Exhibit 10.80(a)
AMENDMENT TWO TO THE
SUBSCRIBER UNITS AND SERVICES SUPPLY AGREEMENT BETWEEN
MOTOROLA, INC. AND NEXTEL PARTNERS OPERATING CORP.
This Amendment to the Subscriber Units and Services Supply Agreement
("Amendment") is entered into the last date signed below and will be deemed
effective as of November 1, 2004 ("Effective Date") between MOTOROLA, INC., a
Delaware corporation, with offices at 0000 Xxxx Xxxxxxx Xxxxxxxxx, Xxxxxxxxxx,
XX 00000 ("Motorola"), and NEXTEL PARTNERS OPERATING CORP., a Delaware
corporation, with offices at 0000 Xxxxxxxx Xxxxx, Xxxxxxxx, XX 00000 ("NPI");
(Motorola and NPI to be collectively referred to as the "Parties" and each a
"Party").
WHEREAS, Motorola and NPI entered into the Subscriber Units and Services
Supply Agreement dated September 20, 2004 (the "Agreement"); and
WHEREAS, Motorola and NPI wish to make certain amendments to the Agreement
to reflect agreement to certain business terms;
NOW, THEREFORE, in consideration of the promises and mutual obligations
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby mutually acknowledged, Motorola and NPI agree as
follows:
1. GENERAL
1.1 Except as set forth herein, all capitalized terms not defined herein
shall have the meanings given to them in the Agreement.
1.2 All references are to sections in the Agreement.
2. ADDITIONAL TERMS AND CONDITIONS
Motorola and NPI agree that the following provisions shall be added to
Attachment B of the Agreement entitled "Product Terms for Subscriber Units
and Accessories":
15. 2004 Special Promotional Funding.
15.1 Motorola agrees to make available to NPI special promotional
funding for the activation of *** and *** handsets on the NPI
network in an amount not to exceed *** in accordance with and
pursuant to the conditions set forth below ("Promotional
Funding").
15.2 The Promotional Funding will be paid as a *** credit per
activation, up to a maximum of *** activations.
15.3 To qualify for the activation credit, NPI must:
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a. Meet or exceed the unit volume and product mix for November
and December that is shown in the Purchase Plan submitted to
Motorola on 10/29/04;
b. Purchase an additional *** and *** handsets in December
2004; and
c. Submit a report to Motorola showing proof of new activations
on the NPI network no later than December 31, 2004.
Failure to meet the conditions set forth above by December 31,
2004 will disqualify for the Promotional Funding and Motorola
will retain all amounts.
15.4 Earned activation credits will be applied to the NPI account in
January 2005.
15.5 This special promotion ends on December 31, 2004, and will not be
applicable in future calendar years, except as specifically
agreed to in writing by the Parties. Any amount of available
Promotional Funding not utilized by NPI by December 31, 2004 will
become unavailable and retained by Motorola.
3. AGREEMENT MODIFICATIONS
Motorola and NPI agree that the last paragraph of Section 3.3 of Attachment
B of the Agreement is modified to reflect an inventory limit of *** units
instead of *** units.
4. RATIFICATION
Except as specifically stated in this Amendment, the Agreement is, in all
other respects, ratified, confirmed and continues in full force and effect.
5. AUTHORITY
Each Party hereto represents and warrants that: (i) it has obtained all
necessary and requisite approvals, consents and authorizations of third
parties and governmental authorities to enter into this Amendment and to
perform and carry out its obligations hereunder; (ii) the persons executing
this Amendment on behalf of each party have express authority to do so,
and, in so doing, to bind the party thereto; (iii) the execution, delivery,
and performance of this Amendment 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 Amendment has been
duly authorized by all necessary partnership or corporate action and this
Amendment is a valid and binding obligation of such party, enforceable in
accordance with its terms.
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IN WITNESS WHEREOF, Motorola and NPI have entered into this Amendment as of
the Effective Date first written above.
MOTOROLA INC. NEXTEL PARTNERS OPERATING CORP.
By: By: /s/ XXXXXX XXXXX
--------------------------------- ------------------------------------
Name: Name: Xxxxxx Xxxxx
------------------------------- ----------------------------------
Title: Title: Vice President
------------------------------ ---------------------------------
Date: Date: 1/14/05
------------------------------- ----------------------------------
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AMENDMENT THREE TO THE
SUBSCRIBER UNITS AND SERVICES SUPPLY AGREEMENT BETWEEN
MOTOROLA, INC. AND NEXTEL PARTNERS OPERATING CORP.
This Amendment Three to the Subscriber Units and Services Supply Agreement
("Amendment") is entered into and will be deemed effective as of January 1, 2005
("Effective Date") between MOTOROLA, INC., a Delaware corporation, with offices
at 0000 Xxxx Xxxxxxx Xxxxxxxxx, Xxxxxxxxxx, XX 00000 ("Motorola"), and, NEXTEL
PARTNERS OPERATING CORP. a Delaware corporation, with offices at 0000 Xxxxxxxx
Xxxxx, Xxxxxxxx, XX 00000 ("NPI"); (Motorola and NPI to be collectively referred
to as the "Parties" and each a "Party").
WHEREAS, Motorola and NPI entered into the Subscriber Units and Services
Supply Agreement dated September 20, 2004 (the "Agreement"); and amended
November 1, 2004;
WHEREAS, Motorola and NPI wish to make certain amendments to the Agreement
to reflect agreement to certain business terms for the calendar year 2005 and
2006;
NOW, THEREFORE, in consideration of the promises and mutual obligations
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby mutually acknowledged, Motorola and NPI agree as
follows:
1. GENERAL
1.1 Except as set forth herein, all capitalized terms not defined herein
shall have the meanings given to them in the Agreement.
1.2 All references are to sections in the Agreement.
1.3 There is no Amendment One to the Agreement and Amendment Two,
effective for the Initial Term of 2004, is attached hereto and
incorporated herein to the extent not inconsistent with the terms of
this Amendment Three.
2. AGREEMENT MODIFICATIONS
A. Motorola and NPI agree that the following section of Attachment A of the
Agreement is modified to read as follows:
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a. The second sentence of Section 5.1 shall be deleted and replaced with
the following new sentence: "The first renewal term of this Agreement
will be for a time period from January 1, 2005 to December 31, 2006
("First Renewal Term"). Thereafter, this Agreement will automatically
renew for one year periods unless terminated by either party upon
written notice to the other thirty (30) days prior to the expiration
of the First Renewal Term or the then current subsequent annual term
(collectively with the Initial Term, the "Term").
B. Motorola and NPI agree that the following sections of Attachment B of
the Agreement are modified to read as follows:
a. Section 2.2 "Falcon Subscriber Unit Post-Paid Pricing" is deleted in
its entirety and replaced with the following:
"2.2 Falcon Subscriber Unit Pricing and Terms
.1 The pricing for each of the "Falcon" Handset Units for 2005
is specified in Appendix B-1 attached hereto and
incorporated herein by this reference and shall constitute
the maximum Base Package price that Motorola shall charge
NPI for the listed Handset Units ("Not to Exceed," or "NTE"
Price). Appendix B-1 supercedes and replaces Appendix B to
the Agreement.
.2 For the *** and *** Handset Units, the Purchase Advance was
exhausted on or before March 1, 2005 and the pricing of
these Handset Units is as set forth on Appendix B-1.
.3 Appendix B-1 may be amended from time to time by mutual
agreement of the Parties by means of written amendments,
additions or supplemental Handset Unit price sheets signed
by each party. For each Handset Unit model, the Handset Unit
price sheet will indicate whether the Handset Unit model is
categorized as a Low Tier, Mid Tier, High Tier, or Special
Category Handset Unit model.
The current tier categorization of Handset Unit models is
reflected on Appendix B-1 attached to this Amendment.
.4 The pricing for each of the "Falcon" Handset Units for 2006
is specified in Appendix B-2 attached hereto and
incorporated herein by this reference and shall constitute
the maximum Base Package price that Motorola shall charge
NPI for the listed Handset Units ("Not to Exceed," or "NTE"
Price). The pricing shown in
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Appendix B-2 is contingent on the product cancellations
described in sections .6 and .7 and the volume and mix
commitments described in section 19.
.5 Appendix B-2 may be amended from time to time by mutual
agreement of the Parties by means of written amendments,
additions or supplemental Handset Unit price sheets signed
by each Party. For each Handset Unit model, the Handset Unit
price sheet will indicate whether the Handset Unit model is
categorized as a Low Tier, Mid Tier, High Tier, or Special
Category Handset Unit model.
The current tier categorization (for Efficiency Curve
threshold calculations) of Handset Unit models in 2006 is:
***
.6 Effective January 1, 2006, the ***, and *** Handset Unit
models will be cancelled. If NPI requires Last Time Buy
"LTB" quantities (LTB available for Service and Repair and
Insurance only), LTB non-cancelable purchase orders, for
delivery in the first quarter of 2006, must be submitted to
Motorola no later then November 30, 2005. The purchase order
price for these LTB handsets will be the price per the
active price list in the month that the LTB order is placed.
.7 Effective on the Motorola Ship Acceptance Date ( defined as
the date that Motorola commercially releases the subject
Handset Unit to NPI) of the *** Handset, the *** and ***
Handset models will be cancelled. If NPI requires Last Time
Buy "LTB" quantities (LTB available for Service and Repair
and Insurance only), LTB non-cancelable purchase orders must
be submitted to Motorola no later then sixty (60) days prior
to the Motorola Ship Acceptance date of the ***. The
purchase order price for these LTB handsets will be the
price per the active price list in the month that the LTB
order is placed.
b. Section 3.2 "Co-operative Advertising Program for the Term" is deleted
in its entirety and replaced with the following:
"3.2 Co-operative Advertising Program for the Term:
Effective for 2005, Motorola agrees to provide NPI with a ***
Co-op fund calculated based upon the kitted net purchase price
for all post-
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paid Handset Units (excluding all "Limited Edition", "Special
Edition", "NASCAR", and DBR models), transceiver only units, and
data devices (excluding CGISS manufactured products), pursuant to
the promotional guidelines previously agreed upon by the Parties.
For purposes of calculating the *** Co-op fund, the kitted net
purchase price will exclude SIM Card, SIM Card fees ("pick fee"),
and any incremental NPI specified collateral and associated pick
fees. Motorola will issue a credit to NPI's account for all prior
month's co-op accruals and net credit against open invoices due
on the wire settlement. Appropriate program guidelines are set
forth at Appendix E.
"Limited Edition" models are defined as those unique versions of
current handset models distributed in quantities of less than ***
units. "Special Edition" models are defined as those unique
versions of current handset models distributed in quantities of
greater than *** units but less than *** units. "NASCAR" models
are those versions of current handset models that are branded
with approved NASCAR trademarks or other approved artwork
reflecting the NASCAR brand.
The Co-operative Advertising Program effective for 2005 remains
effective for 2006 except that, in addition to the exclusions to
the Co-op fund calculation indicated above, the *** Handset model
will also be excluded in 2006."
c. Section 3.3 "2004 Volume Rebate Incentive ("VRI") Program for
Handsets" is deleted in its entirety and replaced with the following:
"3.3 2005 Volume Rebate Incentive ("2005 VRI") Program for Handsets
.1 NPI is to receive 2005 VRIs in accordance with the table
below once Motorola's Handset Sales, as defined below, to
NPI exceed *** for January 1, 2005 through December 31, 2005
("the 2005 Period"). This 2005 VRI shall not be applicable
to future calendar years except as agreed to in writing by
the Parties.
.2 Handset Sales is defined as the handset pricing as invoiced
to NPI less Co-op or other new and/or incremental rebates,
promotions, discounts or price adjustments (including but
not limited to all Efficiency Curve Price Adjustments
pursuant to Section 5) to the extent such rebates,
promotions, discounts and price adjustments are not
otherwise accounted for in the invoiced amounts.
Notwithstanding the foregoing, Purchase Advance credits
applied
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to invoiced prices pursuant to Section 4 will not be
subtracted from the invoiced price for purposes of
calculating the Handset Sales.
.3 Except as set forth below, all handset models are eligible
for the 2005 VRI program unless otherwise agreed by the
Parties from time to time. Items excluded from the
calculation of Handset Sales are data devices (such as
im1100), specialty items, returned items, items passed
through at cost, SIM card, NPI specified
collateral/packaging items, all associated pick fees, and
customer provided third party products. Handset shipments
excluded from the Handset Sales calculation are soft-launch
units, seed stock units, appearance models, units re-sold or
shipped to another carrier or any other units as are
mutually agreed upon in writing by the Parties. Payment of
all earned rebates will coincide with December invoicing
transactions scheduled for settlement in January 2006.
.4 In the 2005 Period, the 2005 VRI amounts for handsets will
be earned in accordance with the following:
Adjusted Handset Sales Range Rebate Earned
---------------------------- -------------
*** ***
.5 As a further condition of any rebate payments under this
2005 VRI program, NPI agrees that it will provide Motorola
with reports of total monthly inventory levels (retail,
warehouse and NPI owned handsets in transit) retroactive to
January 1, 2005 at the same time the Monthly Purchase
Forecast is due by product model and product model
derivatives level (ex: color, limited edition).
.6 As a further condition of any rebate payments under this
2005 VRI program NPI agrees that its average inventory for
iDEN Handset Units (i.e., retail, warehouse, and NPI owned
handsets in transit) during the last three months of the
2005 Period (October, November, and December 2005) will not
exceed *** units, except as the Parties mutually agree is
reasonable due to market and business conditions."
d. Section 5 "Efficiency Curve Price Adjustments" is deleted in its
entirety and replaced with the following:
"5. Efficiency Curve Price Adjustments ("ECPA")
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5.1 The 2005 price reductions or ECPAs set forth in Section 5.2
below will apply to iDEN Falcon post-paid Handset Units
identified in Appendix B-1 and shipped on a worldwide basis,
excluding Special Category, Limited Edition, Special
Edition, NASCAR, and DBR models, and excluding NPI
sourced/selected items (i.e. SIM Cards, collateral pieces,
and associated pick fees) (collectively "2005 Eligible
Handset Units"). The following ECPA thresholds are effective
January 1, 2005 to December 31, 2005 and are not retroactive
to any ECPAs that occurred in 2004 (no retro-active impacts
to the efficiency curve model).
5.2 Efficiency Curve Price Adjustments for 2005 Eligible Handset
Units
.1 A *** price reduction after every *** Low Tier ("LT")
2005 Eligible Handset Units (net of returns) shipped on
a worldwide basis, where LT handsets are defined in
Appendix B-1.
.2 A *** price reduction after every *** Mid Tier ("MT")
2005 Eligible Handset Units (net of returns) shipped on
a worldwide basis, where MT handsets are defined in
Appendix B-1.
.3 An *** price reduction after every *** High Tier ("HT")
2005 Eligible Handset Units (net of returns) shipped on
a worldwide basis, where HT handsets are defined in
Appendix B-1.
.4 Volumes of Handset Units are aggregated by tier (not
model), meaning that the ECPA occur each time the
aggregate number of units shipped in HT total *** or MT
total *** or LT total ***. Only models that have
shipped at the time of an ECPA are eligible for the
corresponding price reduction. Newly introduced models
will not be eligible for an ECPA until six (6) months
after shipment but purchases of those units will still
count toward the aggregate number of Handset Units in a
particular tier for purposes of the ECPA thresholds.
For example, if an eligible MT Handset Unit model
starts shipping on 12/1/04, the units of this model are
included in the count toward the *** MT units from
12/1/04. However, if a MT ECPA occurs in April (prior
to 6/1/05, i.e., 6 months after shipment), this model
will not be eligible for the ECPA in April. The model
will only be eligible for the next MT ECPA when it
occurs.
5.3 The following 2006 price reductions or ECPAs set forth in
Section 5.4 below will apply to iDEN Falcon post-paid
Handset Units identified in Appendix B-2 and shipped on a
worldwide basis, excluding Special
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Category, Limited Edition, Special Edition, NASCAR, and DBR
models, and excluding NPI sourced/selected items (i.e. SIM
Cards, collateral pieces, and associated pick fees)
(collectively "2006 Eligible Handset Units"). The following
ECPA thresholds are effective January 1 to December, 31 2006
and are not retroactive to any ECPAs that occurred in 2005
(no retro-active impacts to the efficiency curve model).
5.4 Efficiency Curve Price Adjustments for 2006 Eligible Handset
Units
.1 A *** price reduction after every *** Low Tier ("LT")
2006 Eligible Handset Units (net of returns) shipped on
a worldwide basis, where LT handsets are defined in
Appendix B-2.
.2 A *** price reduction after every *** Mid Tier ("MT")
2006 Eligible Handset Units (net of returns) shipped on
a worldwide basis, where MT handsets are defined in
Appendix B-2.
.3 An *** price reduction after every *** High Tier ("HT")
2006 Eligible Handset Units (net of returns) shipped on
a worldwide basis, where HT handsets are defined in
Appendix B-2.
.4 Volumes of Handset Units are aggregated by tier (not
model), meaning that the ECPA occur each time the
aggregate number of units shipped in HT total *** or MT
total *** or LT total ***. Only models that have
shipped at the time of an ECPA are eligible for the
corresponding price reduction. Newly introduced models
will not be eligible for an ECPA until six (6) months
after shipment but purchases of those units will still
count toward the aggregate number of Handset Units in a
particular tier for purposes of the ECPA thresholds.
For example, if an eligible MT Handset Unit model
starts shipping on 12/1/05, the units of this model are
included in the count toward the *** MT units from
12/1/05. However, if a MT ECPA occurs in April (prior
to 6/1/06, i.e., 6 months after shipment), this model
will not be eligible for the ECPA in April. The model
will only be eligible for the next MT ECPA when it
occurs.
5.5 The percentage price reductions set forth above for the
First Renewal Term will be based on the fully kitted price
of Eligible Handsets Units, as adjusted by any efficiency
curve or Purchase Advance application, including accessory
upgrades and feature options, but excluding NPI
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sourced/selected items (i.e., SIM Cards, collateral pieces,
and associated pick fees).
5.6 During the First Renewal Term, Motorola reserves the right
in the future to offer separate price adjustments on Handset
Units eligible for ECPA and in such instances, Motorola
reserves the right to make any such price adjustments
contingent on the Handset Unit being thereafter excluded
from the next subsequent ECPA, if the next ECPA occurs
within the *** after the aforementioned pricing adjustment.
However, purchases of those Subscriber Units shall still
count towards the ECPA purchase thresholds. This Section 5.5
does not apply to any of the incentives, credits or rebates
provided to NPI in Sections 16, 17 or 18 herein.
5.7 Effective for the First Renewal Term, individual Handset
Unit models will be limited to:
- *** ECPAs per calendar year.
- *** ECPAs in a specific Handset Unit model's tier
classification, thereafter the Handset Unit model drops
down one tier classification.
- *** ECPAs in the Handset Unit model's lifetime.
5.8 During the First Renewal Term, to address transitional
issues resulting from the implementation of new Handset Unit
tier criteria definitions and guiding principles set forth
above, NPI and Motorola agree that Handset Unit models that
have already received ECPAs prior to January 1, 2005 ("Prior
ECPAs") will be treated as follows:
- Prior ECPAs count toward lifetime limitation of ***
ECPAs (i.e., carry-forward historical count for
purposes of lifetime allowable ECPAs)
- Prior ECPAs do not count toward the limitation of ***
ECPAs in a specific tier classification (i.e., fresh
start, do not carry-forward historical count for
purposes of per tier classification allowable ECPAs).
5.9 During the First Renewal Term, after a Handset Unit model
has received *** ECPAs in a specific Handset Unit model's
tier classification, the model will be reclassified to the
next lower tier classification for purposes of ECPAs and all
of the model's volume from then forward will count towards
the achievement of ECPAs in the model's new tier
classification. All of the model's previous unit
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volume accumulated in the higher tier classification will
remain in the cumulative unit volumes of the higher tier.
5.10 During the First Renewal Term, if a Handset Unit model is
reclassified pursuant to Section 5.8 above, it will not be
eligible for an ECPA in its new tier for a period of ***
from the date it is reclassified and all of the Handset Unit
volume for the reclassified model will count in the new tier
from the date of the reclassification.
5.11 For the 2006 year only, any ECPA reduction that occurs
before July 1, 2006 will not be reflected in an ECPA
Eligible Handset model price until July 1, 2006. ECPAs that
occur after July 1, 2006 will be reflected in the ECPA
Eligible Handset model's price once the ECPA threshold is
achieved.
3. ADDITIONAL TERMS AND CONDITIONS
A. Motorola and NPI agree that the following provision is added to Section
3 entitled "Promotional Programs" of Attachment B of the Agreement entitled
"Product Terms for Subscriber Units and Accessories" as a new subsection:
"3.6 2006 Volume Rebate Incentive ("2006 VRI") Program for
Handsets
.1 NPI is to receive 2006 VRIs in accordance with the table
below once Motorola's Handset Sales, as defined below, to
NPI exceed *** for January 1, 2006 through December 31, 2006
("the 2006 Period"). This 2006 VRI shall not be applicable
to future calendar years except as agreed to in writing by
the Parties.
.2 Handset Sales is defined as the handset pricing as invoiced
to NPI less Co-op or other new and/or incremental rebates,
promotions, discounts or price adjustments (including but
not limited to all Efficiency Curve Price Adjustments
pursuant to Section 5) to the extent such rebates,
promotions, discounts and price adjustments are not
otherwise accounted for in the invoiced amounts.
Notwithstanding the foregoing, Purchase Advance credits
applied to invoiced prices pursuant to Section 4 will not be
subtracted from the invoiced price for purposes of
calculating the Handset Sales.
.3 Except as set forth below, all handset models are eligible
for the 2006 VRI program unless otherwise agreed by the
Parties from time to time. Items excluded from the
calculation of Handset Sales are data devices (such as
im1100), specialty items, returned items,
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items passed through at cost, SIM card, NPI specified
collateral/packaging items, all associated pick fees, and
customer provided third party products. Handset shipments
excluded from the Handset Sales calculation are soft-launch
units, seed stock units, appearance models, units re-sold or
shipped to another carrier or any other units as are
mutually agreed upon in writing by the Parties. Payment of
all earned rebates will coincide with December invoicing
transactions scheduled for settlement in January 2007.
.4 In the 2006 Period, the 2006 VRI amounts for handsets will
be earned in accordance with the following:
Adjusted Handset Sales Range Rebate Earned
---------------------------- -------------
*** ***
.5 As a further condition of any rebate payments under this
2006 VRI program, NPI agrees that it will provide Motorola
with reports of total monthly inventory levels (retail,
warehouse and NPI owned handsets in transit) retroactive to
January 1, 2006 at the same time the Monthly Purchase
Forecast is due by product model and product model
derivatives level (ex: color, limited edition).
.6 As a further condition of any rebate payments under this
2006 VRI program NPI agrees that its average inventory for
iDEN Handset Units (i.e., retail, warehouse, and NPI owned
handsets in transit) during the last three months of the
2006 Period (October, November, and December 2006) will not
exceed *** units, except as the Parties mutually agree is
reasonable due to market and business conditions."
B. Motorola and NPI agree that the following provisions are added to
Attachment B of the Agreement entitled "Product Terms for Subscriber Units
and Accessories" as new sections:
16. Volume Commitments and 2005 Promotional Funding
16.1 Motorola agrees to make available to NPI funding for activation
rebates that are designed to increase NPI's subscriber loading of
handset activations of all handset models. Motorola will provide
NPI with a *** activation rebate in the second and third quarter
of 2005 on
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each newly activated Handset Unit and a *** activation rebate in
the fourth quarter of 2005 on each newly activated Handset Unit.
The maximum dollar amount for this funding is not to exceed ***.
This funding will be available for use for Handset Units
activated between April 4, 2005 and December 31, 2005 provided
that the Handset Units needed to reach the volume commitments set
forth in Section 16.1.2 below have been shipped to NPI between
April 4, 2005 and December 31, 2005. The activation rebate
amounts payable to NPI will be limited to *** of funding
available in the second quarter of 2005, and *** in the third
quarter of 2005, with no limits to the amounts paid to NPI in the
fourth quarter of 2005, except that in no event will the total of
activation rebates pursuant to this Section 16.1 exceed ***. The
aforementioned activation rebates will be designed to drive the
volume and mix requirements set forth in Table A.
16.1.1 NPI has supplied evidence of new customer activations for
the second and third quarter of 2005 as set forth on the
activation report attached hereto as Appendix F and made a
part hereof. Accordingly, Motorola will remit to NPI *** of
the *** total activation rebate amount set forth in Section
16.1 above within sixty (60) days of the execution of this
Amendment. The activation rebate will be subject to pro rata
reimbursement if NPI fails to meet the volume commitments
set forth in Section 16.1.2 below. With respect to the
fourth quarter of 2005, NPI will supply Motorola with an
activation report substantially in the form of the
activation report attached hereto as Appendix F. Based on
the handset activations set forth in that report, and
subject to the volume commitments set forth in Section
16.1.2, Motorola will remit to NPI the *** of the ***
activation rebate that NPI qualifies for as set forth in
Section 16.1 above.
16.1.2 In the event that a NPI commitment is not met as specified
in Table A (i.e. any shortfalls to minimums or excesses to
maximums), NPI will reimburse to Motorola the activation
rebates provided by Motorola pursuant to Section 16.1 on a
pro-rata basis as specified in Table A. In the event that a
reimbursement is due to Motorola, such reimbursement will be
settled on the January 2006 wire (which includes shipments
and activity ending December 31, 2005). The Parties hereby
agree that the dollar amounts specified in Table
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Amendment Three to Subscriber Units and Services Supply Agreement
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A represent fair and reasonable approximation of the
reimbursement of dollar amounts that would be incurred by
Motorola in the event NPI fails to meet its purchase
commitment as set forth in Table A and that such amounts do
not constitute a penalty.
***
17. Special 2005 Promotional Funding
17.1 Motorola agrees to make available to NPI promotional funding in
addition to the activation rebates set forth elsewhere in this
Amendment designed to increase NPI's subscriber loading of
handset activations of all handset models.
17.1.1 Motorola agrees to make available *** of funding in the
second quarter of 2005. This funding will be incremental to
the funding in section 16.1 and will be provided to NPI as a
*** activation rebate on each Handset Unit that is activated
in the second quarter of 2005, provided that the volume and
mix commitments set forth in Section 18 have been achieved
and provided that the quantities of Handset Units subject to
this activation rebate have been shipped to NPI within the
second quarter.
17.1.2 Motorola agrees to make available *** of funding in the
third quarter of 2005. This funding will be incremental to
the funding in section 16.1 and will be provided to NPI as a
*** activation rebate on each Handset Unit that is activated
in the third quarter of 2005, provided that the volume and
mix commitments set forth in Section 18 have been achieved
and provided that the quantities of Handset Units subject to
this activation rebate have been shipped to NPI within the
third quarter.
17.1.3 Motorola agrees to make available *** of funding in the
fourth quarter of 2005. This funding will be incremental to
the funding in section 16.1 and will be provided to NPI as a
*** activation rebate on each Handset Unit that is activated
in the fourth quarter of 2005, provided that the volume and
mix commitments set forth in Section 18 have been achieved
and provided
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Amendment Three to Subscriber Units and Services Supply Agreement
Page 12 of 19
that the quantities of Handset Units subject to this
activation rebate have been shipped to NPI within the fourth
quarter.
17.1.4 Based on the activation report attached hereto as Appendix
F NPI has achieved sufficient Handset Unit activations to
earn the *** funding for the second quarter of 2005 and the
*** funding for the third quarter of 2005. Motorola shall
remit to NPI the aggregate amount of *** within *** of the
execution of this Amendment. This amount shall be subject to
reimbursement to Motorola if NPI fails to achieve the volume
and mix commitments set forth in Section 18.
17.2 Motorola agrees to make available a *** per unit activation
credit for incremental *** handset models that are committed to
in the May 19, 2005 Purchase Forecast. The incremental handset
models eligible for the *** will be defined as the quantity of
*** handsets that are above the quantities shown for these models
in the March 2005 Purchase Forecast plus the incremental purchase
requirements shown in sections 18.2 and 18.3 of this Agreement.
As shown in the following calculation, a maximum of *** units
will be eligible for the *** activation credit.
March 2005 Purchase Forecast *** ***
Q2 Incremental *** (section 18.2) ***
Q3 Incremental *** (section 18.3) ***
---
BASELINE FOR INCREMENTAL FUNDING ***
QUANTITY OF *** COMMITTED TO
IN THE MAY 19, 2005 PURCHASE FORECAST ***
---
QUANTITY ELIGIBLE FOR THE *** ACTIVATION CREDIT ***
Motorola will also make available a *** per unit activation credit for
incremental *** handsets above the *** handsets that are eligible to
receive the *** per unit credit. The following table will be used to
calculate the funding owed to NPI for this program. The activation
rebates in Section 17.2 will be paid on the January 2006 wire file.
***
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Amendment Three to Subscriber Units and Services Supply Agreement
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17.3 Motorola agrees to provide NPI with *** for advertising expenses
incurred by NPI in the fourth quarter of 2005 for "Eligible
Advertising" as defined below. This amount shall be subject to
reimbursement to Motorola if NPI fails to achieve the volume and
mix commitments set forth in Section 18.
Eligible Advertising is defined as advertising that promotes
Motorola iDEN products (i) by including reference to the Motorola
name under the same eligibility requirements currently in effect
for the Co-op Advertising Program described in Section 2.2; (ii)
through radio, print, collateral, or television and (iii) by
including an offer by NPI to sell NPI service and a Motorola
manufactured iDEN phone. NPI will provide to Motorola a summary
report detailing expenditures made for Eligible Advertising that
will include, at a minimum, the type of media, the advertising
copy used, the time frame the advertising appeared and the
expenses incurred related to the described advertising. Payments
to NPI for expenses incurred pursuant to this Section 17.3 will
be made on the January 2006 wire. Without affecting the payment
date set forth in the prior sentence NPI agrees to allow Motorola
to audit NPI records for verification of actual expenditures
reported on the summary reports.
18. 2005 Volume Commitments for Special 2005 Promotional Funding Described
in Section 17
18.1 NPI agrees to a volume commitment to place orders for delivery by
December 31, 2005, for *** Handset Units. Failure to place orders
for delivery by December 31, 2005 for *** Handset Units may cause
NPI to reimburse Motorola for the entire amount of funding agreed
to in sections 17.1,17.2, and 17.3. Before the funding is
reimbursed to Motorola, the Parties will work together to
determine alternative methods to achieve the *** unit commitment.
If the Parties cannot agree, Motorola reserves the right to
receive a reimbursement for the total amount provided to NPI
pursuant to Sections 17.1, 17.2, and 17.3. In the event that a
reimbursement is due to Motorola, such reimbursement will be
settled on the January 2006 wire.
18.2 The volume commitment required for the second quarter of 2005 by
Motorola and agreed to by NPI is as follows: NPI purchases an
incremental *** Handset Units in the second quarter of 2005, of
which *** of the incremental Handset Units must be *** handset
models. The measurement baseline for the incremental Handset
Units for the second quarter of 2005 is the March 2005 Purchase
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Amendment Three to Subscriber Units and Services Supply Agreement
Page 14 of 19
Plan. Total orders placed for shipment in the second quarter of
2005 must equal a minimum of *** total Handset Units, of which a
minimum of *** of the Handset Units must be *** handset models,
and a minimum of *** of the Handset Units must be *** and ***
handset models. Total 2005 *** handset model purchases must equal
a combined minimum quantity of *** (*** shown in the March 2005
Purchase Forecast plus *** incremental *** handsets for the
second quarter of 2005). Motorola and NPI hereby acknowledge and
agree that NPI has achieved and complied with these volume
commitments and conditions as set forth in this Section 18.2.
18.3 The volume commitment required for the third quarter of 2005 by
Motorola and agreed by NPI is as follows: NPI purchases an
incremental *** Handset Units in the third quarter of 2005, of
which *** of the Handset Units must be *** handset models. The
measurement baseline for the incremental Handset Units for the
third quarter of 2005 will be the March 2005 Purchase Plan. Total
orders placed for shipment in the third quarter of 2005 must
equal a minimum of *** total Handset Units, of which the ***
handset models must equal a minimum combined quantity of ***.
Total annual 2005 *** handset model purchases must equal a
combined minimum quantity of *** (*** shown in the annual March
2005 Purchase Forecast plus *** incremental *** handsets for the
second quarter of 2005 plus *** incremental *** handsets for the
third quarter of 2005). Motorola and NPI hereby acknowledge and
agree that NPI has achieved and complied with these volume
commitments and conditions as set forth in this Section 18.3.
18.4 NPI agrees to purchase an additional *** handset models in August
2005 and an additional *** handset models in September 2005.
These additional third quarter 2005 purchases will be "pull-ins"
from the fourth quarter of 2005 and will not increase NPI's
purchase commitment for 2005 Promotional Funding above *** units.
NPI must purchase a minimum of *** Handset Units in the third
quarter of 2005, of which a minimum of *** of the incremental
Handset Units must be *** handset models, *** of the incremental
Handset Units must be *** handset models, and *** of the
incremental Handset Units must be *** handset models. Mix shifts
from the *** to *** and mix shifts from the *** and *** to the
*** will be permitted, but mix shifts from the *** to either the
*** or *** will not be permitted. Motorola and NPI hereby
acknowledge and agree that NPI has achieved and complied with
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Amendment Three to Subscriber Units and Services Supply Agreement
Page 15 of 19
these volume commitments and conditions as set forth in this
Section 18.4.
18.5 In the fourth quarter 2005, NPI agrees to mix shift *** units
from the *** handset models shown in the Purchase Forecast dated
September 22, 2005 for the fourth quarter to the *** handset
model. After the mix shift, NPI agrees to place non-cancelable
purchase orders for delivery by December 31, 2005 for a total of
*** units of the *** Handset Unit model.
18.6 In the fourth quarter 2005, NPI agrees to place non-cancelable
purchase orders for delivery by December 31, 2005 for an
additional *** handset models. The total annual volume commitment
for 2006 will increase from *** to ***. Any portion of the ***
and *** handset models that are not shipped by December 31, 2005
will ship in the first quarter of 2006 and will be incremental to
the 2006 minimum volume and mix commitments. These units will not
count toward any 2006 minimum volume or mix commitment.
19. 2006 Volume and Mix Commitments
19.1 NPI agrees to a volume commitment to place orders for delivery by
December 31, 2006 for *** Handset Units.
19.2 NPI agrees to place orders for delivery by December 31, 2006 for
*** Category A Handset Units, *** Category B Handset Units, and
*** Category C Handset Units. The Categories are defined as
follows:
CATEGORY A: *** (upon *** Motorola Ship Acceptance Date)
CATEGORY B: ***
CATEGORY C: ***
The Category definitions may be amended from time to time by
mutual agreement of the Parties by means of written amendments.
* The *** is currently scheduled for Motorola Ship Acceptance
Date of April, 14, 2006. If the Motorola Ship Acceptance Date for
the *** is later than June 30, 2006, NPI's Category A Handset
minimum of *** units will be reduced by *** units for every ***
period after June 30, 2006 that the Motorola Ship Acceptance Date
for the *** is delayed ("*** Commitment Reduction"); provided,
however, to the extent that and for the period that Motorola
offers and makes
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Amendment Three to Subscriber Units and Services Supply Agreement
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available to NPI a comparable new handset with substantially
similar form, fit, features and functions at a comparable price,
NPI shall not be entitled to the *** Commitment Reduction.
19.3 NPI agrees to place orders for delivery for a minimum of ***
Handset Units in the first quarter of 2006, and a minimum of ***
Handset Units in each of the remaining quarters of 2006. NPI,
through its 2006 volume commitment stated in this section 19,
agrees to place orders for delivery for a minimum mix commitment
of *** Category A and *** Category B Handset Units in the first
quarter of 2006 and *** Category A and *** Category B Handset
Units in the second quarter of 2006.
19.4 In the event that the NPI commitments identified in sections 19.1
and 19.2 are not met, NPI will owe Motorola payments based on the
Shortfall Impact Table (Table B) below. Shortfall payments owed
to Motorola will be calculated against the Handset Unit mix
baseline in 19.2. The total quantity of shipments in each
Category will be compared against the baseline minimums for each
Category.
***
All shortfall and excess amounts within each Category will
combined to determine the net impact. Any net shortfalls will be
owed to Motorola, but net excess amounts will not be owed to NPI;
provided, however, such excess amounts will be used to reduce any
shortfall impact. The shortfall impact cap is *** for 2006. For
example, if NPI takes delivery of *** Category A, *** Category B,
and *** Category C Handset Units, the net shortfall impact (as
shown in the Shortfall Impact Table Example) owed to Motorola
will total ***.
***
4. 2006 HANDSETS NOMENCLATURE
The ***, and *** Handset models referenced in this Agreement have not been
commercially released to NPI, and may have their nomenclature changed prior
to commercial release. A nomenclature change to these handsets does not
change the obligations in this Agreement relative to those Handset Units.
The term nomenclature means a change to the name only and does not affect
the form, fit, features and functions of the Handset Unit.
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5. RATIFICATION
Except as specifically stated in this Amendment, the Agreement is, in all
other respects, ratified, confirmed and continues in full force and effect.
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6. AUTHORITY
Each Party hereto represents and warrants that: (i) it has obtained all
necessary and requisite approvals, consents and authorizations of third
parties and governmental authorities to enter into this Amendment and to
perform and carry out its obligations hereunder; (ii) the persons executing
this Amendment on behalf of each party have express authority to do so,
and, in so doing, to bind the party thereto; (iii) the execution, delivery,
and performance of this Amendment 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 Amendment has
been duly authorized by all necessary partnership or corporate action and
this Amendment is a valid and binding obligation of such party, enforceable
in accordance with its terms.
IN WITNESS WHEREOF, Motorola and NPI have entered into this Amendment as of the
Effective Date.
MOTOROLA INC. NEXTEL PARTNERS OPERATING CORP.
By: /s/ REY MORE 10/21/2005 By: /s/ XXXXXX X. XXXXXXX
--------------------------------- ------------------------------------
Name: Rey More Name: Xxxxxx X. Xxxxxxx
------------------------------- ----------------------------------
Title: Sr VP/GM, iDEN Mobile Devices Title: Vice President
------------------------------ ---------------------------------
Date: 10/21/2005 Date: 10/21/05
------------------------------- ----------------------------------
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Appendix B-1 - Low and Mid Tier
iDEN Subscriber Group
2005 Falcon NPI Pricing Menu as of 10-19-05
***
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SECURITIES AND EXCHANGE COMMISSION.
Appendix B-1 - High Tier & Special Category
iDEN Subscriber Group
2005 Falcon NPI Pricing Menu as of 10-19-05
***
*** CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
Appendix B-2 - Low Tier, Mid Tier, and Special Category
iDEN Subscriber Group
2006 Falcon NPI Pricing Menu as of 10-19-05
***
*** CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
Appendix B-2 - High Tier
iDEN Subscriber Group
2006 Falcon NPI Pricing Menu as of 10-19-05
***
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APPENDIX F
The activation reports as contained in the electronic files sent to Motorola, by
Xxxx Xxxxxxxx of NPI, on October 21, 2005, labeled as follows:
Q2_File1.zip
Q2_File2.zip
Q3_File1.zip
Q3_File2.zip
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SECURITIES AND EXCHANGE COMMISSION.
