CONFIDENTIAL SETTLEMENT MATERIALS
PROTECTED BY DELAWARE RULE EVID.
408
SPRINT/iPCS FORBEARANCE
AGREEMENT
THIS FORBEARANCE AGREEMENT, dated
July 28, 2005 (this “Agreement”), is made and entered
into by and among Sprint Corporation, Sprint Spectrum L.P.,
WirelessCo L.P., Sprint Communications Company L.P., Sprint
Telephony PCS, L.P., and Sprint PCS License, L.L.C. (collectively,
“Sprint”); iPCS, Inc. and iPCS Wireless, Inc.
(collectively, “iPCS”); Horizon Personal
Communications, Inc. (“Horizon”); and Bright Personal
Communications Services, L.L.C. (“Bright” and together
with Horizon and iPCS, the “iPCS
Affiliates”).
RECITALS
A. iPCS Wireless, Inc. and certain
of the Sprint entities referenced above are parties to a Sprint PCS
Management Agreement, dated as of January 22, 1999, as amended (the
“iPCS Management Agreement”). Horizon and certain of
the Sprint entities referenced above are parties to a Sprint PCS
Management Agreement, dated as of June 8, 1998, as amended (the
“Horizon Management Agreement”). Bright and certain of
the Sprint entities referenced above are parties to a Sprint PCS
Management Agreement, dated as of October 13, 1999, as amended (the
“Bright Management Agreement” and together with the
iPCS Management Agreement and the Horizon Management Agreement, the
“Management Agreements”). iPCS Wireless, Inc., Horizon
and Bright are direct or indirect wholly owned subsidiaries of
iPCS, Inc.
B. On July 15, 2005, iPCS filed a
complaint (the “iPCS Complaint”) in the Circuit Court
of Cook County, Illinois against certain of the Sprint entities
referenced above, alleging among other things that certain
activities following the anticipated merger involving Sprint
Corporation and Nextel Communications, Inc. (“Nextel”)
(the “Sprint Nextel Merger”) will violate the
exclusivity provisions of the iPCS Management Agreement. On July
22, 2005, Horizon and Bright filed a complaint (the “Horizon
and Bright Complaint” and together with the iPCS Complaint,
the “Complaints”) in the Court of Chancery of the State
of Delaware against Sprint, alleging among other things that
certain activities following the Sprint Nextel Merger will violate
the exclusivity provisions of the Horizon Management Agreement and
the Bright Management Agreement and that Nextel improperly
interfered with Horizon’s and Bright’s exclusive rights
under the Horizon Management Agreement and the Bright Management
Agreement. The Complaints seek, among other things, (i) a court
order requiring Sprint (together with Nextel) to comply with the
exclusivity provisions of the Management Agreements and prohibiting
Sprint (together with Nextel) from violating those provisions and
(ii) damages caused by the alleged conduct.
C. The parties are entering into
this Agreement to set forth the iPCS Affiliates’ agreement
not to seek certain injunctive relief under certain circumstances
and to outline certain actions not to be taken by Sprint and its
Subsidiaries and Related Parties following the completion of the
Sprint Nextel Merger during the period of time that this Agreement
remains in effect.
D. On the date of the Sprint Nextel
Merger, Nextel will become a subsidiary of Sprint Corporation, and
Sprint Corporation will change its name to “Sprint Nextel
Corporation.” The terms “Sprint Corporation” and
“Sprint” as used in this Agreement will also refer to
Sprint Nextel Corporation following the Sprint Nextel
Merger.
AGREEMENT
In consideration of the recitals and
mutual covenants and agreements contained in this Agreement, the
sufficiency of which consideration is hereby acknowledged, the
parties, intending to be bound, agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Certain
Definitions . The following terms are used in this Agreement
with the meanings assigned below:
“Affiliate Group” means
employees of Sprint Corporation and its Subsidiaries who are housed
in and work out of (a) the Affiliate Relations Group, (b) the
Affiliate/PLS-Plan & Strategy Group or (c) the
Affiliate/PLS-Client Service/Technology Group, each as currently
structured within Sprint Corporation. For purposes of
clarification, each of the groups currently reports to David
Bottoms, Vice President-Strategic Partners. The term
“Affiliate Group” also refers to any successor group of
employees to those groups referenced above that may result from any
internal management restructuring within Sprint Corporation and its
Subsidiaries or Related Parties.
“CDMA Customers” means
subscribers of products and services offered by Sprint PCS and
Sprint PCS Affiliates using the CDMA Network whose account is
assigned to the Service Area.
“CDMA Network” means the
national wireless network owned and operated by Sprint, any of the
iPCS Affiliates and the other Sprint PCS Affiliates providing
services using code division multiple access technology.
“CDMA Products and
Services” means products and services operating on the CDMA
Network.
“Existing Litigation”
means all litigation specified in the Complaints.
“iDEN Customers” means
Nextel customers located in the Service Area who are using iDEN
Products and Services.
“iDEN Network” means the
national integrated digital enhanced network owned and operated by
Nextel and its Related Parties on the date of the Sprint Nextel
Merger.
“iDEN Products and
Services” means Nextel products and services operating on the
iDEN Network.
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“Local Media” means (a)
a print publication that is primarily distributed within the
Service Area, (b) a radio or television station that primarily
broadcasts into the Service Area or (c) a billboard or other
physical advertising presence in the Service Area.
“Service Area” has the
meaning set forth in the Management Agreements, which for the
avoidance of doubt shall mean the aggregate of the Service Area
defined and described in each of the Management
Agreements.
“Sprint PCS Affiliate”
means the iPCS Affiliates and the Other Managers.
“Subsidiary” of any
Person as of any relevant date means any corporation or other
entity of which such Person owns or controls, directly or
indirectly, a majority of the outstanding voting securities or
other ownership interests, provided that Nextel Partners, Inc. will
not be deemed a Subsidiary of Sprint for purposes of this Agreement
until Sprint or any of its Related Parties at any time owns or
controls, directly or indirectly, 50% or more of the voting
securities or other ownership interests of Nextel Partners (as
defined in Section 2.10(a)).
Section 1.2 Management
Agreements . Capitalized terms used but not defined herein have
the meanings assigned to them in the Management
Agreements.
ARTICLE II
COVENANTS BY
SPRINT
Section 2.1 Preservation of
Confidential Information.
(a) Marketing . Sprint will
not allow any proposed marketing and advertising campaign
materials, proposed service plans, or proposed credit policies
provided by the iPCS Affiliates to Sprint to be reviewed by
employees of Sprint Corporation and its Subsidiaries or Related
Parties other than the Affiliate Group and employees with direct
responsibility for implementing such materials, plans or policies
and/or reviewing such materials, plans or policies for compliance
with the Trademark License Agreements, the Marketing Communication
Guidelines or other applicable provisions of the Management
Agreements (who will not use the information for any other
purpose).
(b) Billing. Sprint will not (i)
make billing systems containing data relating to CDMA Customers
(e.g., Convergis/P2K) available to employees of Sprint Corporation
or its Subsidiaries or Related Parties in any retail store
location, sales channel, sales office (except national account
managers who do not directly engage in marketing or sales efforts
with national accounts headquartered in the Service Area for iDEN
Products and Services in the Service Area) or administrative office
that offers, supports or is involved with iDEN Products and
Services in the Service Area, and agrees not to share any such data
with any such employees, or (ii) provide any billing inserts or
similar types of communications reflecting or otherwise referring
to the Sprint Nextel Merger or any resulting brand change to CDMA
Customers or iDEN Customers in the Service Area that are designed
to induce or encourage, or could reasonably be expected to induce
or encourage, CDMA Customers to switch to iDEN Products and
Services (except for de minimus amounts that do not
have a detrimental competitive impact on the iPCS Affiliates’
business).
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(c) Customer Care and
Telemarketing . (i) Sprint will maintain a process of
identifying and directing to designated customer service
representatives CDMA Customers and iDEN Customers who call Sprint
for customer care services. Any CDMA Customer mistakenly directed
to a customer care representative designated to service iDEN
Customers will be transferred to a customer care representative
designated to service CDMA Customers. Any iDEN Customer mistakenly
directed to a customer care representative designated to service
CDMA Customers will be transferred to a customer care
representative designated to service iDEN Customers. Sprint agrees
to make the details of such process available to the iPCS
Affiliates upon request. Notwithstanding the foregoing, Sprint will
have certain customer care representatives who are permitted to
access information regarding both CDMA Customers and iDEN Customers
for the sole purpose of serving customers who use both CDMA
Products and Services and iDEN Products and Services so long as
such customer care representatives are not engaged in marketing or
selling iDEN Products and Services to CDMA Customers. Customer care
representatives shall be permitted to make arrangements to provide
either iDEN or CDMA handsets, upon request, to existing CDMA
Customers and existing iDEN Customers requesting them.
(ii) Any customer care
representative advised that a CDMA Customer desires to terminate
its use of CDMA Products and Services will first seek to convince
such CDMA Customer to continue its use of CDMA Products and
Services. If such efforts are unsuccessful, the representative may
seek to sell iDEN Products and Services to such customers. The
converse process will apply for any iDEN Customer seeking to
terminate its use of iDEN Products and Services. Sprint agrees to
provide to iPCS, at least as frequently as current practice (or, if
there is no such current practice, at least every two weeks), a
detailed report setting forth the CDMA Customers in the Service
Area who have terminated the use of CDMA Products and Services and
have purchased iDEN Products and Services.
(iii) Sprint and its Subsidiaries
will not waive or reduce termination fees as compared to current
levels in order to facilitate any CDMA Customer in the Service Area
transferring from CDMA Products and Services to iDEN Products and
Services.
(d) Subscriber and Financial
Data . iPCS Affiliate-specific information in Sprint’s
EMIS System (or any successor system) will only be able to be
accessed by the Affiliate Group. Other subscriber and financial
information provided by the iPCS Affiliates to Sprint (or otherwise
generated by Sprint or any other party and relating to any iPCS
Affiliate) will only be available to the Affiliate Group and other
employees and consultants of Sprint Corporation and its Related
Parties in the ordinary course of business consistent with past
practice, unless such information is aggregated with subscriber and
financial information of the other Sprint PCS Affiliates on a basis
that does not permit identification of the iPCS Affiliate-specific
information; provided that in no event will any such information be
used by any such employee or consultant in a manner that adversely
affects the competitive position of the CDMA Products and Services
in relation to the iDEN Products and Services in the Service Area.
Sprint will not make any external or public disclosure of any iPCS
Affiliate’s subscriber and financial information, unless such
information is aggregated with subscriber and financial information
of the other Sprint PCS Affiliates on a basis that does not permit
identification of the iPCS Affiliate-specific
information.
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(e) Network Performance.
Sprint will not allow network performance data and Format C reports
provided by any iPCS Affiliate to Sprint (or otherwise generated by
Sprint or any other party and relating to any iPCS Affiliate) to be
reviewed by employees of, or consultants to, Sprint Corporation and
its Subsidiaries or Related Parties other than the Affiliate Group
and employees whose function relates primarily to CDMA Network
performance (who will not use the information for any other
purpose), unless such information is aggregated with information
from the other Sprint PCS Affiliates on a basis that does not
permit identification of the iPCS Affiliate-specific information.
However, Sprint will be permitted to use Format C reports provided
by the iPCS Affiliates (or otherwise generated by Sprint and
relating to the iPCS Affiliates) to update coverage maps and to
disclose such coverage maps consistent with past
practice.
(f) Handset Logistics. Sprint
will not allow handset logistical data and related forecasts
provided by any iPCS Affiliate to Sprint (or otherwise generated by
Sprint or any other party and relating to any iPCS Affiliate) to be
reviewed and used by employees of, or consultants to, Sprint
Corporation and its Subsidiaries or Related Parties other than the
Affiliate Group and employees whose function relates primarily or
is necessary to the procurement of handsets (who will not use the
information for any other purpose), unless such information is
aggregated with handset logistical data and related forecasts of
the other Sprint PCS Affiliates on a basis that does not permit
identification of the iPCS Affiliate-specific
information.
(g) Business Forecasts.
Sprint will not allow business forecast data provided by any iPCS
Affiliate to Sprint (or otherwise generated by Sprint or any other
party and relating to any iPCS Affiliate) to be reviewed by
employees of, or consultants to, Sprint Corporation and its
Subsidiaries or Related Parties other than the Affiliate Group and
employees who need to have such information for operational reasons
(e.g., determining capacity needs for shared network elements), who
will not use the information for any other purpose. However, such
data may be reviewed by other employees after it has been
aggregated with data of the other Sprint PCS Affiliates on a basis
that does not permit identification of the iPCS Affiliate-specific
information.
(h) Business Accounts Data .
Sprint will not share any information regarding CDMA
Customers’ business accounts with any consultants or with any
employees other than the Affiliate Group and employees who need to
have such information for operational reasons (and who will not use
the information for any other purpose). All CDMA Customers’
business accounts (other than national accounts) shall only be
serviced by the iPCS Affiliates, and the CDMA service of national
accounts headquartered in the Service Area shall continue to be
serviced by Sprint and the applicable iPCS Affiliate consistent
with past practice.
Section 2.2 CDMA Products and
Services . Sprint and its Subsidiaries will not use the iDEN
Network in the Service Area or any spectrum in the Service Area
owned by Nextel or its Subsidiaries to provide CDMA Products and
Services. For purposes of clarification, the parties intend the
above provision to apply (without limitation) to the G block 1.9
GHz spectrum to be obtained by Nextel, in addition to
Nextel’s other spectrum.
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Section 2.3 Dual Mode
Handsets . Sprint and its Subsidiaries will not offer or sell,
directly or indirectly, any dual mode CDMA/iDEN handsets in the
Service Area, nor will Sprint or its Subsidiaries offer or sell,
directly or indirectly, any dual mode CDMA/iDEN handsets in any
areas nationwide other than the Service Area unless such handsets
are programmed to use the iPCS Affiliates’ CDMA Network in
the Service Area on the first priority basis prior to using the
iDEN Network in the Service Area (i.e., all such handsets shall
“prefer” the iPCS Affiliates’ CDMA
Network).
Section 2.4 Distribution .
Sprint will not, and will not permit any of its Subsidiaries to,
sell CDMA Products and Services in the Service Area in any retail
store locations owned or operated by Sprint, Nextel or any of their
Subsidiaries, agent retail stores controlled by Sprint, Nextel or
any of their Subsidiaries or through business sales representatives
(other than with respect to national accounts, who are subject to
Section 2.8) employed by Sprint, Nextel or any of their
Subsidiaries (collectively, “Nextel Distribution
Points”). Sprint will not, and will not permit any of its
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