertising, marketing and promotional materials using the Licensed Marks
prepared by Licensee shall, in addition to the provisions set forth in Section
11.2 above, comply with the Marketing Communications Guidelines to be furnished
by Licensor to Licensee as such Marketing, Communications Guidelines may be
amended and updated by Licensor from time to time. Such Marketing Communications
Guidelines shall establish reasonable principles to be followed in the
development of advertising, marketing and promotional campaigns in order to
ensure a consistent and coherent brand image. All advertising, marketing and
promotional campaigns conducted by Licensee shall be conducted in a manner
consistent with the Marketing Communications Guidelines.
Section 11.4. Advertising Agencies; Promotions. Licensee may select its
own advertising agencies for development of its advertising and promotional
campaigns; provided, however, that all media buys shall be coordinated by
Licensee with the buying agency of Licensor. Licensee and Licensor shall conduct
ongoing reviews of upcoming advertising, marketing and promotional campaigns of
each party and shall use good faith efforts to coordinate their respective
campaigns in a manner that will maximize the advertising, marketing and
promotional efforts of the parties and be consistent with the Marketing
Communications Guidelines. Licensee shall not initiate any products or
promotions under names which are confusingly similar to any names of national
product offerings or promotions by Licensor. Neither Licensor nor any of its
Controlled Related Parties shall initiate any products or promotions under names
which are confusingly similar to any names of national product offerings or
promotions by Licensee. In addition, Licensor will use its commercially
reasonable efforts to ensure that no third party licensee under the Licensed
Marks initiates any products or
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promotions in the Service Area under names which are confusingly similar to and,
names of national product offerings or promotions by Licensee.
Section 11.5. Ownership of Advertising Materials. All agreements
entered into by Licensee with advertising agencies shall provide that Licensor
shall own all advertising materials (including concepts, themes, characters and
the like) created or developed thereunder. Subject to the terms and conditions
set forth herein, Licensee shall receive a perpetual, non-exclusive,
royalty-free license to use such materials in connection with advertising and
promotional materials developed by Licensee; provided, however, that the rights
granted under such perpetual license shall be limited solely to the use of such
materials and shall not extend the term of the license with respect to the
Licensed Marks provided for hereunder.
ARTICLE 12
RELATIONSHIP OF PARTIES
Section 12.1. Relationship of Parties. It is the express intention of
the parties that Licensee is and shall be an independent contractor and no
partnership shall exist between Licensee and Licensor pursuant hereto. This
agreement shall not be construed to make Licensee the agent or legal
representative of Licensor for any purpose whatsoever (except as expressly
provided in Articles 7 and 8), and Licensee is not granted any right or
authority to assume or create any obligations for, on behalf of, or in the name
of Licensor (except as expressly provided in Articles 7 and 8). Licensee agrees,
and shall require its permitted sublicensees to agree, not to incur or contract
any debt or obligation on behalf of Licensor, or commit any act, make any
representation, or advertise in any manner that may adversely affect any right
of Licensor in or with respect to the Licensed Marks or be detrimental to
Licensor's image.
ARTICLE 13
TERM; TERMINATION; EFFECTS OF TERMINATION
Section 13.1. Term. This agreement commences on the date of execution
and continues until the Affiliation Agreement terminates, unless earlier
terminated in accordance with the terms set forth in this Article 13. This
agreement automatically terminates upon termination of the Affiliation
Agreement.
Section 13.2. Events of Termination. If any of the following events
shall occur with respect to Licensee, each such occurrence shall be deemed an
"Event of Termination":
(a) Bankruptcy. The occurrence of a "Bankruptcy" with respect to
Licensee.
(b) Breach of Agreements. Licensee fails to perform in accordance
with any of the material terms and conditions contained herein
in any material respect.
(c) Material Misrepresentation. Licensee breaches any material
representation or warranty of Licensee made in Section 4.2 or
Article 6 in any material respect.
(d) Termination of Affiliation Agreement. The termination of the
Affiliation Agreement, for whatever reason.
Section 13.3. Licensor's Right to Terminate Upon Event of Termination.
Licensor may, at its option, without prejudice to any other remedies it may
have, terminate this agreement by giving written notice
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of such termination to Licensee as follows: (a) immediately, upon the occurrence
of any Event of Termination pursuant to Section 13.2(a) with respect to
Licensee; or (b) after the expiration of thirty (30) days from Licensee's
receipt of written notice from Licensor of the occurrence of any Event of
Termination pursuant to Sections 13.2(b) or 13.2(c), if such failure to perform
or breach is then still uncured; or (c) immediately upon the repeated or
continuing occurrence of Events of Termination pursuant to Section 13.2(b)
(regardless of whether such continuing failures to perform or breaches have been
cured by Licensee in accordance with the provisions of clause (b) or this
Section 13.3); or (d) immediately upon the occurrence of a termination pursuant
to Section 13.2(d).
Section 13.4. Licensee's Right to Terminate. Licensee may, at its
option, without prejudice to any other remedies it may have, terminate this
agreement by giving written notice of such termination to Licensor as follows:
(a) immediately, in the event that Licensor abandons the Licensed Marks or
otherwise ceases to support the Licensed Marks in Licensor's business; or (b)
immediately in the event of the occurrence of a Bankruptcy with respect to
Licensor; or (c) immediately in the event of an occurrence of termination
pursuant to Section 11.2(d).
Section 13.5. Effects of Termination. Upon the termination of this
agreement for any reason, all rights of Licensee in and to the Licensed Marks in
the Service Area shall cease within thirty (30) days following the date on which
this agreement terminates (except in the case of a termination resulting from an
Event of Termination described in Section 13.2(b), (c) or (d), in which case
such rights to use the Licensed Marks will terminate immediately upon the date
of termination); provided, however, that Licensee may thereafter sell, transfer
or otherwise dispose of any Related Equipment and Premium and Promotional Items
that are then in Licensee's inventory (or which Licensee has purchased or is
then legally obligated to purchase) for an additional reasonable period not to
exceed three (3) months. Licensee's right of disposal under this Section 13.5
shall not prohibit Licensor from granting to third parties during the disposal
period licenses and other rights with respect to the Licensed Marks. The
provisions of Articles 3 , 4, 5, 6 and 8 will survive any termination of this
agreement.
ARTICLE 14
ASSIGNMENT; SUBLICENSING
Section 14.1. Licensee Right to Assign. Licensee, without the prior
written consent of Licensor (in its sole discretion), shall have no right to
assign any of its rights or obligations hereunder.
Section 14.2. Licensor Right to Assign the Licensed Marks. Nothing
herein shall be construed to limit the right of the Licensor to transfer or
assign its interests in the Licensed Marks, subject to the agreement of the
assignee to be bound by the terms and conditions of this agreement.
Section 14.3. Licenses to Additional Licensees; Sublicenses; Licenses
to Additional Licensees. Licensee shall not sublicense (or attempt to
sublicense) any of its rights hereunder without the prior written consent of
Licensor, in the sole discretion of Licensor.
ARTICLE 15
MISCELLANEOUS
Section 15.1. Notices. Any notice, payment, demand, or communication
required or permitted to be given by any provision of this agreement shall be in
writing and mailed (certified or registered mail, postage
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prepaid, return receipt requested) or sent by hand or overnight courier, or by
facsimile (with acknowledgment received), charges prepaid and addressed as
described on the Notice Address Schedule attached to the Master Signature Page,
or to such other address or number as such party may from time to time specify
by written notice to the other party. All notices and other communications given
to a party in accordance with the provisions of this agreement shall be deemed
to have been given and received (i) four (4) Business Days after the same are
sent by certified or registered mail, postage prepaid, return receipt requested,
(ii) when delivered by hand or transmitted by facsimile (with acknowledgment
received and, in the case of a facsimile only, a copy of such notice is sent no
later than the next Business Day by a reliable overnight courier service, with
acknowledgment of receipt) or (iii) one (1) Business Day after the same are sent
by a reliable overnight courier service, with acknowledgment of receipt.
Section 15.2. Binding Effect. Except as otherwise provided in this
agreement, this agreement shall be binding upon and inure to the benefit of the
parties and their respective successors, transferees, and assigns.
Section 15.3. Construction. This agreement shall be construed simply
according to its fair meaning and not strictly for or against any party.
Section 15.4. Time. Time is of the essence with respect to this
agreement.
Section 15.5. Table of Contents; Headings. The table of contents and
section and other headings contained in this agreement are for reference
purposes only and are not intended to describe, interpret, define or limit the
scope, extent or intent of this agreement.
Section 15.6. Severability. Every provision of this agreement is
intended to be severable. If any term or provision hereof is illegal, invalid or
unenforceable for any reason whatsoever, that term or provision will be enforced
to the maximum extent permissible so as to effect the intent of the parties, and
such illegality, invalidity or unenforceability shall not affect the validity or
legality of the remainder of this agreement. If necessary to effect the intent
of the parties, the parties will negotiate in good faith to amend this agreement
to replace the unenforceable language with enforceable language which as closely
as possible reflects such intent.
Section 15.7. Further Action. Each party, upon the reasonable request
of the other party, agrees to perform all further acts and execute, acknowledge,
and deliver any documents which may be reasonably necessary, appropriate, or
desirable to carry out the intent and purposes of this agreement.
Section 15.8. Governing Law. The internal laws of the State of Missouri
(without regard to principles of conflict of law) shall govern the validity of
this agreement, the construction of its terms, and the interpretation of the
rights and duties of the parties.
Section 15.9. Specific Performance. Each party agrees with the other
party that the other party would be irreparably damaged if any of the provisions
of this agreement are not performed in accordance with their specific terms and
that monetary damages would not provide an adequate remedy in such event.
Accordingly, in addition to any other remedy to which the nonbreaching party may
be entitled, at law or in equity, the nonbreaching party shall be entitled to
injunctive relief to prevent breaches of this agreement and specifically to
enforce the terms and provisions hereof.
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Section 15.10. Entire Agreement. The provisions of this agreement set
forth the entire agreement and understanding between the parties as to the
subject matter hereof and supersede all prior agreements, oral or written, and
other communications between the parties relating to the subject matter hereof
Section 15.11. Limitation on Rights of Others. Nothing in this
agreement, whether express or implied, shall be construed to give any party
other than the parties any legal or equitable right, remedy or claim under or in
respect of this agreement.
Section 15.12. Waivers; Remedies. The observance of any term of this
agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively) by the party or parties entitled to enforce such
term, but any such waiver shall be effective only if in writing signed by the
party or parties against which such waiver is to be asserted. Except as
otherwise provided herein, no failure or delay of any party in exercising any
power or right under this agreement shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such right or power, preclude any other
further exercise thereof or the exercise of any other right or power.
Section 15.13. Jurisdiction; Consent to Service of Process.
(a) Each party hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of
any Missouri State court sitting in the County of Jackson or
any Federal court of the United States of America sitting in
the Western District of Missouri, and any appellate court from
any such court, in any suit action or proceeding arising out
of or relating to this agreement, or for recognition or
enforcement of any judgment, and each party hereby irrevocably
and unconditionally agrees that all claims in respect of any
such suit, action or proceeding may be heard and determined in
such Missouri State Court or, to the extent permitted by law,
in such Federal court.
(b) Each party hereby irrevocably and unconditionally waives, to
the fullest extent it may legally do so, any objection which
it may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this
agreement in Missouri State court sitting in the County of
Jackson or any Federal court sitting in the Western District
of Missouri. Each party hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such suit, action or
proceeding in any such court and further waives the right to
object, with respect to such suit, action or proceeding, that
such court does not have jurisdiction over such party.
(c) Each party irrevocably consents to service of process in the
manner provided for the giving of notices pursuant to this
agreement, provided that such service shall be deemed to have
been given only when actually received by such party. Nothing
in this agreement shall affect the right of a party to serve
process in another manner permitted by law.
Section 15.14. Waiver of Jury Trial. Each party waives, to the fullest
extent permitted by applicable law, any right it may have to a trial by jury in
respect of any action, suit or proceeding arising out of or relating to this
agreement.
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Section 15.15. Consents. Whenever this agreement requires or permits
consent by or on behalf of a party, such consent shall be given in writing in a
manner consistent with the requirements for a waiver of compliance as set forth
in Section 15.13, with appropriate notice in accordance with Section 15.1 of
this agreement.
Section 15.16. Master Signature Page. Each party agrees that it will
execute the Master Signature Page that evidences such party's agreement to
execute, become a party to and be bound by this agreement, which document is
incorporated herein by this reference.
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EXHIBIT 10.13
SPRINT SPECTRUM
TRADEMARK AND SERVICE MARK
LICENSE AGREEMENT
Between
SPRINT SPECTRUM L.P.
and
ALAMOSA PCS, LLC
December 6, 1999
<PAGE> 2
SPRINT SPECTRUM TRADEMARK AND
SERVICE MARK LICENSE AGREEMENT
THIS AGREEMENT is made as of the 6th day of December, 1999, by and
between Sprint Spectrum L.P., a limited partnership organized under the laws of
the State of Delaware, as licensor ("Licensor"), and Alamosa PCS, LLC, a
Delaware limited liability company, as licensee ("Licensee"). THE DEFINITIONS
FOR THIS AGREEMENT ARE SET FORTH ON THE "SCHEDULE OF DEFINITIONS".
RECITALS:
WHEREAS, Licensor is the owner of the U.S. trademarks and service marks
"THE CLEAR ALTERNATIVE TO CELLULAR" and "EXPERIENCE THE CLEAR ALTERNATIVE TO
CELLULAR TODAY" and such other marks as may be adopted and established from time
to time and the goodwill of the business symbolized thereby; and
WHEREAS, Licensee desires to use the trademarks and service marks in
commerce;
NOW, THEREFORE, the parties, in consideration of the mutual agreements
herein contained and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, do hereby agree as follows:
ARTICLE 1
GRANT OF TRADEMARK AND SERVICE MARK RIGHTS; EXCLUSIVITY
Section 1.1. License.
(a) Grant of License. Subject to the terms and conditions hereof,
Licensor hereby grants to Licensee, and Licensee hereby
accepts from Licensor, for the term of this agreement, a
non-transferable, royalty-free license to use the Licensed
Marks solely for and in connection with the marketing,
promotion, advertisement, distribution, lease or sale of
Sprint PCS Products and Services and Premium and Promotional
Items in the Service Area.
(b) Related Equipment. The rights granted hereunder to Licensee
shall not include the right to manufacture equipment under the
Licensed Marks. However, subject to the terms and conditions
hereof, Licensor hereby grants to Licensee, and Licensee
hereby accepts from Licensor, for the term of this agreement,
a non-transferable, royalty-free license to market, promote,
advertise, distribute and resell and lease Related Equipment
in connection with the marketing, promotion, advertisement,
distribution, lease or sale by Licensee of Sprint PCS Products
and Services, and to furnish services relating to such Related
Equipment (including installation, repair and maintenance of
Related Equipment), under the Licensed Marks.
-1-
<PAGE> 3
ARTICLE 2
QUALITY STANDARDS, MAINTENANCE
Section 2.1. Maintenance of Quality.
(a) Adherence to Quality Standards. In the course of marketing,
promoting, advertising, distributing, leasing and selling
Sprint PCS Products and Services and Premium and Promotional
Items under the Licensed Marks, Licensee shall maintain and
adhere to standards of quality and specifications that conform
to or exceed those quality standards and technical and
operational specifications adopted and/or amended in the
manner provided below ("Quality Standards") and those imposed
by Law. Such Quality Standards are designed to ensure that the
quality of the Sprint PCS Products and Services and Premium
and Promotional Items marketed, promoted, advertised,
distributed, leased and sold under the Licensed Marks are
consistent with the high reputation of the Licensed Marks and
are in conformity with applicable Laws.
(b) Establishment of Quality Standards. The parties acknowledge
that the initial Quality Standards for the Sprint PCS Products
and Services and Premium and Promotional Items are attached to
the Management Agreement as Exhibits 4.1, 4.2, 4.3. 7.2. and
8.1. The Quality Standards shall (i) be consistent with the
reputation for quality associated with the Licensed Marks and
(ii) be commensurate with a high level of quality (taking into
account Licensee's fundamental underlying technology and
standards), consistent with the level of quality being offered
in the market for products and services of the same kind as
the Sprint PCS Products and Services.
(c) Changes in Quality Standards. In the event that Licensor
wishes to change the Quality Standards, it will notify
Licensee in writing of such proposed amendments, and will
afford Licensee a reasonable time period in which to adopt
such changes as may be required in order for Licensee to
conform to the amended Quality Standards.
Section 2.2. Rights of Inspection. In order to ensure that the Quality
Standards are maintained, Licensor and its authorized agents and representatives
shall have the right, but not the obligation, with prior notice to Licensee, to
enter upon the premises of any office or facility operated by or for Licensee
with respect to Sprint PCS Products and Services and Premium and Promotional
Items at all reasonable times, to inspect, monitor and test in a reasonable
manner facilities and equipment used to furnish Sprint PCS Products and Services
and Premium and Promotional Items and, with prior written notice to Licensee, to
inspect the books and records of Licensee in a manner that does not unreasonably
interfere with the business and affairs of Licensee, all as they relate to the
compliance with the Quality Standards maintained hereunder.
Section 2.3. Marking; Compliance with Trademark Laws. Licensee shall
cause the appropriate designation "(TM)" or "(sm)" or the registration symbol
"(R)" to be placed adjacent to the Licensed Marks in connection with the use
thereof and to indicate such additional information as Licensor shall reasonably
specify from time to time concerning the license rights under which Licensee
uses the Licensed Marks. Licensee shall place the following notice on all
printed or electronic materials on which the Licensed Marks appear: "THE CLEAR
ALTERNATIVE TO CELLULAR", "EXPERIENCE THE CLEAR ALTERNATIVE TO CELLULAR TODAY",
and such other marks as may be adopted and established from time to time, are
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trademarks and/or service marks of Sprint Spectrum L.P., "used under license" or
such other notice as Licensor may specify from time to time.
Section 2.4. Other Use Restrictions. Licensee shall not use the
Licensed Marks in any manner that would reflect adversely on the image of
quality symbolized by the Licensed Marks.
ARTICLE 3
CONFIDENTIAL INFORMATION
Section 3.1. Maintenance of Confidentiality. Each of Licensor and
Licensee and their respective Controlled Related Parties (each a "Restricted
Party") shall cause their respective officers and directors (in their capacity
as such) to, and shall take all reasonable measures to cause their respective
employees, attorneys, accountants, consultants and other agents and advisors
(collectively, and together with their respective officers and directors,
"Agents") to, keep secret and maintain in confidence the terms of this agreement
and all confidential and proprietary information and data of the other party or
its Related Parties disclosed to it (in each case, a "Receiving Party") in
connection with the performance of its obligations under this agreement (the
"Confidential Information") and shall not, and shall cause their respective
officers and directors not to, and shall take all reasonable measures to cause
their respective other Agents not to, disclose Confidential Information to any
Person other than the parties, their Controlled Related Parties and their
respective Agents that need to know such Confidential Information. Each party
further agrees that it shall not use the Confidential Information for any
purpose other than determining and performing its obligations and exercising its
rights under this agreement. Each party shall take all reasonable measures
necessary to prevent any unauthorized disclosure of the Confidential Information
by any of their respective Controlled Related Parties or any of their respective
Agents. The measures taken by a Restricted Party to protect Confidential
Information shall be not deemed unreasonable if the measures taken are at least
as strong as the measures taken by the disclosing party to protect such
Confidential Information.
Section 3.2. Permitted Disclosures. Nothing herein shall prevent any
Restricted Party or its Agents from using, disclosing, or authorizing the
disclosure of Confidential Information it receives and which:
(i) has been published or is in the public domain, or which
subsequently comes into the public domain, through no fault of
the receiving party;
(ii) prior to receipt hereunder was property within the legitimate
possession of the Receiving Party or, subsequent to receipt
hereunder is lawfully received from a third party having
rights therein without restriction of the third party's right
to disseminate the Confidential Information and without notice
of any restriction against its further disclosure.
(iii) is independently developed by the Receiving Party through
Persons who have not had, either directly or indirectly,
access to or knowledge of such Confidential Information;
(iv) is disclosed to a third party with the written approval of the
party originally disclosing such information, provided that
such Confidential Information shall cease to be confidential
and proprietary information covered by this agreement only to
the extent of the disclosure so consented to;
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(v) subject to the Receiving Party's compliance with Section 3.4
below, is required to be produced under order of a court of
competent jurisdiction or other similar requirements of a
governmental agency, provided that such Confidential
Information to the extent covered by a protective order or its
equivalent shall otherwise continue to be Confidential
Information required to be held confidential for purpose of
this agreement; or
(vi) subject to the Receiving Party's compliance with Section 3.4
below, is required to be disclosed by applicable Law or a
stock exchange or association on which such Receiving Party's
securities (or those of its Related Party) are listed.
Section 3.3. Financial Institutions. Notwithstanding this Article 3,
any party may provide Confidential Information to any financial institution in
connection with borrowings from such financial institution by such party or any
of its Controlled Related Parties, so long as prior to any such disclosure such
financial institution executes a confidentiality agreement that provides
protection substantially equivalent to the protection provided the parties in
this Article 3.
Section 3.4. Procedures. In the event that any Receiving Party (i) must
disclose Confidential Information in order to comply with applicable Law or the
requirements of a stock exchange or association on which such Receiving Party's
securities or those of its Related Parties are listed or (ii) becomes legally
compelled (by oral questions, interrogatories, requests for information or
documents, subpoenas, civil investigative demand or otherwise) to disclose any
Confidential Information, the Receiving Party shall provide the disclosing party
with prompt written notice so that in the case of clause (i), the disclosing
party can work with the Receiving Party to limit the disclosure to the greatest
extent possible consistent with legal obligations or in the case of clause (ii),
the disclosing party may seek a protective order or other appropriate remedy or
waive compliance with the provisions of this agreement. In the case of a clause
(ii), (A) if the disclosing party is unable to obtain a protective order or
other appropriate remedy, or if the disclosing party so directs, the Receiving
Party shall, and shall cause its employees to, exercise all commercially
reasonable efforts to obtain a protective order or other appropriate remedy at
the disclosing party's reasonable expense, and (B) failing the entry of a
protective order or other appropriate remedy or receipt of a waiver hereunder,
the Receiving Party shall furnish only that portion of the Confidential
Information which it is advised by opinion of its counsel is legally required to
be furnished and shall exercise all commercially reasonable efforts to obtain
reliable assurance that confidential treatment shall be accorded such
Confidential Information, it being understood that such reasonable efforts shall
be at the cost and expense of the disclosing party whose Confidential
Information has been sought.
Section 3.5. Survival. The obligations under this Article 3 shall
survive, as to any party, until two (2) years following the date of termination
of this agreement, and, as to any Controlled Related Party of a party, until two
(2) years following the earlier to occur of (A) the date that such Person is no
longer a Controlled Related Party of a party, or (B) the date of the termination
of this agreement; provided that such obligations shall continue indefinitely
with respect to any trade secret or similar information which is proprietary to
a party or its Controlled Related Parties and provides such party or its
Controlled Related Parties with an advantage over its competitors.
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ARTICLE 4
REPRESENTATIONS, WARRANTIES AND COVENANTS OF LICENSEE
Section 4.1. Licensor's Ownership. Licensee acknowledges Licensor's
exclusive right, title and interest in and to the Licensed Marks and
acknowledges that nothing herein shall be construed to accord to Licensee any
rights in the Service Area in the Licensed Marks except as expressly provided,
herein. Licensee acknowledges that its use in the Service Area of the Licensed
Marks shall not create in Licensee any right, title or interest in the Service
Area in the Licensed Marks and that all use in the Service Area of the Licensed
Marks and the goodwill symbolized by and connected with such use of the Licensed
Marks will inure solely to the benefit of the Licensor.
Section 4.2. No Challenge by Licensee. Licensee covenants that (i)
Licensee will not at any time challenge Licensor's rights, title or interest in
the Licensed Marks (other than to assert the specific rights granted to Licensee
under this agreement), (ii) Licensee will not do or cause to be done or omit to
do anything, the doing, causing or omitting of which would contest or in any way
impair or tend to impair the rights of Licensor in the Licensed Marks, and (iii)
Licensee will not represent to any third party that Licensee has any ownership
or rights in the Service Area with respect to the Licensed Marks other than the
specific rights conferred by this agreement.
ARTICLE 5
REPRESENTATIONS, WARRANTIES AND COVENANTS OF LICENSOR
Section 5.1. Title to the Licensed Marks. Licensor represents and
warrants that:
(a) Licensor has good title to the Licensed Marks and has the
right to grant the licenses provided for hereunder in
accordance with the terms and conditions hereof, free of any
liabilities, charges, liens, pledges, mortgages, restrictions,
adverse claims, security interests, rights of others, and
encumbrances of any kind (collectively, "Encumbrances"), other
than Encumbrances which will not restrict or interfere in any
material respect with the exercise by Licensee of the rights
granted to Licensee hereunder.
(b) There is no claim, action, proceeding or other litigation
pending or, to the knowledge of Licensor, threatened with
respect to Licensor's ownership of the Licensed Marks or
which, if adversely determined, would restrict or otherwise
interfere in any material respect with the exercise by
Licensee of the rights purported to be granted to Licensee
hereunder.
Except as expressly provided above in this Section 5.1, Licensor makes
no representation or warranty of any kind or nature whether express or implied
with respect to the Licensed Marks (including freedom from third party
infringement of the Licensed Marks).
The representations and warranties provided for in this Section 5.1
shall survive the execution and delivery of this agreement.
Section 5.2. Other Licensees. In the event Licensor grants to any third
party any licenses or rights with respect to the Licensed Marks, Licensor shall
not, in connection with the grant of any such license or rights, take any
actions, or suffer any omission that would adversely affect the existence or
validity of the Licensed Marks or conflict with the rights granted to Licensee
hereunder.
Section 5.3. Abandonment. Licensor covenants and agrees that, during
the term of this agreement, it will not abandon the Licensed Marks.
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ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF BOTH PARTIES
Section 6.1. Representations and Warranties. Each party hereby
represents and warrants to the other party as follows:
(a) Due Incorporation or Formation; Authorization of Agreement.
Such party is a corporation duly organized, a limited
liability company duly organized or a partnership duly formed,
validly existing and, if applicable, in good standing under
the laws of the jurisdiction of its incorporation or formation
and has the corporate, company or partnership power and
authority to own its property and carry on its business as
owned and carried on at the date hereof and as contemplated
hereby. Such party is duly licensed or qualified to do
business and, if applicable, is in good standing in each of
the jurisdictions in which the failure to be so licensed or
qualified would have a material adverse effect on its
financial condition or its ability to perform its obligations
hereunder. Such party has the corporate, company or
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 corporate, company or
partnership action. Assuming the due execution and delivery by
the other party hereto, this agreement constitutes the legal,
valid and binding obligation of such party enforceable against
such party 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.
(b) No Conflict with Restrictions; No Default. Neither the
execution, delivery and performance of this agreement nor the
consummation by such party of the transactions contemplated
hereby (i) will conflict with, violate or result in a breach
of any of the terms, conditions or provisions of 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 such party or any of its Controlled Related
Parties, (ii) will conflict with, violate, result in a breach
of or constitute a default under any of the terms, conditions
or provisions of the articles of incorporation, articles of
organization or certificate of formation, bylaws, operating
agreement or limited liability company agreement, or
partnership agreement of such party or any of its Controlled
Related Parties or of any material agreement or instrument to
which such party or any of its Controlled Related Parties is a
party or by which such party or any of its Controlled Related
Parties is or may be bound or to which any of its material
properties or assets is subject (other than any such conflict,
violation, breach or default that has been validly and
unconditionally waived), (iii) will conflict with, violate,
result in 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 material interests or rights or require any
consent, authorization or approval under any indenture,
mortgage, lease agreement or instrument to which such party or
any of its Controlled Related Parties is a party or by which
such party or any of its Controlled Related Parties is or may
be bound, or (iv) will result in the creation or imposition of
any lien upon any of the material properties or assets of such
party or any of its Controlled Related Parties, which in any
such case could reasonably be expected to materially impair
such party's ability
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to perform its obligations under this agreement or to have a
material adverse effect on the consolidated financial
condition of each party or its Parent.
(c) Governmental Authorizations. 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 such party in connection with the valid execution,
delivery, acceptance and performance by such party under this
agreement or the consummation by such party of any transaction
contemplated hereby has been completed, made or obtained, as
the case may be.
(d) Litigation. There are no actions, suits, proceedings or
investigations pending or, to the knowledge of such party,
threatened against or affecting such party or any of its
Controlled Related Parties or any of their 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 materially impair such
party's ability to perform its obligations under this
agreement or to have a material adverse effect on the
consolidated financial condition of such party or its parent;
and such party or any of its Controlled Related Parties has
not received any currently effective notice of any default,
and such party or any of its Controlled Related Parties is not
in default, under any applicable order, writ, injunction,
decree, permit, determination or award of any court, any
governmental department, board, agency or instrumentality,
domestic or foreign, or any arbitrator, which default could
reasonably be expected to materially impair such party's
ability to perform its obligations under this agreement or to
have a material adverse effect on the consolidated financial
condition of such party or its Parent.
Section 6.2. Survival. The representations and warranties provided for
under this Article 6 will survive the execution and delivery of this agreement.
ARTICLE 7
PROSECUTION OF INFRINGEMENT CLAIMS
Section 7.1. Notice and Prosecution of Infringement. Licensee agrees to
notify Licensor promptly, in writing, of any alleged, actual or threatened
infringement of any of the Licensed Marks within the Service Area of which
Licensee becomes aware. Licensor has the sole right to determine whether or not
to take any action on such infringements. Licensor has the sole right to employ
counsel of its choosing and to direct any litigation and settlement of
infringement actions. Any recoveries, damages and costs recovered through such
proceedings shall belong exclusively to Licensor, and Licensor shall be solely
responsible for all costs and expenses (including attorney fees) of prosecuting
such actions. Licensee agrees to provide Licensor with all reasonably requested
assistance in connection with such proceedings.
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ARTICLE 8
LICENSEE DEFENSE AND INDEMNIFICATION OF LICENSOR
Section 8.1. Indemnification. (a) Each party hereby agrees to indemnify
the other party against and agrees to hold it harmless from any Loss incurred or
suffered by such other party arising out of or in connection with:
(i) the material breach of any representation or warranty
made by such party in this agreement; and
(ii) the material breach of any covenant or agreement by
such party contained in this agreement.
(b) In addition to the indemnification provided for in Section
8.1(a), Licensee agrees to indemnify Licensor against and hold
it harmless from any Loss suffered or incurred by Licensor or
its Controlled Related Parties by reason of a third party
claim arising out of or relating to (i) the use of the
Licensed Marks by Licensee; or (ii) the marketing, promotion,
advertisement, distribution, lease or sale by Licensee ( or
any permitted sublicensee) or by any additional Licensee (or
any permitted sublicensee) of any Sprint PCS Products and
Services, Related Equipment or Premium and Promotional Items
under the Licensed Marks pursuant to this agreement, including
unfair or fraudulent advertising claims, warranty claims and
product defect or liability claims, pertaining to the Sprint
PCS Products and Services, Related Equipment or Premium and
Promotional Items. Notwithstanding the foregoing, Licensee
will not be required under this paragraph (b) to indemnify any
Loss arising solely out of Licensee's use of the Licensed
Marks in compliance with the terms of the Trademark and
Service Mark Usage Guidelines; provided that Licensor shall
have no obligation to indemnify for third-party claims alleged
to arise from the specifics of uses of third party trademarks
or service marks, or the specifics of claims made, in
marketing materials prepared by or for Licensee, which
marketing materials have not been approved by Licensor prior
to the publication out of which such claims are alleged to
have arisen.
ARTICLE 9
OBLIGATIONS/SETOFF
Section 9.1. Obligations/Setoff. The obligations of the parties as set
forth in this agreement shall be unconditional and irrevocable, and shall not be
subject to any defense or be released, discharged or otherwise affected by any
matter, including impossibility, illegality, impracticality, frustration of
purpose, force majeure, act of government, the bankruptcy or insolvency of any
party hereto, and the obligations of each party shall not be subject to any
right of setoff or recoupment which such party may not or hereafter have against
the other party.
ARTICLE 10
LIMITATION ON USE OF LICENSED MARKS
Section 10.1. Restrictions on Use. Licensee is not permitted to make
any use of the Licensed Marks in connection with products or services other than
the Sprint PCS Products and Services, and as specifically
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authorized in Sections 1.1(b) above with respect to Related Equipment and
Premium and Promotional Items, nor to make any use of the Licensed Marks
directed outside of the Service Area.
Section 10.2. Adherence to Trademark and Service Mark Usage Guidelines.
Licensee agrees to comply with and adhere to Trademark and Service Mark Usage
Guidelines for the depiction or presentation of the Licensed Marks, as furnished
by Licensor. Prior to Licensee depicting or presenting any of the Licensed Marks
on any type of marketing, advertising or promotional materials, Licensee agrees
to submit samples of such materials to Licensor for approval. Licensor shall
have fourteen (14) days from the date Licensor receives such materials to
approve or object to any such materials submitted to Licensor for review. In the
event Licensor does not object to such materials within such fourteen (14) day
period, such materials shall be deemed approved by Licensor. Thereafter,
Licensee shall not be obligated to submit to Licensor materials prepared in
accordance with the samples previously approved by Licensor and the Trademark
and Service Mark Usage Guidelines; provided, however, Licensee shall, at the
reasonable request of Licensor, continue to furnish samples of such marketing,
advertising and promotional materials to Licensor from time to time during the
term hereof at the request of Licensor.
Section 10.3. Use of Similar Trademarks and Service Marks. Licensee
agrees not to use (a) any trademark or service mark which is confusingly similar
to, or a colorable imitation of, the Licensed Marks or any part thereof, or (b)
any work, symbol, character, or set of words, symbols, or characters, which in
any language would be identified as the equivalent of the Licensed Marks or that
are otherwise confusingly similar to, or a colorable imitation of, the Licensed
Marks, whether during the term of this agreement or at any time following
termination of this agreement. Licensee shall not knowingly engage in any
conduct which may place the Sprint PCS Products and Services, the Licensed Marks
or Licensor in a negative light or context.
Section 10.4. Services of Public Figures. Licensee agrees to obtain
Licensor's prior written approval (which approval will not be unreasonably
withheld) before engaging the services of any celebrity or publicly known
individual for endorsement of any Sprint PCS Products and Services or Premium
and Promotional Items.
ARTICLE 11
CONTROL OF BRAND IMAGE
Section 11.1. Exclusive Use of Licensed Marks. The Sprint PCS Products
and Services shall be marketed by Licensee solely under the Licensed Marks.
Section 11.2. Consistency With Brand Image and Principles. Licensee
shall use the Licensed Marks in a manner that is consistent with the brand image
and principles established by Licensor, and mechanics to ensure consistency will
be included in the Marketing Communications Guidelines.
Section 11.3. Management of Brand Image. Licensor shall be responsible
for the overall management of the brand image for the Licensed Marks. All
advertising, marketing and promotional materials using the Licensed Marks
prepared by Licensee shall, in addition to the provisions set forth in Section
11.2 above, comply with the Marketing Communications Guidelines to be furnished
by Licensor to Licensee as such Marketing Communications Guidelines may be
amended and updated by Licensor from time to time. Such Marketing Communications
Guidelines shall establish reasonable principles to be followed in the
development of advertising, marketing and promotional campaigns in order to
ensure a consistent and coherent brand image.
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All advertising, marketing and promotional campaigns conducted by Licensee shall
be conducted in a manner consistent with the Marketing Communications
Guidelines.
Section 11.4. Advertising Agencies; Promotions. Licensee may select its
own advertising agencies for development of its advertising and promotional
campaigns; provided, however, that all media buys shall be coordinated by
Licensee with the buying agency of Licensor. Licensee and Licensor shall conduct
ongoing reviews of upcoming advertising, marketing and promotional campaigns of
each party and shall use good faith efforts to coordinate their respective
campaigns in a manner that will maximize the advertising, marketing and
promotional efforts of the parties and be consistent with the Marketing
Communications Guidelines. Licensee shall not initiate any products or
promotions under names which are confusingly similar to any names of national
product offerings or promotions by Licensor. Neither Licensor nor any of its
Controlled Related Parties shall initiate any products or promotions under names
which are confusingly similar to any names of national product offerings or
promotions by Licensee. In addition, Licensor will use its commercially
reasonable efforts to ensure that no third party licensee under the Licensed
Marks initiates any products or promotions in the Service Area under names which
are confusingly similar to any names of national product offerings or promotions
by Licensee.
Section 11.5. Ownership of Advertising Materials. All agreements
entered into by Licensee with advertising agencies shall provide that Licensor
shall own all advertising materials (including concepts, themes, characters and
the like) created or developed thereunder. Subject to the terms and conditions
set forth herein, Licensee shall receive a perpetual, non-exclusive,
royalty-free license to use such materials in connection with advertising and
promotional materials developed by Licensee; provided, however, that the rights
granted under such perpetual license shall be limited solely to the use of such
materials and shall not extend the term of the license with respect to the
Licensed Marks provided for hereunder.
ARTICLE 12
RELATIONSHIP OF PARTIES
Section 12.1. Relationship of Parties. It is the express intention of
the parties that Licensee is and shall be an independent contractor and no
partnership shall exist between Licensee and Licensor pursuant hereto. This
agreement shall not be construed to make Licensee the agent or legal
representative of Licensor for any purpose whatsoever (except as expressly
provided in Articles 7 and 8), and Licensee is not granted any right or
authority to assume or create any obligations for, on behalf of, or in the name
of Licensor (except as expressly provided in Articles 7 and 8). Licensee agrees,
and shall require its permitted sublicensees to agree, not to incur or contract
any debt or obligation on behalf of Licensor, or commit any act, make any
representation, or advertise in any manner that may adversely affect any right
of Licensor in or with respect to the Licensed Marks or be detrimental to
Licensor's image.
ARTICLE 13
TERM; TERMINATION; EFFECTS OF TERMINATION
Section 13.1. Term. This agreement commences on the date of execution
and continues until the Management Agreement terminates, unless earlier
terminated in accordance with the terms set forth in this Article 13. This
agreement automatically terminates upon termination of the Management Agreement.
Section 13.2. Events of Termination. If any of the following events
shall occur with respect to Licensee, each such occurrence shall be deemed an
"Event of Termination":
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(a) Bankruptcy. The occurrence of a "Bankruptcy" with respect to
Licensee.
(b) Breach of Agreements. Licensee fails to perform in accordance
with any of the material terms and conditions contained herein
in any material respect.
(c) Material Misrepresentation. Licensee breaches any material
representation or warranty of Licensee made in Section 4.2 or
Article 6 in any material respect.
(d) Termination of Management Agreement. The termination of the
Management Agreement, for whatever reason.
Section 13.3. Licensor's Right to Terminate Upon Event of Termination.
Licensor may, at its option without prejudice to any other remedies it may have,
terminate this agreement by giving written notice of such termination to
Licensee as follows: (a) immediately, upon the occurrence of any Event of
Termination pursuant to Section 13.2(a) with respect to Licensee, or (b) after
the expiration of thirty (30) days from Licensee's receipt of written notice
from Licensor of the occurrence of any Event of Termination pursuant to Sections
13.2(b) or 13.2(c), if such failure to perform or breach is then still uncured;
or (c) immediately upon the repeated or continuing occurrence of Events of
Termination pursuant to Section 13.2(b) (regardless of whether such continuing
failures to perform or breaches have been cured by Licensee in accordance with
the provisions of clause (b) or this Section 13.3); or (d) immediately upon the
occurrence of a termination pursuant to Section 13.2(d).
Section 13.4. Licensee's Right to Terminate. Licensee may, at its
option, without prejudice to any other remedies it may have, terminate this
agreement by giving written notice of such termination to Licensor as follows:
(a) immediately, in the event that Licensor abandons the Licensed Marks or
otherwise ceases to support the Licensed Marks in Licensor's business; or (b)
immediately in the event of the occurrence of a Bankruptcy with respect to
Licensor; or (c) immediately in the event of an occurrence of termination
pursuant to Section 13.2(d).
Section 13.5. Effects of Termination. Upon the termination of this
agreement for any reason, all rights of Licensee in and to the Licensed Marks in
the Service Area shall cease within thirty (30) days following the date on which
this agreement terminates (except in the case of a termination resulting from an
Event of Termination described in Section 13.2(b), (c) or (d), in which case
such rights to use the Licensed Marks will terminate immediately upon the date
of termination); provided, however, that Licensee may thereafter sell, transfer
or otherwise dispose of any Related Equipment and Premium and Promotional Items
that are then in Licensee's inventory (or which Licensee has purchased or is
then legally obligated to purchase) for an additional reasonable period not to
exceed three (3) months. Licensee's right of disposal under this Section 13.5
shall not prohibit Licensor from granting to third parties during the disposal
period licenses and other rights with respect to the Licensed Marks. The
provisions of Articles 3, 4, 5, 6 and 8 will survive any termination of this
agreement.
ARTICLE 14
ASSIGNMENT; SUBLICENSING
Section 14.1. Licensee Right to Assign. Licensee, without the prior
written consent of Licensor (in its sole discretion), shall have no right to
assign any of its rights or obligations hereunder.
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Section 14.2. Licensor Right to Assign the Licensed Marks. Nothing
herein shall be construed to limit the right of the Licensor to transfer or
assign its interests in the Licensed Marks, subject to the agreement of the
assignee to be bound by the terms and conditions of this agreement.
Section 14.3. Licenses to Additional Licensees; Sublicenses; Licenses
to Additional Licensees. Licensee shall not sublicense (or attempt to
sublicense) any of its rights hereunder without the prior written consent of
Licensor, in the sole discretion of Licensor.
ARTICLE 15
MISCELLANEOUS
Section 15.1. Notices. Any notice, payment, demand, or communication
required or permitted to be given by any provision of this agreement shall be in
writing and mailed (certified or registered mail, postage prepaid, return
receipt requested) or sent by hand or overnight courier, or by facsimile (with
acknowledgment received), charges prepaid and addressed as described on the
Notice Address Schedule attached to the Master Signature Page, or to such other
address or number as such party may from time to time specify by written notice
to the other party in accordance with the provisions of this Section 15.1. All
notices and other communications given to a party in accordance with the
provisions of this agreement shall be deemed to have been given and received (i)
four (4) Business Days after the same are sent by certified or registered mail,
postage prepaid, return receipt requested, (ii) when delivered by hand or
transmitted by facsimile (with acknowledgment received and, in the case of a
facsimile only, a copy of such notice is sent no later than the next Business
Day by a reliable overnight courier service, with acknowledgment of receipt) or
(iii) one (1) Business Day after the same are sent by a reliable overnight
courier service, with acknowledgment of receipt.
Section 15.2. Binding Effect. Except as otherwise provided in this
agreement, this agreement shall be binding upon and inure to the benefit of the
parties and their respective successors, transferees, and assigns.
Section 15.3. Construction. This agreement shall be construed simply
according to its fair meaning and not strictly for or against any party.
Section 15.4. Time. Time is of the essence with respect to this
agreement.
Section 15.5. Table of Contents; Headings. The table of contents and
section and other headings contained in this agreement are for reference
purposes only and are not intended to describe, interpret, define or limit the
scope, extent or intent of this agreement.
Section 15.6. Severability. Every provision of this agreement is
intended to be severable. If any term or provision hereof is illegal, invalid or
unenforceable for any reason whatsoever, that term or provision will be enforced
to the maximum extent permissible so as to effect the intent of the parties, and
such illegality, invalidity or unenforceability shall not affect the validity or
legality of the remainder of this agreement. If necessary to effect the intent
of the parties, the parties will negotiate in good faith to amend this agreement
to replace the unenforceable language with enforceable language which as closely
as possible reflects such intent.
Section 15.7. Further Action. Each party, upon the reasonable request
of the other party, agrees to perform all further acts and execute, acknowledge,
and deliver any documents which may be reasonably necessary, appropriate, or
desirable to carry out the intent and purposes of this agreement.
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<PAGE> 14
Section 15.8. Governing Law. The internal laws of the State of Missouri
(without regard to principles of conflict of law) shall govern the validity of
this agreement, the construction of its terms, and the interpretation of the
rights and duties of the parties.
Section 15.9. Specific Performance. Each party agrees with the other
party that the other party would be irreparably damaged if any of the provisions
of this agreement are not performed in accordance with their specific terms and
that monetary damages would not provide an adequate remedy in such event.
Accordingly, in addition to any other remedy to which the nonbreaching party may
be entitled, at law or in equity, the nonbreaching party shall be entitled to
injunctive relief to prevent breaches of this agreement and specifically to
enforce the terms and provisions hereof.
Section 15.10. Entire Agreement. The provisions of this agreement set
forth the entire agreement and understanding between the parties as to the
subject matter hereof and supersede all prior agreements, oral or written, and
other communications between the parties relating to the subject matter hereof.
Section 15.11. Limitation on Rights of Others. Nothing in this
agreement, whether express or implied, shall be construed to give any party
other than the parties any legal or equitable right, remedy or claim under or in
respect of this agreement.
Section 15.12. Waivers; Remedies. The observance of any term of this
agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively) by the party or parties entitled to enforce such
term, but any such waiver shall be effective only if in writing signed by the
party or parties against which such waiver is to be asserted. Except as
otherwise provided herein, no failure or delay of any party in exercising any
power or right under this agreement shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such right or power, preclude any other
further exercise thereof or the exercise of any other right or power.
Section 15.13. Jurisdiction; Consent to Service of Process.
(a) Each party hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of
any Missouri State court sitting in the County of Jackson or
any Federal court of the United States of America sitting in
the Western District of Missouri, and any appellate court from
any such court, in any suit action or proceeding arising out
of or relating to this agreement, or for recognition or
enforcement of any judgment, and each party hereby irrevocably
and unconditionally agrees that all claims in respect of any
such suit, action or proceeding may be heard and determined in
such Missouri State Court or, to the extent permitted by law,
in such Federal court.
(b) Each party hereby irrevocably and unconditionally waives, to
the fullest extent it may legally do so, any objection which
it may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this
agreement in Missouri State court sitting in the County of
Jackson or any Federal court sitting in the Western District
of Missouri. Each party hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such suit, action or
proceeding in any such court
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<PAGE> 15
and further waives the right to object, with respect to such
suit, action or proceeding, that such court does not have
jurisdiction over such party.
(c) Each party irrevocably consents to service of process in the
manner provided for the giving of notices pursuant to this
agreement, provided that such service shall be deemed to have
been given only when actually received by such party. Nothing
in this agreement shall affect the right of a party to serve
process in another manner permitted by law.
Section 15.14. Waiver of Jury Trial. Each party waives, to the fullest
extent permitted by applicable law, any right it may have to a trial by jury in
respect of any action, suit or proceeding arising out of or relating to this
agreement.
Section 15.15. Consents. Whenever this agreement requires or permits
consent by or on behalf of a party, such consent shall be given in writing in a
manner consistent with the requirements for a waiver of compliance as set forth
in Section 15.13, with appropriate notice in accordance with Section 15.1 of
this agreement.
Section 15.16. Master Signature Page. Each party agrees that it will
execute the Master Signature Page that evidences such party's agreement to
execute, become a party to and be bound by this agreement, which document in
incorporated herein by this reference.
[The remainder of this page is intentionally left blank.]
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<PAGE> 1
EXHIBIT 10.14
ENGINEERING SERVICE CONTRACT
SYSTEM DESIGN AND CONSTRUCTION INSPECTION
AGREEMENT made July 27, 1998, between ALAMOSA PCS, LLC. (hereinafter
called the "Owner") and HICKS & RAGLAND ENGINEERING CO., INC. (hereinafter
called the "Engineer").
WHEREAS, the Owner proposes to implement certain additions,
rehabilitations or improvements to its system (all such improvements,
rehabilitation, new construction with its associated facilities being
hereinafter called the "Project" TEXAS 907); and
WHEREAS, the Owner desires the Engineer to perform certain engineering
services in connection with the Project; and
WHEREAS, the Engineer represents that it has access to sufficient
experienced personnel and equipment to perform such engineering services for the
Project.
NOW, THEREFORE, in consideration of the mutual undertakings herein
contained, the parties hereto agree as follows:
SECTION 1. FINANCING OF THE PROJECT. The financing of the Project, including
costs of materials, construction, installation, and engineering will be the
responsibility of the Owner.
SECTION 2. GENERAL OBLIGATION. The Engineer shall diligently and competently
render engineering services which shall be reasonably necessary or advisable for
the expeditious, economical, and sound design of that portion of the Project
included in the Attachments and for such other preparatory work as is necessary
to place such portion of the Project in service, except where such duties are
excluded from the terms of this Agreement.
2.01 DESCRIPTION OF PROJECT. The Engineer shall perform the services identified
in the Attachments for the Owner's Project as described in general below.
Provide Engineering Services for implementation of a PCS system in the Owner's
Markets. The Owner, as an Affiliate of Sprint, has the rights to serve areas in
Texas, New Mexico, Colorado and Arizona as defined in the Sprint agreement
Service Area. The Scope of Work is outlined in Attachment C. The Contract will
cover the deployment of mobile switching centers and base stations for the
pre-op period, year 1 and year 2. Estimates are based upon the deployment of
three switching centers: Lubbock, Albuquerque and El Paso. Estimates are also
based upon deployment of owner supplied base station estimates. The estimated
fees are based upon base station deployment as follows: pre op - 103 base
stations, year 1 - 89 base stations, and year 2 - 25 base stations. The Pre op
period will run through December 1998. Year 1 services will be from January 1999
through December 1999. Year 2 services will be from January 2000 through
December 2000. This contract excludes services associated with tower and site
work which will be provided by others.
SECTION 3. TERMS AND CONDITIONS.
3.01 INSURANCE. The Engineer shall take out and maintain throughout the contract
period the following minimum insurance:
a. Workmen's compensation insurance in statutory limits covering all employees
of the Engineer who shall perform any of the obligations of the Engineer
hereunder, whether or not such insurance is required by the laws of the
State governing the employment of any such employee. If any employee is not
subject to the workmen's compensation
<PAGE> 2
laws of such State, such insurance shall extend to such employee, voluntary
coverage to the same extent as though such employee were subject to such
laws.
b. Public liability and property damage liability insurance covering all
operations under the contact; limits for bodily injury or death, not less
than $1,000,000 for each occurrence; for property damage, not less than
$1,000,000 for each occurrence and $1,000,000 aggregate for occurrences
during the policy period.
c. Automobile liability insurance on all vehicles used in connection with the
contract whether owned, non-owned, or hired; public liability limits of not
less then $1,000,000 for one person and $1,000,000 for each occurrence;
property damage limit of $1,000,000 for each occurrence.
The Engineer shall furnish the Owner a certificate evidencing compliance with
the foregoing requirements which shall provide not less than thirty (30) days
prior written notice to the Owner of any cancellation or material reduction in
the insurance.
3.02 PROJECT SCHEDULE. The Engineer shall prepare in collaboration with the
Owner, a work and progress report schedule.
3.03 PLANS AND SPECIFICATIONS. Complete and detailed plans and specifications,
drawings, maps, and other documents as required for the construction of the
Project (all of the foregoing being herein sometimes collectively called the
"Plans and Specifications"), shall be prepared by the Engineer, pursuant to the
various Attachments to this Agreement, and made a part hereof.
3.04 GOVERNING LAW. This Agreement shall be governed by the laws of the State of
Texas.
3.05 STANDARDS. All maps, drawings, plans, specifications, estimates, studies
and other documents required to be prepared or submitted by the Engineer under
this Agreement shall conform to industry standards generally acceptable at the
date of this Agreement.
3.06 TERMINATION BY OWNER. The Owner may at any time terminate this Agreement
for cause by giving notice to the Engineer, in writing, to that effect not less
than thirty (30) days prior to the effective date of termination specified in
this notice. Such notice shall be deemed given if delivered or mailed to the
last known address of the Engineer. From and after the effective date specified
in such notice this Agreement shall be terminated. In the event of such
termination, the Owner shall immediately pay Engineer for all work performed on
a Time & Expense basis prior to the date of termination.
3.07 TERMINATION BY THE ENGINEER. The Engineer may at any time terminate this
Agreement by giving notice to the Owner, in writing, to that effect not less
than thirty (30) days prior to the effective date of termination specified in
this notice. Such notice shall be deemed given if delivered or mailed to the
last known address of the Owner. From and after the effective date specified in
such notice this Agreement shall be terminated, except that the Engineer shall
be entitled to receive compensation for services performed hereunder, computed
and payable as set forth in Section 3, 3.06 and 3.13.
3.08 OWNERSHIP OF DOCUMENTS. All reports, plans, specifications, computer files
and other documents prepared by the Engineer as instruments of service shall
remain the property of the Engineer. The Engineer shall retain all common law,
statutory and other reserved rights including copyrights.
3.09 EMPLOYEES' QUALIFICATIONS. The obligations and duties to be performed by
the Engineer under this Agreement shall be performed by persons qualified to
perform such duties efficiently. The Engineer, if the Owner shall so direct,
shall promptly replace any resident engineer or other person employed by the
Engineer in connection with the Project.
The term engineer or resident engineer as used in this Agreement shall mean a
person properly trained and experienced to perform the services required under
the terms of this Agreement, and does not mean that the person performing those
duties must be a licensed or a registered professional engineer.
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<PAGE> 3
3.10 LICENSE. The engineer shall comply with all applicable statutes pertaining
to engineering and warrants that David E. Sharbutt who will be in responsible
charge of the Project possesses license number 41663 issued to him by the State
of Texas on the 30th day of June, 1977.
3.11 PAYMENTS OF ENGINEER'S EMPLOYEES. Prior to the time when any payment shall
be made to the Engineer pursuant to this Agreement, the Engineer, as requested
by the Owner, shall furnish to the Owner, as a condition precedent to such
payment, a certificate to the effect that all salaries or wages earned by the
employees of the Engineer in connection with the Project have been fully paid by
the Engineer up to and including a date not more than thirty (30) days prior to
the date of such invoice. Before the time when the final payment provided to be
made pursuant to this Agreement shall be made to the Engineer by the Owner, the
Engineer shall also furnish to the Owner as a condition precedent to such
payment a certificate that all of the employees of the Engineer have been paid
by him for services rendered by them in connection with the Project, and that
all other obligations which might become a lien upon the Project have been paid.
3.12 ENGINEER'S RECORDS. The Owner shall have the right to inspect and audit all
payrolls, records, and accounts of the Engineer relevant to the work for the
Purposes of this Agreement and the Engineer agrees to provide all reasonable
facilities necessary for such inspection and audit.
3.13 COMPENSATION. For the purpose of this Agreement, compensation for each type
of work covered by the Attachments and thereby made a part of this Agreement
shall be as outlined below.
a. TIME & EXPENSE. The Owner shall pay the Engineer for all services
performed pursuant this Agreement, "Time & Expense" compensation as
defined below (not to exceed the Guaranteed Maximum Fee amount defined
in Form P506).
1. TIME RATES. For services defined as Time & Expense, the Time
rates will include all costs associated with the employee except
for those listed in 2 and 3 below. The hourly rates are
identified in the Attachments and will be multiplied by the
number of hours expended in each job category to determine the
Time Rates.
2. EXPENSE RATES. These will include subsistence expense, if any,
paid to (or on behalf of) employees, plus reasonable
transportation cost of employees, plus a fee of 7% of billed
labor to cover the cost of prints, mailing and transportation
expenses relating to printed and other materials and equipment,
and telephone and telecommunications expenses.
3. TEST EQUIPMENT AND COMPUTER USAGE. The Owner will pay the
Engineer for the costs of test equipment and computer usage as
identified in the Attachments.
4. REVIEW OF RATES. The Time rates and Test Equipment and Computer
Usage rates attached are valid until July 1, 1999. Beginning on
July 1, 1999 and on each subsequent anniversary of this Agreement
new Rates shall be mutually agreed to by both Parties, until
Completion or Termination of this Agreement.
b. GUARANTEED MAXIMUM FEE. The engineering cost identified in Form P506 as
the Guaranteed Maximum Fee is based upon the time and expense billing of
the project as defined in 2.01 Description of the Project.
CONTINGENCIES. The Guaranteed Maximum Fee in this engineering contract is based
upon a set amount of construction. In the implementation of a PCS project there
are many uncertainties. The fees do not include any contingency costs that may
or may not have been projected by the Owner. These contingencies, should they
occur, will require additional engineering to ensure that the Owner's system
performs as required. Should any additional sites, beyond those identified in
2.01 Description of Project, require additional engineering expenditures, the
Guaranteed Maximum Fee of this contract will be automatically amended to add any
additional sites the owner requires due to any contingencies. The Guaranteed
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<PAGE> 4
Maximum Fee will be amended upward on a per site fee. The per site fee will be
the amount of the Guaranteed Maximum Fee of the original scope divided by the
number of sites in the original scope.
INCENTIVE BONUS. The Owner and the Engineer mutually agree to strive to complete
the work defined in this Agreement at a cost less that the Guaranteed Maximum
Fee (GMF) amount defined in Form P506. As an incentive to reduce the cost of
engineering, if the total billing for the project is less than the amount
defined as the GMF, the Engineer will be paid an amount equal to 50% of the
difference between the GMF and the total billing as an Incentive Bonus. The
incentive bonus will be paid based upon the identified periods on the P506 forms
as follows.
PRE OP INCENTIVE. The amount of incentive payable at the conclusion of
the pre op period will be 75% of the calculated incentive amount due. The
remaining 25% will be held as a reserve for future periods. The incentive amount
due is calculated by taking the GMF for the pre op period less the actual
billing as follows.
Incentive amount = [Pre op GMF - Pre op billing]*50%
Incentive payable = incentive amount * 75%
The incentive payable will be determined within 45 days after the
completion of the pre op period as defined in this agreement.
YEAR 1 INCENTIVE. The amount of incentive payable at the conclusion of
the year 1 period will be 75% of the calculated incentive amount due. The
remaining 25% will be held as a reserve for future periods. The incentive amount
due is calculated by taking the GMF for all periods to date less the actual
billing for all periods as follows.
Incentive amount = [Pre op GMF + Year 1 GMF - Pre op billing -
Year 1 times billing]*50%
Incentive payable = incentive amount * 75% - pre op incentive
payable
The incentive payable will be determined within 45 days after the
completion of the year 1 period as defined in this agreement.
YEAR 2 (CONTRACT) INCENTIVE. The amount of incentive payable at the
conclusion of the contract which is the year 2 period is calculated by taking
the GMF for all periods to date less the actual billing for all periods as
follows.
Incentive amount = [Total GMF - Total billing]*50%
Incentive payable = incentive amount - total incentive paid to
date
The incentive payable will be determined within 45 days after the
completion of the Contract period as defined in this agreement.
3.14 TAXES. Compensation payable to the Engineer under any of the attachments to
this Agreement shall be in addition to taxes, or levies, (excluding Federal,
State and Local Income Taxes), which may be assessed against the Engineer by the
State or political sub-division directly on services performed or payments for
services performed by the Engineer pursuant to this Agreement. Such taxes or
levies, which the Engineer may be required to collect or pay, shall, in turn, be
added by the Engineer to invoices submitted to the Owner pursuant to this
Agreement.
3.15 INTEREST. Interest at the rate of TWELVE percent (12%) per annum shall be
paid by the Owner to the Engineer on any unpaid balance due the Engineer,
commencing thirty (45) days after the due date, provided that the delay in
payment beyond due date shall not have been caused by any conditions within the
control of the Engineer. Such compensation shall be paid ten (10) days after the
amount of the interest has been determined.
All amounts received by Engineer shall be applied first to accrued
unpaid interest and then to outstanding invoices for services and associated
expenses.
3.16 NON-ASSIGNMENT. The obligations of the Engineer under this Agreement shall
not be assigned without the approval in writing of the Owner.
3.17 ATTACHMENTS. The following listed Attachments, when checked in appropriate
boxes, are attached to and made a part of this Agreement, by this reference.
/ XX / Attachment A - Hourly Billing Rates
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<PAGE> 5
/ XX / Attachment B - Test Equipment and Computer Usage Rates
/ XX / Attachment C - PCS Engineering Services
/ XX / Form P506 - Guaranteed Maximum Fee for PCS Engineering Services
3.18 SERVICE ADDITION. If after execution of this Agreement, a service not
listed as an Attachment in Paragraph 3.17 above is added to a this Agreement, an
amendment to this Agreement is required.
3.19 INVOICE INFORMATION. The Engineer shall furnish to the Owner detailed
itemized invoices on a monthly basis.
3.20 ENGINEERING FEE. The total cost of engineering shall not exceed the
Guaranteed Maximum Fee as set out in Form P506. Any change to the Scope of Work
outlined in Attachment C will require a contract amendment.
3.21 COMPENSATION FOR CORRECTIONS. No compensation shall be due or payable to
the Engineer, pursuant to this Agreement, for any engineering services performed
by the Engineer in connection with effecting of corrections to the Design of the
Project, when such corrections are required as a direct result of negligence by
the Engineer to properly fulfill any of his obligations as set forth in this
Agreement.
3.22 COMPENSATION PAYMENT. Compensation payable shall be due and payable ten
(10) days after approval of the Owner of the services performed. The Engineer's
invoice shall include detail of the services performed. The Owner must notify
the Engineer within ten (10) days of receipt of invoice of any discrepancies
which require correction or of any additions as a precedent for payment of such
charges. If no discrepancies are noted within ten (10) days of receipt of
invoice, the invoice will be considered to be approved. On invoices where
discrepancies are noted, all charges not identified for correction will be
considered approved and shall be due ten (10) days from the date of the
notification.
3.23 INDEMNIFICATION. Engineer shall hold Owner and Owner's employee's agents,
officers, and directors, harmless from any and all claims for injuries to
persons or for damage to property happening by reason of any negligence, default
or misconduct, on the part of the Engineer, his agents, servants or employees,
during the performance of this contract. This indemnity shall include, but not
be limited to, all expenses of litigation, court costs and reasonable attorney's
fees.
Owner shall hold Engineer and Engineer's employee's agents, officers, and
directors, harmless from any and all claims for injuries to persons or for
damage to property happening by reason of any negligence, default or misconduct,
on the part of the Owner, his agents, servants or employees, during the
performance of this contract. This indemnity shall include, but not be limited
to, all expenses of litigation, court costs and reasonable attorney's fees.
3.24 LIMITATION OF LIABILITY. In no event will Engineer be liable for
consequential damages, including lost profits, loss of investment, or other
incidental damages incurred from Owner's investment based on the Scope of Work
to be performed by Engineer under this Agreement. The Engineer's total liability
for work performed shall never exceed the amount paid by the Owner for services
performed under this Agreement.
3.25 FORCE MAJEURE. If the performance of the Agreement, or of any obligation
hereunder is prevented, restricted or interfered with by reason of fires,
breakdown of plant, labor disputes, embargoes, government ordinances or
requirements, civil or military authorities, acts of God or the public enemy,
acts or omissions of carriers, or other causes beyond the reasonable control of
the party whose performance is affected, then the party affected, upon giving
prompt notice to the other party, shall be excused from such performance on a
day-for-day basis to the extent of such prevention, restriction, or interference
(and the other party shall likewise be excused from performance of its
obligations on the day-for-day basis to the extent such party's obligations
relate to the performance so prevented, restricted or interfered with); provided
that the party so affected shall use its best efforts to avoid or remove such
causes.
3.26 DISPUTES. Owner and Engineer agree to submit to non-binding arbitration as
a first step toward resolution of any disputes arising under this contract.
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<PAGE> 6
3.27 SOLICITATION TO HIRE EMPLOYEES. Owner and Engineer acknowledge and agree
that each party has invested significant time and resources in the recruitment
and training of its employees. Therefore, to the extent permitted by applicable
law, both parties agree that, during the term of this Agreement and for one (1)
year thereafter, that neither party will directly or indirectly solicit or seek
to employ the employees of the other party except as by mutual agreement of the
Owner and Engineer.
6
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed.
ALAMOSA PCS, LLC.
-----------------------------------------
Owner
BY
---------------------------------------
President
ATTEST:
- ------------------------------------
Secretary
HICKS & RAGLAND ENGINEERING CO., INC.
-----------------------------------------
Engineer
BY
---------------------------------------
Vice President
ATTEST:
- ------------------------------------
Assistant Secretary
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<PAGE> 8
ADDENDUM I TO
ENGINEERING SERVICE CONTRACT SYSTEM DESIGN
AND CONSTRUCTION INSPECTION
This Addendum contains certain changes, additional or supplemental
terms and provisions to that certain Engineering Service Contract System Design
and Construction Inspection Agreement (the "Hicks & Ragland Agreement") entered
into contemporaneously with and by the same parties as the Engineering Service
Contact System Design and Construction Inspection Agreement dated July 27, 1998,
by and between Alamosa PCS LLC, as "Owner", and Hicks & Ragland Engineering Co.,
Inc., as "Engineer". Except for the express modifications made in this Addendum,
the Engineering Service Contract System Design and Construction Inspection
Agreement continues in full force and effect.
The Hicks & Ragland Agreement is modified as follows:
1. Paragraph 3.01 shall delete the last sentence thereof and
substitute the following:
"The Engineer shall furnish the Owner a certificate evidencing
compliance with the foregoing requirements showing the Owner
and Sprint Spectrum L.P., a Delaware Limited Partnership,
WirelessCo, L.P., a Delaware Limited Partnership, and
SprintCom, Inc., a Kansas Corporation, as additional insured.
Such certificates and policies of insurance shall provide not
less than thirty (30) days written notice to the Owner and all
additional insureds of any cancellation or material reduction
in the insurance."
2. Paragraph 3.04 is changed to read as follows:
"3.04 GOVERNING LAW AND PERFORMANCE. This Agreement shall be
governed by the laws of the State of Texas and shall be deemed
to be executed in and performance called for in Lubbock,
Lubbock County, Texas."
3. Paragraph 3.06 will be changed to read as follows:
"3.06 TERMINATION BY OWNER. The Owner may terminate this
Agreement for cause. Such termination may be made only after
first giving the Engineer written notice giving the Engineer
at least ten (10) days to cure any default or breach of the
contract by Engineer. If Engineer fails to cure said default
or breach within this twenty (20) day notice, the Owner may
then give ten (10) days written notice prior to the effective
date of termination of this Agreement. Such notice shall be
deemed given if delivered or mailed to the last known address
of the Engineer. From and after the effective date specified
in such termination notice this Agreement shall be terminated.
In the event of such termination, the Owner shall immediately
pay Engineer compensation for services performed hereunder,
computed and payable as
================================================================================
ADDENDUM I TO PAGE 1 OF 7
ENGINEERING SERVICE CONTRACT SYSTEM DESIGN AND CONSTRUCTION INSPECTION
<PAGE> 9
set forth in Section 3, less any damages caused by the
termination. Cause for termination shall include, but not be
limited to, gross negligence in the performance of its duties
under this Agreement, willful or intentional breach or
habitual neglect of its duties under this Agreement,
intentional disregard of the terms and provisions of the
Agreement, misconduct in the performance of a duty called for
under the terms of this Agreement, or committing dishonest
acts."
4. Paragraph 3.07 shall be changed to read as follows:
3.07 TERMINATION BY THE ENGINEER. The Engineer may terminate
this Agreement for cause. Such termination may be made only
after first giving the Owner written notice giving the Owner
at least ten (10) days to cure any default or breach of the
contract by Owner. If Owner fails to cure said default or
breach within this twenty (20) day notice, the Engineer shall
then give ten (10) days written notice prior to the effective
date of termination of this Agreement. Such notice shall be
deemed given if delivered or mailed to the last known address
of the Owner. From and after the effective date specified in
such termination notice this Agreement shall be terminated. In
the event of such termination, the Engineer shall be entitled
to receive compensation for services performed hereunder,
computed and payable as set forth in Section 3. Cause for
termination shall include, but not be limited to, gross
negligence in the performance of its duties under this
Agreement, willful or intentional breach or habitual neglect
of its duties under this Agreement, intentional disregard of
the terms and provisions of the Agreement, misconduct in the
performance of a duty called for under the terms of this
Agreement, or committing dishonest acts."
5. Paragraph 3.10 shall have added thereto the following
sentence:
"In addition to the Texas license set forth above, David E.
Sharbutt possesses New Mexico license number 66655; Colorado
license number 15576; and Arizona license number 11828."
6. Paragraph 3.13(a)(4) shall have added thereto the following:
"In the event that the parties shall fail to mutually agree on
any new Rates, in that event, there shall be no change in the
Rates and the Time Rates and Test Equipment and Computer Usage
rates attached throughout the entire term of this Agreement.
Such failure to mutually agree on any new Rates shall not be a
breach nor a cause for a breach of this Agreement. Provided,
however, that owner shall not unreasonably withhold consent to
new Rates which are at or below Engineer's normal and usual
Rates for such services to Engineer's clients and customers."
================================================================================
ADDENDUM I TO PAGE 2 OF 7
ENGINEERING SERVICE CONTRACT SYSTEM DESIGN AND CONSTRUCTION INSPECTION
<PAGE> 10
7. Paragraph 3.13(b) shall have added thereto the following:
"Notwithstanding anything herein to the contrary or apparently
to the contrary, the foregoing incentive bonus shall only be
earned by the Engineer, if the Engineer performs its services
within the time frames called for as set forth in the
finalized version of the Business Plan for the Sprint
Affiliate or Sprint Management Agreement, which is the basis
of this Agreement. Attached hereto marked Attachment D and
incorporated herein by this reference as if copied herein in
full is a Time Line based upon that finalized version of the
Business Plan referred to above. The Engineer agrees that in
order to be entitled to any incentive bonus as set forth in
this provision, that the Engineer must complete all of those
services called for to be made and completed by the Engineer
within the time frames set forth in the Attachment D. If for
any reason there is a delay in providing the services of the
Engineer under this Agreement, which delay is within the
definition of force majeure as set forth in Paragraph 3.25, or
any matter over which the Engineer has no control, in that
event, the Engineer shall be entitled to an extension of the
Time Line items equal to the number of days delay caused by
such matters within the definition of force majeure as set
forth in Paragraph 3.25, or any matter over which the Engineer
has no control. If the Engineer does not meet the Time Line as
set forth in Attachment D, in that event, the Engineer shall
not be entitled to the incentive bonus for any or all of the
three (3) incentive bonuses set forth above, being the pre op
incentive, the year one incentive in the year two (contract)
incentive. If the Engineer does not provide its services
within the time frame for any of these incentive periods, the
Engineer may nonetheless be entitled to earn the incentive
bonus for any other incentive period, if the Engineer provides
its services within the time frames for any of the incentive
bonuses referred to above. Engineer also agrees that at the
time of the execution of this Agreement and at the time of any
change in the Time rates in this Agreement, that the Time
rates of this Agreement for Engineer's services, shall be at
or below Engineer's normal and usual rate for such services to
Engineer's clients and customers."
8. Paragraph 3.15 shall be changed by deleting in the second line
thereof the word thirty and (45) and substituting therefor the
word sixty and (60).
9. Paragraph 3.23 shall be changed by adding the following
paragraph:
"In the event that either party hereto shall provide the
indemnification set forth in the preceding paragraphs of this
Section, in that event, the party to whom indemnification is
given shall have the right to choose and approve of any
attorneys or firm of attorneys who may represent them in any
matter for which indemnification is being provided by the
other party. The costs of
================================================================================
ADDENDUM I TO PAGE 3 OF 7
ENGINEERING SERVICE CONTRACT SYSTEM DESIGN AND CONSTRUCTION INSPECTION
<PAGE> 11
such representation shall be paid by the party who is
providing the indemnification and shall be paid at the normal
and usual rates of such attorneys and in the manner to which
is normal and usual for such representation."
10. Paragraph 3.26 is hereby changed to read as follows:
"3.26 DISPUTES. Owner and Engineer agree to the following in
regard to any disputes between them arising under this
contract.
1. MEDIATION. Owner and Engineer agree to mediate any
dispute arising under this contract. In the event of
any dispute, the parties, within thirty (30) days of
a written request for mediation, shall attend, in
good faith, a mediation in order to make a good faith
reasonable effort to resolve any dispute arising
under this contract. If this good faith mediation
effort fails to resolve any dispute arising under
this contract, Owner and Engineer agree to arbitrate
any dispute arising under this contract. This
arbitration shall occur only after the mediation
process described herein.
2. ARBITRATION. Owner and Engineer agree, as
concluded by the parties to this Agreement on the
advice of their counsel, and as evidenced by the
signatures of the parties and of their respective
attorneys, it is agreed that all questions as to
rights and obligations arising under the terms of
this contract are subject to arbitration and such
arbitration shall be governed by the provisions of
the Texas General Arbitration Act (Texas Civil
Practice and Remedies Code ss. 171.001 et seq as it
may be amended from time to time).
3. DEMAND FOR ARBITRATION. If a dispute should arise
under this contract, either party may within thirty
(30) days make a demand for arbitration by filing a
demand in writing with the other.
4. APPOINTMENT OF ARBITRATORS. The parties to this
Agreement may agree on one arbitrator, but in the
event that they cannot so agree, there shall be three
arbitrators, one named in writing by each of the
parties within thirty (30) days after demand for
arbitration is made, and a third to be chosen by the
two so named. Should either party fail to timely join
in the appointment of the arbitrators, the
arbitrators shall be appointed in accordance with the
provisions of Texas Civil Practice and Remedies Code
ss. 171.041.
5. HEARING. All arbitration hearings conducted under
the terms of this Agreement, and all judicial
proceedings to enforce any of the provisions of this
Agreement, shall take place in Lubbock County, Texas.
The hearing before the arbitrators of the matter to
be
================================================================================
ADDENDUM I TO PAGE 4 OF 7
ENGINEERING SERVICE CONTRACT SYSTEM DESIGN AND CONSTRUCTION INSPECTION
<PAGE> 12
arbitrated shall be at the time and place within that
County selected by the arbitrators or if deemed by
the arbitrators to be more convenient for the parties
or more economically feasible, may be conducted in
any city of the State of Texas.
6. ARBITRATION AWARD. If there is only one
arbitrator, his or her decision shall be binding and
conclusive. The submission of a dispute to the
arbitrators and the rendering of their decision shall
be a condition precedent to any right of legal action
on the dispute. A judgment confirming the award of
the arbitrators may be rendered by any court having
jurisdiction; or the court may vacate, modify, or
correct the award in accordance with the provisions
of the Texas General Arbitration Act (Texas Civil
Practice and Remedies Code ss. 171.087 et seq as it
may be amended from time to time).
7. NEW ARBITRATORS. If the arbitrators selected,
pursuant to Paragraph c., above, shall fail to render
a decision within thirty (30) days of the date of
hearing, they shall be discharged, and three new
arbitrators shall be appointed and shall proceed in
the same manner, and the process shall be repeated
until a decision is finally reached by two of the
three arbitrators selected.
8. COSTS OF ARBITRATION. The costs and expenses of
arbitration, including the fees of the arbitrators,
shall be borne by the losing party or in such
proportions as the arbitrators shall determine.
9. CONDUCT OF ARBITRATION. Any arbitration brought
under the terms of this Agreement shall be conducted
in the following manner:
a. Time Limitations. The parties agree that
the following time limitations shall govern
the arbitration proceedings conducted under
the terms of this Agreement:
(i) Any demand for arbitration must
be filed within thirty (30) days of
the date on which the dispute arises
or the alleged breach occurs.
(ii) Each party must select an
arbitrator within thirty (30) days
of receipt of notice that an
arbitration proceeding has
commenced. In the event that no such
selection is made, the arbitrator
selected by the other party may
conduct the arbitration proceeding
without selecting any other
arbitrator.
================================================================================
ADDENDUM I TO PAGE 5 OF 7
ENGINEERING SERVICE CONTRACT SYSTEM DESIGN AND CONSTRUCTION INSPECTION
<PAGE> 13
(iii) The hearing must be held
within thirty (30) days of the date
on which the third arbitrator is
selected.
(iv) Hearing briefs must be selected
within ten (10)
days of the hearing date.
(v) The arbitration award must be
made within thirty (30) days of the
receipt of hearing briefs.
b. Discovery in Arbitration Proceedings. The
parties agree that discovery may be
conducted in the course of the arbitration
proceeding in accordance with the following
provisions:
(i) Each party may notice no more
than three (3) depositions in total,
including both witnesses adherent to
the adverse party and third-party
witnesses.
(ii) Each party may serve no more
than twenty-five (25) requests for
admission on the other party. No
requests may be served within ten
(10) days of the date of hearing,
unless the parties otherwise
stipulate. All requests for
admission shall be responded to
within ten (10) days of service of
the requests, unless the parties
otherwise stipulate.
(iii) Each party may serve no more
than fifty (50) interrogatories on
the other party. No interrogatory
shall contain subparts, or concern
more than one topic or subject of
inquiry. Interrogatories may not be
phrased so as to circumvent the
effect of this clause. No
interrogatories may be served within
ten (10) days of the date of
hearing, unless the parties
otherwise stipulate. All
interrogatories shall be responded
to within ten (10) days of service
of the interrogatories, unless the
parties otherwise stipulate.
(iv) Each party may serve no more
than ten (10) requests for
production of documents on the other
party. No request for production of
documents shall contain subparts, or
seek more than one type of document.
Requests for production of documents
may not be phrased so as to
circumvent the effect of this
clause. Unless the parties otherwise
stipulate, requests for production
of documents may not be served
within ten (10) day of the date of
hearing, and all requests for
================================================================================
ADDENDUM I TO PAGE 6 OF 7
ENGINEERING SERVICE CONTRACT SYSTEM DESIGN AND CONSTRUCTION INSPECTION
<PAGE> 14
production of documents shall be
responded to within ten (10) days of
service of the requests.
(v) If any party contends that the
other party has served discovery
requests in a manner not permitted
by this Section, or that the other
party's response to a discovery
request is unsatisfactory, the party
may request the arbitrators to
resolve such discovery disputes. The
arbitrators shall prescribe the
procedure by which such disputes are
resolved.
The foregoing Addendum is hereby agreed to this 27th day of July, 1998.
OWNER
ALAMOSA PCS LLC
By /s/ David Sharbutt
----------------------------------
DAVID E. SHARBUTT, Chairman
ENGINEER
HICKS & RAGLAND ENGINEERING CO., INC.
By /s/ W. D. Stull
---------------------------
W. Don Stull (Name)
---------------------------
Vice President (Title)
---------------------------
/s/ Paula Sexton
- ----------------------------------
Assistant Secretary
Approved as to the Mediation and Arbitration provisions in paragraph 10
above.
Crenshaw, Dupree & Milam, L.L.P.
By: /s/ Jack McCutchin, Jr.
----------------------------------
Jack McCutchin, Jr.
Attorneys for Alamosa PCS LLC
/s/ Paula Sexton
----------------------------------
Paula Sexton
Attorney for Hicks & Ragland
Engineering Co., Inc.
================================================================================
ADDENDUM I TO PAGE 7 OF 7
ENGINEERING SERVICE CONTRACT SYSTEM DESIGN AND CONSTRUCTION INSPECTION
<PAGE> 15
AMENDMENT TO ENGINEERING SERVICE CONTRACT
SYSTEM DESIGN AND CONSTRUCTION INSPECTION
This Amendment, made this 1st day of September, 1999, contains certain
changes, additional or supplemental terms and provisions to the Engineering
Service Contract System Design and Construction Inspection dated July 27, 1998
and Addendum I thereto of same date ("Engineering Service Contract") by and
between ALAMOSA PCS LLC and Hicks & Ragland Engineering Co., Inc. Except for the
express modifications made in this Amendment, the Engineering Service Contract
as previously amended by Addendum I thereto continues in full force and effect.
In consideration of the mutual undertakings herein contained, the parties agree
to amend the Engineering Service Contract as follows:
1. Pursuant to Paragraph 3.13.b of the Engineering Service Contract, the
Guaranteed Maximum Fee is automatically amended to add additional sites.
The Guaranteed Maximum Fee is amended upward on a per site fee. The per
site fee is the amount of the Guaranteed Maximum Fee of the original
scope divided by the number of sites in the original scope. The per site
fee is $24,442 calculated using the original Guaranteed Maximum Fee of
$5,304,000 and 217 sites as noted in Paragraph 2.01 of the Engineering
Service Contract. The addition of sites is as follows:
<TABLE>
<CAPTION>
MARKET ORIGINAL SITES CURRENT SITES CHANGE IN SITES
<S> <C> <C> <C>
Phase I
Albuquerque/Santa Fe 47 67 20
El Paso/Las Cruces 43 38 (5)
Laredo 13 20 7
Phase 2A
Lubbock 21 26 5
Amarillo 14 21 7
Midland/Odessa 18 15 (3)
Phase 2B
Abilene/San Angelo 25 26 1
Prescott/Flagstaff 6 12 6
Pueblo/Grand Junction 14 14 --
Phase 3A
Eagle Pass/Del Rio 3 6 3
Farmington 3 3 --
Roswell/Carlsbad 6 6 --
Gallup 4 4 --
Phase 3B
I-17 -- 13 13
I-25 -- 17 17
---------------------------------------------------------------------------------------
TOTALS 217 288 71
</TABLE>
Engineering Service Contract Amendment 1
September 1, 1999
<PAGE> 16
Therefore, the increase in the Guaranteed Maximum Fee is $1,735,382 (71
sites at $24,442 per site). The amended Guaranteed Maximum Fee is
$7,039,382.
2. The Pre-Op period is extended from December 1998 through August 1999.
The Year 1 services will be from September 1999 through August 2000. The
Year 2 services will be from September 2000 through August 2001.
The base station deployment schedule is changed as follows:
PRE-OP:
<TABLE>
<S> <C> <C> <C>
Albuquerque/Santa Fe 67 sites 80% 54 net sites
El Paso/Las Cruces 38 sites 100% 38 net sites
Laredo 20 sites 95% 19 net sites
Lubbock 26 sites 95% 24 net sites
Midland/Odessa 15 sites 95% 14 net sites
Amarillo 21 sites 90% 19 net sites
------------------------------------------------------------
TOTAL NET PRE-OP SITES 168
YEAR 1:
Albuquerque/Santa Fe 67 sites 20% 13 net sites
Laredo 20 sites 5% 1 net sites
Lubbock 26 sites 5% 2 net sites
Midland/Odessa 15 sites 5% 1 net sites
Amarillo 21 sites 10% 2 net sites
Abilene/San Angelo 26 sites 100% 26 net sites
Prescott/Flagstaff 12 sites 100% 12 net sites
Pueblo/Grand Junction 14 sites 100% 14 net sites
Eagle Pass/Del Rio 6 sites 100% 6 net sites
Farmington 3 sites 100% 3 net sites
Roswell/Carlsbad 6 sites 100% 6 net sites
Gallup 4 sites 100% 4 net sites
------------------------------------------------------------
TOTAL NET YEAR 1 SITES 90
YEAR 2:
I-17 13 sites 100% 13 net sites
I-25 17 sites 100% 17 net sites
------------------------------------------------------------
TOTAL NET YEAR 2 SITES 30
</TABLE>
Attached are revised estimated fee schedules (H&R Form P506C) that
reflect the amended number of sites and deployment schedule.
3. Pursuant to Paragraph 3.13.a.4, attached is a revised Attachment A
reflecting the new time rates as of July 1, 1999 for the designated
classifications.
Engineering Service Contract Amendment 2
September 1, 1999
<PAGE> 17
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed.
ALAMOSA PCS, LLC.
--------------------------------------
Owner
ATTEST:
/s/ PAULA SEXTON BY /s/ DAVID SHARBUTT
- -------------------------------- --------------------------------------
Secretary Chairman
HICKS & RAGLAND ENGINEERING CO., INC.
--------------------------------------
Engineer
ATTEST:
/s/ EILEEN G. HILDEBRAND BY /s/ RICK OVERMAN
- -------------------------------- --------------------------------------
Assistant Secretary Chief Operating Officer
Engineering Service Contract Amendment 3
September 1, 1999
<PAGE> 1
EXHIBIT 10.15
MASTER SITE DEVELOPMENT AND LEASE AGREEMENT
THIS AGREEMENT, made this day of August, 1998 (the "Effective Date"),
between ALAMOSA PCS, LLC, a Texas limited liability company, with its principal
offices located at 6688 N. Central Expressway, Suite 850, Dallas, Texas,
("Customer") and Speciality Capital Services, Inc., a Nevada corporation with
its principal offices located as 12001 Hwy. 14 North, Cedar Crest, New Mexico,
87008 ("Specialty").
W I T N E S S E T H:
WHEREAS, Specialty provides site acquisition, zoning, construction,
site development, site maintenance and site leasing services for wireless
communications facilities located in the United States of America;
WHEREAS, Customer desires to lease space on certain wireless
communications towers or platforms to be constructed and owned by Specialty
("Leased Sites"); and
WHEREAS, Specialty and Customer desire to set forth terms and
conditions upon which Specialty will construct and Customer will lease from
Speciality Leased Sites located in the areas identified in Exhibit "A" hereto.
NOW THEREFORE, in consideration of the premises and the mutual
covenants and obligations hereinafter set forth, the parties agree as follows:
1. Leased Sites.
1.1 Leased Site Schedules. This Agreement and each Leased Site Schedule
in substantially the form attached hereto as Exhibit "B" ("Leased Site
Schedule") executed in connection with this Agreement contain the basic terms
and conditions upon which each Leased Site will be constructed and leased by
Specialty to Customer. The location of each Leased Site is individually referred
to in this Agreement as a "Site." Each Leased Site Schedule will describe the
specific location, description and the size of the Site to which it pertains and
contain a precise description of the wireless communications platform or tower
to be constructed by Speciality on the Site. Customer will indicate its interest
in obtaining a Leased Site Schedule for a particular Site by completing and
forwarding to Specialty either search rings for a particular area or a written
notice identifying particular Sites for implementation pursuant to this
Agreement. Upon receipt of search rings, Specialty will, at its sole expense,
promptly inventory and review all existing elevated structures within each
search ring that are susceptible of locating a Site, including existing roof top
sites, water tank sites, towers and other elevated structures. The purpose of
this inventory and review process is to identify sites on which Customer's
wireless transmission facilities can be located or co-located with other
carriers thereby minimizing the need for construction of new towers. Upon
completion of this inventory and review, Speciality and Customer will analyze
the results and review Customer's search rings in order to (i) identify the
specific roof top sites, water tank sites, existing towers and other existing
elevated structures to be utilized by Customer and (ii) determine the number and
MASTER SITE DEVELOPMENT AND LEASE AGREEMENT - PAGE 1
<PAGE> 2
location of new towers to be constructed. Customer and Specialty understand and
agree that so long as Customer's time-to-market, and RF engineering criteria are
satisfied, Customer's wireless transmission facilities will be co-located on
existing structures within the applicable search rings whenever possible. After
Customer and Specialty determine that a new tower will be constructed within a
given search ring or location, Specialty will locate and identify to Customer a
proposed Site for construction of the new tower. Upon identification of each
proposed Site for construction of a new tower, Customer will have three (3)
business days in which to notify Specialty whether the proposed Site is
acceptable to Customer. If Customer deems the Site acceptable or if Customer
fails to notify Specialty that it deems the Site unacceptable within three (3)
business days after the proposed Site is identified to Customer, then Customer
will forward an executed Leased Site Schedule to Specialty whereupon, Specialty
will, at its sole expense, promptly complete the site acquisition, lease
procurement and zoning (collectively, "Site Acquisition and Zoning Services") of
the Site and construct the Leased Site in accordance with the time frames and
specifications set forth in Exhibit 2 to the Lease Site Schedule. Upon
completion of the Lease Site, Specialty will lease the Leased Site to Customer
pursuant to this Agreement and the applicable Lease Site Schedule. To the extent
requested by Customer, Specialty will use its best efforts to utilize existing
bulk siting agreements or other favorable siting arrangements available to
Customer, coordinate all zoning and permitting related activities with Customer
and allow Customer to participate in such zoning and permitting processes to
ensure consistency with Customer zoning and permitting practices and procedures.
Specialty intends to utilize Specialty personnel and existing subcontractor
relationships to perform Site Acquisition and Zoning Services. However, if
requested by Customer, Specialty will agree to utilize or work with individuals
and/or subcontractors designated by Customer (assuming such individuals and/or
subcontractors are willing to work with Specialty and meet Specialty's pricing
objectives to Customer). If Customer identifies one or more specific Sites to
Specialty for which Site Acquisition and Zoning Services already have been
completed, then Customer will forward an executed Leased Site Schedule to
Specialty describing the Site, whereupon, Specialty will, at its sole expense,
promptly enter into or accept the assignment of the underlying site lease or
sublease, construct the Leased Site in accordance with the time frames and
specifications set forth in Exhibit 2 to the Leased Site Schedule, and, upon
completion of the Leased Site, lease the Leased Site to Customer as described in
the Leased Site Schedule, and, upon completion of the Leased Site, lease the
Leased Site to Customer as described in the Leased Site Schedule. Each Leased
Site Schedule will become a part of this Agreement only upon its execution and
delivery by both Customer and Specialty. The parties acknowledge and agree that
the specifications for each Leased Site will be sufficient to facilitate
co-location of additional tenants on the Leased Site following completion.
1.2 Improvement of Existing Sites. Where an existing communications
tower or platform (including existing roof top sites, water tank sites, towers
and other elevated structures, owned or otherwise controlled by a party other
than Specialty) in any of the areas identified in Exhibit "A" is selected by
Customer for the co-location of a wireless transmission facility, Customer
agrees to engage Specialty to perform any necessary Site Acquisition and Zoning
Services and to construct any necessary improvements to implement the planned
facility, provided Specialty's fees for performing such services are competitive
with those available from contractors ("qualified competing contractors") of
similar expertise, quality and reputation to Specialty. Specialty will provide
such services at competitive prices that are not higher than the average prices
available in the given market for like services from qualified competing
contractors, provided, however, that if Customer believes
MASTER SITE DEVELOPMENT AND LEASE AGREEMENT - PAGE 2
<PAGE> 3
that the pricing offered by Specialty is not competitive, then Customer will
have the right to obtain bids from qualified competing contractors for the same
services (including, without limitation, construction management services) as
those proposed to be provided by Specialty. If Customer obtains a pricing bid
for the required services from a qualified competing contractor that is other
than Specialty's proposed pricing, then Customer shall notify Specialty and
Specialty shall have the right of first refusal, exercisable by notifying
Customer within seven (7) days following receipt of such notice from Customer,
to meet the bid upon the same terms and conditions as set forth in the bid. If
Specialty declines to meet the bid, then Customer will have the right to hire
the qualified competing contractor to perform the work with respect to that site
(subject to the qualified competing contractor's provision of certificates of
insurance consistent with the provisions of this Agreement).
1.3 Use of Additional Sites. If during the initial term of this
Agreement Customer desires to install additional wireless transmission
facilities in any of the areas identified in Exhibit "A," then the following
provisions shall apply:
1.3.1 If (i) Specialty owns, controls or manages an
existing roof top site, water tank site, tower or
other elevated structure within any of the areas
identified in Exhibit "A" that meets Customer's
predetermined coverage requirements (for purposes of
this Agreement, Customer's predetermined coverage
requirement shall include but not be limited to
location, height above ground level, antenna
configuration and radiation center) for such
additional wireless transmission facilities, (ii) the
required antenna space can be made available to
Customer within a mutually agreed upon period of time
that meets Customer's implementation requirements for
the additional wireless transmission facilities,
(iii) the placement of Customer's antennas, coaxial
cabling and other equipment on the subject structure
and the location of Customer's base station equipment
at the subject location will not require material
structural modification of the subject structure or
interfere with the contractual or other rights or
existing tenants at the location, then Customer may
request a Leased Site Schedule for the subject
structure and lease the required antenna space on the
subject structure pursuant to this Agreement for a
monthly lease price that does not exceed the
applicable monthly lease price set forth on Exhibit
"C." If Customer requests a Leased Site Schedule
pursuant to this Section 1.3.1, then Specialty shall
have ten (10) days from receiving notice of
Customer's request for a Leased Site Schedule to
notify Customer whether the subject structure is
available for Customer's purposes. In the event
Specialty fails to respond within said ten (10) days,
the subject structure will be deemed unavailable. In
connection with Customer's assessment of any
additional Sites, Specialty shall provide, at no
charge to Customer (i) for a period of up to
twenty-one (21) days, access to the subject structure
and necessary documentation for the purpose of
determining the suitability of the subject structure
(Customer shall supply, at Customer's expense, all
equipment and materials needed to conduct such tests)
and (ii) a copy of the Prime Lease (as hereinafter
defined), if any, applicable to the Site and such
other documentation applicable to the Site as
Customer shall reasonably
MASTER SITE DEVELOPMENT AND LEASE AGREEMENT - PAGE 3
<PAGE> 4
request (subject to any restrictions regarding
confidentiality or disclosure as may be contained in
or otherwise applicable to such documents). Specialty
shall supply at Specialty's expense, the labor to
install one (1) antenna and one (1) coaxial cable to
conduct a suitability test at each Site. In order to
facilitate the parties compliance with the provisions
of this Section 1.3, Specialty agrees to provide
Customer with a list of all roof top sites, water
tank sites, towers or other elevated structures
within any of the areas identified in Exhibit "A"
that are owned, controlled or managed by Specialty
and to update this list from time to time as
necessary during the initial term of this Agreement.
1.3.2 If (i) Specialty does not own, control or manage an
existing roof top site, water tank site, tower or
other elevated structure within any of the areas
identified in Exhibit "A" that meets Customer's
predetermined coverage requirements for such
additional wireless transmission facilities, (ii) no
other existing roof top site, water tank site, tower
or other elevated structure within any of the areas
identified in Exhibit "A" meets Customer's
predetermined coverage requirements for such
additional wireless transmission facilities, (iii)
Customer determines to obtain a new tower to locate
such additional wireless transmission facilities, and
(iv) Specialty is willing to construct the new tower
within a mutually agreed upon time period that meets
Customer's construction schedule and lease the
required antenna space to Customer for a monthly
lease price that does not exceed the applicable
monthly lease price set forth on Exhibit "C," then
Customer shall request a Leased Site Schedule for the
new tower and lease the required antenna space on the
new tower pursuant to this Agreement.
2. Customer's Use of the Leased Site
Customer may use the Leased Site only for the installation, operation
and maintenance of unmanned radio communications equipment consistent with the
terms of this Agreement and the applicable Leased Site Schedule. Customer must,
at Customer's sole expense, comply with all laws, orders, ordinances,
regulations and directives of applicable federal, state, county and municipal
authorities or regulatory agencies including, without limitation, the Federal
Communications Commission ("FCC"), that are applicable to the installation or
operation of Customer's equipment at the Site. Customer must operate its
equipment in a manner that does not interfere with the operation of the
communications facility or any prior existing users of the communications
facility. Specialty agrees to cooperate with Customer, at Customer's expense, in
executing such documents or applications required in order for Customer to
obtain such licenses, permits or other governmental approval needed for
Customer's permitted use of the Site.
Notwithstanding the foregoing, Specialty shall obtain, at Specialty's
expense, any municipal permits necessary for the initial installation of the
Leased Site. Customer will maintain its equipment at the Site in a reasonable
condition and in a manner that will not interfere with other uses of the Site.
MASTER SITE DEVELOPMENT AND LEASE AGREEMENT - PAGE 4
<PAGE> 5
3. Term.
3.1 Term of Agreement. The initial term of this Agreement shall be five
(5) years commencing on the Effective Date. The term of this Agreement will be
automatically renewed for three (3) additional terms of five (5) years each
unless Customer provides Specialty with notice of intention not to renew at last
six (6) months prior to the expiration of the then current term.
3.2 Term of Leased Site Schedule. Each Site leased by Specialty to
Customer pursuant to a Leased Site Schedule shall be leased for an initial term
of five (5) years with the commencement date ("Commencement Date") of the term
of each particular Leased Site Schedule being as of the first (1st) day of the
earlier of (i) the month following the completion of installation of Customer's
antennas and coaxial at the Site or (ii) if the Leased Site is a newly
constructed site constructed for Customer and the Leased Site is completed
within the time frame for completion set forth in the applicable Leased Site
Schedule, the second month following completion f the Leased Site. The term of
each particular Leased Site Schedule shall automatically be extended for up to
three (3) additional five (5) year terms unless Customer terminates it at the
end of the then current term by giving Specialty written notice of the intent to
terminate at least six (6) months prior to the end of the then current term;
provided, however, that the term of all Leased Site Schedules shall immediately
terminate upon the termination or expiration of this Agreement. If Specialty's
rights in any Site are derived from a prime lease or other agreement with a
third party (a "Prime Lease"), a copy of such Prime Lease will be attached as
Exhibit 4 to the applicable Leased Site Schedule. Notwithstanding the foregoing,
if Specialty's rights in any Site are derived from a Prime Lease and such Prime
Lease has a shorter term or extension terms than those provided for under this
paragraph, then Customer's right to extend the Leased Site Schedule applicable
to such Site shall only be for as long as Specialty retains its interest in the
same applicable property pursuant to such Prime Lease.
4. Rent
4.1 Rental Payments. The annual rental shall be paid in equal
installments beginning on the Commencement Date and continuing on the first day
of each and every month thereafter. Payments shall be made to Speciality, or
such other person, firm or place as Specialty may, from time to time, designate
in writing at least thirty (30) days in advance of any rental payment date. The
amount of the annual rental shall be that amount designated on the applicable
Leased Site Schedule which amount shall be adjusted on each Adjustment Date
according to the formula set forth in Section 4.2. The rental amounts designated
on each Leased Site Schedule shall be calculated according to the schedule set
forth in Exhibit "C."
4.2 Rental Payment Adjustment. The annual rental payment identified in
this Agreement shall be adjusted (collectively "Adjusted Fee") on the first
anniversary of the Effective Date and every annual anniversary thereafter
("Adjustment Date") by the following formula:
Adjusted Fee = Base Fee + ((IR-IL)YIL) + Base Fee
MASTER SITE DEVELOPMENT AND LEASE AGREEMENT - PAGE 5
<PAGE> 6
"Base Fee" shall mean the applicable annual rental or other fees
identified in this Agreement which, for the purposes of the formula identified
above, shall remain the same as set forth in this Agreement as of the Effective
date.
IR is the Consumer Price Index for the month which is three (3) months
immediately preceding the month in which the Adjustment Date occurs.
IL is the Consumer Price Index for the month which is three (3) months
immediately preceding the month of the Effective Date.
"Consumer Price Index" shall mean the Consumer Price Index published by
the Bureau of Labor Statistics of the United States Department of Labor for
Urban Wage Earners and Clerical Workers for All Items (CPI-W) - U.S. City
average or shall mean the successor thereto. In the event the Consumer Price
Index is converted to a different standard reference base or otherwise revised,
the determination of Adjusted Fee for the Adjustment Date shall be made with the
use of such conversion factor, formula or table for converting the Consumer
Price Index as may be published by the Bureau of Labor Statistics, or if the
Bureau should fail to publish the same, then with the use of such conversion
factor, formula or table for converting the Consumer Price Index as may be
published by Prentice Hall, Inc., or any other nationally recognized publisher
or similar statistical information. If the Consumer Price Index ceases to be
published and there is no successor thereto, such other index as Customer and
Specialty may agree upon shall be substituted for the Consumer Price Index, and
if they are unable to agree, then such matter shall be submitted to arbitration
in accordance with the terms of Section 18.
4.3 Additional Rent. Customer shall pay as additional rent any taxes or
other assessments, including but limited to real estate or personal property
taxes, that are (i) levied against the Leased Sites or the improvements thereon
and (ii) attributable to the improvements, or portions thereof, that are
constructed or installed by or on behalf of Customer. Specialty will provide
reasonable documentation of real estate or personal property taxes attributable
to the improvements, or portions thereof, that are constructed or installed by
or on behalf of Customer.
4.4 Interest. Any fee or other payment not paid within ten (10)
business days of when due shall bear interest until paid at the lesser of:
4.4.1 The rate of ten percent (10%) per annum; or
4.4.2 The maximum rate allowed under applicable law.
5. Relationship of the Parties. Nothing contained in this Agreement shall be
deemed to create any partnership or joint venture relationship between the
parties.
6. Access
Customer shall have free access during the term of a Leased Site
Schedule to the applicable Site twenty-four (24) hours per day, seven (7) days
per week. Customer acknowledges that with
MASTER SITE DEVELOPMENT AND LEASE AGREEMENT - PAGE 6
<PAGE> 7
respect to Sites where Specialty's rights are derived from a Prime Lease,
notwithstanding this Section 6, Customer's access rights to the Site are subject
to any restrictions on access to the Site as are set forth in such Prime Lease.
In the event Customer or its agents or contractors perform any work at a Site,
Specialty will be guaranteed by Customer that Specialty will not experience any
down time in operation or any other operations at the communications facility
and Customer will indemnify and reimburse Specialty for any and all claims of
liability or losses by any third party resulting from any such down time in
operation and any actual damages or losses sustained by Specialty resulting from
any such down time in operation directly attributable to Customer's or its
agent's or contractor's work at a Site. Specialty shall furnish Customer with
necessary devices for the purpose of ingress and egress to the said Site and
communications facility. It is agreed, however, that only authorized engineers,
employees or properly authorized contractors of Customer or persons under their
direct supervision will be permitted to enter said Site. Customer will retain
ownership of all buildings, equipment and appurtenances Customer installs at any
Site; provided; however, that the removal of said equipment will not adversely
affect the integrity of any structure.
7. Improvements and Construction of Leased Sites
7.1 Approved Communications Facility. Customer has the right, at
Customer's sole cost and expense, to erect, maintain, replace and operate at the
Site, only that communications facility specified on the Leased Site Schedule.
It is understood that Customer shall have the right at each and every Site,
subject to compliance with the terms of this Agreement and particularly those
set forth in this Section, to replace the equipment described in a Leased Site
schedule with similar and comparable equipment so long as: (a) there is no
greater wind loading, structural loading, size, weight or height; and (b) the
equipment operates at the frequency or range of frequencies designated in the
applicable Leased Site Schedule, or at the frequency or range of frequencies
identified in Customer's current licenses or successor licenses thereto, for the
transmission of wireless communications signals of that given Site. It is
understood that any such replacement equipment must be frequency compatible with
then existing uses of the Site and that any change in frequency shall not
adversely impact the business of Specialty, as determined within Specialty's
sole discretion. Prior to commencing any Installation or material alteration of
a communications facility and prior to accessing the communications tower
structure for any reason whatsoever, Customer must obtain Specialty's approval
of:
7.1.1 Customer's plans for Installation or alteration work;
and
7.1.2 The identity of the contractor performing the
installation or material alteration or in any way
accessing the tower structure itself.
Specialty's approval must not be unreasonably withheld or delayed. All of
Customer's installation and alteration work must be performed:
7.1.3 At Customer's sole cost and expense;
MASTER SITE DEVELOPMENT AND LEASE AGREEMENT - PAGE 7
<PAGE> 8
7.1.4 In a good and workmanlike manner, using the care and
skill ordinarily used by members of the profession
practicing under similar conditions at the same time
and in the same geographic area;
7.1.5 In accordance with applicable building codes; and
7.1.6 Must not adversely affect the structural integrity or
maintenance of the Leased Site or any structure on or
use of the Leased Site.
Said erection, maintenance, replacement and operation will in no way
damage or interface with any existing tenant's use of or existing operations at
the communications facility. If damage or interference is caused by Customer and
Customer fails to make such repairs immediately after notice by Specialty,
Specialty may make the repairs and the reasonable costs thereof shall be payable
to Specialty by Customer on demand. If Customer does not make payment to
Specialty within thirty (30) days after such demand, Specialty shall have the
right to immediately terminate the applicable Leased Site Schedule. No materials
may be used in the installation of the antennas or transmission lines that will
cause corrosion or rust or deterioration of the tower structure or its
appurtenances.
After completion of the initial construction by Specialty and
acceptance of a Leased Site by Customer, any structural alterations to a
structure on the Leased Site must be designed, at Customer's sole cost and
expense, by a structural engineer licensed in the jurisdiction where the Site is
located. Notwithstanding the foregoing, for any structural alterations on a
tower, such structural engineer must either be approved by the lower
manufacturer or by Specialty. For structural alterations requiring a municipal
permit, the structural engineer must be satisfactory to the local municipality.
Following the initial installation of Customer's equipment at a Site,
any Installation, material alteration or removal of such equipment by Customer
and any activities whatsoever requiring access to the tower structure at the
Site, must be performed by Specialty or by a contractor reasonably acceptable to
Specialty (which acceptance may specifically include a requirement that all such
contractors provide to Specialty, at least three (3) business days prior to
performing any such installation, material alteration or removal, certificates
of insurance consistent with the provisions of this Agreement). Specialty's
consent thereto shall not be unreasonably withheld or delayed. In the event that
Specialty does not perform such installation, material alteration or removal,
Customer must engage Specialty's project manager to monitor, inspect and approve
all activities performed by or on behalf of Customer at the initial rate of
$70.00 per hour not to exceed a total of $2,000.00 per Site for any given
installation, material alteration or removal project. The hourly rate and the
maximum charge for the project manager shall be adjusted on each Adjustment Date
pursuant to the formula set forth in Section 4.2. Notwithstanding anything to
the contrary contained in this Agreement, Specialty, with respect to any work to
be performed at a Site, shall have the right of first refusal to meet any bona
fide bid selected by Customer for the performance of such work upon the same
terms and conditions as set forth in the bid. Specialty shall have seven (7)
business days after the receipt of such bid to notify Customer whether Specialty
intends to meet such bid and perform the work in accordance with the bid. In the
event Specialty does not notify Customer within such time, Customer may proceed
to contract with said bidder subject to Specialty's approval as set forth above.
MASTER SITE DEVELOPMENT AND LEASE AGREEMENT - PAGE 8
<PAGE> 9
7.2 Liens. Customer must keep the Site free from any liens arising from
any work performed, materials furnished or obligations incurred by or at the
request of Customer. If any lien is filed against the Site as a result of the
acts or omissions of Customer's employees, agent or contractors, Customer must
discharge the lien or bond the lien off in a manner reasonably satisfactory to
Specialty within thirty (30) days after Customer receives written notice from
any party that the lien has been filed. If Customer fails to discharge or bond
any lien within such period, then, in addition to any other right or remedy of
Specialty, Specialty may, at Specialty's election, discharge the lien by either
paying the amount claimed to be due or obtaining the discharge by deposit with a
court or a title company or by bonding. Customer must pay on demand any amount
paid by Specialty for the discharge or satisfaction of any lien, and all
reasonable attorneys' fees and other legal expenses of Specialty incurred in
defending any such action or in obtaining the discharge of such lien, together
with all necessary disbursements in connection therewith.
7.3 Waiver of Specialty's Lien
7.3.1 Specialty waives any lien rights it may have
concerning Customer improvements which are deemed
Customer's personal property and not fixtures and
Customer has the right to remove the same at any time
without Specialty's consent.
7.3.2 Specialty acknowledges that Customer has or may enter
into a financing arrangement including promissory
notes, security agreements and other similar
documents (collectively, "Financing Agreement") for
the financing of the Customer improvements at the
Sites (the "Collateral") with a third party or
parties (the "Financing Entity"). In connection
therewith, Specialty (i) consents to the installation
of the Collateral; (ii) disclaims any interest in the
Collateral, as fixtures or otherwise; and (iii)
agrees that the Collateral shall be exempt from
execution, foreclosure, sale, levy, attachment, or
distress for any Rent due or to become due and that
such Collateral may be removed at any time without
recourse to legal proceedings. Customer agrees to
notify Specialty in writing that Customer has entered
into the Financing Agreement and of the identity of
the Financing Entity. Any removal of property made
pursuant to this Section 7.3 shall be made consistent
with the provisions of this Agreement.
7.4 Possession. Taking possession of the Site by Customer is conclusive
evidence that Customer:
7.4.1 Accepts the Site as suitable for the purposes for
which they are leased;
7.4.2 Accepts the Site and any structure on the Site and
every part and appurtenance thereof AS IS, with all
faults; and
MASTER SITE DEVELOPMENT AND LEASE AGREEMENT - PAGE 9
<PAGE> 10
7.4.3 Waives any claims against Specialty in respect of
defects in the Site or the Leased Sites and its
appurtenances, their habitability or suitability for
any permitted purposes, except:
7.4.3.1 If otherwise expressly provided
hereunder;
7.4.3.2 If resulting from the negligence or
willful misconduct of Specialty,
Specialty's employees, agents or
contractors;
7.4.3.3 If resulting from any known claim by a
third party not identified by Specialty
in Specialty's representations under
this Agreement; or
7.4.3.4 If Specialty had actual knowledge of
such defects and did not disclose such
defects to Customer.
For the purposes of this provision, Customer is deemed to have taken
possession on the Commencement Date of the respective Leased Site Schedule.
8. Interference
Specialty and Customer understand that Customer and other current or
future users of Leased Sites will utilize the Leased Sites for the transmission
of wireless communication signals. Customer agrees to have installed at each
Leased Site transmitting and receiving equipment of a type and frequency that
will not cause measurable interference as defined by the FCC ("measurable
interference") to other users of such Leased Site. In addition, Customer agrees
that it will not change the manner in which it uses its equipment after the date
such equipment is installed at a Leased Site to a manner that causes measurable
interference to other current users of such Leased Site. Specialty agrees that
it will prohibit any future tenants of a Leased Site who take possession after
the date of execution by Customer of a Leased Site Schedule with respect to such
Leased Site from installing transmitting and receiving equipment of a type and
frequency that will cause measurable interference to Customer. In addition,
Specialty agrees that it will prohibit any tenant that took possession of space
on the Leased Site prior to execution by Customer of a Lease Site Schedule with
respect to such Leased Site from changing the manner in uses its equipment at
the Leased Site after Customer's execution of such Leased Site Schedule to a
manner that causes measurable interference to Customer. In the event that
Customer's equipment causes measurable interference to other users of a Leased
Site, Customer will take all steps necessary to correct and eliminate such
interference to other users of a Leased Site, Customer will take all steps
necessary to correct and eliminate such interference within forty-eight (48)
hours of Customer's receipt of notice of such interference from Specialty;
provided, however, that if (i) upon receipt of such notice, Customer
continuously and diligently endeavors to correct and eliminate such
interference, and (ii) notwithstanding Customer's efforts to correct and
eliminate such interference, such interference cannot be corrected and
eliminated within said forty-eight (48) hour period, then Customer shall notify
Specialty of this fact, whereupon the period during which Customer shall have
the right to cure such interference pursuant to this Section 8 shall be extended
automatically for an additional period not to exceed thirty (30) days following
the
MASTER SITE DEVELOPMENT AND LEASE AGREEMENT - PAGE 10
<PAGE> 11
expiration of such initial forty-eight (48) hour period as long as Customer
continuously and diligently endeavors to correct and eliminate said
interference, unless prior to the expiration of such additional thirty (30) day
period, Specialty notifies Customer that such interference materially and
adversely affects another user's use of the Leased Site, in which case
Customer's right to extend the period during which it has the right to cure such
interference pursuant to this Section 8 shall terminate forty-eight (48) hours
after Customer's receipt of such notice, unless, prior to such time, Customer
ceases operation from the Leased Site until said interference is eliminated. In
the event that any equipment of any future tenant to the extent that the
tenant's equipment is malfunctioning or is difference or being operated
differently from when Customer installed its equipment, or the communications
facility causes measurable interference, Specialty will require that said tenant
takes all steps necessary to correct and eliminate the interference within
seventy-two (72) hours of Specialty's receipt of notice from Customer; provided,
however, that if (i) upon receipt of such notice, Specialty and/or the other
user whose equipment is causing such interference (the "other user")
continuously and diligently endeavors to correct and eliminate such
interference, and (ii) notwithstanding Specialty's and/or such other user's
efforts to correct and eliminate such interference, such interference cannot be
correct and eliminated within said forty-eight (48) hour period, then Specialty
shall promptly notify Customer of this fact, whereupon the period during which
Specialty shall have the right to cure such interference pursuant to this
Section 8 shall be extended automatically for an additional period not to exceed
thirty (30) days following the expiration of such initial forty-eight (48) hour
period as long as Specialty and/or the other user continuously and diligently
endeavors to correct and eliminate such interference, unless prior to the
expiration of such additional thirty (30) day period, Customer notifies
Specialty that such interference materially and adversely affects Customer's use
of the Leased Site, in which case Specialty's right to extend the period during
which it has the right to cure such interference pursuant to this Section 8
shall terminate forty-eight (48) hours after Specialty's receipt of such notice,
unless, prior to such time, the other user ceases operation from the Leased Site
until said interference is eliminated.
9. Indemnification
Customer shall indemnify and hold Specialty and all subsidiary
companies and affiliates harmless against any claim of liability or loss from
bodily injury and/or property damage resulting from or arising out of Customer's
and/or any of its subcontractors', servants', agents' or invitees' use or
occupancy of the Site, including but not limited to any claim of liability or
loss associated with any Environmental Hazards as defined in this Agreement,
excepting, however, such claims or damages as may be caused by the negligence or
willful misconduct of Specialty, or its subcontractors, servants, agents or
invitees. If Specialty is made a party to any litigation commenced by or against
Customer for any of the above reasons, then Customer shall protect and hold
Specialty harmless and pay all costs, penalties, charges, damages, expenses and
reasonable attorneys' fees incurred or paid by Specialty in connection
therewith.
Specialty shall indemnify and hold Customer and all subsidiary
companies and affiliates harmless against any claim of liability or loss from
bodily injury and/or property damage resulting from or arising out of
Specialty's and/or any of its subcontractors', servants', agents' or invitees'
use of occupancy of the Site, including but not limited to any claim of
liability or loss associated with any Environmental Hazards as defined in this
Agreement, excepting, however, such claims or damages
MASTER SITE DEVELOPMENT AND LEASE AGREEMENT - PAGE 11
<PAGE> 12
as may be due to or caused by the negligence or willful misconduct of Customer,
or its subcontractors, servants, agent or invitees. If Customer is made a party
to any litigation commenced by or against Specialty for any of the above
reasons, then Specialty shall protect and hold Customer harmless and pay all
costs, penalties, charges, damages, expenses and reasonable attorneys' fees
incurred or paid by Customer in connection therewith.
10. Insurance
Customer shall maintain at its expense throughout the term of this
Agreement, general liability insurance with a combined single limit of Five
Million ($5,000,000.00) Dollars for bodily injury and property damage. Coverage
shall include Independent Contractors Liability. At execution of this Agreement,
Customer shall provide a Certificate of Insurance to Specialty, evidencing
Specialty as an additional insured and which shall contain a provision for
thirty (30) day notice of cancellation or material change to Specialty. Customer
shall also maintain Auto Liability insurance in an amount no less than One
Million ($1,000,000.00) Dollars combined single limit for bodily injury and/or
property damage. Customer must also maintain statutory Workers' Compensation
Insurance and Employee's Liability for the statutory limit but in no event less
than One Million ($1,000,000.00) Dollars.
All insurers will be rated A or better and must be licensed to do
business in the jurisdiction where the respective Sites are located. The
provision of insurance required in this Agreement shall not be construed to
limit or otherwise affect the liability of Customer.
Customer will not do or permit to be done in or about the Leased Sites
nor bring or keep or permit to be brought to the Leased Sites anything that: (a)
is prohibited by any insurance policy carried by Specialty covering the Site,
any improvements thereon, or the Leased Sites; or (b) will increase the existing
premiums for any such policy beyond that contemplated for the additional of
Customer's communications facility. Specialty acknowledges and agrees that the
installation of Customer's communications facility upon the Leased Sites in
accordance with the terms and conditions of this Agreement will be considered
within the underwriting requirements of any of Specialty's insurers and such
premiums contemplate the addition of the communications facility.
The parties hereby waive any and all rights of action for negligence
against the other which may hereafter since on account of damages to the
premises or Site resulting from any fire, or other casualty of the kind covered
by standard fire insurance policies, regardless of whether or not, or in what
amounts, such insurance is now or hereafter carried by the parties, or either of
them. Customer and Specialty shall each obtain a Waiver of Subrogation from
their respective insurance companies in which said insurance companies also
waive their respect rights to recover.
11. Surrender of Leased Site
Customer, upon termination of the Agreement or the applicable Leased
Site Schedule, shall have removed its equipment, personal property and all
fixtures and have restored the Leased Site to its original condition, reasonable
wear and tear excepted. If such time for removal causes Customer to remain on
the Site after termination of this Agreement or the applicable Leased Site
Schedule, Customer shall pay rent at one and one-half times the then existing
annual rate until such time as the
MASTER SITE DEVELOPMENT AND LEASE AGREEMENT - PAGE 12
<PAGE> 13
removal of the equipment, personal property and all fixtures are completed.
Nothing in this provision shall be construed as providing Customer the right to
hold over and Specialty, immediately upon the termination or expiration of the
Agreement or the applicable Leased Site Schedule, shall have the right to evict
Customer from the Leased Sites.
12. Representation, Warranties and Covenants
12.1 Specialty. Specialty warrants, with respect to each particular
Leased Site Schedule that:
12.1.1 Specialty, or the entity for which Specialty
possesses the management rights, owns good,
marketable fee simple title or has a good and
marketable leasehold interest or has the right as a
manager or has a valid license or easement in the
land on which the Site is located and has the right
of access thereto;
12.1.2 Specialty will not permit or suffer the installation
and existence of any other improvement upon the
structure land of which the Site is a portion if such
improvement materially interferes with transmission
or reception by Customer's wireless transmission
facilities at the Site;
12.1.3 None of the Leased Sites, to the best knowledge of
Specialty, is contaminated by any Environmental
Hazards as defined below;
12.1.4 Electrical service is available to Customer at each
and every Site with the understanding that Customer
will pay for all utility services needed to operate
its communications facility; and
12.1.5 Specialty will keep, at Specialty's expense, the
communications tower structure in good repair as
required by law and applicable state and local codes
and regulations and shall also comply with all rules
and regulations enforced by the FCC and FAA with
regard to the lighting, marking and painting of
towers.
12.2 Customer. Customer warrants, with respect to each particular
Leased Site Schedule that:
12.2.1 Customer will maintain its equipment, antennas,
transmission lines and other appurtenances in proper
operating condition and maintain same as to
appearance and safety;
12.2.2 All installations and operations by Customer in
connection with this Agreement shall meet with all
applicable rules, codes and regulations of
governmental authorities, including, without
limitation, the FCC and the municipality, county and
state in which such installations and operations
exist.
MASTER SITE DEVELOPMENT AND LEASE AGREEMENT - PAGE 13
<PAGE> 14
Specialty specifically assumes no responsibility for
the licensing, operation and/or maintenance of
Customer's radio equipment; and
12.2.3 Customer is responsible for bringing telephone
service to the Leased Site or for otherwise obtaining
access from the Leased Site to telephone service and
Customer will pay for all utility services needed to
operate its communications facility.
12.3 Mutual. Each party represents and warrants to the other party:
12.3.1 It has full right, power and authority to make this
Agreement and to enter into the Leased Sites
Schedules;
12.3.2 The making of this Agreement and the performance
thereof will not violate any laws, ordinances,
restrictive covenants, or other agreements under
which such party is bound;
12.3.3 That such party is qualified to do business in any
states in which the Sites are located; and
12.3.4 All persons signing on behalf of such party were
authorized to do so by appropriate corporate or
partnership action.
12.4 No Brokers. Specialty and Customer represent to each other that
neither has had any dealings with any real estate brokers or agents in
connection with this Agreement.
13. Casualty or Condemnation
13.1 Casualty. If there is a casualty to any structure upon which a
Customer communications facility is located, Specialty must within ninety (90)
days repair or restore the structure. During said period of repair or
restoration, all rent and other fees identified in this Agreement applicable to
that Site shall be abated. Upon completion of such repair or restoration,
Customer is entitled to reinstall Customer's communications facility. In the
event such repairs or restoration will reasonably require more than ninety (90)
days to complete, Customer is entitled to terminate the applicable Leased Site
Schedule upon thirty (30) days prior written notice. During any period during
which Customer's equipment cannot function at a Site due to a casualty to any
structure upon which a Customer communications facility is located, subject to
the terms of this Agreement regarding interference and relations with other
tenants, Customer shall be afforded the right to locate portable communications
equipment at the Site.
13.2 Condemnation. If there is a condemnation of the Site, including
without limitation a transfer of the Site by consensual deed in lieu of
condemnation, then the Leased Site Schedule for the condemned Site will
terminate upon transfer of title to the condemning authority, without further
liability to either party under this Agreement. Customer is entitled to pursue a
separate condemnation award for Customer's communications facility from the
condemning authority. Specialty will notify
MASTER SITE DEVELOPMENT AND LEASE AGREEMENT - PAGE 14
<PAGE> 15
Customer within ten (10) business days following Specialty's receipt of notice
of condemnation with respect to a Site.
14. Default
14.1 Customer's Default. The occurrence of any one or more of the
following events constitutes an "event of default" by Customer under this
Agreement:
14.1.1 If Customer falls with respect to a total of five (5)
or more Sites to pay any fee or other sums payable by
Customer within twenty (20) business days of
Customer's receipt of written request for payment;
14.1.2 Breach of any representation, warranty or covenant
set forth in this Agreement including any Leased Site
Schedule, with the exception of the non- payment of
any fee or other sums by Customer, which is not cured
within thirty (30) days of receipt of written notice,
except such thirty (30) day cure period will be
extended as reasonably necessary to permit Customer
to complete the cure so long as Customer commences
the cure within such thirty (30) day period and
thereafter continuously and diligently pursues and
completes such cure;
14.1.3 If any petition is filed by or against Customer,
under any section or chapter of the present or any
future federal Bankruptcy Code or under any similar
law or statute of the United States or any state
thereof (and with respect to any petition filed
against Customer, such petition is not dismissed
within ninety (90) days after the filing thereof), or
Customer is adjudged bankruptcy or insolvent in
proceedings filed under any section or chapter of the
present or any future Bankruptcy Code or under any
similar law or statute of the United States or any
state thereof;
14.1.4 If a receiver, customer or trustee is appointed for
Customer or for any of the assets of Customer and
such appointment is not vacated within sixty (60)
days of the date of appointment;
14.1.5 If Customer becomes insolvent or makes a transfer in
fraud of creditors; or
14.1.6 If Customer's equipment is found to be interfering as
described to this Agreement and said interference is
not timely corrected as provided herein.
14.2 Specialty's Remedies. If an event of default occurs, Specialty
(without notice or demand except as expressly required above) may terminate this
Agreement including applicable Leased Site Schedules, in which event Customer
will immediately surrender the Sites to Specialty. Customer will become liable
for damages equal to the total of;
14.2.1 The actual costs of recovering the Sites;
MASTER SITE DEVELOPMENT AND LEASE AGREEMENT - PAGE 15
<PAGE> 16
14.2.2 The rent earned as of the date of termination, plus
interest thereon from the date due until paid;
14.2.3 The amount by which any rents, fees and other
benefits that Specialty would have received under the
applicable Leased Site Schedules for the remainder of
the term under the applicable Leased Site Schedule
after the time of award subject to Specialty's duty
to mitigate damages as set forth below;
14.2.4 All other sums of money and damages owing by Customer
to Specialty.
Specialty may elect any one or more of the foregoing remedies with
respect to this Agreement or to any particular Leased Sites Schedules.
14.3 Specialty's Default. If Specialty is in breach of an
representation, warranty or covenant set forth in this Agreement and such breach
is not cured within thirty (30) days of receipt of written notice thereof,
except such thirty (30) day cure period will be extended as reasonable necessary
to permit Specialty to complete the cure so long as Specialty commences the cure
within such thirty (30) day period and thereafter continuously and diligently
pursues and completes such cure. Customer may, in addition to any other remedy
available at law or in equity, at Customer's option upon written notice:
14.3.1 Terminate the applicable Leased Site Schedule; or
14.3.2 Incur any expense reasonably necessary to perform the
obligation of Specialty specified in such notice and
invoice Specialty for the actual expenses, together
with interest as set forth herein from the date
named. Any invoice shall be accompanied by
documentation reasonably detailing actual expense. If
Specialty fails to reimburse the costs within thirty
(30) days of receipt of written notice, then Customer
is entitled to offer and deduct such expenses from
the fees or other charges next becoming due under any
Leased Site Schedule.
Customer may elect any one or more of the foregoing remedies with
respect to any particular Leased Site Schedule.
14.4 Duty to Mitigate Damages. Specialty and Customer shall endeavor in
good faith to mitigate damages arising under this Agreement.
15. Environmental Matters
Specialty represents and warrants that to the best of Specialty's
knowledge there are no Environmental Hazards on any Site. Nothing in this
Agreement or in any Leased Site Schedule will be construed or interpreted to
require that Customer remediate any Environmental Hazards located
MASTER SITE DEVELOPMENT AND LEASE AGREEMENT - PAGE 16
<PAGE> 17
at any Site unless Customer or Customer's officers, employee, agents or
contractors placed the Environmental Hazards on the Site.
Customer will not bring to, transport across or dispose of any
Environmental Hazards on any particular Leased Sites or Site without Specialty's
prior written approval, which approval shall not unduly be withheld or delayed.
Customer's use of any approved substances constituting Environmental Hazards
must comply with all applicable laws, ordinances and regulations governing such
use.
The term "Environmental Hazards" means hazardous substances, hazardous
wastes, pollutants, asbestos, polychlorinated biphenyl (PCB), petroleum or other
fuels (including crude oil or any fraction or derivative thereof) and
underground storage tanks. The term "hazardous substances" shall be defined in
the Comprehensive Environmental Response, Compensation, and Liability Act, and
any regulations promulgated pursuant thereto. The term "pollutants" shall be as
defined in the Clean Water Act, and any regulations promulgated pursuant
thereto. This Section shall survive termination of the Agreement and any
particular Leased Site Schedule.
16. Covenant of Quite Enjoyment
Specialty covenants that Customer, on paying the rent and performing
all the terms, covenants and conditions of this Agreement, shall peaceably and
quietly have, hold and enjoy the Leased Sites.
17. Entire Agreement
It is agreed and understood that this Agreement, including all Leased
Site Schedules, contain all the agreements, promises and understandings between
Specialty and Customer and that no verbal or oral agreements, promises or
understandings shall be binding upon either Specialty or Customer in any
dispute, controversy or proceeding at law, and any addition, variation or
modification to this Agreement shall be void and ineffective unless made in
writing signed by the parties.
18. Governing Laws Arbitration
The laws of the State of Texas, disregarding conflict of law
principles, shall govern this Agreement. Any dispute or controversy arising
under, out of, in connection with or in relation to this Agreement shall, at the
election and upon written demand of either party, be finally determined and
settled by arbitration in the city of Dallas, Texas in accordance with the rules
and procedures of the American Arbitration Associations, and judgment upon the
award may be entered in any court having jurisdiction hereof.
19. Assignment
This Agreement may not be sold, subleased, assigned or transferred by
Customer without prior approval or consent of Specialty; provided, however, that
Customer may assign its interest to its parent company, any subsidiary or
affiliate or to any successor-in-interest or entity acquiring 51% or more of its
stock or assets, so long as any such purchaser, sublessee, assignee or
transferee has a
MASTER SITE DEVELOPMENT AND LEASE AGREEMENT - PAGE 17
<PAGE> 18
net worth of $25,000,000.00 as defined by generally accepted accounting
principles. It is understood that any such assignment shall not relieve Customer
of any liability for performance of this Agreement. Customer acknowledges that
Customer is the current holder of all requisite FCC licenses necessary for it to
lawfully provide the wireless services that it intends to offer utilizing the
Leased Sites identified in Exhibit "A." As to other entities, this Agreement may
not be sold, subleased, assigned or transferred, in whole or in part, without
the written consent of Specialty, for any purpose, which consent may be withheld
in Specialty's absolute discretion.
Specialty consents to the assignment by Customer of this Agreement to
the Financing Entity described in Paragraph 7.3 above as security for the
payment of all indebtedness and performance of obligations under the Financing
Agreement; provided that, such assignment shall not constitute assumption by the
Financing Entity of any obligations under this Agreement unless and until the
Financing Entity elects to assume Customer's rights and obligations herein in
the event Customer defaults under the Financing Agreement or any agreement with
the Financing Entity related thereto. In such event, the Financing Entity may,
but shall have no obligation to take in its name or in the name of Customer or
otherwise, such actions as the Financing Entity may, at any time or from time to
time deem necessary to utilize the Leased Site. Customer hereby irrevocably
authorizes Specialty to accept such performance by the Financing Entity. Any
such assignment does not relieve Customer of any liabilities or obligations for
performance identified in this Agreement.
20. Severability
If any provision of this Agreement or any Leased Site Schedule is
invalid or unenforceable with respect to any party, the remainder of this
Agreement, or the application of such provision to persons other than those as
to whom it is held invalid or unenforceable, is not to be affected and each
provision of this Agreement is valid and enforceable to the fullest extent
permitted by law.
21. No Waiver
No provision of this Agreement will be deemed to have been waived by
either party unless the waiver is in writing and signed by the party against
whom enforcement is attempted. The rights granted in this Agreement are
cumulative of every other right or remedy that the enforcing party may otherwise
have at law or in equity or by statute and the exercise of one or more rights or
remedies will not prejudice or impair the concurrent or subsequent exercise of
other rights or remedies.
22. Representation
Each of the parties acknowledges and agrees that it has been
represented by counsel and that it has participated in the drafting of this
Agreement. Accordingly, it is the intention and agreement of the parties that
the language, terms and conditions of this Agreement are not to be construed in
any way against or in favor of any party hereto by reason of the
responsibilities in connection with the preparation of this Agreement.
MASTER SITE DEVELOPMENT AND LEASE AGREEMENT - PAGE 18
<PAGE> 19
23. Notices
Any notice or demand required to be given in this Agreement shall be
made by certified mail, return receipt requested, or reliable overnight courier,
to the address of the other party set forth below:
As to Customer: ALAMOSA PCS, LLC
P.O. Box 65700
Lubbock, Texas 79424
Attention: David Sharbutt
WITH A COPY TO:
-----------------------
-----------------------
-----------------------
Attention:
-------------
As to Specialty: Specialty Capital Services, Inc.
12001 Hwy 14 North
Cedar Crest, New Mexico 87008
Attention: Jeffrey A. Howard, Vice President
WITH A COPY TO: OmniAmerica, Inc.
2 Summit Park Drive, Suite 105
Cleveland, Ohio 44131
Attention: F. Howard Mandel, Vice President
and General Counsel
Any such notice or demand is deemed received three (3) business days
following deposit in the United States Mails addressed as required above.
Specialty or Customer may from time to time designate any other address for this
purpose by giving written notice to the other part.
24. Binding Effect
This Agreement shall extend to and bind the heirs, personal
representatives, successors and assigns of the parties hereto. The parties
further agree that all of the provisions in this Agreement shall affect and bind
any and all tenants or occupants of the Site who come upon the same through or
by agreement with either party. Each party shall be fully responsible to ensure
that any and all tenants or occupants of the Site who come upon the same through
or by agreement with that party comply with all of the terms and provisions of
this Agreement and such party shall be fully liable and responsible for any
breaches of this Agreement by its tenants or occupants.
MASTER SITE DEVELOPMENT AND LEASE AGREEMENT - PAGE 19
<PAGE> 20
25. Prime Lease
The parties acknowledge that Specialty's rights in the Site may be
derived from a Prime Lease in which Specialty is lessee, sublessee, grantee,
licensee or assignee therein. If this is the case, a copy of said Prime Lease
shall be attached as Exhibit 4 to the applicable Leased Site Schedule, and the
following provisions shall be applicable. In the event approval of the prime
lessor, grantor or licensor is required in the Prime Lease, the effectiveness of
any Leased Site Schedule concerning such property shall be specifically subject
to the obtaining of such approval. Further, all the terms, conditions and
covenants contained in this Agreement shall be specifically subject to and
subordinate to the terms and conditions of any Prime Lease affecting the Site
that is the subject of the particular Leased Site Schedule. In the event any o
the provisions of the Prime Lease supersede or contradict the terms of this
Agreement, such terms of this Agreement shall be deemed deleted or superseded to
the extent of the contradiction as applicable to the space utilized by Customer.
Further, Customer agrees to be bound by and agrees to perform all the acts and
responsibilities required of the lessee, sublessee, grantee, licensee or
assignee pursuant to the Prime Lease as are applicable to the access and
occupancy of the premises utilized by Customer. Lastly, in the event the Prime
Lease terminates for any reason, the Leased Site Schedule relating to the Site
covered by said Prime Lease, shall be deemed to have terminated effective the
date of the termination of the Prime Lease.
26. Termination
In the event any previously approved zoning or governmental permit
affecting the use of the property as a communications facility is withdrawn or
terminated, the Leased Site Schedule relating to the property covered by said
permit or approval shall be deemed to have been terminated effective the date of
the termination of the permit or approval. In addition to any other rights to
terminate a Leased Site Schedule, Specialty has the right to terminate a Leased
Site Schedule and all of Customer's right to the premises leased pursuant to the
Leased Site Schedule if any equipment placed on the Site by Customer
unreasonably interferes with any equipment located on said Leased Site and
Customer fails to resolve such interference problem as provided above.
27. Supercedes
This Agreement revokes and supersedes any other oral or written
agreements between the parties, whether or not in writing, that pertain to the
subject matter described herein.
28. Non-Disclosure
The parties agree that without the express written consent of the other
party, neither party shall reveal, disclose or promulgate to any third party the
terms of this Agreement or any portion thereof, except to such third party's
auditor, accountant or attorney or investors or to a governmental agency if
required by regulation, subpoena or government order to do so.
29. Third Parties
Any obligations imposed on Customer in this Agreement shall be equally
and fully applicable to any other third parties that Customer brings on to the
property or comes upon the property through or under the authority of Customer.
Any breach by such other third parties shall be decreed
MASTER SITE DEVELOPMENT AND LEASE AGREEMENT - PAGE 20
<PAGE> 21
a breach by Customer under this Agreement and Customer shall be fully liable and
responsible to Specialty pursuant to the terms of this Agreement for such
breach.
IN WITNESS WHEREOF, the parties have duly executed and delivered this
Agreement as of the Effective Date.
ALAMOSA PCS LLC
By: /s/ David Sharbutt
-----------------------------------
Name: David Sharbutt
-----------------------------
Title: Chairman
----------------------------
SPECIALTY CAPITAL SERVICES, IN.
By: /s/ Michael Budagher
-----------------------------------
Name: Michael Budagher
-----------------------------
Title: Chairman
----------------------------
MASTER SITE DEVELOPMENT AND LEASE AGREEMENT - PAGE 21
<PAGE> 22
ADDENDUM I TO
MASTER SITE DEVELOPMENT AND LEASE AGREEMENT
This Addendum contains certain changes, additional or supplemental
terms and provisions to that certain Master Site Development and Lease Agreement
(the "Master Site Agreement") entered into contemporaneously with and by the
same parties as the Master Site Development and Lease Agreement dated the 20th
day of August, 1998, by and between Alamosa PCS LLC, as "Customer", and
Specialty Capital Services, Inc., as "Specialty". Except for the expressed
modifications made in this Addendum, the Master Site Development and Lease
Agreement continues in full force and effect.
The Master Site Development and Lease Agreement is modified as follows:
1. Paragraph 1.1 shall have added thereto the following:
"The parties acknowledge that the initial portions of this
Agreement are being done in a very short time frame. If for
any reason a site is located and in a good faith effort to
provide such short time frame services, Specialty should incur
expenses in acquiring a site, doing extensive research
involved a site such as soil surveys, environmental reports,
seeking zoning and other licenses for locating a site, and
after incurring such expenses for reasons caused by the
customer such site should change, in that event, Alamosa will
pay, as additional consideration under this Agreement, all
such amounts. This reimbursement on a cost basis only with no
additional added expense or cost, shall occur only in those
events in which customer shall change the site location and in
which Specialty has incurred such additional time and
expense."
2. Paragraph 3.2 shall have added thereto the following:
"In the event that a Prime Lease shall terminate for any
reason during the terms of this Agreement, and such
termination of a Prime Lease cause the loss of a site,
Specialty agrees to make its best efforts to attempt to secure
a substitute for the site lost by the termination of the Prime
Lease with no obligation to actually substitute the site."
3. Paragraph 9 shall have added thereto the following:
"In the event that either party hereto shall provide the
indemnification set forth in the preceding paragraphs of this
Section, in that event, the party to whom indemnification is
given shall have the right to choose and approve of any
attorneys or firm of attorneys who may represent them in any
matter for which indemnification is being provided by the
other party. The costs of such representation shall be paid by
the party who is providing the indemnification and shall be
paid at the normal and usual rates of such attorneys and in
the manner to which is normal and usual for such
representation."
ADDENDUM I TO
MASTER SITE DEVELOPMENT AND LEASE AGREEMENT - PAGE 1
<PAGE> 23
4. Paragraph 10 shall have added thereto the following:
"Specialty shall furnish the Customer a certificate evidencing
compliance with the foregoing requirements showing the
Customer and Sprint Spectrum L.P., a Delaware Limited
Partnership, Wireless Co, L.P., a Delaware Limited
Partnership, and SprintCom, Inc., a Kansas Corporation, as
additional insureds. Such certificates and policies of
insurance shall provide not less than thirty (30) days written
notice to the Customer and all additional insureds of any
cancellation or material reduction in the insurance."
5. Paragraph 18 shall be changed to read as follows:
"18. GOVERNING LAW; PERFORMANCE AND ARBITRATION. This
Agreement shall be governed by the laws of the State of Texas
and shall be deemed to be executed in and performance called
for in Lubbock, Lubbock County, Texas. Any dispute or
controversy arising under, out of, or in connection with this
Agreement, shall be determined and settled by mediation or by
arbitration as follows:
1. MEDIATION. Customer and Specialty agree to mediate
any dispute arising under this contract. In the event
of any dispute, the parties, within thirty (30) days
of a written request for mediation, shall attend, in
good faith, a mediation in order to make a good faith
reasonable effort to resolve any dispute arising
under this contract. If this good faith mediation
effort fails to resolve any dispute arising under
this contract, Customer and Specialty agree to
arbitrate any dispute arising under this contract.
This arbitration shall occur only after the mediation
process described herein.
2. ARBITRATION. Customer and Specialty agree, as
concluded by the parties to this Agreement on the
advice of their counsel, and as evidenced by the
signatures of the parties and of their respective
attorneys, it is agreed that all questions as to
rights and obligations arising under the terms of
this contract are subject to arbitration and such
arbitration shall be governed by the provisions of
the Texas General Arbitration Act (Texas Civil
Practice and Remedies Code Section 171.001 et seq as
it may be amended from time to time).
3. DEMAND FOR ARBITRATION. If a dispute should arise
under this contract, either party may within thirty
(30) days make a demand for arbitration by filing a
demand in writing with the other.
4. APPOINTMENT OF ARBITRATORS. The parties to this
Agreement may agree on one arbitrator, but in the
event that they cannot so agree, there shall be three
arbitrators, one named in writing by each of the
parties within thirty (30) days after demand for
arbitration is made, and a third to be chosen by the
ADDENDUM I TO
MASTER SITE DEVELOPMENT AND LEASE AGREEMENT - PAGE 2
<PAGE> 24
two so named. Should either party fail to timely join
in the appointment of the arbitrators, the
arbitrators shall be appointed in accordance with the
provisions of Texas Civil Practice and Remedies Code
Section 171.041.
5. HEARING. All arbitration hearings conducted under
the terms of this Agreement, and all judicial
proceedings to enforce any of the provisions of this
Agreement, shall take place in Lubbock County, Texas.
The hearing before the arbitrators of the matter to
be arbitrated shall be at the time and place within
that County selected by the arbitrators or if deemed
by the arbitrators to be more convenient for the
parties or more economically feasible, may be
conducted in any city of the State of Texas.
6. ARBITRATION AWARD. If there is only one
arbitrator, his or her decision shall be binding and
conclusive. The submission of a dispute to the
arbitrators and the rendering of their decision shall
be a condition precedent to any right of legal action
on the dispute. A judgement confirming the award of
the arbitrators may be rendered by any court having
jurisdiction; or the court may vacate, modify, or
correct the award in accordance with the provisions
of the Texas General Arbitration Act (Texas Civil
Practice and Remedies Code Section 171.087 et seq as
it may be amended from time to time).
7. NEW ARBITRATORS. If the arbitrators selected,
pursuant to Paragraph c., above, shall fail to render
a decision within thirty (30) days of the date of
hearing, they shall be discharged, and three new
arbitrators shall be appointed and shall proceed in
the same manner, and the process shall be repeated
until a decision is finally reached by two of the
three arbitrators selected.
8. COSTS OF ARBITRATION. The costs and expenses of
arbitration, including the fees of the arbitrators,
shall be borne by the losing party or in such
proportions as the arbitrators shall determine.
9. CONDUCT OF ARBITRATION. Any arbitration brought
under the terms of this Agreement shall be conducted
in the following manner:
a. Time Limitations. The parties agree that
the following time limitations shall govern
the arbitration proceedings conducted under
the terms of this Agreement:
(i) Any demand for arbitration must
be filed within thirty (30) days of
the date on which the dispute arises
or the alleged breach occurs.
ADDENDUM I TO
MASTER SITE DEVELOPMENT AND LEASE AGREEMENT - PAGE 3
<PAGE> 25
(ii) Each party must select an
arbitrator within thirty (30) days
of receipt of notice that an
arbitration proceeding has
commenced. In the event that no such
selection is made, the arbitrator
selected by the other party may
conduct the arbitration proceeding
without selecting any other
arbitrator.
(iii) The hearing must be held
within thirty (30) days of the date
on which the third arbitrator is
selected.
(iv) Hearing briefs must be selected
within ten (10) days of the hearing
date.
(v) The arbitration award must be
made within thirty (30) days of the
receipt of hearing briefs.
b. Discovery in Arbitration Proceedings. The
parties agree that discovery may be
conducted in the course of the arbitration
proceeding in accordance with the following
provisions:
(i) Each party may notice no more
than three (3) depositions in total,
including both witnesses adherent to
the adverse party and third-party
witnesses.
(ii) Each party may serve no more
than twenty-five (25) requests for
admission on the other party. No
requests may be served within ten
(10) days of the date of hearing,
unless the parties otherwise
stipulate. All requests for
admission shall be responded to
within ten (10) days of service of
the requests, unless the parties
otherwise stipulate.
(iii) Each party may serve no more
than fifty (50) interrogatories on
the other party. No interrogatory
shall contain subparts, or concern
more than one topic or subject of
inquiry. Interrogatories may not be
phrased so as to circumvent the
effect of this clause. No
interrogatories may be served within
ten (10) days of the date of
hearing, unless the parties
otherwise stipulate. All
interrogatories shall be responded
to within ten (10) days of service
of the interrogatories, unless the
parties otherwise stipulate.
(iv) Each party may serve no more
than ten (10) requests for
production of documents on the other
party. No request for production of
documents shall contain subparts, or
seek
ADDENDUM I TO
MASTER SITE DEVELOPMENT AND LEASE AGREEMENT - PAGE 4
<PAGE> 26
more than one type of document.
Requests for production of documents
may not be phrased so as to
circumvent the effect of this
clause. Unless the parties otherwise
stipulate, requests for production
of documents may not be served
within ten (10) day of the date of
hearing, and all requests for
production of documents shall be
responded to within ten (10) days of
service of the requests.
(v) If any party contends that the
other party has served discovery
requests in a manner not permitted
by this Section, or that the other
party's response to a discovery
request is unsatisfactory, the party
may request the arbitrators to
resolve such discovery disputes. The
arbitrators shall prescribe the
procedure by which such disputes are
resolved."
6. Paragraph 28 shall be changed to read as follows:
"28. NON-DISCLOSURE. The parties agree that without the
express written consent of the other party, neither party
shall reveal, disclose or promulgate to any third party the
terms of this Agreement or any portion thereof, except to such
third party's auditor or accountant or attorney or investors
or to a governmental agency if required by regulation,
subpoena or government order to do so, or to customer's bank
or other financial institutions lending money to customer."
7. Paragraph 12.2.3 shall have added thereto the following:
"Notwithstanding the foregoing, customer shall be responsible
for bringing telephone service to the leased site, and once
such service is brought to the leased site, Speciality shall
be responsible for all installation of that service or
otherwise obtaining access to that service from the tower or
other location being provided by Speciality under this
Agreement."
ADDENDUM I TO
MASTER SITE DEVELOPMENT AND LEASE AGREEMENT - PAGE 5
<PAGE> 27
The foregoing Addendum is hereby agreed to this 20th day of August,
1998, to be effective the 27th day of July, 1998.
CUSTOMER
ALAMOSA PCS LLC
By /s/ David Sharbutt
------------------------------------
DAVID E. SHARBUTT, Chairman
SPECIALTY
SPECIALTY CAPITAL SERVICES, INC.
By /s/ Jeffrey A. Howard
------------------------------------
Jeffery A. Howard (Name)
------------------------------
Vice President (Title)
-----------------------------
Approved as to the Mediation and Arbitration provisions in paragraph 5 above.
CRENSHAW, DUPREE & MILAM, L.L.P.
By /s/ Jack McCutchin, Jr.
------------------------------------
Jack McCutchin, Jr.
Attorneys for Alamosa PCS LLC
/s/ Jeffrey A. Howard
---------------------------------------
Jeffrey A. Howard
Attorney for Specialty Capital
Services, Inc.
ADDENDUM I TO
MASTER SITE DEVELOPMENT AND LEASE AGREEMENT - PAGE 6
<PAGE> 1
EXHIBIT 10.18
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is entered into this date by
and between ALAMOSA PCS LLC, a Texas Limited Liability Company, having its
principal executive office located at 4747 S. Loop 289, Lubbock, Texas 79424
(the "Company"), and JERRY BRANTLEY, an individual residing at San Antonio,
Texas (the "Employee").
WITNESSETH:
WHEREAS, the parties are entering into this Agreement to set forth and
confirm their respective rights and obligations with respect to the Employee's
employment by the Company.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto mutually agree as follows:
1. EMPLOYMENT; TERM; DUTIES. The Company hereby employs the Employee as
Chief Operating Officer. The term of the Employee's employment, pursuant to this
Agreement, will commence on October 1, 1998, (the "Commencement Date") and will
continue for a period of three (3) years, or the termination of this Agreement,
as described in Section 5 hereof, whichever shall occur first. The Employee
hereby accepts such employment, and agrees to devote his full time and effort to
the business and affairs of the Company with such duties consistent with the
Employee's position as may be assigned to him from time to time by the Board of
Managers of the Company. The Company may employ a Chief Executive Officer, and,
if so directed by the Board of Managers, Employee shall report to and perform
such duties as may be assigned by said Chief Executive Officer.
2. COMPENSATION. In consideration of all services rendered by the Employee
during the term of his employment, pursuant to this Agreement, the Company will
provide the Employee with the following compensation:
(a) BASE SALARY. The Company will pay the Employee a base salary at the
annual rate of $175,000.00, payable semi-monthly in accordance with the
Company's payroll practices from time to time in effect. The Company
will review the Employee's salary at least once each year and may, in
its discretion, increase the Employee's salary. Notwithstanding anything
to the contrary in this Agreement, nothing in this Agreement shall be
deemed to impose any obligation on the Company or any of its
subsidiaries to continue to employ the Employee, or on the Employee to
remain in the employ of the Company or any of its subsidiaries.
(b) BONUS. In addition to the Employee's base salary, for each quarter
the Employee is employed by the Company, beginning April 1, 1999, the
Employee is entitled to a Quarterly Bonus of $15,000.00 for each
calender quarter in which the milestones (the "Milestones") set forth in
the attached EXHIBIT "A", which is incorporated by this reference as if
copied at length,
1
<PAGE> 2
are met or exceeded. This Bonus will be paid at the end of each month.
If the Milestones are not met, Employee is entitled to a portion of the
Quarterly Bonus, calculated based on the pro rata portion of the
Milestones met. For each calender quarter in which the Exceptional
Milestones as set forth in Exhibit "A" are met or exceeded, Employee is
entitled to an additional $15,000.00 Quarterly Bonus. The bonuses
provided for in this subsection 2(b) are referred to herein,
individually and collectively, as the "Quarterly Bonus(es)."
(1) In lieu of the Quarterly Bonuses, Employee shall receive a
bonus of $5,000.00 per month (the "Monthly Bonus") for the first
six (6) months of this Agreement. The Monthly Bonus is
nonrefundable, and is not conditioned on meeting or exceeding the
Milestones.
(2) Any Quarterly Bonus after the first six (6) months of this
Agreement to which Employee is entitled to under this subsection
2(b) must be paid in full no later than forty-five (45) days after
the end of the calender quarter for which the Quarterly Bonus was
earned.
(c) EMPLOYEE STOCK OPTIONS. The Employee shall be granted stock options
in three series; the 8% Option Series, the 15% Option Series, and the
25% Option Series. Over the term of the agreement each stock option
series shall give the employee the right to purchase a 0.5% interest in
the Company, up to a total of 1.5%, at the Exercise Price at any time
after January 1, 2004 but before its expiration date on January 5, 2008.
(1) Vesting of Options. The options shall vest over three years.
The first options shall vest on the first day following the
one-year anniversary of the Commencement Date. On that day, three
stock options, one from each series, shall be vested giving the
employee the right to purchase 0.16667% of the Company with each
option. For each month of the Employee's continued employment
following the one-year anniversary, an option from each series for
the purchase of 0.013889% of the Company shall vest. This monthly
vesting shall continue until such time as the employee has options
to purchase a maximum of 1.5% of the Company, a 0.5% interest in
the Company through each series.
(2) Calculation of the Exercise Price. The Exercise Price for each
option shall increase monthly by the Monthly compounded rate as
specified for each option. The 8% Option shall have an Exercise
Price that shall increase 8% annually or a Monthly compounded rate
of 0.64340%. The 15% Option shall have an Exercise Price that shall
increase 15% annually or a Monthly compounded rate of 1.17149%. The
25% Option shall have an Exercise Price that shall increase 25%
annually or Monthly compounded rate of 1.8769%.
2
<PAGE> 3
(i) The Exercise Price for each option shall increase each
month. The Exercise Price shall be calculated each month by
multiplying (i.) the Exercise Price for the previous month,
times (ii.) one plus the Monthly compounded rate. For the
purposes of this calculation, the starting period for the
calculation of the Exercise Price for each option shall be
September 30, 1998, and the initial Exercise Price shall be
the product of the Committed Capital for Alamosa times the
percent interest represented by the Option. Committed Capital
for Alamosa is, initially, $48,500,000 as set forth in EXHIBIT
"A" to the Regulations of Alamosa PC LLC which is incorporated
by this reference as if copied at length. Committed Capital
may increase or decrease, and the Exercise Price shall be
adjusted to reflect any such increases or decreases.
(3) Distributions in Excess of the Distribution of Available Cash.
If during any month, the Company shall make any distributions to
the Members of the Company greater than the distribution of
Available Cash as required by subsection 5.2 of the Regulations of
Alamosa PCS LLC, which is incorporated by this reference as if
copied at length, then the Exercise Price shall be reduced. The
Exercise Price shall be reduced by an amount equal to (i.) the
difference between the actual distribution and the distribution of
Available Cash required by the Regulations, times (ii.) the percent
interest represented by the Option.
(4) Expiration. All Options shall expire January 5, 2008.
(5) Exercise of Options. The Employee must give the Company at
least sixty (60) days notice of his desire to exercise any of his
vested options. The Employee shall have two methods of exercising
his options. First, the Employee may purchase for cash an interest
in the Company by paying the exercise price of the options. This
method may be used to purchase an interest in whole or in part.
Second, the Employee may notify the Company that he wishes to
exercise the options under the Cashless Exercise Provisions
outlined below.
(i) If the Employee wishes to exercise his options under the
Cashless Exercise Provisions, he shall notify the Company in
writing at least sixty (60) days prior to the desired exercise
date. The Cashless exercise date may occur only at the end of
the annual accounting year. Within fifteen (15) days of
receiving notice, the Company shall appoint an independent
appraiser who is an expert in the valuation of wireless
telecommunication businesses to prepare an estimated value for
the Company within forty-five (45) days after his
3
<PAGE> 4
appointment, the Company Value. Such value shall not include
any provisions for a minority or marketability discount. If
the Employee does not agree with the Company appointed
appraiser's valuation of the business, he may hire, at his own
expense, a second independent appraiser who is an expert in
the valuation of wireless telecommunication businesses to
prepare a second valuation. If the second valuation is within
10% of the valuation prepared by the Company's appointed
appraiser, the Company Value shall be the arithmetic mean of
the two (2) valuations.
If the two (2) valuations are not within 10% of each other,
the Company and Employee will appoint and split the cost of
hiring a third independent appraiser who is an expert in the
valuation of wireless telecommunication businesses to prepare
a third valuation.
If two (2) of the fair market values determined by the
appraisers are within 10% of one another, and the third value
is not within 10% of the other fair market values, then the
Company Value will be the arithmetic mean of the two (2) more
closely aligned fair market values.
If none of the three (3) valuations are within 10% of each
other, then the Company Value will be the average of all three
(3) valuations.
(ii) Using the Company Value estimated above, the value of the
Employee's options shall be calculated. The value of an option
shall be the value of the Company, times the percent interest
represented by the option, less the Exercise Price of the
option, less any unpaid balance of Employee's loan as
described in Paragraph 7(b). The sum of all such option values
shall be the Total Option Value.
(iii) In exchange for the Employee's options, the Company
shall then issue an interest in the Company equal to the Total
Option Value, divided by the Company Value.
(6) Termination of Employment. If the Employee's employment is
terminated prior to September 30, 2001, for any reason, the Company
shall have the absolute right to purchase the Employee's stock options
at the Total Option Value described above, at any time after October 2,
2003.
3. EMPLOYEE BENEFITS. The Employee will be entitled to participate in all
incentive, retirement, profit-sharing, life, medical, disability and other
benefit plans and
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<PAGE> 5
programs (collectively "Benefit Plans") as are from time to time generally
available to other executives of the Company with comparable responsibilities,
subject to the provisions of those programs. Without limiting the generality of
the foregoing, the Company will provide the Employee with basic health and
medical benefits on the terms that such benefits are provided to other
executives of the Company with comparable responsibilities. The Employee will
also be entitled to a minimum of three (3) weeks paid vacation per year.
Vacation time must be used during the year in which it accrues. Unused vacation
time may not be carried over into the next employment year. Unused vacation time
will not be paid to the Employee upon termination of the Employee's employment.
4. REIMBURSEMENT OF EXPENSES.
(a) The Company will promptly reimburse the Employee, in accordance with
the Company's policies and practices in effect from time to time, for
all expenses reasonably incurred by the Employee in performance of the
Employee's duties under this Agreement.
(b) In addition to reimbursed expenses, Employee is entitled to $600.00
per month for a vehicle allowance plus the standard mileage rate allowed
by the Internal Revenue Service, and set forth in a Revenue Procedure
("Rev. Proc.") each year.
(1) In 1998, the standard mileage rate is 32.5(cent) per mile as
set forth in Rev. Proc. 97-58, 1997-52 I.R.B. 24, 12/27/97.
(2) Business mileage does not include commuting from Employee's
residence to the Company's headquarters.
(3) Employee is responsible for proper substantiation and reporting
of business mileage and/or actual expenses.
(4) Employee acknowledges that the payment to him of a monthly
vehicle allowance plus the standard mileage rate may result in
taxable income if the business portion of actual automobile
expenses is less than the total amount paid to employee under this
subsection, or if employee does not maintain the records required
by the Internal Revenue Code and the Regulations thereunder.
Employee has been advised to consult a tax advisor to determine the
taxability of payments under this subsection, and the record
keeping requirements associated with the travel and expenses
associated with such payments.
5. TERMINATION. The Employee's employment by the Company: (a) shall
terminate upon the Employee's death or disability (as defined below); (b) may be
terminated by the Company without cause at any time beginning on the first day
of the thirteenth (13th) month after the Commencement Date; (c) may be
terminated by the Company for cause (as defined below) at any time.
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<PAGE> 6
(a) The term "disability" means a physical or mental impairment which
renders the Employee unable to carry out the Employee's duties under
this Agreement for more than ninety (90) days in any twelve-month
period.
(b) The term "cause" means (i) the Employee's willful and continued
failure substantially to perform the Employee's duties with the Company,
(ii) any material breach of this Agreement by Employee which is not
cured within thirty (30) days after notice from the Company thereof,
(iii) commission of any act of fraud, embezzlement or dishonesty by the
Employee, (iv) any act or omission which constitutes a breach of that
certain Sprint PCS Management Agreement dated July 17, 1998 ("the Sprint
Agreement"); or (v) any other intentional misconduct by the Employee
adversely affecting the business or affairs of the Company in a material
manner. The term "intentional misconduct by the Employee adversely
affecting the business or affairs of the Company" shall mean such
misconduct that is detrimental to the business or the reputation of the
Company as it is perceived both by the general public and the
telecommunications industry.
6. CONSEQUENCES OF TERMINATION.
(a) CONSEQUENCES OF TERMINATION FOR CAUSE. If the Employee's employment
is terminated for cause, (i) this Agreement terminates immediately, (ii)
except as may have vested or accrued or been paid or become payable
prior to the date of such termination or otherwise required under
applicable law, from and after such date, the Company shall be under no
obligation to pay the Employee any compensation (base salary or bonus)
pursuant to this Agreement, and (iii) the Employee's benefits and rights
under any Benefit Plan shall be paid, retained or forfeited in
accordance with the terms of such plan; provided, however, that Employer
shall have no obligation to make any payments toward these benefits for
Employee from and after termination.
(b) CONSEQUENCES OF TERMINATION ON EMPLOYEE'S DEATH OR DISABILITY. If
the Employee's employment is terminated because of the Employee's death
or disability, (i) this Agreement terminates immediately, (ii) the
Employee or his legal representative or estate, as the case may be, will
be entitled to receive any base salary due to the Employee through the
last day of employment, plus any accrued but unpaid bonus, to which the
Employee may have been entitled on the last day of employment, but had
not yet received, and (iii) the Employee's benefits and rights under any
Benefit Plan shall be paid, retained or forfeited in accordance with the
terms of such plan; provided, however, that Employer shall have no
obligation to make any payments toward these benefits for Employee from
and after termination.
(c) CONSEQUENCES OF TERMINATION FOR ANY REASON OTHER THAN FOR CAUSE OR
EMPLOYEE'S DEATH OR DISABILITY.
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<PAGE> 7
(1) If the Employee's employment is terminated, prior to September
30, 2001, for any reason other than for cause or Employee's death
or disability, (i) the Company will pay the Employee, in full
satisfaction of all of its compensation (base salary and bonus)
obligations under this Agreement, an amount (the "Termination
Payment") equal to the sum of any base salary due to the Employee
through the last day of employment, plus any accrued but unpaid
bonus, to which the Employee may have been entitled on the last day
of employment, but not yet received; (ii) in the event of
termination without cause, the Company will pay the Employee
severance pay equal to six (6) months' base salary; and (iii) the
Employee's benefits and rights under any Benefit Plan, other than
any basic health and medical benefit plan, shall be paid, retained
or forfeited in accordance with the terms of such plan; provided,
however, that Employer shall have no obligation to make any
payments toward these benefits for Employee from and after
termination.
(2) The Termination Payment
a. will be in addition to any salary and bonus otherwise paid
during the fiscal year in which the Termination Event occurs;
b. will be subject to offset for any advances, amounts
receivable, loans (except for the loan in subsection 7(b)
herein), including accrued interest, outstanding on the date
of the Termination Event; and
c. will not be subject to offset on account of any
remuneration paid or payable to the Employee for any
subsequent employment the Employee may obtain, whether during
or after the period during which the Termination Payment is
made, and the Employee shall have no obligation whatever to
seek any subsequent employment.
(3) For purposes of this Agreement, the term "Termination Event"
shall mean (i) the Employee's receipt of a Non-Continuation Notice
from the Company, or, (ii) termination of the Employee's employment
by the Company for any reason other than for cause or the
Employee's death or disability, or (iii) the Employee's submission
of a Non-Continuation Notice to the Company notifying the Company
of the Employee's voluntary termination of employment.
a. "Non-Continuation Notice" means written notice from the
Employee or the Company to the other that the Employee or
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<PAGE> 8
the Company does not wish to continue the Employee's
employment hereunder.
7. EMPLOYEE'S OFFICE/RELOCATION. Initially, the Employee's office will be
located in the Company's offices in Lubbock, Texas. In the event the Employee
relocates to a location outside the San Antonio, Texas, area, the Company will
(a) pay or reimburse the Employee for reasonable relocation expenses;
including (i) two (2) house-hunting trips not to exceed $1,000.00 per
trip, (ii) the reasonable cost to pack, transport, and unpack Employee's
household goods and vehicles, (iii) real estate sales commission up to
six percent (6%) real estate commission paid in connection with the sale
of Employee's current residence, (iv) six (6) months' temporary housing
expense, not to exceed $1,500.00 per month, and (v) $2,500.00 to cover
incidental expenses related to the relocation; and
(b) upon Employee's providing the Company with written notice as to
Employee's intent to relocate, loan Employee $100,000.00 for a period of
fifteen (15) years at the Wall Street Journal prime rate of interest
then in effect.
(1) The loan shall be payable in equal monthly installments of
principal and interest until paid in full, said payments beginning
one (1) year after the date the loan is advanced, for a loan
amortization period of fourteen (14) years.
(2) If Employee's employment with the Company terminates, prior to
September 30, 2001, for any reason, the loan, plus any accrued
interest, is due and payable within two (2) years after the date of
termination.
(3) The loan shall be secured by Employee's Stock Options provided
in this Agreement.
8. NON-COMPETITION BY EMPLOYEE. During the term of this Agreement, the
Employee shall not, directly or indirectly, either as an Employee, Employer,
Consultant, Agent, Principal, Partner, Corporate Officer, Director or in any
other individual or representative capacity, engage or participate in any
business that is in competition in any manner whatever with the business of the
Company. For these purposes, the business of the Company is the PCS business,
including all aspects of PCS, within the Service Area as that term is defined in
the Schedule of Definitions referred to in and incorporated by reference into
the Sprint Agreement. Furthermore, upon the expiration of this Agreement or the
termination of this Agreement, prior to September 30, 2001, for any reason, the
Employee expressly agrees not to engage or participate, directly or indirectly,
either as an Employee, Employer, Consultant, Agent, Principal, Partner,
Stockholder, Corporate Officer, Director or in any other individual or
representative capacity, in any business located within and/or doing business
within the Service Area as defined above, that is in competition with the
business of the Company for a period of two (2) years. The parties agree that
the Company has a legitimate interest in protecting the business and goodwill of
the Company that has developed in the areas of the Company's business and in the
geographical areas
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<PAGE> 9
of this Covenant Not To Compete as a result of the operations of the Company.
The parties agree that the Company is entitled to protection of its interests in
these areas. The parties further agree that the limitations as to time,
geographical area, and scope of activity to be restrained do not impose a
greater restraint upon Employee than is necessary to protect the goodwill or
other business interest of the Company. The parties further agree that in the
event of a violation of this Covenant Not To Compete, that the Company shall be
entitled to the recovery of damages from Employee and/or an injunction against
Employee for the breach or violation or continued breach or violation of this
Covenant. This Covenant Not To Compete shall not prohibit the Employee from
owning or purchasing any corporate securities that are regularly traded on a
recognized stock exchange or over-the-counter market.
9. CONFIDENTIAL INFORMATION OF EMPLOYEE. During the time of the Employee's
employment by the Company, the Company will provide to Employee certain
information that is confidential to the Company. This confidential information
will include, but not be limited to, client, customer and/or mailing lists as
well as marketing information as well as information containing other contacts
within the PCS and telecommunications industries. Such information may also
include information that may constitute a trade secret as to the Company. This
confidential information belongs to the Company and is vital to the Company's
business. The disclosure of this confidential information could be harmful to
the Company's business.
10. NO DISCLOSURE OF CONFIDENTIAL INFORMATION. The parties agree that the
Employer has a legitimate interest in protecting this confidential information
of the Company. The parties agree that the Company is entitled to protection of
its interests in this confidential information. Employee agrees that Employee
will not disclose to anyone or any third party any of the confidential
information referred to in the preceding paragraph. Employee acknowledges that
the disclosure of the above described confidential information belonging to the
Company to anyone or any third party could cause monetary loss and damages to
the Company. The parties further agree that in the event of a violation of this
covenant against non-disclosure of confidential information, that the Company
shall be entitled to a recovery of damages from Employee and/or an injunction
against Employee for the breach or violation or continued breach or violation of
this covenant.
11. EXCEPTIONS TO NON-DISCLOSURE AND NON-COMPETITION COVENANTS.
Notwithstanding anything herein to the contrary or apparently to the contrary,
the following shall not be a violation or breach of the non-disclosure of
confidential information and/or the non-competition covenants contained in this
Agreement. Employee may invest in an entity involved in the PCS or
telecommunications industries, provided that Employee is only an investor and
such investment does not in any way involve actual active control of or actual
active management of the entity. The mere investment by Employee in an entity
involved in the PCS or telecommunications industries, without any control and
without any management of the entity, will not be a violation of the
non-disclosure and non-competition covenants contained in this Agreement. While
such passive role shall not be deemed to be a breach of these covenants,
Employee shall not disclose any trade secrets of the Company to any third party
or entity.
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<PAGE> 10
12. DISPUTES. The Company and Employee agree to the following in regard to
any disputes between them arising under this Agreement.
(a) MEDIATION. The Company and Employee agree to mediate any dispute
arising under this Agreement. In the event of any dispute, the parties,
within thirty (30) days of a written request for mediation, shall
attend, in good faith, a mediation in order to make a good faith
reasonable effort to resolve any dispute arising under this Agreement.
The parties shall attempt, in good faith, to agree to a mediator. If
unable to so agree, the parties, in that event, will move to arbitration
as provided in this Agreement and there will be no mediation. If this
good faith mediation effort fails to resolve any dispute arising under
this Agreement, the Company and Employee agree to arbitrate any dispute
arising under this Agreement. This arbitration shall occur only after
the mediation process described herein.
(b) ARBITRATION. The Company and Employee agree, as concluded by the
parties to this Agreement on the advice of their counsel, and as
evidenced by the signatures of the parties and of their respective
attorneys, it is agreed that all questions as to rights and obligations
arising under the terms of this Agreement are subject to arbitration and
such arbitration shall be governed by the provisions of the Texas
General Arbitration Act (Texas Civil Practice and Remedies Code Section
171.001 et seq as it may be amended from time to time).
(c) DEMAND FOR ARBITRATION. If a dispute should arise under this
Agreement, either party may within thirty (30) days make a demand for
arbitration by filing a demand in writing with the other.
(d) APPOINTMENT OF ARBITRATORS. The parties to this Agreement may agree
on one arbitrator, but in the event that they cannot so agree, there
shall be three arbitrators, one named in writing by each of the parties
within thirty (30) days after demand for arbitration is made, and a
third to be chosen by the two so named. The arbitrators among themselves
shall appoint a presiding arbitrator. Should either party fail to timely
join in the appointment of the arbitrators, the arbitrators shall be
appointed in accordance with the provisions of Texas Civil Practice and
Remedies Code Section 171.041.
(e) HEARING. All arbitration hearings conducted under the terms of this
Agreement, and all judicial proceedings to enforce any of the provisions
of this Agreement, shall take place in Lubbock County, Texas. The
hearing before the arbitrators of the matter to be arbitrated shall be
at the time and place within that County selected by the arbitrators or
if deemed by the arbitrators to be more convenient for the parties or
more economically feasible, may be conducted in any city within the
Service Area as defined herein or within the State of Texas.
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<PAGE> 11
(f) ARBITRATION AWARD. If there is only one arbitrator, his or her
decision shall be binding and conclusive. The submission of a dispute to
the arbitrators and the rendering of their decision shall be a condition
precedent to any right of legal action on the dispute. A judgment
confirming the award of the arbitrators may be rendered by any court
having jurisdiction; or the court may vacate, modify, or correct the
award in accordance with the provisions of the Texas General Arbitration
Act (Texas Civil Practice and Remedies Code Section 171.087 et seq as it
may be amended from time to time).
(g) COSTS OF ARBITRATION. The costs and expenses of arbitration,
including the fees of the arbitrators, shall be advanced by the Company,
but will ultimately be borne by the losing party or in such proportions
as the arbitrators shall determine.
(h) CONDUCT OF ARBITRATION. Any arbitration brought under the terms of
this Agreement shall be conducted in the following manner:
(1) Time Limitations. The parties agree that the following time
limitations shall govern the arbitration proceedings conducted
under the terms of this Agreement:
(a) Any demand for arbitration must be filed within thirty
(30) days of the date the mediation is deemed unsuccessful, or
thirty (30) days after the date of the written request for
mediation, whichever is later.
(b) Each party must select an arbitrator within thirty (30)
days of receipt of notice that an arbitration proceeding has
commenced. In the event that no such selection is made, the
arbitrator selected by the other party may conduct the
arbitration proceeding without selecting any other arbitrator.
(c) The hearing must be held within sixty (60) days of the
date on which the third arbitrator is selected.
(d) Hearing briefs must be submitted no later than ten (10)
days after the hearing.
(e) The arbitration award must be made within thirty (30) days
of the receipt of hearing briefs.
(2) Discovery in Arbitration Proceedings. The parties agree that
discovery may be conducted in the course of the arbitration
proceeding in accordance with the following provisions:
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(a) Each party may notice no more than three (3) depositions
in total, including both witnesses adherent to the adverse
party and third-party witnesses.
(b) Each party may serve no more than twenty-five (25)
requests for admission on the other party. No requests may be
served within ten (10) days of the date of hearing, unless the
parties otherwise stipulate. All requests for admission shall
be responded to within ten (10) days of service of the
requests, unless the parties otherwise stipulate.
(c) Each party may serve no more than fifty (50)
interrogatories on the other party. No interrogatory shall
contain subparts, or concern more than one topic or subject of
inquiry. Interrogatories may not be phrased so as to
circumvent the effect of this clause. No interrogatories may
be served within ten (10) days of the date of hearing, unless
the parties otherwise stipulate. All interrogatories shall be
responded to within ten (10) days of service of the
interrogatories, unless the parties otherwise stipulate.
(d) Each party may serve no more than ten (10) requests for
production of documents on the other party. No request for
production of documents shall contain subparts, or seek more
than one type of document. Requests for production of
documents may not be phrased so as to circumvent the effect of
this clause. Unless the parties otherwise stipulate, requests
for production of documents may not be served within ten (10)
day of the date of hearing, and all requests for production of
documents shall be responded to within ten (10) days of
service of the requests.
(e) If any party contends that the other party has served
discovery requests in a manner not permitted by this Section,
or that the other party's response to a discovery request is
unsatisfactory, the party may request the presiding arbitrator
to resolve such discovery disputes. The presiding arbitrator
shall prescribe the procedure by which such disputes are
resolved. Any discovery dispute may be handled by telephone
conference among the parties and the presiding arbitrator.
13. SUCCESSORS; BINDING AGREEMENT; ASSIGNMENT. The Company shall require
any successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business or assets of the Company
to expressly assume and agree in writing to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place, provided that the Employee need only be a
senior executive officer with the
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<PAGE> 13
authority, powers and responsibilities set forth in Section 1 hereof with
respect to the subsidiary or subdivision which operates the business of the
Company as it exists on the date of such business combination. Failure of the
Company to obtain such express assumption and agreement at or prior to the
effectiveness of any such succession shall be a breach of this Agreement and
shall entitle the Employee to compensation and benefits from the Company in the
same amount and on the same terms to which the Employee would be entitled
hereunder if the Company terminated the Employee's employment without Cause,
except that for purposes of implementing the foregoing, the date on which any
such succession becomes effective shall be deemed the date of termination. As
used in this Agreement, "Company" shall mean the Company as hereinbefore defined
and any successor to its business or assets as aforesaid which assumes and
agrees to perform this Agreement by operation of law, or otherwise. The Company
may not assign this Agreement, except in connection with, and to the acquiror
of, all or substantially all of the business or assets of the Company, provided
such acquiror expressly assumes and agrees in writing to perform this Agreement
as provided in this Section. The Employee may not assign his rights or delegate
his duties or obligations under this Agreement.
14. NOTICE. Any notices or other communications required or permitted to be
given hereunder shall be in writing and shall be deemed to have been duly made
or given when hand delivered, one (1) business day after being transmitted by
telecopier (confirmed by mail) or sent by overnight courier against receipt, or
five (5) days after being mailed by registered or certified mail, postage
prepaid, return receipt requested, to the party to whom such communication is
given at the address set forth below, which address may be changed by notice
given in accordance with this Section:
If to the Company: Alamosa PCS LLC
P. O. Box 65700
Lubbock, Texas 79464-5700
Attn: David E. Sharbutt, Chairman
With Copy to: Jack McCutchin, Jr.
Crenshaw, Dupree & Milam, L.L.P.
P. O. Box 1499
Lubbock, Texas 79408-1499
If to the Employee: Jerry Brantley
14639 Snip
San Antonio, Texas 78248
With Copy to: Paul T. Curl
300 Convent, Suite 2500
San Antonio, Texas 78205
15. MISCELLANEOUS.
(a) SEVERABILITY. If any provision of this Agreement shall be declared
to be invalid or unenforceable, in whole or in part, such invalidity or
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<PAGE> 14
unenforceability shall not affect the remaining provisions hereof which
shall remain in full force and effect.
(b) NO ORAL MODIFICATION, WAIVER OR DISCHARGE. No provisions of this
Agreement may be modified, waived or discharged orally, but only by a
waiver, modification or discharge in writing signed by the Employee and
such officer as may be designated by the Board of Managers of the
Company to execute such a waiver, modification or discharge. No waiver
by either party hereto at any time of any breach by the other party
hereto of, or failure to be in compliance with, any condition or
provision of this Agreement to be performed by such other party shall be
deemed a waiver of similar or dissimilar provisions or conditions at the
time or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to
the subject matter hereof have been made by either party which are not
expressly set forth in this Agreement or in the documents attached as
Exhibits to this Agreement.
(c) ENTIRE AGREEMENT. This Agreement and the Exhibits attached hereto
represent the entire agreement of the parties and shall supersede any
and all previous contracts, arrangements or understandings, express or
implied, between the Employee and the Company with respect to the
subject matter hereof.
(d) SECTION HEADINGS FOR CONVENIENCE ONLY. The section headings herein
are for the purpose of convenience only and are not intended to define
or limit the contents of any section.
(e) EXECUTION IN COUNTERPARTS. The parties may sign this Agreement in
counterparts, all of which shall be considered one and the same
instrument.
(f) GOVERNING LAW AND PERFORMANCE. This Agreement shall be governed by
the laws of the State of Texas and shall be deemed to be executed in and
performance called for in Lubbock, Lubbock County, Texas.
* * * * *
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DATED this 2nd day of October, 1998, to be effective October 1, 1998.
COMPANY
ALAMOSA PCS LLC
By /s/ David E. Sharbutt
--------------------------------------
DAVID E. SHARBUTT, Chairman
EMPLOYEE
/s/ Jerry W. Brantley
-----------------------------------------
JERRY W. BRANTLEY
Approved as to the mediation and arbitration provisions in Paragraph 12 above.
CRENSHAW, DUPREE & MILAM, L.L.P.
By /s/ Jack McCutchin, Jr.
--------------------------------------
JACK McCUTCHIN, JR.
Attorneys for Alamosa PCS LLC
/s/ Paul T. Curl
-----------------------------------------
PAUL T. CURL
Attorney for Employee
Attachment: Exhibit "A" - The Milestones
15
<PAGE> 1
EXHIBIT 10.19
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is entered into this date
by and between ALAMOSA PCS LLC, a Texas Limited Liability Company, having its
principal executive office located at 4747 S. Loop 289, Lubbock, Texas 79424
(the "Company"), and DON STULL, an individual residing at Lubbock, Texas (the
"Employee").
WITNESSETH:
WHEREAS, the parties are entering into this Agreement to set forth and
confirm their respective rights and obligations with respect to the Employee's
employment by the Company.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto mutually agree as follows:
1. EMPLOYMENT; TERM; DUTIES. The Company hereby employs the Employee as
Chief Technology Officer. The term of the Employee's employment, pursuant to
this Agreement, will commence on October 29, 1998, (the "Commencement Date") and
will continue for a period of three (3) years, or the termination of this
Agreement, as described in Section 5 hereof, whichever shall occur first. The
Employee hereby accepts such employment, and agrees to devote his full time and
effort to the business and affairs of the Company with such duties consistent
with the Employee's position as may be assigned to him from time to time by the
Chief Executive Officer or the Chief Operating Officer of the Company.
2. COMPENSATION. In consideration of all services rendered by the
Employee during the term of his employment, pursuant to this Agreement, the
Company will provide the Employee with the following compensation:
(a) BASE SALARY. The Company will pay the Employee a base salary at
the annual rate of $90,000.00, payable semi-monthly in accordance
with the Company's payroll practices from time to time in effect.
The Company will review the Employee's salary at least once each
year and may, in its discretion, increase the Employee's salary.
Notwithstanding anything to the contrary in this Agreement, nothing
in this Agreement shall be deemed to impose any obligation on the
Company or any of its subsidiaries to continue to employ the
Employee beyond the term of employment set forth herein, or on the
Employee to remain in the employ of the Company or any of its
subsidiaries, beyond the term of employment set forth herein.
(b) BONUS. In addition to the Employee's base salary, for each
quarterly period the Employee is employed by the Company, beginning
January 1, 1999, the Employee is entitled to a Quarterly Bonus of
$7,500.00 for each calender quarter period in which the milestones
(the "Milestones") set forth in the attached Exhibit "A", which is
incorporated by this reference as if copied herein in full, are met
or exceeded. This bonus shall be referred to
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<PAGE> 2
as the "Quarterly Bonus". This Quarterly Bonus will be paid within
forty-five (45) days of the end of each calendar quarter. If the
Milestones are not met, Employee is entitled to a portion of the
Quarterly Bonus, calculated based on the pro rata portion of the
Milestones met. For each quarterly period in which the Exceptional
Milestones, as set forth in Exhibit "A", are met or exceeded,
Employee is entitled to an additional $7,500.00 Bonus. This
additional Bonus shall be referred to as the "Exceptional Quarterly
Bonus". This Exceptional Quarterly Bonus will be paid within
forty-five (45) days of the end of each calendar quarter. If the
Exceptional Milestones are not met, Employer is entitled to a
portion of the Exceptional Bonus, calculated based on the prorata
portion of the Exceptional Milestones met.
(c) EMPLOYEE INCENTIVE OWNERSHIP PLAN. The Employee shall be granted
an Incentive Ownership Plan. This Incentive Ownership Plan shall
consist of an Option granted to the Employee to purchase an interest
in the Company at the price set forth in this Incentive Ownership
Plan. This Option granted to Employee shall be an Option to purchase
Incentive Units in the Company. These Incentive Units shall be
non-voting Class II Membership in the Company, pursuant to Section
3.11(b) of the Regulations of the Company.
The Purchase Price for each category of Incentive Units is set forth
in the attached Exhibit "B", which is incorporated by this reference
as if copied herein in full. This Exhibit "B" also sets forth the
Purchase Price for each category of Incentive Units based upon the
date of the exercise of any of the Options set forth herein.
(1) Incentive Units Granted to Employee. Employee is hereby
granted the following number of Incentive Units in the
following categories, to-wit:
Category Number of Units
-------- ---------------
Series 8 100
Series 15 100
Series 25 100
---
Total Units 300
Each Incentive Unit shall represent an interest in the Company,
which interest shall be calculated as follows:
<TABLE>
<S> <C>
500 x 100 = % ownership interest in
----------------------------------------
(50,000,000 plus additional capital calls) the Company
</TABLE>
The term "additional capital calls" used above means any additional
voluntary capital contributions made, pursuant to Section 2.3 of the
Regulations of the Company.
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<PAGE> 3
(2) Vesting of Option. The Option granted to Employee shall vest
over a period beginning eighteen (18) months after the Commencement
Date. On the first day following eighteen (18) months after the
Commencement Date, forty-six percent (46%) of the Option shall be
vested giving the Employee the right to purchase forty-six (46)
Units in each series. For each month of the Employee's continued
employment following the initial eighteen (18) months of the
Employees employment, Employee shall have the right to purchase an
additional three (3) Units in each series. This monthly vesting
shall continue until such time as the Employee has an Option to
purchase a maximum of 100 Units of each series as indicated above.
(3) Purchase Price. The Purchase Price (also referred to as the
"Exercise Price" or the "Strike Price") for each Unit and for each
series of Units, as of the actual date of the exercise of the
Option, shall be as shown on the attached Exhibit "B", which is
incorporated herein by this reference as if copied herein in full.
This Purchase Price as reflected in Exhibit "B" for each Unit
granted to Employee in this Employee Incentive Ownership Plan shall
not change.
(4) Expiration. All Options granted herein shall expire December 31,
2006. If Employee has not exercised all of the Options granted
herein by that date, any unexercised Options at that time will
expire and Employee will have no right to any Options of any type or
kind from and after that date.
(5) Exercise of Options. The Employee must give the Company at least
thirty (30) days notice of Employee's desire to exercise any of the
Employee's vested Options. This notice must be given to the Company
prior to November 1,2006. If the Employee gives such notice, the
Employee must either (1) pay to the Company an amount equal to the
price per Unit as shown in Exhibit "B", times the number of Units,
or (2) the Employee may notify the Company that he wishes to
exercise the Options under the Cashless Exercise Provisions outlined
below. The Employee may exercise the Option granted herein for all
or any part of the Units or series of Units granted to Employee in
this Employee Incentive Ownership Plan. After December 31, 2006,
Employee shall have no further Options of any type or kind. Employee
shall forfeit, waive and release any portion of Employee's Option
for Units not paid for or exercised by Employee by on or before
December 31, 2006. Employee may not exercise Employee's Option prior
to July 1, 2000, and may not exercise Employee's Option after
December 31, 2006. Employee may exercise this Option for all vested
Units of Employee, regardless of whether or not Employee is an
Employee of the Company.
(i) If the Employee wishes to exercise his Options
under the payment provisions, the Employee shall pay
all amounts due and payable to the Company within
sixty (60) days of Employee notifying the Company of
Employee's desire to exercise Employee's vested
Options.
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<PAGE> 4
(ii) If the Employee wishes to exercise his Options
under the Cashless Exercise Provisions, he shall
notify the Company in writing at least sixty (60)
days prior to the desired exercise date. The Cashless
Exercise date may occur only at the end of the annual
accounting year of the Company. Within fifteen (15)
days of receiving notice, the Company shall appoint
an independent appraiser who is an expert in the
valuation of wireless telecommunication businesses to
prepare an estimated value for the Company within
forty-five (45) days after his appointment. This
estimated value for the Company shall be the Company
Value. Such value shall not include any provisions
for a minority or marketability discount. If the
Employee does not agree with the Company appointed
appraiser's valuation of the business, he may hire,
at his own expense, a second independent appraiser
who is an expert in the valuation of wireless
telecommunication businesses to prepare a second
valuation.
If the second valuation is within ten percent (10%)
of the valuation prepared by the Company's appointed
appraiser, the Company Value shall be the arithmetic
mean of the two (2) valuations.
If the two (2) valuations are not within ten percent
(10%) of each other, the Company and Employee will
appoint and split the cost of hiring a third
independent appraiser, who is an expert in the
valuation of wireless telecommunication businesses,
to prepare a third valuation.
If two (2) of the fair market values determined by
the appraisers are within ten percent (10%) of one
another, and the third value is not within ten
percent (10%) of the other fair market values, then
the Company Value will be the arithmetic mean of the
two (2) more closely aligned fair market values.
If none of the three (3) valuations are within ten
percent (10%) of each other, then the Company Value
will be the average of all three (3) valuations.
(iii) Using the Company Value estimated above, the
value of the Employee's Options shall be calculated.
The value of an Option shall be the value of the
Company, times the percent interest of the Company
represented by the Option, less the Exercise Price of
the Option. The percent interest of the Company
represented by the Option shall be determined as set
forth in Paragraph (1) above. The sum of all such
Option values shall be the Total Option Value.
(iv) In exchange for the Employee's Options, the
Company shall then issue to the Employee, Incentive
Units in the Company equal to the Total Option Value,
divided by the Company Value. These Incentive
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<PAGE> 5
Units shall be issued prorata among any Series of
Units to which Employee may be entitled at the time
of Employee's exercise of these Cashless Exercise
Provisions.
(6) Sale of Employer. Upon the sale of the Company or upon the sale
of substantially all of the assets of the Company, all vested Units
of Employee's Option shall be considered to be exercised. In such
event, Employee will receive, as the total proceeds for Employee's
Options granted herein, the difference in the sales price of the
Company, after deducting all debts to be paid by the Company,
computed on a per Unit price or the total sales price for
substantially all of the assets of the Company, after deducting all
debts to be paid by the Company, calculated on a per Unit price,
less the applicable purchase price per Unit, as of the date of the
sale, as shown on the attached Exhibit "B", times the number of
vested units granted to Employee. This difference to be paid to
Employee shall be paid by the Company to Employee within two (2)
weeks of closing the sale. If Employee has purchased any of
Employee's Units prior to such sale, the Employee shall receive that
portion of the sales proceeds attributable to those Units actually
purchased by Employee at the time of the sale, less a prorata
deduction for any debts to be paid by Employer attributable to those
Units. Employee agrees to sign any documents necessary to convey by
closing these Units free and clear of all claims or liens of any
type or kind. If Employee has purchased some Units by the time of
the closing but also is entitled to some additional vested Units
that Employee has not yet paid for, at the date of the sale,
Employee shall be entitled to the proceeds as described above, both
for Employee's purchased and vested but not yet purchased Units.
(7) Termination of Employment. If the Employee's employment is
terminated prior to October 31, 2001, for any reason, the Company
may purchase the Employee's vested Options and its applicable Units
by paying to Employee an amount equal to the fair market value of
each vested Unit, less the Purchase Price for each vested unit as
shown on the attached Exhibit "B", as of the date that the Company
actually purchases the vested Units of Employee. This right to
purchase by the Company expires on December 31, 2006, and if the
Company has not paid to Employee the amount described above by that
time, this right to purchase by the Company shall expire.
(8) Distributions. No distributions will be paid by the Company on
any Option or vested Units under this Employee Incentive Plan, until
such time as the Employee shall have actually purchased or acquired
the Employee's vested Units or upon the sale of Employer as set
forth in Paragraph (6) above.
3. EMPLOYEE BENEFITS. The Employee will be entitled to participate in
all incentive, retirement, profit-sharing, life, medical, disability and other
benefit
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<PAGE> 6
plans and programs (collectively "Benefit Plans") as are from time to time
generally available to other executives of the Company with comparable
responsibilities, subject to the provisions of those programs. Without limiting
the generality of the foregoing, the Company will provide the Employee with
basic health and medical benefits on the terms that such benefits are provided
to other executives of the Company with comparable responsibilities. The
Employee will also be entitled to a minimum of two (2) weeks paid vacation per
year. Vacation time must be used during the year in which it accrues. Unused
vacation time may not be carried over into the next employment year. Unused
vacation time will not be paid to the Employee upon termination of the
Employee's employment.
4. REIMBURSEMENT OF EXPENSES.
(a) The Company will promptly reimburse the Employee, in accordance
with the Company's policies and practices in effect from time to
time, for all expenses reasonably incurred by the Employee in
performance of the Employee's duties under this Agreement.
(b) In addition to reimbursed expenses, Employee is entitled to
$400.00 per month for a vehicle allowance, plus 18 cents per mile
for all business related mileage.
(1) Business mileage does not include commuting from Employee's
residence to the Company's headquarters.
(2) Employee is responsible for proper substantiation and
reporting of business mileage and/or actual expenses.
(3) Employee acknowledges that the payment to him of a monthly
vehicle allowance plus the standard mileage rate may result in
taxable income if the business portion of actual automobile
expenses is less than the total amount paid to employee under
this subsection, or if employee does not maintain the records
required by the Internal Revenue Code and the Regulations
thereunder. Employee has been advised to consult a tax advisor to
determine the taxability of payments under this subsection, and
the record keeping requirements associated with the travel and
expenses associated with such payments.
5. TERMINATION. The Employee's employment by the Company: (a) shall
terminate upon the Employee's death or disability (as defined below); (b) may be
terminated by the Company without cause at any time beginning on the first day
of the thirteenth (13th) month after the Commencement Date; (c) may be
terminated by the Company for cause (as defined below) at any time.
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<PAGE> 7
(a) The term "disability" means a physical or mental impairment
which renders the Employee unable to carry out the Employee's duties
under this Agreement for more than ninety (90) days in any
twelve-month period.
(b) The term "cause" means (i) the Employee's willful and continued
failure substantially to perform the Employee's duties with the
Company, (ii) any material breach of this Agreement by Employee
which is not cured within thirty (30) days after notice from the
Company thereof, (iii) commission of any act of fraud, embezzlement
or dishonesty by the Employee, (iv) any act or omission which
constitutes a breach of that certain Sprint PCS Management Agreement
dated July 17, 1998 ("the Sprint Agreement"); or (v) any other
intentional misconduct by the Employee adversely affecting the
business or affairs of the Company in a material manner. The term
"intentional misconduct by the Employee adversely affecting the
business or affairs of the Company" shall mean such misconduct that
is detrimental to the business or the reputation of the Company as
it is perceived both by the general public and the
telecommunications industry.
6. CONSEQUENCES OF TERMINATION.
(a) CONSEQUENCES OF TERMINATION FOR CAUSE. If the Employee's
employment is terminated for cause, (i) this Agreement terminates
immediately, (ii) except as may have vested or accrued or been paid
or become payable prior to the date of such termination or otherwise
required under applicable law, from and after such date, the Company
shall be under no obligation to pay the Employee any compensation
(base salary or bonus) pursuant to this Agreement, and (iii) the
Employee's benefits and rights under any Benefit Plan shall be paid,
retained or forfeited in accordance with the terms of such plan;
provided, however, that Employer shall have no obligation to make
any payments toward these benefits for Employee from and after
termination.
(b) CONSEQUENCES OF TERMINATION ON EMPLOYEE'S DEATH OR DISABILITY.
If the Employee's employment is terminated because of the Employee's
death or disability, (i) this Agreement terminates immediately, (ii)
the Employee or his legal representative or estate, as the case may
be, will be entitled to receive any base salary due to the Employee
through the last day of employment, plus any accrued but unpaid
bonus, to which the Employee may have been entitled on the last day
of employment, but had not yet received, and (iii) the Employee's
benefits and rights under any Benefit Plan shall be paid, retained
or forfeited in accordance with the terms of such plan; provided,
however, that Employer shall have no obligation to make any payments
toward these benefits for Employee from and after termination.
(c) CONSEQUENCES OF TERMINATION FOR ANY REASON OTHER THAN FOR CAUSE
OR EMPLOYEE'S DEATH OR DISABILITY.
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<PAGE> 8
(1) If the Employee's employment is terminated, prior to October 31,
2001, for any reason other than for cause or Employee's death or
disability, (i) the Company will pay the Employee, in full
satisfaction of all of its compensation (base salary and bonus)
obligations under this Agreement, an amount (the "Termination
Payment") equal to the sum of any base salary due to the Employee
through the last day of employment, plus any accrued but unpaid
bonus, to which the Employee may have been entitled on the last day
of employment, but not yet received; (ii) in the event of
termination without cause, the Company will pay the Employee
severance pay equal to one (1) month's base salary; and (iii) the
Employee's benefits and rights under any Benefit Plan, other than
any basic health and medical benefit plan, shall be paid, retained
or forfeited in accordance with the terms of such plan; provided,
however, that Employer shall have no obligation to make any payments
toward these benefits for Employee from and after termination.
(2) The Termination Payment
a. will be in addition to any salary and bonus otherwise paid
during the fiscal year in which the Termination Event occurs;
b. will be subject to offset for any advances, amounts
receivable, loans, including accrued interest, outstanding on
the date of the Termination Event; and
c. will not be subject to offset on account of any remuneration
paid or payable to the Employee for any subsequent employment
the Employee may obtain, whether during or after the period
during which the Termination Payment is made, and the Employee
shall have no obligation whatever to seek any subsequent
employment.
(3) For purposes of this Agreement, the term "Termination Event"
shall mean (i) the Employee's receipt of a Non-Continuation Notice
from the Company, or, (ii) termination of the Employee's employment
by the Company for any reason other than for cause or the Employee's
death or disability, or (iii) the Employee's submission of a
Non-Continuation Notice to the Company notifying the Company of the
Employee's voluntary termination of employment.
a. "Non-Continuation Notice" means written notice from the
Employee or the Company to the other that the Employee or the
Company does not wish to continue the Employee's employment
hereunder.
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<PAGE> 9
7. NON-COMPETITION BY EMPLOYEE. During the term of this Agreement, the
Employee shall not, directly or indirectly, either as an Employee, Employer,
Consultant, Agent, Principal, Partner, Corporate Officer, Director or in any
other individual or representative capacity, engage or participate in any
business that is in competition in any manner whatever with the business of the
Company. For these purposes, the business of the Company is the PCS business,
including all aspects of PCS, within the Service Area as that term is defined in
the Schedule of Definitions referred to in and incorporated by reference into
the Sprint Agreement. Furthermore, upon the expiration of this Agreement or the
termination of this Agreement, prior to October 31, 2001, for any reason, the
Employee expressly agrees not to engage or participate, directly or indirectly,
either as an Employee, Employer, Consultant, Agent, Principal, Partner,
Stockholder, Corporate Officer, Director or in any other individual or
representative capacity, in any business located within and/or doing business
within the Service Area as defined above, that is in competition with the
business of the Company for a period of two (2) years. The parties agree that
the Company has a legitimate interest in protecting the business and goodwill of
the Company that has developed in the areas of the Company's business and in the
geographical areas of this Covenant Not To Compete as a result of the operations
of the Company. The parties agree that the Company is entitled to protection of
its interests in these areas. The parties further agree that the limitations as
to time, geographical area, and scope of activity to be restrained do not impose
a greater restraint upon Employee than is necessary to protect the goodwill or
other business interest of the Company. The parties further agree that in the
event of a violation of this Covenant Not To Compete, that the Company shall be
entitled to the recovery of damages from Employee and/or an injunction against
Employee for the breach or violation or continued breach or violation of this
Covenant. This Covenant Not To Compete shall not prohibit the Employee from
owning or purchasing any corporate securities that are regularly traded on a
recognized stock exchange or over-the-counter market.
8. CONFIDENTIAL INFORMATION OF EMPLOYEE. During the time of the
Employee's employment by the Company, the Company will provide to Employee
certain information that is confidential to the Company. This confidential
information will include, but not be limited to, client, customer and/or mailing
lists as well as marketing information as well as information containing other
contacts within the PCS and telecommunications industries. Such information may
also include information that may constitute a trade secret as to the Company.
This confidential information belongs to the Company and is vital to the
Company's business. The disclosure of this confidential information could be
harmful to the Company's business.
9. NO DISCLOSURE OF CONFIDENTIAL INFORMATION. The parties agree that
the Employer has a legitimate interest in protecting this confidential
information of the Company. The parties agree that the Company is entitled to
protection of its interests in this confidential information. Employee agrees
that Employee will not disclose to anyone or any third party any of the
confidential information referred to in the preceding paragraph. Employee
acknowledges that the disclosure of the above described confidential information
belonging to the Company to anyone or any third party could cause monetary loss
and damages to the Company. The parties further agree that in the event of a
violation of this covenant against non-disclosure of confidential information,
that the
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Company shall be entitled to a recovery of damages from Employee and/or an
injunction against Employee for the breach or violation or continued breach or
violation of this covenant.
10. EXCEPTIONS TO NON-DISCLOSURE AND NON-COMPETITION COVENANTS.
Notwithstanding anything herein to the contrary or apparently to the contrary,
the following shall not be a violation or breach of the non-disclosure of
confidential information and/or the non-competition covenants contained in this
Agreement. Employee may invest in an entity involved in the PCS or
telecommunications industries, provided that Employee is only an investor and
such investment does not in any way involve actual active control of or actual
active management of the entity. The mere investment by Employee in an entity
involved in the PCS or telecommunications industries, without any control and
without any management of the entity, will not be a violation of the
non-disclosure and non-competition covenants contained in this Agreement. While
such passive role shall not be deemed to be a breach of these covenants,
Employee shall not disclose any trade secrets of the Company to any third party
or entity.
11. DISPUTES. The Company and Employee agree to the following in regard
to any disputes between them arising under this Agreement.
(a) MEDIATION. The Company and Employee agree to mediate any dispute
arising under this Agreement. In the event of any dispute, the
parties, within thirty (30) days of a written request for mediation,
shall attend, in good faith, a mediation in order to make a good
faith reasonable effort to resolve any dispute arising under this
Agreement. The parties shall attempt, in good faith, to agree to a
mediator. If unable to so agree, the parties, in that event, will
move to arbitration as provided in this Agreement and there will be
no mediation. If this good faith mediation effort fails to resolve
any dispute arising under this Agreement, the Company and Employee
agree to arbitrate any dispute arising under this Agreement. This
arbitration shall occur only after the mediation process described
herein.
(b) ARBITRATION. The Company and Employee agree, as concluded by the
parties to this Agreement on the advice of their counsel, and as
evidenced by the signatures of the parties and of their respective
attorneys, it is agreed that all questions as to rights and
obligations arising under the terms of this Agreement are subject to
arbitration and such arbitration shall be governed by the provisions
of the Texas General Arbitration Act (Texas Civil Practice and
Remedies Code Section 171.001 et seq as it may be amended from time
to time).
(c) DEMAND FOR ARBITRATION. If a dispute should arise under this
Agreement, either party may within thirty (30) days make a demand
for arbitration by filing a demand in writing with the other.
(d) APPOINTMENT OF ARBITRATORS. The parties to this Agreement may
agree on one arbitrator, but in the event that they cannot so agree,
there
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shall be three arbitrators, one named in writing by each of the
parties within thirty (30) days after demand for arbitration is
made, and a third to be chosen by the two so named. The arbitrators
among themselves shall appoint a presiding arbitrator. Should either
party fail to timely join in the appointment of the arbitrators, the
arbitrators shall be appointed in accordance with the provisions of
Texas Civil Practice and Remedies Code Section 171.041.
(e) HEARING. All arbitration hearings conducted under the terms of
this Agreement, and all judicial proceedings to enforce any of the
provisions of this Agreement, shall take place in Lubbock County,
Texas. The hearing before the arbitrators of the matter to be
arbitrated shall be at the time and place within that County
selected by the arbitrators or if deemed by the arbitrators to be
more convenient for the parties or more economically feasible, may
be conducted in any city within the Service Area as defined herein
or within the State of Texas.
(f) ARBITRATION AWARD. If there is only one arbitrator, his or her
decision shall be binding and conclusive. The submission of a
dispute to the arbitrators and the rendering of their decision shall
be a condition precedent to any right of legal action on the
dispute. A judgment confirming the award of the arbitrators may be
rendered by any court having jurisdiction; or the court may vacate,
modify, or correct the award in accordance with the provisions of
the Texas General Arbitration Act (Texas Civil Practice and Remedies
Code Section 171.087 et seq as it may be amended from time to time).
(g) COSTS OF ARBITRATION. The costs and expenses of arbitration,
including the fees of the arbitrators, shall be advanced by the
Company, but will ultimately be borne by the losing party or in such
proportions as the arbitrators shall determine.
(h) CONDUCT OF ARBITRATION. Any arbitration brought under the terms
of this Agreement shall be conducted in the following manner:
(1) Time Limitations. The parties agree that the following time
limitations shall govern the arbitration proceedings conducted
under the terms of this Agreement:
(a) Any demand for arbitration must be filed within
thirty (30) days of the date the mediation is deemed
unsuccessful, or thirty (30) days after the date of the
written request for mediation, whichever is later.
(b) Each party must select an arbitrator within thirty
(30) days of receipt of notice that an arbitration
proceeding has commenced. In the event that no such
selection is made, the arbitrator selected by the other
party may conduct the arbitration proceeding without
selecting any other arbitrator.
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(c) The hearing must be held within sixty (60) days of
the date on which the third arbitrator is selected.
(d) Hearing briefs must be submitted no later than ten
(10) days after the hearing.
(e) The arbitration award must be made within thirty
(30) days of the receipt of hearing briefs.
(2) Discovery in Arbitration Proceedings. The parties agree that
discovery may be conducted in the course of the arbitration
proceeding in accordance with the following provisions:
(a) Each party may notice no more than three (3)
depositions in total, including both witnesses adherent
to the adverse party and third-party witnesses.
(b) Each party may serve no more than twenty-five (25)
requests for admission on the other party. No requests
may be served within ten (10) days of the date of
hearing, unless the parties otherwise stipulate. All
requests for admission shall be responded to within ten
(10) days of service of the requests, unless the parties
otherwise stipulate.
(c) Each party may serve no more than fifty (50)
interrogatories on the other party. No interrogatory
shall contain subparts, or concern more than one topic
or subject of inquiry. Interrogatories may not be
phrased so as to circumvent the effect of this clause.
No interrogatories may be served within ten (10) days of
the date of hearing, unless the parties otherwise
stipulate. All interrogatories shall be responded to
within ten (10) days of service of the interrogatories,
unless the parties otherwise stipulate.
(d) Each party may serve no more than ten (10) requests
for production of documents on the other party. No
request for production of documents shall contain
subparts, or seek more than one type of document.
Requests for production of documents may not be phrased
so as to circumvent the effect of this clause. Unless
the parties otherwise stipulate, requests for production
of documents may not be served within ten (10) day of
the date of hearing, and all requests for production of
documents shall be responded to within ten (10) days of
service of the requests.
(e) If any party contends that the other party has
served discovery requests in a manner not permitted by
this Section,
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or that the other party's response to a discovery
request is unsatisfactory, the party may request the
presiding arbitrator to resolve such discovery disputes.
The presiding arbitrator shall prescribe the procedure
by which such disputes are resolved. Any discovery
dispute may be handled by telephone conference among the
parties and the presiding arbitrator.
12. SUCCESSORS; BINDING AGREEMENT; ASSIGNMENT. The Company shall
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business or
assets of the Company to expressly assume and agree in writing to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place, provided that the
Employee need only be a senior executive officer with the authority, powers and
responsibilities set forth in Section 1 hereof with respect to the subsidiary or
subdivision which operates the business of the Company as it exists on the date
of such business combination. Failure of the Company to obtain such express
assumption and agreement at or prior to the effectiveness of any such succession
shall be a breach of this Agreement and shall entitle the Employee to
compensation and benefits from the Company in the same amount and on the same
terms to which the Employee would be entitled hereunder if the Company
terminated the Employee's employment without Cause, except that for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the date of termination. As used in this Agreement,
"Company" shall mean the Company as hereinbefore defined and any successor to
its business or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise. The Company may not assign this
Agreement, except in connection with, and to the acquiror of, all or
substantially all of the business or assets of the Company, provided such
acquiror expressly assumes and agrees in writing to perform this Agreement as
provided in this Section. The Employee may not assign his rights or delegate his
duties or obligations under this Agreement.
13. NOTICE. Any notices or other communications required or permitted
to be given hereunder shall be in writing and shall be deemed to have been duly
made or given when hand delivered, one (1) business day after being transmitted
by telecopier (confirmed by mail) or sent by overnight courier against receipt,
or five (5) days after being mailed by registered or certified mail, postage
prepaid, return receipt requested, to the party to whom such communication is
given at the address set forth below, which address may be changed by notice
given in accordance with this Section:
If to the Company: Alamosa PCS LLC
P. O. Box 65700
Lubbock, Texas 79464-5700
Attn: Jerry W. Brantley,
Chief Operating Officer
With Copy to: Jack McCutchin, Jr.
Crenshaw, Dupree & Milam, L.L.P.
P. O. Box 1499
Lubbock, Texas 79408-1499
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If to the Employee: Don Stull
4009 92nd Street
Lubbock, Texas 79423
With Copy to: ---------------------------------------------
---------------------------------------------
---------------------------------------------
14. MISCELLANEOUS.
(a) SEVERABILITY. If any provision of this Agreement shall be
declared to be invalid or unenforceable, in whole or in part, such
invalidity or unenforceability shall not affect the remaining
provisions hereof which shall remain in full force and effect.
(b) NO ORAL MODIFICATION, WAIVER OR DISCHARGE. No provisions of
this Agreement may be modified, waived or discharged orally, but
only by a waiver, modification or discharge in writing signed by
the Employee and such officer as may be designated by the Board of
Managers of the Company to execute such a waiver, modification or
discharge. No waiver by either party hereto at any time of any
breach by the other party hereto of, or failure to be in compliance
with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the time or at any prior or
subsequent time. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter
hereof have been made by either party which are not expressly set
forth in this Agreement or in the documents attached as Exhibits to
this Agreement.
(c) ENTIRE AGREEMENT. This Agreement and the Exhibits attached
hereto represent the entire agreement of the parties and shall
supersede any and all previous contracts, arrangements or
understandings, express or implied, between the Employee and the
Company with respect to the subject matter hereof.
(d) SECTION HEADINGS FOR CONVENIENCE ONLY. The section headings
herein are for the purpose of convenience only and are not intended
to define or limit the contents of any section.
(e) EXECUTION IN COUNTERPARTS. The parties may sign this Agreement
in counterparts, all of which shall be considered one and the same
instrument.
(f) GOVERNING LAW AND PERFORMANCE. This Agreement shall be governed
by the laws of the State of Texas and shall be deemed to be
executed in and performance called for in Lubbock, Lubbock County,
Texas.
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DATED this 29th day of October, 1998, to be effective October 29, 1998.
COMPANY
ALAMOSA PCS LLC
By: /s/ Jerry W. Brantley
-----------------------------------------
JERRY W. BRANTLEY, Chief Operating Officer
EMPLOYEE
/s/ W. D. Stull
----------------------------------------------
DON STULL
Approved as to the mediation and arbitration provisions in Paragraph 11 above.
CRENSHAW, DUPREE & MILAM, L.L.P.
By
--------------------------------------------
JACK McCUTCHIN, JR.
Attorneys for Alamosa PCS LLC
------------------------------------------------
------------------------------------------------
Attorney for Employee
Attachments: Exhibit "A" - The Milestones
Exhibit "B" - Purchase Price for Units
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EXHIBIT 21.1
ALAMOSA PCS HOLDINGS, INC.
LIST OF SUBSIDIARIES
The following list of companies represents all of the subsidiaries of
Alamosa PCS Holdings, Inc. after giving effect to the reincorporation merger:
Subsidiary of Alamosa PCS Holdings, Inc.:
Alamosa PCS, Inc., a Delaware corporation
Subsidiaries of Alamosa PCS, Inc.:
Texas Telecommunications, LP, a Texas limited partnership
Alamosa Wisconsin Limited Partnership, a Wisconsin limited partnership
Alamosa Texas GP, LLC, a Texas limited liability company
Alamosa Wisconsin GP, LLC, a Wisconsin limited liability company
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this first amendment to the Registration
Statement on Form S-1 (File No. 333-89995) of our report dated December 5, 1999,
relating to the financial statements of Alamosa PCS LLC (a development stage
enterprise), which appear in such Registration Statement. We also consent to the
references to us under the headings "Experts," "Summary Financial and Operating
Data" and "Selected Financial Data" in such Registration Statement.
PricewaterhouseCoopers LLP
Dallas, Texas
December 22, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS AS OF AND FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30,
1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 7,454,309
<SECURITIES> 0
<RECEIVABLES> 957,182
<ALLOWANCES> 24,355
<INVENTORY> 4,989,500
<CURRENT-ASSETS> 13,981,993
<PP&E> 37,825,883
<DEPRECIATION> 896,075
<TOTAL-ASSETS> 88,411,727
<CURRENT-LIABILITIES> 14,481,661
<BONDS> 60,031,276
0
0
<COMMON> 0
<OTHER-SE> 13,209,796
<TOTAL-LIABILITY-AND-EQUITY> 88,411,727
<SALES> 813,052
<TOTAL-REVENUES> 2,000,060
<CGS> 794,963
<TOTAL-COSTS> 1,613,641
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (885,868)
<INCOME-PRETAX> (17,247,297)
<INCOME-TAX> 0
<INCOME-CONTINUING> (17,688,419)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (17,688,419)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
