Table of Contents     

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
—————————————————————
FORM 10-Q
—————————————————————
x
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2016
or
o
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to  
   
Commission File number 1-04721
—————————————————————
SPRINT CORPORATION
(Exact name of registrant as specified in its charter)
—————————————————————
Delaware
46-1170005
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
 
 
6200 Sprint Parkway, Overland Park, Kansas
66251
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code: (855) 848-3280
—————————————————————
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes   x     No   o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes   x     No   o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
x
 
Accelerated filer
o
Non-accelerated filer
o
 (Do not check if a smaller reporting company)
Smaller reporting company
o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.)    Yes   o     No   x
COMMON SHARES OUTSTANDING AT FEBRUARY 3, 2017 :
Sprint Corporation Common Stock
3,987,167,109

 



Table of Contents

SPRINT CORPORATION
TABLE OF CONTENTS
 
 
 
Page
Reference  
Item
PART I — FINANCIAL INFORMATION
 
1.
 
 
 
 
 
2.
3.
4.
 
 
 
 
 
 
 
PART II — OTHER INFORMATION
 
1.
1A.
2.
3.
4.
5.
6.






Table of Contents

PART I — FINANCIAL INFORMATION

Item 1.
Financial Statements (Unaudited)

SPRINT CORPORATION
CONSOLIDATED BALANCE SHEETS  
 
December 31,
 
March 31,
 
2016
 
2016
 
(in millions, except share and per share data)
ASSETS
Current assets:
 
 
 
Cash and cash equivalents
$
3,707

 
$
2,641

Short-term investments
2,349

 
—

Accounts and notes receivable, net of allowance for doubtful accounts and deferred interest of $46 and $39, respectively
1,236

 
1,099

Device and accessory inventory
1,296

 
1,173

Prepaid expenses and other current assets
1,984

 
1,920

Total current assets
10,572

 
6,833

Property, plant and equipment, net
19,333

 
20,297

Intangible assets


 
 
Goodwill
6,579

 
6,575

FCC licenses and other
40,556

 
40,073

Definite-lived intangible assets, net
3,582

 
4,469

Other assets
673

 
728

Total assets
$
81,295

 
$
78,975

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
 
 
 
Accounts payable
$
2,894

 
$
2,899

Accrued expenses and other current liabilities
4,189

 
4,374

Current portion of long-term debt, financing and capital lease obligations
6,554

 
4,690

Total current liabilities
13,637

 
11,963

Long-term debt, financing and capital lease obligations
30,759

 
29,268

Deferred tax liabilities
14,238

 
13,959

Other liabilities
3,665

 
4,002

Total liabilities
62,299

 
59,192

Commitments and contingencies

 

Stockholders' equity:
 
 
 
Common stock, voting, par value $0.01 per share, 9.0 billion authorized, 3.985 billion and 3.975 billion issued, respectively
40

 
40

Paid-in capital
27,694

 
27,563

Treasury shares, at cost
—

 
(3
)
Accumulated deficit
(8,301
)
 
(7,378
)
Accumulated other comprehensive loss
(437
)
 
(439
)
Total stockholders' equity
18,996

 
19,783

Total liabilities and stockholders' equity
$
81,295

 
$
78,975

See Notes to the Consolidated Financial Statements

1
Table of Contents



SPRINT CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
 
Three Months Ended
 
Nine Months Ended
 
December 31,
 
December 31,
 
2016
 
2015
 
2016
 
2015
 
(in millions, except per share amounts)
Net operating revenues:
 
 
 
 
 
 
 
Service
$
6,323

 
$
6,683

 
$
19,252

 
$
20,600

Equipment
2,226

 
1,424

 
5,556

 
3,509

 
8,549

 
8,107

 
24,808


24,109

Net operating expenses:
 
 
 
 
 
 
 
Cost of services (exclusive of depreciation and amortization included below)
1,925

 
2,348

 
6,125

 
7,194

Cost of products (exclusive of depreciation and amortization included below)
1,985

 
1,589

 
5,097

 
4,244

Selling, general and administrative
2,080

 
2,129

 
5,992

 
6,540

Severance and exit costs
19

 
209

 
30

 
247

Depreciation
1,837

 
1,549

 
5,227

 
4,202

Amortization
255

 
316

 
813

 
994

Other, net
137

 
164

 
230

 
386

 
8,238

 
8,304

 
23,514


23,807

Operating income (loss)
311

 
(197
)
 
1,294


302

Other (expense) income:
 
 
 
 
 
 
 
Interest expense
(619
)
 
(546
)
 
(1,864
)
 
(1,630
)
Other (expense) income, net
(60
)
 
4

 
(67
)
 
13

 
(679
)
 
(542
)
 
(1,931
)

(1,617
)
Loss before income taxes
(368
)
 
(739
)
 
(637
)

(1,315
)
Income tax expense
(111
)
 
(97
)
 
(286
)
 
(126
)
Net loss
$
(479
)
 
$
(836
)
 
$
(923
)

$
(1,441
)
 
 
 
 
 
 
 
 
Basic net loss per common share
$
(0.12
)
 
$
(0.21
)
 
$
(0.23
)
 
$
(0.36
)
Diluted net loss per common share
$
(0.12
)
 
$
(0.21
)
 
$
(0.23
)
 
$
(0.36
)
Basic weighted average common shares outstanding
3,983

 
3,970

 
3,979

 
3,969

Diluted weighted average common shares outstanding
3,983

 
3,970

 
3,979

 
3,969

 
 
 
 
 
 
 
 
Other comprehensive (loss) income, net of tax:
 
 
 
 
 
 
 
Net unrealized holding losses on securities and other
$
(5
)
 
$
(9
)
 
$
—

 
$
(16
)
Net unrecognized net periodic pension and other postretirement benefits
—

 
2

 
2

 
5

Other comprehensive (loss) income
(5
)
 
(7
)
 
2

 
(11
)
Comprehensive loss
$
(484
)
 
$
(843
)
 
$
(921
)
 
$
(1,452
)
See Notes to the Consolidated Financial Statements

2
Table of Contents




SPRINT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS



 
Nine Months Ended
 
December 31,
 
2016
 
2015
 
(in millions)
Cash flows from operating activities:
 
 
 
Net loss
$
(923
)
 
$
(1,441
)
Adjustments to reconcile net loss to net cash provided by operating activities:
 
 
 
Depreciation and amortization
6,040

 
5,196

Provision for losses on accounts receivable
406

 
385

Share-based and long-term incentive compensation expense
57

 
58

Deferred income tax expense
276

 
120

Gains from asset dispositions and exchanges
(354
)
 
—

Amortization of long-term debt premiums, net
(234
)
 
(236
)
Loss on disposal of property, plant and equipment
368

 
228

Contract terminations
96

 
—

Other changes in assets and liabilities:
 
 
 
Accounts and notes receivable
(542
)
 
(1,482
)
Deferred purchase price from sale of receivables
(220
)
 
2,048

Inventories and other current assets
(2,254
)
 
(2,165
)
Accounts payable and other current liabilities
(97
)
 
(816
)
Non-current assets and liabilities, net
(313
)
 
112

Other, net
594

 
596

Net cash provided by operating activities
2,900

 
2,603

Cash flows from investing activities:
 
 
 
Capital expenditures - network and other
(1,421
)
 
(3,958
)
Capital expenditures - leased devices
(1,530
)
 
(1,724
)
Expenditures relating to FCC licenses
(46
)
 
(75
)
Proceeds from sales and maturities of short-term investments
2,649

 
377

Purchases of short-term investments
(4,998
)
 
(252
)
Proceeds from sales of assets and FCC licenses
126

 
36

Proceeds from sale-leaseback transaction
—

 
1,136

Other, net
26

 
(25
)
Net cash used in investing activities
(5,194
)
 
(4,485
)
Cash flows from financing activities:
 
 
 
Proceeds from debt and financings
6,830

 
755

Repayments of debt, financing and capital lease obligations
(3,266
)
 
(727
)
Debt financing costs
(272
)
 
(1
)
Other, net
68

 
20

Net cash provided by financing activities
3,360

 
47

Net increase (decrease) in cash and cash equivalents
1,066

 
(1,835
)
Cash and cash equivalents, beginning of period
2,641

 
4,010

Cash and cash equivalents, end of period
$
3,707

 
$
2,175

See Notes to the Consolidated Financial Statements

3
Table of Contents



SPRINT CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(in millions)
 
 
Common Stock
 
Paid-in
Capital
 
Treasury Shares
 
Accumulated
Deficit
 
Accumulated
Other
Comprehensive
Loss
 
Total
 
Shares
 
Amount
Shares
 
Amount
Balance, March 31, 2016
3,974

 
$
40

 
$
27,563

 
1

 
$
(3
)
 
$
(7,378
)
 
$
(439
)
 
$
19,783

Net loss
 
 
 
 
 
 
 
 
 
 
(923
)
 
 
 
(923
)
Other comprehensive income, net of tax
 
 
 
 
 
 
 
 
 
 
 
 
2

 
2

Issuance of common stock, net
11

 
 
 
32

 
(1
)
 
3

 

 
 
 
35

Share-based compensation expense
 
 
 
 
56

 
 
 
 
 
 
 
 
 
56

Capital contribution by SoftBank
 
 
 
 
6

 
 
 
 
 
 
 
 
 
6

Other, net
 
 
 
 
37

 
 
 
 
 
 
 
 
 
37

Balance, December 31, 2016
3,985

 
$
40

 
$
27,694

 
—

 
$
—

 
$
(8,301
)
 
$
(437
)
 
$
18,996


See Notes to the Consolidated Financial Statements

4
Table of Contents



SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
INDEX
 



5



SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 1.
Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X for interim financial information. All normal recurring adjustments considered necessary for a fair presentation have been included. Certain disclosures normally included in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) have been omitted. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes contained in our annual report on Form 10-K for the year ended March 31, 2016 . Unless the context otherwise requires, references to "Sprint," "we," "us," "our" and the "Company" mean Sprint Corporation and its consolidated subsidiaries for all periods presented, and references to "Sprint Communications" are to Sprint Communications, Inc. and its consolidated subsidiaries.
The preparation of the unaudited interim consolidated financial statements requires management of the Company to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities at the date of the unaudited interim consolidated financial statements. These estimates are inherently subject to judgment and actual results could differ.
Certain prior period amounts have been reclassified to conform to the current period presentation.

Note 2.
New Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board (FASB) issued new authoritative literature, Revenue from Contracts with Customers, and has subsequently modified several areas of the standard in order to provide additional clarity and improvements . The issuance is part of a joint effort by the FASB and the International Accounting Standards Board (IASB) to enhance financial reporting by creating common revenue recognition guidance for U.S. GAAP and International Financial Reporting Standards and, thereby, improving the consistency of requirements, comparability of practices and usefulness of disclosures. The new standard will supersede much of the existing authoritative literature for revenue recognition. In July 2015, the FASB deferred the effective date of this standard. As a result, the standard and related amendments will be effective for the Company's fiscal year beginning April 1, 2018, including interim periods within that fiscal year. Early application is permitted, but not before the original effective date of April 1, 2017.
Two adoption methods are available for implementation of the standard update related to the recognition of revenue from contracts with customers. Under one method, the guidance is applied retrospectively to contracts for each reporting period presented, subject to allowable practical expedients. Under the other method, the guidance is applied only to the most current period presented, recognizing the cumulative effect of the change as an adjustment to the beginning balance of retained earnings, and also requires additional disclosures comparing the results to the previous guidance. The Company is currently evaluating the guidance, including which implementation approach will be applied. We expect this guidance to have a material impact on our consolidated financial statements.
In January 2015, the FASB issued authoritative guidance on Extraordinary and Unusual Items , eliminating the concept of extraordinary items. The issuance is part of the FASB’s initiative to reduce complexity in accounting standards. Under the current guidance, an entity is required to separately classify, present and disclose events and transactions that meet the criteria for extraordinary classification. Under the new guidance, reporting entities will no longer be required to consider whether an underlying event or transaction is extraordinary, however, presentation and disclosure guidance for items that are unusual in nature or occur infrequently was retained and expanded to include items that are both unusual in nature and infrequently occurring. The amendments are effective for the Company’s fiscal year beginning April 1, 2016, and did not have a material impact on our consolidated financial statements. 
In February 2015, the FASB issued authoritative guidance regarding Consolidation , which provides guidance to management when evaluating whether they should consolidate certain legal entities. The updated guidance modifies evaluation criteria of limited partnerships and similar legal entities, eliminates the presumption that a general partner should consolidate a limited partnership, and affects the consolidation analysis of reporting entities that are involved with variable interest entities, particularly those that have fee arrangements and related party relationships. All legal entities will be subject to reevaluation under the revised consolidation model. The standard is effective for the Company’s fiscal year beginning April 1, 2016, including interim reporting periods within this fiscal year and did not have a material impact on our consolidated financial statements.

6



SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

In July 2015, the FASB issued authoritative guidance regarding Inventory , which simplifies the subsequent measurement of certain inventories by replacing today’s lower of cost or market test with a lower of cost and net realizable value test. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The standard will be effective for the Company’s fiscal year beginning April 1, 2017, including interim periods within this fiscal year. The Company does not expect the adoption of this guidance to have a material impact on our consolidated financial statements.
In September 2015, the FASB issued authoritative guidance amending Business Combinations, which requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined, including the cumulative effect of the change in provisional amount as if the accounting had been completed at the acquisition date. The adjustments related to previous reporting periods since the acquisition date must be disclosed by income statement line item either on the face of the income statement or in the notes. The amendments are effective for the Company's fiscal year beginning April 1, 2016, including interim periods within this fiscal year and, will be applied, as necessary, to future business combinations. The amendments are to be applied prospectively to adjustments that occur after the effective date.
In January 2016, the FASB issued authoritative guidance regarding Financial Instruments , which amended guidance on the classification and measurement of financial instruments. Under the new guidance, entities will be required to measure equity investments that are not consolidated or accounted for under the equity method at fair value with any changes in fair value recorded in net income, unless the entity has elected the new practicability exception. For financial liabilities measured using the fair value option, entities will be required to separately present in other comprehensive income the portion of the changes in fair value attributable to instrument-specific credit risk. Additionally, the guidance amends certain disclosure requirements associated with the fair value of financial instruments. The standard will be effective for the Company’s fiscal year beginning April 1, 2018, including interim reporting periods within that fiscal year. The Company does not expect the adoption of this guidance to have a material impact on our consolidated financial statements.
In February 2016, the FASB issued authoritative guidance regarding Leases. The new standard will supersede much of the existing authoritative literature for leases. This guidance requires lessees, among other things, to recognize right-of-use assets and liabilities on their balance sheet for all leases with lease terms longer than twelve months. The standard will be effective for the Company for its fiscal year beginning April 1, 2019, including interim periods within that fiscal year, with early application permitted. Entities are required to use modified retrospective application for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements with the option to elect certain transition reliefs. The Company is currently evaluating the guidance and expects it to have a material impact on our consolidated financial statements, however we are still assessing the overall impact.
In June 2016, the FASB issued authoritative guidance regarding Financial Instruments - Credit Losses , which requires entities to use a Current Expected Credit Loss impairment model based on expected losses rather than incurred losses. Under this model, an entity would recognize an impairment allowance equal to its current estimate of all contractual cash flows that the entity does not expect to collect from financial assets measured at amortized cost. The entity's estimate would consider relevant information about past events, current conditions and reasonable and supportable forecasts, which will result in recognition of lifetime expected credit losses. The standard will be effective for the Company's fiscal year beginning April 1, 2020, including interim reporting periods within that fiscal year, although early adoption is permitted. The Company does not expect the adoption of this guidance to have a material impact on our consolidated financial statements.
In August 2016, the FASB issued authoritative guidance regarding Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments, to address diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. It provides guidance on eight specific cash flow issues. The standard will be effective for the Company for its fiscal years beginning after April 1, 2018, including interim periods within that fiscal year, with early adoption permitted. The Company is currently evaluating the guidance and assessing the impact it will have on our consolidated financial statements.
In October 2016, the FASB issued authoritative guidance regarding Income Taxes , which amended guidance for the income tax consequences of intra-entity transfers of assets other than inventory. Under the new guidance, entities will be required to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs, thereby eliminating the recognition exception within current guidance. The standard will be effective for the

7



SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Company’s fiscal year beginning April 1, 2018, including interim reporting periods within that fiscal year. The Company is currently evaluating the guidance and assessing the impact it will have on our consolidated financial statements.
In November 2016, the FASB issued authoritative guidance regarding Statement of Cash Flows: Restricted Cash, requiring that amounts generally described as restricted cash or restricted cash equivalents be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The standard will be effective for the Company’s fiscal year beginning April 1, 2018, including interim reporting periods within that fiscal year, with early adoption permitted. The Company is currently evaluating the guidance and assessing the impact it will have on our consolidated financial statements.
In January 2017, the FASB issued authoritative guidance amending Business Combinations: Clarifying the Definition of a Business , to clarify the definition of a business with the objective of providing a more robust framework to assist management when evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The standard will be effective for the Company for its fiscal year beginning April 1, 2018, including interim periods within that fiscal year, with early application permitted. The amendments are to be applied prospectively to business combinations that occur after the effective date.

Note 3.
Funding Sources
Our device leasing and installment billing programs require a greater use of operating cash flows in the earlier part of the device contracts as our subscribers will generally pay less upfront than a traditional subsidy program. The Accounts Receivable Facility and the Handset Sale-Leaseback transactions described below were designed in large part to mitigate the significant use of cash from purchasing devices from original equipment manufacturers (OEMs) to fulfill our installment billing and leasing programs. We also entered into the Network Equipment Sale-Leaseback transaction in April 2016 to sell and leaseback certain network equipment to unrelated bankruptcy-remote special purpose entities (SPEs) that provided $2.2 billion in cash proceeds. Additionally, in October 2016 we entered into a spectrum financing transaction whereby a portion of our spectrum holdings was used as collateral to issue $3.5 billion in senior secured notes.
Accounts Receivable Facility
Transaction Overview
Our Accounts Receivable Facility (Receivables Facility) provides us the opportunity to sell certain wireless service, installment receivables, and future amounts due from customers who lease certain devices from us to unaffiliated third parties (the Purchasers). The maximum funding limit under the Receivables Facility is $4.3 billion with an expiration of November 2017 (see Note 16. Subsequent Events) . T he Receivables Facility was amended in November 2016 to, among other things, reallocate the Purchasers' commitments between service, installment and future lease receivables. The amendment was in response to changing trends in the financing methods selected by customers. While we have the right to decide how much cash to receive from each sale, the maximum amount of cash available to us varies based on a number of factors and currently represents approximately 50% of the total amount of the eligible receivables sold to the Purchasers. As of December 31, 2016 , the total amount available to be drawn was $6 million . The proceeds from the sale of these receivables are comprised of a combination of cash and a deferred purchase price receivable (DPP). The DPP is realized by us upon the ultimate collection of the underlying receivables sold to the Purchasers or upon Sprint's election to receive additional advances in cash from the Purchasers subject to the total availability under the Receivables Facility.
Wireless service and installment receivables sold are treated as a sale of financial assets and Sprint derecognizes these receivables, as well as the related allowances, and recognizes the net proceeds received in cash provided by operating activities on the consolidated statements of cash flows. The net amount drawn for wireless service and installment receivables was $1.8 billion as of December 31, 2016 . The fees associated with these sales are recognized in "Selling, general and administrative" in the consolidated statements of comprehensive loss. The sale of future lease receivables is treated as a financing transaction. Accordingly, the proceeds received are reflected as cash provided by financing activities on the consolidated statements of cash flows and the fees are recognized as "Interest expense" in the consolidated statements of comprehensive loss.

8



SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Transaction Structure
Sprint contributes certain wireless service, installment and future lease receivables, as well as the associated leased devices to Sprint's wholly-owned consolidated bankruptcy-remote SPEs. At Sprint's direction, the SPEs have sold, and will continue to sell, wireless service, installment and future lease receivables to Purchasers or to a bank agent on behalf of the Purchasers. Leased devices will remain with the SPEs and continue to be depreciated over their estimated useful life. At December 31, 2016 , the net book value of devices contributed to the SPEs was approximately $965 million .
Each SPE is a separate legal entity with its own separate creditors who will be entitled, prior to and upon the liquidation of the SPE, to be satisfied out of the SPE’s assets prior to any assets in the SPE becoming available to Sprint. Accordingly, the assets of the SPE are not available to pay creditors of Sprint or any of its affiliates (other than any other SPE), although collections from these receivables in excess of amounts required to repay the advances, yield and fees of the Purchasers and other creditors of the SPEs may be remitted to Sprint during and after the term of the Receivables Facility.
Sprint has no retained interest in the receivables sold, other than collection and administrative responsibilities and its right to the DPP. Sales of eligible receivables by the SPEs generally occur daily and are settled on a monthly basis. Sprint pays a fee for the drawn and undrawn portions of the Receivables Facility. A subsidiary of Sprint services the receivables in exchange for a monthly servicing fee, and Sprint guarantees the performance of the servicing obligations under the Receivables Facility.
DPP
The DPP related to our wireless service and installment receivables, which amounted to approximately $1.4 billion and $1.2 billion as of December 31, 2016 and March 31, 2016 , respectively, is classified as a trading security within "Prepaid expenses and other current assets" in the consolidated balance sheets and is recorded at its estimated fair value. The fair value of the DPP is estimated using a discounted cash flow model, which relies principally on unobservable inputs such as the nature and credit class of the sold receivables and subscriber payment history, and for installment receivables sold, the estimated timing of upgrades and upgrade payment amounts for those with upgrade options. Accretable yield on the DPP is recognized as interest revenue within net operating service revenue on the consolidated statements of comprehensive loss and other changes in the fair value of the DPP are recognized in "Selling, general and administrative" in the consolidated statements of comprehensive loss. Changes in the fair value of the DPP did not have a material impact on our statements of comprehensive loss for the three and nine-month periods ended December 31, 2016 . Changes to the unobservable inputs used to determine the fair value did not and are not expected to result in a material change in the fair value of the DPP.
During the nine-month period ended December 31, 2016 , we remitted $185 million of funds to the Purchasers because the amount of cash proceeds received by us under the facility exceeded the maximum funding limit, which increased the total amount of the DPP due to Sprint. We also elected to receive $625 million of cash, which decreased the total amount of the DPP due to Sprint. In addition, during the nine-month period ended December 31, 2016 , sales of new receivables exceeded cash collections on previously sold receivables such that the DPP increased by $660 million .
Continuing Involvement
Sprint has continuing involvement in the receivables sold by the SPEs to the Purchasers because a subsidiary of Sprint services the receivables. Additionally, in accordance with the Receivables Facility, Sprint is required to repurchase aged receivables, or those that will be written off in accordance with Sprint's credit and collection policies, both of which result from subscriber non-payment. Sprint recognizes assets and liabilities, as applicable, with respect to its continuing involvement at fair value. Sprint's continuing involvement did not have a material impact on its financial statements as of December 31, 2016 .
Variable Interest Entity
Sprint determined that certain of the Purchasers, which are multi-seller asset-backed commercial paper conduits (Conduits) are considered variable interest entities because they lack sufficient equity to finance their activities. Sprint's interest in the service and installment receivables purchased by the Conduits, which is comprised of the DPP due to Sprint, is not considered variable because it consists of assets that represent less than 50% of the total activity of the Conduits.

9



SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Handset Sale-Leasebacks
In December 2015 and May 2016, we sold certain iPhone ® devices being leased by our customers to Mobile Leasing Solutions, LLC (MLS), a company formed by a group of equity investors, including SoftBank Group Corp. (SoftBank), and then subsequently leased the devices back. Under the agreements, Sprint generally maintains the customer leases, continues to collect and record lease revenue from the customer and remits monthly rental payments to MLS during the leaseback periods.
Under the agreements, Sprint contributed the devices and the associated customer leases to wholly-owned consolidated bankruptcy-remote special purpose entities of Sprint (SPE Lessees). The SPE Lessees then sold the devices and transferred certain specified customer lease end rights and obligations, such as the right to receive the proceeds from customers who elect to purchase the device at the end of the customer lease term, to MLS in exchange for a combination of cash and DPP. Settlement for the DPP occurs near the end of the agreement and can be reduced to the extent that MLS experiences a loss on the device (either not returned or sold at an amount less than the expected residual value of the device), but only to the extent of the device's DPP balance. In the event that MLS sells the devices returned from our customers at a price greater than the expected device residual value, Sprint has the potential to share some of the excess proceeds.
The SPE Lessees retain all rights to the underlying customer leases, such as the right to receive the rental payments during the device leaseback period, other than the aforementioned certain specified customer lease end rights. Each SPE Lessee is a separate legal entity with its own separate creditors who will be entitled, prior to and upon the liquidation of the SPE Lessee, to be satisfied out of the SPE Lessee’s assets prior to any assets in the SPE Lessee becoming available to Sprint. Accordingly, the assets of the SPE Lessee are not available to pay creditors of Sprint or any of its affiliates. The SPE Lessees are obligated to pay the full monthly rental payments under each device lease to MLS regardless of whether our customers make lease payments on the devices leased to them or whether the customer lease is canceled. Sprint has guaranteed to MLS the performance of the agreements and undertakings of the SPE Lessees under the transaction documents.
Handset Sale-Leaseback Tranche 1 (Tranche 1)
In December 2015, Sprint transferred devices with a net book value of approximately $1.3 billion to MLS in exchange for cash proceeds totaling $1.1 billion and a DPP of $126 million . We recorded the sale, removed the devices from our balance sheet, and classified the leasebacks as operating leases. The difference between the fair value and the net book value of the devices sold was recognized as a loss on disposal of property, plant and equipment in the amount of $65 million and was included in "Other, net" in the consolidated statements of comprehensive loss for the three and nine-month periods ended December 31, 2015. The cash proceeds received in the transaction were reflected as cash provided by investing activities on the consolidated statements of cash flows and payments made to MLS under the leaseback are reflected as "Cost of products" in the consolidated statements of comprehensive loss. Rent expense related to MLS totaled $117 million and $494 million during the three and nine-month periods ended December 31, 2016 , respectively, and is reflected within cash flows from operations. The monthly rental payments for the devices leased backed by us were expected to approximate the amount of cash received from the associated customer leases during the weighted average leaseback period. In December 2016, Sprint terminated Tranche 1 by repurchasing the devices and related customer lease end rights and obligations from MLS for consideration of $371 million of net cash payments and the DPP of $126 million . As a result of the transaction, Sprint recorded $477 million of property, plant and equipment, $16 million of other assets, and was released from certain liabilities. Additionally, the leaseback was canceled and there will be no future rental payments owed to MLS related to Tranche 1. The impact to the consolidated statements of comprehensive loss as a result of the termination was immaterial.
Handset Sale-Leaseback Tranche 2 (Tranche 2)
In May 2016, Sprint transferred devices with a net book value of approximately $1.3 billion to MLS in exchange for cash proceeds totaling $1.1 billion and a DPP of $186 million . Unlike Tranche 1, Tranche 2 was accounted for as a financing. Accordingly, the devices remain in "Property, plant and equipment, net" in the consolidated balance sheets and we continue to depreciate the assets to their estimated residual values over the respective customer lease terms. At December 31, 2016 , the net book value of devices transferred to MLS was approximately $725 million .
The proceeds received are reflected as cash provided by financing activities in the consolidated statements of cash flows and payments made to MLS will be reflected as principal repayments and interest expense over the respective terms. We have elected to account for the financing obligation at fair value. Accordingly, changes in the fair value of the financing

10



SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

obligation are recognized in "Other (expense) income, net" in the consolidated statements of comprehensive loss over the course of the arrangement.
Tranche 2 primarily includes devices from our iPhone Forever Program, whereas these devices were specifically excluded from Tranche 1. The iPhone Forever Program provides our leasing customers the ability to upgrade their devices and to enter into a new lease agreement, subject to certain conditions, upon Apple's release of a next generation device. Upon a customer exercising their iPhone Forever upgrade right, Sprint has the option to terminate the existing leaseback by immediately remitting all unpaid device leaseback payments and returning the device to MLS. Alternatively, Sprint is required to transfer the title in the new device to MLS in exchange for the title in the original device (Exchange Option). If Sprint elects the Exchange Option, we are required to continue to pay existing device leaseback rental related to the original device, among other requirements.
To address the introduction of the upgrade feature into the sale-leaseback structure, among other factors, numerous contractual terms from Tranche 1 were modified, which shifted certain risks of ownership in the devices away from MLS to Sprint and resulted in Tranche 2 being accounted for as a financing. For instance, the device leaseback periods are generally longer in Tranche 2 as compared to Tranche 1, and the resulting amounts committed to be paid by the Company represent the initial proceeds received from MLS plus interest. This mitigates MLS's exposure to certain risks for non-returned and damaged devices, as well as to declines in device residual values.
Network Equipment Sale-Leaseback
In April 2016, Sprint sold and leased back certain network equipment to unrelated bankruptcy-remote special purpose entities (collectively, "Network LeaseCo"). The network equipment acquired by Network LeaseCo was used by them as collateral to raise approximately $2.2 billion in borrowings from external investors, including SoftBank. Sprint's payments to Network LeaseCo during the leaseback period are used by Network LeaseCo to service their debt.
Network LeaseCo is a variable interest entity for which Sprint is the primary beneficiary. As a result, Sprint is required to consolidate Network LeaseCo and our consolidated financial statements include Network LeaseCo's debt and the related financing cash inflows. The network assets included in the transaction, which had a net book value of approximately $3.0 billion and consisted primarily of equipment located at cell towers, remain on Sprint's consolidated financial statements and continue to be depreciated over their respective estimated useful lives. At December 31, 2016 , these network assets had a net book value of approximately $2.5 billion .
The proceeds received were reflected as cash provided by financing activities in the consolidated statements of cash flows and payments made to Network LeaseCo are reflected as principal repayments and interest expense over the respective terms. Sprint has the option to purchase the equipment at the end of the leaseback term for a nominal amount. All intercompany transactions between Network LeaseCo and Sprint are eliminated in our consolidated financial statements. Principal and interest payments on the borrowings from the external investors will be repaid in staggered, unequal payments through January 2018 with the first principal payment of approximately $300 million due in March 2017 followed by the remaining $1.9 billion of principal payments due in fiscal year 2017.
Spectrum Financing
In October 2016, Sprint transferred certain directly held and third-party leased spectrum licenses (collectively, "the Spectrum Portfolio") to wholly-owned bankruptcy-remote special purpose entities (collectively, "the Spectrum Financing SPEs"). The Spectrum Portfolio, which represents approximately 14% of Sprint's total spectrum holdings on a MHz-pops basis, was used as collateral to raise an initial $3.5 billion in senior secured notes at 3.36% from external investors under a $7.0 billion program. Sprint can utilize this financing structure to potentially raise up to an additional $3.5 billion subject to certain conditions. The notes will be repaid over a five -year term, with interest only payments over the first four quarters and amortizing quarterly principal and interest payments thereafter through September 2021.
Sprint Communications, Inc. simultaneously entered into a long-term lease with the Spectrum Financing SPEs for the ongoing use of the Spectrum Portfolio. Sprint Communications, Inc. is required to make monthly lease payments to the Spectrum Financing SPEs, at a market rate in an amount sufficient to service the notes. As the Spectrum Financing SPEs are wholly-owned Sprint subsidiaries, these entities are consolidated and all intercompany activity has been eliminated.
As a result of this transaction, our $2.5 billion unsecured financing facility was terminated.


11



SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 4.
Financial Instruments
The Company carries certain assets and liabilities at fair value. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The three tier hierarchy for inputs used in measuring fair value, which prioritizes the inputs based on the observability as of the measurement date, is as follows: quoted prices in active markets for identical assets or liabilities; observable inputs other than the quoted prices in active markets for identical assets and liabilities; and unobservable inputs for which there is little or no market data, which require the Company to develop assumptions of what market participants would use in pricing the asset or liability.
The carrying amount of cash and cash equivalents, accounts and notes receivable, and accounts payable approximates fair value. Short-term investments (consisting primarily of time deposits and commercial paper) are recorded at amortized cost, and the respective carrying amounts approximate fair value. Short-term investments totaled approximately $2.3 billion as of December 31, 2016 and Sprint did not hold any short-term investments as of March 31, 2016 . The fair value of marketable equity securities totaling $50 million and $46 million as of December 31, 2016 and March 31, 2016 , respectively, are measured on a recurring basis using quoted prices in active markets.
Except for our financing transaction with MLS, current and long-term debt and our other financings are carried at amortized cost. The Company elected to measure the financing obligation with MLS at fair value as a means to better reflect the economic substance of the arrangement. The Tranche 2 financing obligation, which amounted to $554 million at December 31, 2016 and is reported in "Current portion of long-term debt, financing and capital lease obligations" in our consolidated balance sheets, is the only eligible financial instrument for which we have elected the fair value option.
The fair value of the financing obligation, which was determined at the outset of the arrangement using a discounted cash flow model, was derived by unobservable inputs such as customer churn rates, customer upgrade probabilities, and the likelihood that Sprint will elect the Exchange Option versus the termination option upon a customer upgrade. Any gains or losses resulting from changes in the fair value of the financing obligation are included in “Other (expense) income, net” on the consolidated statements of comprehensive loss. During the nine-month period ended December 31, 2016 , the change in fair value of the financing obligation resulted in a loss of approximately $30 million . During the nine-month period ended December 31, 2016 , the payments made to MLS totaled $502 million .
The estimated fair value of the majority of our current and long-term debt, excluding our credit facilities, future lease receivables and borrowings under our Network Equipment Sale-Leaseback and Tranche 2 transactions, is determined based on quoted prices in active markets or by using other observable inputs that are derived principally from, or corroborated by, observable market data.
The following table presents carrying amounts and estimated fair values of current and long-term debt:
 
Carrying amount at December 31, 2016
 
Estimated Fair Value Using Input Type
 
 
Quoted prices in active markets
 
Observable
 
Unobservable
 
Total estimated fair value
 
(in millions)
Current and long-term debt
$
36,870

 
$
29,457

 
$
4,391

 
$
4,758

 
$
38,606

 
Carrying amount at March 31, 2016
 
Estimated Fair Value Using Input Type
 
 
Quoted prices in active markets
 
Observable
 
Unobservable
 
Total estimated fair value
 
(in millions)
Current and long-term debt
$
33,645

 
$
21,757

 
$
4,474

 
$
2,130

 
$
28,361



12



SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 5.
Property, Plant and Equipment
Property, plant and equipment consists primarily of network equipment and other long-lived assets used to provide service to our subscribers. Non-cash accruals included in property, plant and equipment (excluding leased devices) totaled $325 million and $763 million as of December 31, 2016 and 2015 , respectively.
The following table presents the components of property, plant and equipment and the related accumulated depreciation:
 
December 31,
2016
 
March 31,
2016
 
(in millions)
Land
$
260

 
$
260

Network equipment, site costs and related software
21,696

 
21,500

Buildings and improvements
808

 
798

Non-network internal use software, office equipment, leased devices and other
8,450

 
6,182

Construction in progress
1,460

 
1,249

Less: accumulated depreciation
(13,341
)
 
(9,692
)
Property, plant and equipment, net
$
19,333

 
$
20,297

In September 2014, Sprint introduced a leasing program, whereby qualified subscribers can lease a device for a contractual period of time. At the end of the lease term, the subscriber has the option to turn in the device, continue leasing the device, or purchase the device. As of December 31, 2016 , substantially all of our device leases were classified as operating leases. At lease inception, the devices leased through Sprint's direct channels are reclassified from inventory to property, plant and equipment. For those devices leased through indirect channels, Sprint purchases the device to be leased from the retailer at lease inception. The devices are then depreciated using the straight-line method to their estimated residual value generally over the term of the lease.
The following table presents leased devices and the related accumulated depreciation:
 
December 31,
2016
 
March 31,
2016
 
(in millions)
Leased devices
$
7,099

 
$
4,913

Less: accumulated depreciation
(2,645
)
 
(1,267
)
Leased devices, net
$
4,454

 
$
3,646

During the nine-month periods ended December 31, 2016 and 2015 , there were non-cash transfers to leased devices of approximately $2.3 billion and $2.6 billion , respectively, along with a corresponding decrease in "Device and accessory inventory." Non-cash accruals included in leased devices totaled $166 million and $306 million as of December 31, 2016 and 2015 , respectively, for devices purchased from indirect dealers that were leased to our subscribers. Depreciation expense incurred on all leased devices was $837 million and $2.2 billion for the three and nine-month periods ended December 31, 2016 , respectively, and $535 million and $1.2 billion for the same periods in 2015 , respectively.
During the three and nine-month periods ended December 31, 2016 , we recorded $137 million and $368 million , respectively, of loss on disposal of property, plant and equipment, net of recoveries, which is included in "Other, net" in our consolidated statements of comprehensive loss. These losses primarily resulted from the write-off of leased devices associated with lease cancellations prior to the scheduled customer lease terms where customers did not return the devices to us. If customers continue to not return devices, we may continue to have similar losses in future periods. During the three and nine-month periods ended December 31, 2015 , we recorded $78 million and $163 million , respectively, of loss on disposal of property, plant and equipment, net of recoveries, which is included in "Other, net" in our consolidated statements of comprehensive loss. These losses resulted from the write-off of leased devices associated with lease cancellations prior to the scheduled customer lease terms where customers did not return the devices to us and cell site construction costs and other network costs that are no longer recoverable as a result of changes in the Company's network plans.


13



SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 6.
Intangible Assets
Indefinite-Lived Intangible Assets
Our indefinite-lived intangible assets consist of FCC licenses, which were acquired primarily through FCC auctions and business combinations, certain of our trademarks, and goodwill. At December 31, 2016 , we held 1.9 GHz, 800 MHz and 2.5 GHz FCC licenses authorizing the use of radio frequency spectrum to deploy our wireless services. As long as the Company acts within the requirements and constraints of the regulatory authorities, the renewal and extension of these licenses is reasonably certain at minimal cost. Accordingly, we have concluded that FCC licenses are indefinite-lived intangible assets. Our Sprint and Boost Mobile trademarks have also been identified as indefinite-lived intangible assets. Goodwill represents the excess of consideration paid over the estimated fair value of net tangible and identifiable intangible assets acquired in business combinations.
The following provides the activity of indefinite-lived intangible assets within the consolidated balance sheets:
 
March 31,
2016
 
Net
Additions
 
December 31,
2016
 
(in millions)
FCC licenses (1)
$
36,038

 
$
483

 
$
36,521

Trademarks
4,035

 
—

 
4,035

Goodwill
6,575

 
4

 
6,579

 
$
46,648

 
$
487

 
$
47,135

_________________
(1)
Net additions within FCC licenses includes $85 million of spectrum acquired from the Shentel transaction (see Note 8. Long-Term Debt, Financing and Capital Lease Obligations) and an increase from spectrum license exchanges described below during the nine-month period ended December 31, 2016 .
Spectrum License Exchanges
In the second quarter of fiscal year 2016, we exchanged certain spectrum licenses with other carriers in non-cash transactions. As a result, we recorded a non-cash gain of $354 million , which represented the difference between the fair value and the net book value of the spectrum transferred to the other carriers. The gain was presented in "Other, net" in the consolidated statements of comprehensive loss for the nine-month period ended December 31, 2016 .
Assessment of Impairment
Our annual impairment testing date for goodwill and indefinite-lived intangible assets is January 1 of each year; however, we test for impairment between our annual tests if an event occurs or circumstances change that indicate that the asset may be impaired, or in the case of goodwill, that the fair value of the reporting unit is below its carrying amount. We did not record an impairment during the nine-month period ended December 31, 2016 .
The determination of fair value requires considerable judgment and is highly sensitive to changes in underlying assumptions. Consequently, there can be no assurance that the estimates and assumptions made for the purposes of the goodwill, spectrum and trademarks impairment tests will prove to be an accurate prediction of the future. Continued, sustained declines in the Company’s operating results, future forecasted cash flows, growth rates and other assumptions, as well as significant, sustained declines in the Company’s stock price and related market capitalization could impact the underlying key assumptions and our estimated fair values, potentially leading to a future material impairment of goodwill or other indefinite-lived intangible assets.
Intangible Assets Subject to Amortization
Customer relationships are amortized using the sum-of-the-months' digits method, while all other definite-lived intangible assets are amortized using the straight line method over the estimated useful lives of the respective assets. We reduce the gross carrying value and associated accumulated amortization when specified intangible assets become fully amortized. Amortization expense related to favorable spectrum and tower leases is recognized in "Cost of services" in our consolidated statements of comprehensive loss.

14



SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 
 
 
December 31, 2016
 
March 31, 2016
 
Useful Lives
 
Gross
Carrying
Value
 
Accumulated
Amortization
 
Net
Carrying
Value
 
Gross
Carrying
Value
 
Accumulated
Amortization
 
Net
Carrying
Value
 
 
 
(in millions)
Customer relationships
4 to 8 years
 
$
6,923

 
$
(4,824
)
 
$
2,099

 
$
6,923

 
$
(4,045
)
 
$
2,878

Other intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
Favorable spectrum leases
23 years
 
870

 
(129
)
 
741

 
881

 
(110
)
 
771

Favorable tower leases
3 to 7 years
 
589

 
(367
)
 
222

 
589

 
(302
)
 
287

Trademarks
34 years
 
520

 
(55
)
 
465

 
520

 
(43
)
 
477

Other
4 to 10 years
 
90

 
(35
)
 
55

 
83

 
(27
)
 
56

Total other intangible assets
 
2,069


(586
)

1,483


2,073


(482
)

1,591

Total definite-lived intangible assets
 
$
8,992


$
(5,410
)

$
3,582


$
8,996


$
(4,527
)

$
4,469


Note 7.
Accounts Payable
Accounts payable at December 31, 2016 and March 31, 2016 include liabilities in the amounts of $83 million and $66 million , respectively, for payments issued in excess of associated bank balances but not yet presented for collection.

Note 8.
Long-Term Debt, Financing and Capital Lease Obligations
 
 
Interest Rates
 
Maturities
 
December 31,
2016
 
March 31,
2016
 
 
 
 
 
 
 
 
 
(in millions)
Notes
 
 
 
 
 
 
 
 
 
 
 
Senior notes
 
 
 
 
 
 
 
 
 
 
 
Sprint Corporation
7.13
-
7.88%
 
2021
-
2025
 
$
10,500

 
$
10,500

Sprint Communications, Inc.
6.00
-
11.50%
 
2017
-
2022
 
7,280

 
9,280

Sprint Capital Corporation
6.88
-
8.75%
 
2019
-
2032
 
6,204

 
6,204

Senior secured notes
 
 
 
 
 
 
 
 
 
 
 
Sprint Spectrum Co LLC, Sprint Spectrum Co II LLC, Sprint Spectrum Co III LLC
3.36%
 
2021
 
3,500

 
—

Guaranteed notes
 
 
 
 
 
 
 
 
 
 
 
Sprint Communications, Inc.
7.00
-
9.00%
 
2018
-
2020
 
4,000

 
4,000

Secured notes
 
 
 
 
 
 
 
 
 
 
 
Clearwire Communications LLC (1)
14.75%
 
2016
 
—

 
300

Exchangeable notes
 
 
 
 
 
 
 
 
 
 
 
Clearwire Communications LLC (1)(2)
8.25%
 
2017
 
629

 
629

Credit facilities
 
 
 
 
 
 
 
 
 
 
 
Bank credit facility
4.00%
 
2018
 
—

 
—

Export Development Canada (EDC)
4.48
-
6.23%
 
2017
-
2019
 
550

 
550

Secured equipment credit facilities
2.03
-
3.27%
 
2017
-
2021
 
586

 
805

Financing obligations, capital lease and other obligations
2.35
-
10.63%
 
2017
-
2024
 
3,881

 
1,093

Net premiums and debt financing costs
 
 
 
 
 
 
 
 
183

 
597

 
 
 
 
 
 
 
 
 
37,313

 
33,958

Less current portion
 
 
 
 
 
 
 
 
(6,554
)
 
(4,690
)
Long-term debt, financing and capital lease obligations
 
 
 
 
 
 
 
 
$
30,759

 
$
29,268

_________________
  (1)    Notes of Clearwire Communications LLC are also direct obligations of Clearwire Finance, Inc. and are guaranteed by certain Clearwire subsidiaries.
(2)    The $629 million Clearwire 8.25% Exchangeable Notes have both a par call and put on December 1, 2017 resulting in the balance
being classified as a current debt obligation as of December 31, 2016.

15



SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2016 , Sprint Corporation, the parent corporation, had $10.5 billion in aggregate principal amount of senior notes outstanding. In addition, as of December 31, 2016 , the outstanding principal amount of senior notes issued by Sprint Communications, Inc. and Sprint Capital Corporation, guaranteed notes issued by Sprint Communications, Inc., exchangeable notes issued by Clearwire Communications LLC, the EDC agreement, the secured equipment credit facilities, the installment payment obligations, and the Network Equipment Sale-Leaseback and Handset Sale-Leaseback Tranche 2 financing obligations, collectively totaled $22.3 billion in principal amount of our long-term debt issued by 100% owned subsidiaries, was fully and unconditionally guaranteed by Sprint Corporation. Although certain financing agreements restrict the ability of Sprint Communications, Inc. and its subsidiaries to distribute cash to Sprint Corporation, the ability of the subsidiaries to distribute cash to their respective parents, including to Sprint Communications, Inc., is generally not restricted.
Cash interest payments, net of amounts capitalized of $32 million and $40 million , totaled $1.9 billion and $1.8 billion during the nine-month periods ended December 31, 2016 and 2015 , respectively.
Notes
As of December 31, 2016 , our outstanding notes consisted of senior notes, guaranteed notes, and exchangeable notes, all of which are unsecured, as well as senior secured notes associated with our Spectrum Financing transaction. Cash interest on all of the notes is generally payable semi-annually in arrears with the exception of the Spectrum Financing senior secured notes, which are payable quarterly. As of December 31, 2016 , $31.3 billion aggregate principal amount of the notes was redeemable at the Company's discretion at the then-applicable redemption prices plus accrued interest.
As of December 31, 2016 , $25.1 billion aggregate principal amount of our senior notes and guaranteed notes provided holders with the right to require us to repurchase the notes if a change of control triggering event (as defined in the applicable indentures and supplemental indentures) occurs.
Upon the close of the acquisition of Clearwire Corporation (Clearwire Acquisition), the Clearwire Communications LLC 8.25% Exchangeable Notes due 2040 became exchangeable at any time, at the holder’s option, for a fixed amount of cash equal to $706.21 for each $1,000 principal amount of notes surrendered. On December 1, 2017 the Exchangeable Notes can be tendered at the holder’s option for 100% of the par value plus accrued interest resulting in the entire balance being classified as a current debt obligation as of December 31, 2016.
During the three-month period ended December 31, 2016, the Company repaid $2.0 billion aggregate principal upon maturity of its outstanding Sprint Communications, Inc. 6% senior notes and $300 million in aggregate principal of its Clearwire Communications LLC 14.75% secured notes.
In October 2016, Sprint transferred the Spectrum Portfolio to the Spectrum Financing SPEs. The Spectrum Portfolio, which represents approximately 14% of Sprint's total spectrum holdings on a MHz-pops basis, was used as collateral to raise an initial $3.5 billion in senior secured notes at 3.36% from external investors under a $7.0 billion program. Sprint can utilize this financing structure to potentially raise up to an additional $3.5 billion , subject to certain conditions. The notes will be repaid over a five -year term, with interest only payments over the first four quarters and amortizing quarterly principal and interest payments thereafter through September 2021. As of December 31, 2016, approximately $219 million of the total principal outstanding was classified as "Current portion of long-term debt" in the consolidated balance sheets. Total debt finance costs incurred and capitalized in connection with the issuance of notes were approximately $95 million .
Credit Facilities
Unsecured Financing Facility
During the three-month period ended June 30, 2016, Sprint Communications entered into an unsecured financing facility for $2.5 billion . In October 2016, this facility was terminated as a result of entering into the Spectrum Financing transaction described in Note 3. Funding Sources . During the three and nine-months periods ended December 31, 2016, the company recognized the remaining debt finance costs of $74 million associated with the terminated unsecured financing facility, which is included in "Other (expense) income, net" on the consolidated statements of comprehensive loss.

16



SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Bank Credit Facility
The Company has a $3.3 billion unsecured revolving bank credit facility that expires in February 2018. Borrowings under the revolving bank credit facility bear interest at a rate equal to LIBOR plus a spread that varies depending on the Company’s credit ratings. As of December 31, 2016 , approximately $274 million in letters of credit were outstanding under this credit facility, including the letter of credit required by the Report and Order (see Note 11. Commitments and Contingencies) . As a result of the outstanding letters of credit, which directly reduce the availability of borrowings, the Company had approximately $3.0 billion of borrowing capacity available under the revolving bank credit facility as of December 31, 2016 . The required ratio (Leverage Ratio) of total indebtedness to trailing four quarters earnings before interest, taxes, depreciation and amortization and other non-recurring items, as defined by the credit facility (adjusted EBITDA), may not exceed 6.25 to 1.0 through the quarter ending December 31, 2016 and 6.0 to 1.0 each fiscal quarter ending thereafter through expiration of the facility. The facility allows us to reduce our total indebtedness for purposes of calculating the Leverage Ratio by subtracting from total indebtedness the amount of any cash contributed into a segregated reserve account, provided that, after such cash contribution, our cash remaining on hand for operations exceeds $2.0 billion . Upon transfer, the cash contribution will remain restricted until and to the extent it is no longer required for the Leverage Ratio to remain in compliance.
EDC Agreement
As of December 31, 2016, the unsecured EDC agreement provided for covenant terms similar to those of the unsecured revolving bank credit facility. However, under the terms of the EDC agreement, repayments of outstanding amounts cannot be re-drawn. As of December 31, 2016 , the total principal amount of our borrowings under the EDC facility was $550 million . On February 3, 2017, we amended the EDC agreement to provide for security and covenant terms similar to our new secured term loan and revolving bank credit facility.
Secured Equipment Credit Facilities
Eksportkreditnamnden (EKN)
In 2013, we had fully drawn and began to repay the EKN secured equipment credit facility totaling $1.0 billion , which was used to finance certain network-related purchases from Ericsson. During the nine-month period ended December 31, 2016 , we made principal repayments totaling $127 million on the facility, resulting in a total principal amount of $127 million outstanding at December 31, 2016 .
Finnvera plc (Finnvera)
The Finnvera secured equipment credit facility provides us with the ability to borrow up to $800 million to finance network-related purchases from Nokia Solutions and Networks US LLC, USA. The facility, which initially could be drawn upon as many as three consecutive tranches, now has one tranche remaining and available for borrowing through October 2017. Such borrowings are contingent upon the amount and timing of Sprint's network-related purchases. During the nine-month period ended December 31, 2016 , we made principal repayments totaling $28 million on the facility, resulting in a total principal amount of $168 million outstanding at December 31, 2016 .
K-sure
The K-sure secured equipment credit facility provides for the ability to borrow up to $750 million to finance network-related purchases from Samsung Telecommunications America, LLC. The facility can be divided in up to three consecutive tranches of varying size with borrowings available until May 2018, contingent upon the amount of network-related purchases made by Sprint. During the nine-month period ended December 31, 2016 , we made principal repayments totaling $65 million on the facility, resulting in a total principal amount of $258 million outstanding at December 31, 2016 .
Delcredere | Ducroire (D/D)
The D/D secured equipment credit facility provides for the ability to borrow up to $250 million to finance network equipment-related purchases from Alcatel-Lucent USA Inc. The principal balance outstanding at December 31, 2016 was $32 million .
Borrowings under the EKN, Finnvera, K-sure and D/D secured equipment credit facilities are each secured by liens on the respective equipment purchased pursuant to each facility's credit agreement. In addition, repayments of outstanding amounts borrowed under the secured equipment credit facilities cannot be redrawn. Each of these facilities is

17



SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

fully and unconditionally guaranteed by both Sprint Communications, Inc. and Sprint Corporation. As of February 3, 2017, the secured equipment credit facilities have certain key covenants similar to those in our new secured term loan and revolving bank credit facility.
Financing Obligations
Financing of Future Lease Receivables
In the three-month period ended March 31, 2016, we sold approximately $1.2 billion in total of future amounts due from customers who lease certain devices from us in exchange for cash proceeds of $600 million through our Receivables Facility (see Note 3. Funding Sources) . The difference between the amount sold and the cash received represents additional collateral to the lenders. The sale was accounted for as a financing and the $600 million cash proceeds were, accordingly, reflected as debt in our consolidated balance sheets. The associated leased devices continue to be reported as part of our "Property, plant and equipment, net" in our consolidated balance sheets and continue to be depreciated over their estimated useful life.
During the nine-month period ended December 31, 2016 , we repaid $153 million to the Purchasers, which reduced the principal amount outstanding to $447 million as of December 31, 2016 .
Network Equipment Sale-Leaseback
In April 2016, Sprint sold and leased back certain network equipment to Network LeaseCo. The network equipment acquired by Network LeaseCo, which is consolidated by us, was used by them as collateral to raise approximately $2.2 billion in borrowings from external investors, including SoftBank. Principal and interest payments on the borrowings from the external investors will be repaid in staggered, unequal payments through January 2018 with the first principal payment of approximately $300 million due in March 2017 followed by the remaining $1.9 billion of principal payments due in fiscal year 2017 (see Note 3. Funding Sources).
Handset Sale-Leaseback Tranche 2
In May 2016, Sprint entered into a second transaction with MLS to sell and leaseback certain iPhone ® devices leased by our customers. Upon the transfer of devices with a net book value of approximately $1.3 billion to MLS, Sprint received cash proceeds of $1.1 billion . Unlike Tranche 1, the proceeds from Tranche 2 were accounted for as a financing (see Note 3. Funding Sources) . During the nine-month period ended December 31, 2016 , we repaid $502 million to MLS, which reduced the principal amount of the financing obligation to $554 million as of December 31, 2016 .
Tower Financing
We have approximately 3,000 cell sites that we sold and subsequently leased back during 2008. Terms extend through 2021, with renewal options for an additional 20 years. These cell sites continue to be reported as part of our "Property, plant and equipment, net" in our consolidated balance sheets due to our continued involvement with the property sold and the transaction is accounted for as a financing.
Capital Lease and Other Obligations
On August 10, 2015, Shenandoah Telecommunications Company (Shentel) entered into a definitive agreement to acquire one of our wholesale partners, NTELOS Holdings Corp (nTelos). In connection with this definitive agreement, we entered into a series of agreements with Shentel to, among other things, acquire certain assets such as spectrum, terminate our existing wholesale arrangement with nTelos, and amend our existing affiliate agreement with Shentel to primarily include the subscribers formerly under the wholesale arrangement with nTelos. The agreements also expanded the area in which Shentel provides wireless service to Sprint customers and provided for more favorable economic terms. In April 2016, we received regulatory approval and the transaction closed in May 2016. The total consideration for this transaction included $181 million , on a net present value basis, of notes payable to Shentel. Sprint will satisfy its obligations under the notes payable over an expected term of five to six years. FCC licenses acquired from Shentel had a total value of $85 million . $96 million of the total purchase was recorded in “Other, net” in the consolidated statements of comprehensive loss as a contract termination in the quarter ended June 30, 2016, which related to the termination of our pre-existing wholesale arrangement with nTelos. The remainder of our capital lease and other obligations are primarily for the use of wireless network equipment.

18



SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Covenants
Certain indentures and other agreements require compliance with various covenants, including covenants that limit the ability of the Company and its subsidiaries to sell all or substantially all of its assets, limit the ability of the Company and its subsidiaries to incur indebtedness and liens, and require that we maintain certain financial ratios, each as defined by the terms of the indentures, supplemental indentures and financing arrangements.
As of December 31, 2016 , the Company was in compliance with all restrictive and financial covenants associated with its borrowings. A default under any of our borrowings could trigger defaults under certain of our other debt obligations, which in turn could result in the maturities being accelerated.
Under our revolving bank credit facility and certain other agreements, we are currently restricted from paying cash dividends because our ratio of total indebtedness to adjusted EBITDA (each as defined in the applicable agreements) exceeds 2.5 to 1.0 .

Note 9.
Severance and Exit Costs
Severance and exit costs consist of lease exit costs primarily associated with tower and cell sites, access exit costs related to payments that will continue to be made under our backhaul access contracts for which we will no longer be receiving any economic benefit, and severance costs associated with reductions in our work force.
The following provides the activity in the severance and exit costs liability included in "Accounts payable," "Accrued expenses and other current liabilities" and "Other liabilities" within the consolidated balance sheets:
 
March 31,
2016
 
Net
 (Benefit) Expense
 
Cash Payments
and Other
 
December 31,
2016
 
(in millions)
Lease exit costs
$
338

 
$
(3
)
(1)  
$
(100
)
 
$
235

Severance costs
150

 
15

(2)  
(145
)
 
20

Access exit costs
37

 
20

(3)  
(24
)
 
33

 
$
525

 
$
32

 
$
(269
)
 
$
288

 _________________
(1)
For the three and nine-month periods ended December 31, 2016 , we recognized costs of $2 million (Wireless only) and a benefit of $3 million ( $5 million benefit Wireless, $2 million costs Wireline), respectively. The Wireless benefit for the nine-month period resulted from the reversal of certain lease exit cost reserves associated with the shutdown of the Clearwire WiMAX network on March 31, 2016.
(2)
For the three and nine-month periods ended December 31, 2016 , we recognized costs of $6 million (Wireless only) and $15 million (Wireless only), respectively.
(3)
For the three and nine-month periods ended December 31, 2016 , $11 million ( $6 million Wireless , $5 million Wireline) and $18 million ( $8 million Wireless, $10 million Wireline), respectively, were recognized as "Severance and exit costs." For the nine-month period ended December 31, 2016 , $2 million (Wireline only) was recognized as "Cost of services."
We continually refine our network strategy and evaluate other potential network initiatives to improve the overall performance of our network. Additionally, a major cost reduction initiative is underway, which may include headcount reductions, among other actions, to reduce operating expenses and improve our operating cash flows. As a result of these ongoing activities, we may incur future material charges associated with lease and access exit costs, severance, asset impairments, and accelerated depreciation, among others.


19



SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 10.
Income Taxes
The differences that caused our effective income tax rates to differ from the 35% U.S. federal statutory rate for income taxes were as follows:
 
Nine Months Ended
December 31,
 
2016
 
2015
 
(in millions)
Income tax benefit at the federal statutory rate
$
223

 
$
460

Effect of:
 
 
 
State income taxes, net of federal income tax effect
8

 
33

State law changes, net of federal income tax effect
3

 
23

Increase deferred tax liability on FCC licenses
(46
)
 
—

Tax benefit from organizational restructuring
42

 
—

Change in federal and state valuation allowance
(522
)
 
(647
)
Other, net
6

 
5

Income tax expense
$
(286
)
 
$
(126
)
Effective income tax rate
(44.9
)%
 
(9.6
)%
The realization of deferred tax assets, including net operating loss carryforwards, is dependent on the generation of future taxable income sufficient to realize the tax deductions, carryforwards and credits. However, our history of annual losses reduces our ability to rely on expectations of future income in evaluating the ability to realize our deferred tax assets. Valuation allowances on deferred tax assets are recognized if it is determined that it is more likely than not that the asset will not be realized. As a result, the Company recognized income tax expense to increase the valuation allowance by $522 million and $647 million during the nine-month periods ended December 31, 2016 and 2015 , respectively, on deferred tax assets primarily related to losses incurred during the period that were not currently realizable and expenses recorded during the period that were not currently deductible for income tax purposes. We do not expect to record significant tax benefits on future net operating losses until our circumstances justify the recognition of such benefits.
We believe it is more likely than not that our remaining deferred income tax assets, net of the valuation allowance, will be realized based on current income tax laws and expectations of future taxable income stemming from the reversal of existing deferred tax liabilities. Uncertainties surrounding income tax law changes, shifts in operations between state taxing jurisdictions and future operating income levels may, however, affect the ultimate realization of all or some of these deferred income tax assets.
Income tax expense of $286 million for the nine-month period ended December 31, 2016 was primarily attributable to taxable temporary differences from the tax amortization of FCC licenses and tax expense on pre-tax gains from spectrum license exchanges during the period, partially offset by tax benefits from the reversal of certain state income tax valuation allowance on deferred tax assets. As a result of organizational restructuring, which drove a sustained increase in the profitability of specific legal entities, we revised our estimate regarding the realizability of the involved entities’ deferred state tax assets and recorded a state tax benefit of $42 million . Additionally, in conjunction with the Spectrum Financing and resulting change in state taxability footprint, we recognized tax expense of $46 million to increase the deferred tax liability for the temporary differences between the carrying amounts of our FCC licenses for financial statement purposes and their tax bases. Income tax expense of $126 million for the nine-month period ended December 31, 2015 was primarily attributable to taxable temporary differences from the tax amortization of FCC licenses, partially offset by tax benefits recorded from changes in state income tax laws enacted during the period. FCC licenses are amortized over 15 years for income tax purposes but, because these licenses have an indefinite life, they are not amortized for financial statement reporting purposes. These temporary differences cannot be scheduled to reverse during the loss carryforward period against our deferred tax assets. As a result, a valuation allowance is recorded against our loss carryforward and other excess deferred tax assets resulting in a net deferred tax expense.
As of December 31, 2016 and March 31, 2016 , we maintained unrecognized tax benefits of $176 million and $166 million , respectively. Cash paid for income taxes, net, was $34 million for each of the nine-month periods ended December 31, 2016 and 2015 .

20



SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

In March 2016, the FASB issued authoritative guidance on Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting which, in part, eliminates the additional paid-in capital pools and requires excess tax benefits and tax deficiencies to be recorded in the income statement when the awards vest or are settled. The company has elected to early adopt this guidance effective April 1, 2016. The early adoption of this guidance did not have a material effect on our consolidated financial statements.

Note 11.
Commitments and Contingencies
Litigation, Claims and Assessments
In March 2009, a stockholder brought suit, Bennett v. Sprint Nextel Corp. , in the U.S. District Court for the District of Kansas, alleging that Sprint Communications and three of its former officers violated Section 10(b) of the Exchange Act and Rule 10b-5 by failing adequately to disclose certain alleged operational difficulties subsequent to the Sprint-Nextel merger, and by purportedly issuing false and misleading statements regarding the write-down of goodwill. The district court granted final approval of a settlement in August 2015, which did not have a material impact to our financial statements. Five stockholder derivative suits related to this 2009 stockholder suit were filed against Sprint Communications and certain of its present and/or former officers and directors. The first, Murphy v. Forsee , was filed in state court in Kansas on April 8, 2009, was removed to federal court, and was stayed by the court pending resolution of the motion to dismiss the Bennett case; the second, Randolph v. Forsee , was filed on July 15, 2010 in state court in Kansas, was removed to federal court, and was remanded back to state court; the third, Ross-Williams v. Bennett, et al. , was filed in state court in Kansas on February 1, 2011; the fourth, Price v. Forsee, et al., was filed in state court in Kansas on April 15, 2011; and the fifth, Hartleib v. Forsee, et al ., was filed in federal court in Kansas on July 14, 2011. These cases were essentially stayed while the Bennett case was pending, and we have reached an agreement in principle to settle the matters, by agreeing to some governance provisions and by paying plaintiffs' attorneys fees in an immaterial amount. The court approved the settlement but reduced the plaintiff's attorneys fees; the attorneys fees issue is on appeal.
On April 19, 2012, the New York Attorney General filed a complaint alleging that Sprint Communications has fraudulently failed to collect and pay more than $100 million in New York sales taxes on receipts from its sale of wireless telephone services since July 2005. The complaint also seeks recovery of triple damages under the False Claims Act, as well as penalties and interest. Sprint Communications moved to dismiss the complaint on June 14, 2012. On July 1, 2013, the court entered an order denying the motion to dismiss in large part, although it did dismiss certain counts or parts of certain counts. Sprint Communications appealed that order and the intermediate appellate court affirmed the order of the trial court. On October 20, 2015, the Court of Appeals of New York affirmed the decision of the appellate court that the tax statute requires us to collect and remit the disputed taxes. Our petition for certiorari to the U.S. Supreme Court on grounds of federal preemption was denied. We accrued $180 million during the year ended March 31, 2016 associated with this matter. We will continue to defend this matter vigorously and we do not expect the resolution of this matter to have a material adverse effect on our financial position or results of operations.
Eight related stockholder derivative suits have been filed against Sprint Communications and certain of its current and former officers and directors. Each suit alleges generally that the individual defendants breached their fiduciary duties to Sprint Communications and its stockholders by allegedly permitting, and failing to disclose, the actions alleged in the suit filed by the New York Attorney General. One suit, filed by the Louisiana Municipal Police Employees Retirement System, was dismissed by a federal court. Two suits were filed in state court in Johnson County, Kansas and one of those suits was dismissed as premature; and five suits are pending in federal court in Kansas. The remaining Kansas suits have been stayed pending resolution of the Attorney General's suit. We do not expect the resolution of these matters to have a material adverse effect on our financial position or results of operations.
Sprint Communications, Inc. is also a defendant in a complaint filed by stockholders of Clearwire Corporation asserting claims for breach of fiduciary duty by Sprint Communications, and related claims and otherwise challenging the Clearwire Acquisition.  ACP Master, LTD, et al. v. Sprint Nextel Corp., et al. , was filed April 26, 2013, in Chancery Court in Delaware. Plaintiffs in the ACP Master, LTD suit have also filed suit requesting an appraisal of the fair value of their Clearwire stock. Trial of those cases took place in October and November, 2016, and the parties are in the process of submitting their post-trial briefings. We do not expect the resolution of these matters to have a material adverse effect on our financial position or results of operations.

21



SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Sprint is currently involved in numerous court actions alleging that Sprint is infringing various patents. Most of these cases effectively seek only monetary damages. A small number of these cases are brought by companies that sell products and seek injunctive relief as well. These cases have progressed to various degrees and a small number may go to trial if they are not otherwise resolved. Adverse resolution of these cases could require us to pay significant damages, cease certain activities, or cease selling the relevant products and services. In many circumstances, we would be indemnified for monetary losses that we incur with respect to the actions of our suppliers or service providers. We do not expect the resolution of these cases to have a material adverse effect on our financial position or results of operations.
In October 2013, the FCC Enforcement Bureau began to issue notices of apparent liability (NALs) to other Lifeline providers, imposing fines for intracarrier duplicate accounts identified by the government during its audit function. Those audits also identified a small percentage of potentially duplicative intracarrier accounts related to our Assurance Wireless business. No NAL has yet been issued with respect to Sprint and we do not know if one will be issued. Further, we are not able to reasonably estimate the amount of any claim for penalties that might be asserted. However, based on the information currently available, if a claim is asserted by the FCC, Sprint does not believe that any amount ultimately paid would be material to the Company’s results of operations or financial position. 
Various other suits, inquiries, proceedings and claims, either asserted or unasserted, including purported class actions typical for a large business enterprise and intellectual property matters, are possible or pending against us or our subsidiaries. During the nine-month period ended December 31, 2016 , we recorded a $103 million charge associated with a state tax matter which is presented in our consolidated statements of comprehensive loss within "Other, net". If our interpretation of certain laws or regulations, including those related to various federal or state matters such as sales, use or property taxes, or other charges were found to be mistaken, it could result in payments by us. While it is not possible to determine the ultimate disposition of each of these proceedings and whether they will be resolved consistent with our beliefs, we expect that the outcome of such proceedings, individually or in the aggregate, will not have a material adverse effect on our financial position or results of operations.
Spectrum Reconfiguration Obligations
In 2004, the FCC adopted a Report and Order that included new rules regarding interference in the 800 MHz band and a comprehensive plan to reconfigure the 800 MHz band. The Report and Order provides for the exchange of a portion of our 800 MHz FCC spectrum licenses, and requires us to fund the cost incurred by public safety systems and other incumbent licensees to reconfigure the 800 MHz spectrum band. Also, in exchange, we received licenses for 10 MHz of nationwide spectrum in the 1.9 GHz band.
The minimum cash obligation is $2.8 billion under the Report and Order. We are, however, obligated to pay the full amount of the costs relating to the reconfiguration plan, even if those costs exceed $2.8 billion . As required under the terms of the Report and Order, a letter of credit has been secured to provide assurance that funds will be available to pay the relocation costs of the incumbent users of the 800 MHz spectrum. The letter of credit was initially $2.5 billion , but has been reduced during the course of the proceeding to $189 million as of December 31, 2016 . Since the inception of the program, we have incurred payments of approximately $3.5 billion directly attributable to our performance under the Report and Order, including approximately $15 million and $43 million during the three and nine-month periods ended December 31, 2016 , respectively. When incurred, substantially all costs are accounted for as additions to FCC licenses with the remainder as property, plant and equipment. Although costs incurred through December 31, 2016 have exceeded $2.8 billion , not all of those costs have been reviewed and accepted as eligible by the transition administrator.
Completion of the 800 MHz band reconfiguration was initially required by June 26, 2008 and public safety reconfiguration is nearly complete across the country with the exception of the States of Arizona, California, Texas and New Mexico. The FCC continues to grant the remaining 800 MHz public safety licensees additional time to complete their band reconfigurations which, in turn, delays our access to our 800 MHz replacement channels in these areas. In the areas where band reconfiguration is complete, Sprint has received its replacement spectrum in the 800 MHz band and Sprint is deploying 3G CDMA and 4G LTE on this spectrum in combination with its spectrum in the 1.9 GHz and 2.5 GHz bands.


22



SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 12.
Per Share Data
Basic net loss per common share is calculated by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted net loss per common share adjusts basic net loss per common share, computed using the treasury stock method, for the effects of potentially dilutive common shares, if the effect is not antidilutive. Outstanding options and restricted stock units (exclusive of participating securities) that had no effect on our computation of dilutive weighted average number of shares outstanding as their effect would have been antidilutive were approximately 118 million shares and 83 million shares as of the periods ended December 31, 2016 and 2015 , respectively, in addition to 62 million total shares issuable under warrants, of which 55 million relate to shares issuable under the warrant held by SoftBank. The warrant was issued to SoftBank at the close of the merger with SoftBank and is exercisable at $5.25 per share at the option of SoftBank, in whole or in part, at any time on or prior to July 10, 2018.


23



SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 13.
Segments
Sprint operates two reportable segments: Wireless and Wireline.
•
Wireless primarily includes retail, wholesale, and affiliate revenue from a wide array of wireless voice and data transmission services and equipment revenue from the sale of wireless devices (handsets and tablets) and accessories in the U.S., Puerto Rico and the U.S. Virgin Islands.
•
Wireline primarily includes revenue from domestic and international wireline voice and data communication services provided to other communications companies and targeted business subscribers, in addition to our Wireless segment.
We define segment earnings as wireless or wireline operating (loss) income before other segment expenses such as depreciation, amortization, severance, exit costs, goodwill impairments, asset impairments, and other items, if any, solely and directly attributable to the segment representing items of a non-recurring or unusual nature. Expense and income items excluded from segment earnings are managed at the corporate level. Transactions between segments are generally accounted for based on market rates, which we believe approximate fair value. The Company generally re-establishes these rates at the beginning of each fiscal year. Over the past several years, there has been an industry-wide trend of lower rates due to increased competition from other wireline and wireless communications companies, as well as cable and Internet service providers.
Segment financial information is as follows:  
Statement of Operations Information
Wireless
 
Wireline
 
Corporate,
Other and
Eliminations
 
Consolidated
 
(in millions)
Three Months Ended December 31, 2016
 
 
 
 
 
 
 
Net operating revenues
$
8,172

 
$
372

 
$
5

 
$
8,549

Inter-segment revenues (1)
—

 
125

 
(125
)
 
—

Total segment operating expenses
(5,775
)
 
(449
)
 
125

 
(6,099
)
Segment earnings
$
2,397

 
$
48

 
$
5

 
2,450

Less:
 
 
 
 
 
 
 
Depreciation
 
 
 
 
 
 
(1,837
)
Amortization
 
 
 
 
 
 
(255
)
Other, net (2)
 
 
 
 
 
 
(47
)
Operating income
 
 
 
 
 
 
311

Interest expense
 
 
 
 
 
 
(619
)
Other expense, net
 
 
 
 
 
 
(60
)
Loss before income taxes
 
 
 
 
 
 
$
(368
)
 
 
 
 
 
 
 
 
Statement of Operations Information
Wireless
 
Wireline
 
Corporate,
Other and
Eliminations
 
Consolidated
 
(in millions)
Three Months Ended December 31, 2015
 
 
 
 
 
 
 
Net operating revenues
$
7,670

 
$
434

 
$
3

 
$
8,107

Inter-segment revenues (1)
—

 
147

 
(147
)
 
—

Total segment operating expenses
(5,804
)
 
(548
)
 
143

 
(6,209
)
Segment earnings
$
1,866

 
$
33

 
$
(1
)
 
1,898

Less:
 
 
 
 
 
 
 
Depreciation
 
 
 
 
 
 
(1,549
)
Amortization
 
 
 
 
 
 
(316
)
Other, net (2)
 
 
 
 
 
 
(230
)
Operating loss
 
 
 
 
 
 
(197
)
Interest expense
 
 
 
 
 
 
(546
)
Other income, net
 
 
 
 
 
 
4

Loss before income taxes
 
 
 
 
 
 
$
(739
)
 
 
 
 
 
 
 
 

24



SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Statement of Operations Information
Wireless
 
Wireline
 
Corporate,
Other and
Eliminations
 
Consolidated
 
(in millions)
Nine Months Ended December 31, 2016
 
 
 
 
 
 
 
Net operating revenues
$
23,620

 
$
1,177

 
$
11

 
$
24,808

Inter-segment revenues (1)
—

 
386

 
(386
)
 
—

Total segment operating expenses
(16,460
)
 
(1,473
)
 
379

 
(17,554
)
Segment earnings
$
7,160

 
$
90

 
$
4

 
7,254

Less:
 
 
 
 
 
 
 
Depreciation
 
 
 
 
 
 
(5,227
)
Amortization
 
 
 
 
 
 
(813
)
Other, net (2)
 
 
 
 
 
 
80

Operating income
 
 
 
 
 
 
1,294

Interest expense
 
 
 
 
 
 
(1,864
)
Other expense, net
 
 
 
 
 
 
(67
)
Loss before income taxes
 
 
 
 
 
 
$
(637
)
 
 
 
 
 
 
 
 
Statement of Operations Information
Wireless
 
Wireline
 
Corporate,
Other and
Eliminations
 
Consolidated
 
(in millions)
Nine Months Ended December 31, 2015
 
 
 
 
 
 
 
Net operating revenues
$
22,726

 
$
1,372

 
$
11

 
$
24,109

Inter-segment revenues (1)
—

 
448

 
(448
)
 
—

Total segment operating expenses
(16,807
)
 
(1,749
)
 
435

 
(18,121
)
Segment earnings
$
5,919

 
$
71

 
$
(2
)
 
5,988

Less:
 
 
 
 
 
 
 
Depreciation
 
 
 
 
 
 
(4,202
)
Amortization
 
 
 
 
 
 
(994
)
Other, net (2)
 
 
 
 
 
 
(490
)
Operating income
 
 
 
 
 
 
302

Interest expense
 
 
 
 
 
 
(1,630
)
Other income, net
 
 
 
 
 
 
13

Loss before income taxes
 
 
 
 
 
 
$
(1,315
)
 
 
 
 
 
 
 
 
Other Information
Wireless
 
Wireline
 
Corporate and
Other
 
Consolidated
 
(in millions)
Capital expenditures for the nine months ended December 31, 2016
$
2,654

 
$
74

 
$
223

 
$
2,951

Capital expenditures for the nine months ended December 31, 2015
$
5,236

 
$
205

 
$
241

 
$
5,682

 _________________
(1)
Inter-segment revenues consist primarily of wireline services provided to the Wireless segment for resale to, or use by, wireless subscribers.
(2)
Other, net for the three and nine-month periods ended December 31, 2016 consists of $19 million and $30 million expense, respectively, of severance and exit costs as well as a $28 million loss on disposal of property, plant and equipment related to cell site construction costs that are no longer recoverable as a result of changes in our network plans recognized in the three-month period ended December 31, 2016 . In addition, the nine-month period ended December 31, 2016 includes a $354 million non-cash gain related to spectrum license exchanges with other carriers, a $103 million charge related to a state tax matter, and $113 million of contract termination costs primarily related to the termination of our pre-existing wholesale arrangement with nTelos as a result of the Shentel transaction. Losses totaling $109 million and $340 million relating to the write-off of leased devices associated with lease cancellations were excluded from Other, net and included within Wireless segment earnings for the three and nine-month periods ended December 31, 2016 , respectively. Other, net for the three and nine-month periods ended December 31, 2015 consists of $209 million and $247 million , respectively, of severance and exit costs and $21 million and $178 million , respectively, of accruals for legal reserves related to various pending legal suits and proceedings. In addition, the nine-month period ended December 31, 2015 includes an $85 million loss on disposal of property, plant and equipment related to cell site construction costs that are no longer recoverable as a result of changes in our network plans and $20 million of income resulting from a revision to our estimate of a previously recorded reserve. Losses totaling approximately $143 million relating to the write-off of leased devices associated with lease cancellations of $78 million and the loss on sale of devices to MLS under the Handset Sale-Leaseback Tranche 1 transaction for $65 million were excluded from Other, net and included within Wireless segment earnings for the three and nine-month periods ended December 31, 2015 .

25



SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Operating Revenues by Service and Products
Wireless
 
Wireline
 
Corporate,
Other and
Eliminations (1)
 
Consolidated
 
(in millions)
Three Months Ended December 31, 2016
 
 
 
 
 
 
 
Wireless services
$
5,763

 
$
—

 
$
—

 
$
5,763

Wireless equipment
2,226

 
—

 
—

 
2,226

Voice
—

 
153

 
(61
)
 
92

Data
—

 
41

 
(23
)
 
18

Internet
—

 
281

 
(38
)
 
243

Other
183

 
22

 
2

 
207

Total net operating revenues
$
8,172

 
$
497

 
$
(120
)
 
$
8,549

 
 
 
 
 
 
 
 
Operating Revenues by Service and Products
Wireless
 
Wireline
 
Corporate,
Other and
Eliminations (1)
 
Consolidated
 
(in millions)
Three Months Ended December 31, 2015
 
 
 
 
 
 
 
Wireless services
$
6,058

 
$
—

 
$
—

 
$
6,058

Wireless equipment
1,424

 
—

 
—

 
1,424

Voice
—

 
201

 
(82
)
 
119

Data
—

 
42

 
(17
)
 
25

Internet
—

 
317

 
(48
)
 
269

Other
188

 
21

 
3

 
212

Total net operating revenues
$
7,670

 
$
581

 
$
(144
)
 
$
8,107

 
 
 
 
 
 
 
 
Operating Revenues by Service and Products
Wireless
 
Wireline
 
Corporate,
Other and
Eliminations (1)
 
Consolidated
 
(in millions)
Nine Months Ended December 31, 2016
 
 
 
 
 
 
 
Wireless services
$
17,555

 
$
—

 
$
—

 
$
17,555

Wireless equipment
5,556

 
—

 
—

 
5,556

Voice
—

 
506

 
(196
)
 
310

Data
—

 
127

 
(67
)
 
60

Internet
—

 
871

 
(119
)
 
752

Other
509

 
59

 
7

 
575

Total net operating revenues
$
23,620

 
$
1,563

 
$
(375
)
 
$
24,808

 
 
 
 
 
 
 
 
Operating Revenues by Service and Products
Wireless
 
Wireline
 
Corporate,
Other and
Eliminations (1)
 
Consolidated
 
(in millions)
Nine Months Ended December 31, 2015
 
 
 
 
 
 
 
Wireless services
$
18,631

 
$
—

 
$
—

 
$
18,631

Wireless equipment
3,509

 
—

 
—

 
3,509

Voice
—

 
646

 
(249
)
 
397

Data
—

 
134

 
(55
)
 
79

Internet
—

 
968

 
(140
)
 
828

Other
586

 
72

 
7

 
665

Total net operating revenues
$
22,726

 
$
1,820

 
$
(437
)
 
$
24,109

 
 
 
 
 
 
 
 
_______________
(1)
Revenues eliminated in consolidation consist primarily of wireline services provided to the Wireless segment for resale to or use by wireless subscribers.


26



SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 14.
Related-Party Transactions
Sprint has entered into various arrangements with SoftBank or its controlled affiliates (SoftBank Parties) or with third parties to which SoftBank Parties are also parties, including for international wireless roaming, wireless and wireline call termination, real estate, logistical management, and other services.
Brightstar
We have arrangements with Brightstar US, Inc. (Brightstar), whereby Brightstar provides supply chain and inventory management services to us in our indirect channels and whereby Sprint may sell new and used devices and new accessories to Brightstar for its own purposes. We have provided a $1.0 billion credit line to Brightstar to facilitate certain of these arrangements. As a result, we shifted our concentration of credit risk away from our indirect channel partners to Brightstar. As Brightstar is a subsidiary of SoftBank, we expect SoftBank will provide the necessary support to ensure that Brightstar will fulfill its obligations to us under these agreements. However, we have no assurance that SoftBank will provide such support.
The supply chain and inventory management arrangement provides, among other things, that Brightstar may purchase inventory from the OEMs or Sprint to sell directly to our indirect dealers. As compensation for these services, we remit per unit fees to Brightstar for each device sold to dealers or retailers in our indirect channels. During the three and nine-month periods ended December 31, 2016 and 2015 , we incurred fees under these arrangements totaling $15 million and $43 million , and $29 million and $82 million , respectively. We may also purchase new and used devices and accessories from Brightstar to be sold in our direct channels or to be used to fulfill service and repair needs.
Amounts included in our consolidated financial statements associated with these arrangements with Brightstar were as follows:
Consolidated balance sheets:
December 31,
2016
 
March 31,
2016
 
(in millions)
Accounts receivable
$
219

 
$
197

Accounts payable
$
126

 
$
96

Consolidated statements of comprehensive loss:
Three Months Ended
December 31,
 
Nine Months Ended
December 31,
 
2016
 
2015
 
2016
 
2015
 
(in millions)
Equipment revenues
$
480

 
$
598

 
$
1,107

 
$
1,375

Cost of products
$
403

 
$
601

 
$
1,021

 
$
1,362

SoftBank
In November 2015 and April 2016, Sprint entered into Handset Sale-Leaseback transactions with MLS, a company formed by a group of equity investors, including SoftBank, to sell and leaseback certain devices, which are currently being leased by our customers, for total cash proceeds of approximately $2.2 billion . SoftBank's equity investment in MLS totaled $79 million . Brightstar provides reverse logistics and remarketing services to MLS with respect to the devices.
In December 2016, Handset Sale-Leaseback Tranche 1 was terminated and the associated devices were repurchased by Sprint from MLS. With the cash proceeds, MLS repurchased the equity units from its investors including SoftBank. As a result, SoftBank's remaining equity investment in MLS totaled $39 million .
In April 2016, Sprint sold and leased back certain network equipment to Network LeaseCo. The network equipment acquired by Network LeaseCo, which is consolidated by us, was used by them as collateral to raise approximately $2.2 billion in borrowings from external investors, including $250 million from SoftBank. Principal and interest payments on the borrowings from the external investors will be repaid in staggered, unequal payments through January 2018 ( See Note 3. Funding Sources ) with the first principal payment of approximately $300 million due in March 2017 followed by the remaining $1.9 billion of principal payments due in fiscal year 2017.
All other transactions under agreements with SoftBank Parties, in the aggregate, were immaterial through the period ended December 31, 2016 .

27



SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 15.
Guarantor Financial Information
On September 11, 2013, Sprint Corporation issued $2.25 billion aggregate principal amount of 7.250% notes due 2021 and $4.25 billion aggregate principal amount of 7.875% notes due 2023 in a private placement transaction with registration rights. On December 12, 2013, Sprint Corporation issued $2.5 billion aggregate principal amount of 7.125% notes due 2024 in a private placement transaction with registration rights. Each of these issuances is fully and unconditionally guaranteed by Sprint Communications, Inc. (Subsidiary Guarantor), which is a 100% owned subsidiary of Sprint Corporation (Parent/Issuer). In connection with the foregoing, the registration rights agreements with respect to the notes required the Company and Sprint Communications, Inc. to use their reasonable best efforts to cause an offer to exchange the notes for a new issue of substantially identical exchange notes registered under the Securities Act of 1933. Accordingly, in November 2014, we completed an exchange offer for these notes in compliance with our registration obligations. We did not receive any proceeds from this exchange offer. In addition, on February 24, 2015, Sprint Corporation issued $1.5 billion aggregate principal amount of 7.625% notes due 2025, which are fully and unconditionally guaranteed by Sprint Communications, Inc.
During the nine-month period ended December 31, 2016 , there was a non-cash equity contribution from the Subsidiary Guarantor to the non-guarantor subsidiaries primarily as a result of organizational restructuring for tax purposes of approximately $600 million .
Under the Subsidiary Guarantor's revolving bank credit facility and certain other finance agreements, the Subsidiary Guarantor is currently restricted from paying cash dividends to the Parent/Issuer because the ratio of total indebtedness to adjusted EBITDA (each as defined in the applicable agreement) exceeds 2.5 to 1.0 .
Sprint has a Receivables Facility providing for the sale of eligible wireless service, installment and certain future lease receivables. In November 2015, Sprint entered into the Tranche 1 transaction to sell and leaseback certain leased devices, which was subsequently terminated in December 2016. In April 2016, Sprint entered into the Tranche 2 transaction to sell and leaseback certain leased devices and a Network Equipment Sale-Leaseback to sell and leaseback certain network equipment. In connection with the Receivables Facility, Tranches 1 and 2 and the Network Equipment Sale-Leaseback, Sprint formed certain wholly-owned consolidated bankruptcy-remote SPEs and SPE Lessees that are included in the non-guarantor subsidiaries condensed consolidated financial information. Each SPE and SPE Lessee is a separate legal entity with its own separate creditors who will be entitled, prior to and upon the liquidation of the SPE or SPE Lessee, to be satisfied out of the SPE or SPE Lessee’s assets prior to any assets in the SPE and SPE Lessee becoming available to Sprint (see Note 3. Funding Sources).
We have accounted for investments in subsidiaries using the equity method. Presented below is the condensed consolidating financial information.


28



SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATING BALANCE SHEET
 
As of December 31, 2016
 
Parent/Issuer
 
Subsidiary Guarantor
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
 
(in millions)
ASSETS
Current assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
—

 
$
3,117

 
$
590

 
$
—

 
$
3,707

Short-term investments
—

 
2,329

 
20

 
—

 
2,349

Accounts and notes receivable, net
195

 
1

 
1,235

 
(195
)
 
1,236

Device and accessory inventory
—

 
—

 
1,296

 
—

 
1,296

Prepaid expenses and other current assets
—

 
15

 
1,969

 
—

 
1,984

Total current assets
195

 
5,462

 
5,110

 
(195
)
 
10,572

Investments in subsidiaries
18,988

 
23,932

 
—

 
(42,920
)
 
—

Property, plant and equipment, net
—

 
—

 
19,333

 
—

 
19,333

Due from consolidated affiliate
25

 
13,125

 
—

 
(13,150
)
 
—

Note receivable from consolidated affiliate
10,390

 
575

 
—

 
(10,965
)
 
—

Intangible assets
 
 
 
 
 
 
 
 
 
Goodwill
—

 
—

 
6,579

 
—

 
6,579

FCC licenses and other
—

 
—

 
40,556

 
—

 
40,556

Definite-lived intangible assets, net
—

 
—

 
3,582

 
—

 
3,582

Other assets
—

 
103

 
570

 
—

 
673

Total assets
$
29,598

 
$
43,197

 
$
75,730

 
$
(67,230
)
 
$
81,295

 
 
 
 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
 
 
 
 
 
 
 
 
 
Accounts payable
$
—

 
$
—

 
$
2,894

 
$
—

 
$
2,894

Accrued expenses and other current liabilities
212

 
560

 
3,612

 
(195
)
 
4,189

Current portion of long-term debt, financing and capital lease obligations
—

 
2,583

 
3,971

 
—

 
6,554

Total current liabilities
212

 
3,143

 
10,477

 
(195
)
 
13,637

Long-term debt, financing and capital lease obligations
10,390

 
9,773

 
10,596

 
—

 
30,759

Deferred tax liabilities
—

 
—

 
14,238

 
—

 
14,238

Note payable due to consolidated affiliate
—

 
10,390

 
575

 
(10,965
)
 
—

Other liabilities
—

 
903

 
2,762

 
—

 
3,665

Due to consolidated affiliate
—

 
—

 
13,150

 
(13,150
)
 
—

Total liabilities
10,602

 
24,209

 
51,798

 
(24,310
)
 
62,299

Commitments and contingencies
 
 
 
 
 
 
 
 
 
Total stockholders' equity
18,996

 
18,988

 
23,932

 
(42,920
)
 
18,996

Total liabilities and stockholders' equity
$
29,598

 
$
43,197

 
$
75,730

 
$
(67,230
)
 
$
81,295



29



SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


CONDENSED CONSOLIDATING BALANCE SHEET
 
As of March 31, 2016
 
Parent/Issuer
 
Subsidiary Guarantor
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
 
(in millions)
ASSETS
Current assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
—

 
$
2,154

 
$
487

 
$
—

 
$
2,641

Accounts and notes receivable, net
87

 
27

 
1,099

 
(114
)
 
1,099

Device and accessory inventory
—

 
—

 
1,173

 
—

 
1,173

Prepaid expenses and other current assets
—

 
12

 
1,908

 
—

 
1,920

Total current assets
87

 
2,193

 
4,667

 
(114
)
 
6,833

Investments in subsidiaries
19,783

 
23,129

 
—

 
(42,912
)
 
—

Property, plant and equipment, net
—

 
—

 
20,297

 
—

 
20,297

Due from consolidated affiliate
50

 
19,518

 
—

 
(19,568
)
 
—

Note receivable from consolidated affiliate
10,377

 
245

 
—

 
(10,622
)
 
—

Intangible assets
 
 
 
 
 
 
 
 
 
Goodwill
—

 
—

 
6,575

 
—

 
6,575

FCC licenses and other
—

 
—

 
40,073

 
—

 
40,073

Definite-lived intangible assets, net
—

 
—

 
4,469

 
—

 
4,469

Other assets
—

 
1,127

 
620

 
(1,019
)
 
728

Total assets
$
30,297

 
$
46,212

 
$
76,701

 
$
(74,235
)
 
$
78,975

 
 
 
 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
 
 
 
 
 
 
 
 
 
Accounts payable
$
—

 
$
—

 
$
2,899

 
$
—

 
$
2,899

Accrued expenses and other current liabilities
137

 
531

 
3,820

 
(114
)
 
4,374

Current portion of long-term debt, financing and capital lease obligations
—

 
3,065

 
1,625

 
—

 
4,690

Total current liabilities
137

 
3,596

 
8,344

 
(114
)
 
11,963

Long-term debt, financing and capital lease obligations
10,377

 
11,495

 
8,415

 
(1,019
)
 
29,268

Deferred tax liabilities
—

 
—

 
13,959

 
—

 
13,959

Note payable due to consolidated affiliate
—

 
10,377

 
245

 
(10,622
)
 
—

Other liabilities
—

 
961

 
3,041

 
—

 
4,002

Due to consolidated affiliate
—

 
—

 
19,568

 
(19,568
)
 
—

Total liabilities
10,514

 
26,429

 
53,572

 
(31,323
)
 
59,192

Commitments and contingencies
 
 
 
 
 
 
 
 
 
Total stockholders' equity
19,783

 
19,783

 
23,129

 
(42,912
)
 
19,783

Total liabilities and stockholders' equity
$
30,297

 
$
46,212

 
$
76,701

 
$
(74,235
)
 
$
78,975


30



SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE (LOSS) INCOME
 
For the Three Months Ended December 31, 2016
 
Parent/Issuer
 
Subsidiary Guarantor
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
 
(in millions)
Net operating revenues
$
—

 
$
—

 
$
8,549

 
$
—

 
$
8,549

Net operating expenses:
 
 
 
 
 
 
 
 
 
Cost of services (exclusive of depreciation and amortization included below)
—

 
—

 
1,925

 
—

 
1,925

Cost of products (exclusive of depreciation and amortization included below)
—

 
—

 
1,985

 
—

 
1,985

Selling, general and administrative
—

 
—

 
2,080

 
—

 
2,080

Severance and exit costs
—

 
—

 
19

 
—

 
19

Depreciation
—

 
—

 
1,837

 
—

 
1,837

Amortization
—

 
—

 
255

 
—

 
255

Other, net
—

 
—

 
137

 
—

 
137

 
—

 
—

 
8,238

 
—

 
8,238

Operating income
—

 
—

 
311

 
—

 
311

Other income (expense):
 
 
 
 
 
 
 
 
 
Interest income
198

 
43

 
4

 
(233
)
 
12

Interest expense
(198
)
 
(409
)
 
(245
)
 
233

 
(619
)
(Losses) earnings of subsidiaries
(479
)
 
(38
)
 
—

 
517

 
—

Other (expense) income, net
—

 
(75
)
 
3

 
—

 
(72
)
 
(479
)
 
(479
)
 
(238
)
 
517

 
(679
)
(Loss) income before income taxes
(479
)
 
(479
)
 
73

 
517

 
(368
)
Income tax expense
—

 
—

 
(111
)
 
—

 
(111
)
Net (loss) income
(479
)
 
(479
)
 
(38
)
 
517

 
(479
)
Other comprehensive (loss) income
(5
)
 
(5
)
 
(4
)
 
9

 
(5
)
Comprehensive (loss) income
$
(484
)
 
$
(484
)
 
$
(42
)
 
$
526

 
$
(484
)

31



SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE (LOSS) INCOME
 
For the Three Months Ended December 31, 2015
 
Parent/Issuer
 
Subsidiary Guarantor
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
 
(in millions)
Net operating revenues
$
—

 
$
—

 
$
8,107

 
$
—

 
$
8,107

Net operating expenses:
 
 
 
 
 
 
 
 
 
Cost of services (exclusive of depreciation and amortization included below)
—

 
—

 
2,348

 
—

 
2,348

Cost of products (exclusive of depreciation and amortization included below)
—

 
—

 
1,589

 
—

 
1,589

Selling, general and administrative
—

 
—

 
2,129

 
—

 
2,129

Severance and exit costs
—

 
—

 
209

 
—

 
209

Depreciation
—

 
—

 
1,549

 
—

 
1,549

Amortization
—

 
—

 
316

 
—

 
316

Other, net
—

 
—

 
164

 
—

 
164

 
—

 
—

 
8,304

 
—

 
8,304

Operating loss
—

 
—

 
(197
)
 
—

 
(197
)
Other income (expense):
 
 
 
 
 
 
 
 
 
Interest income
198

 
39

 
2

 
(236
)
 
3

Interest expense
(198
)
 
(406
)
 
(178
)
 
236

 
(546
)
(Losses) earnings of subsidiaries
(838
)
 
(471
)
 
—

 
1,309

 
—

Other income, net
—

 
—

 
1

 
—

 
1

 
(838
)
 
(838
)
 
(175
)
 
1,309

 
(542
)
(Loss) income before income taxes
(838
)
 
(838
)
 
(372
)
 
1,309

 
(739
)
Income tax benefit (expense)
2

 
—

 
(99
)
 
—

 
(97
)
Net (loss) income
(836
)
 
(838
)
 
(471
)
 
1,309

 
(836
)
Other comprehensive (loss) income
(7
)
 
(7
)
 
(4
)
 
11

 
(7
)
Comprehensive (loss) income
$
(843
)
 
$
(845
)
 
$
(475
)
 
$
1,320

 
$
(843
)


32



SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE (LOSS) INCOME
 
For the Nine Months Ended December 31, 2016
 
Parent/Issuer
 
Subsidiary Guarantor
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
 
(in millions)
Net operating revenues
$
—

 
$
—

 
$
24,808

 
$
—

 
$
24,808

Net operating expenses:
 
 
 
 
 
 
 
 
 
Cost of services (exclusive of depreciation and amortization included below)
—

 
—

 
6,125

 
—

 
6,125

Cost of products (exclusive of depreciation and amortization included below)
—

 
—

 
5,097

 
—

 
5,097

Selling, general and administrative
—

 
—

 
5,992

 
—

 
5,992

Severance and exit costs
—

 
—

 
30

 
—

 
30

Depreciation
—

 
—

 
5,227

 
—

 
5,227

Amortization
—

 
—

 
813

 
—

 
813

Other, net
—

 
—

 
230

 
—

 
230

 
—

 
—

 
23,514

 
—

 
23,514

Operating income
—

 
—

 
1,294

 
—

 
1,294

Other income (expense):
 
 
 
 
 
 
 
 
 
Interest income
593

 
105

 
13

 
(674
)
 
37

Interest expense
(593
)
 
(1,271
)
 
(674
)
 
674

 
(1,864
)
(Losses) earnings of subsidiaries
(923
)
 
320

 
—

 
603

 
—

Other expense, net
—

 
(77
)
 
(27
)
 
—

 
(104
)
 
(923
)
 
(923
)
 
(688
)
 
603

 
(1,931
)
(Loss) income before income taxes
(923
)
 
(923
)
 
606

 
603

 
(637
)
Income tax expense
—

 
—

 
(286
)
 
—

 
(286
)
Net (loss) income
(923
)
 
(923
)
 
320

 
603

 
(923
)
Other comprehensive income (loss)
2

 
2

 
3

 
(5
)
 
2

Comprehensive (loss) income
$
(921
)
 
$
(921
)
 
$
323

 
$
598

 
$
(921
)



33



SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE (LOSS) INCOME
 
For the Nine Months Ended December 31, 2015
 
Parent/Issuer
 
Subsidiary Guarantor
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
 
(in millions)
Net operating revenues
$
—

 
$
—

 
$
24,109

 
$
—

 
$
24,109

Net operating expenses:
 
 
 
 
 
 
 
 
 
Cost of services (exclusive of depreciation and amortization included below)
—

 
—

 
7,194

 
—

 
7,194

Cost of products (exclusive of depreciation and amortization included below)
—

 
—

 
4,244

 
—

 
4,244

Selling, general and administrative
—

 
—

 
6,540

 
—

 
6,540

Severance and exit costs
—

 
—

 
247

 
—

 
247

Depreciation
—

 
—

 
4,202

 
—

 
4,202

Amortization
—

 
—

 
994

 
—

 
994

Other, net
—

 
—

 
386

 
—

 
386

 
—

 
—

 
23,807

 
—

 
23,807

Operating income
—

 
—

 
302

 
—

 
302

Other income (expense):
 
 
 
 
 
 
 
 
 
Interest income
593

 
118

 
3

 
(707
)
 
7

Interest expense
(593
)
 
(1,220
)
 
(524
)
 
707

 
(1,630
)
(Losses) earnings of subsidiaries
(1,443
)
 
(341
)
 
—

 
1,784

 
—

Other income, net
—

 
—

 
6

 
—

 
6

 
(1,443
)
 
(1,443
)
 
(515
)
 
1,784

 
(1,617
)
(Loss) income before income taxes
(1,443
)
 
(1,443
)
 
(213
)
 
1,784

 
(1,315
)
Income tax benefit (expense)
2

 
—

 
(128
)
 
—

 
(126
)
Net (loss) income
(1,441
)
 
(1,443
)
 
(341
)
 
1,784

 
(1,441
)
Other comprehensive (loss) income
(11
)
 
(11
)
 
(6
)
 
17

 
(11
)
Comprehensive (loss) income
$
(1,452
)
 
$
(1,454
)
 
$
(347
)
 
$
1,801

 
$
(1,452
)




34



SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
 
For the Nine Months Ended December 31, 2016
 
Parent/Issuer
 
Subsidiary Guarantor
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
 
(in millions)
Cash flows from operating activities:
 
 
 
 
 
 
 
 
 
Net cash (used in) provided by operating activities
$
—

 
$
(1,168
)
 
$
4,186

 
$
(118
)
 
$
2,900

Cash flows from investing activities:
 
 
 
 
 
 
 
 
 
Capital expenditures - network and other
—

 
—

 
(1,421
)
 
—

 
(1,421
)
Capital expenditures - leased devices
—

 
—

 
(1,530
)
 
—

 
(1,530
)
Expenditures relating to FCC licenses
—

 
—

 
(46
)
 
—

 
(46
)
Proceeds from sales and maturities of short-term investments
—

 
2,614

 
35

 
—

 
2,649

Purchases of short-term investments
—

 
(4,943
)
 
(55
)
 
—

 
(4,998
)
Change in amounts due from/due to consolidated affiliates
—

 
6,865

 
—

 
(6,865
)
 
—

Proceeds from sales of assets and FCC licenses
—

 
—

 
126

 
—

 
126

Intercompany note advance to consolidated affiliate
—

 
(392
)
 
—

 
392

 
—

Proceeds from intercompany note advance to consolidated affiliate
—

 
62

 
—

 
(62
)
 
—

Other, net
—

 
—

 
26

 
—

 
26

Net cash provided by (used in) investing activities
—

 
4,206

 
(2,865
)
 
(6,535
)
 
(5,194
)
Cash flows from financing activities:
 
 
 
 
 
 
 
 
 
Proceeds from debt and financings
—

 
—

 
6,830

 
—

 
6,830

Repayments of debt, financing and capital lease obligations
—

 
(2,000
)
 
(1,266
)
 
—

 
(3,266
)
Debt financing costs
—

 
(110
)
 
(162
)
 
—

 
(272
)
Intercompany dividends paid to parent
—

 
—

 
(118
)
 
118

 
—

Change in amounts due from/due to consolidated affiliates
—

 
—

 
(6,865
)
 
6,865

 
—

Intercompany note advance from parent
—

 
—

 
392

 
(392
)
 
—

Repayments of intercompany note advance from parent
—

 
—

 
(62
)
 
62

 
—

Other, net
—

 
35

 
33

 
—

 
68

Net cash (used in) provided by financing activities
—

 
(2,075
)
 
(1,218
)
 
6,653

 
3,360

Net increase in cash and cash equivalents
—

 
963

 
103

 
—

 
1,066

Cash and cash equivalents, beginning of period
—

 
2,154

 
487

 
—

 
2,641

Cash and cash equivalents, end of period
$
—

 
$
3,117

 
$
590

 
$
—

 
$
3,707


35



SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
 
For the Nine Months Ended December 31, 2015
 
Parent/Issuer
 
Subsidiary Guarantor
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
 
(in millions)
Cash flows from operating activities:
 
 
 
 
 
 
 
 
 
Net cash (used in) provided by operating activities
$
—

 
$
(1,029
)
 
$
3,800

 
$
(168
)
 
$
2,603

Cash flows from investing activities:
 
 
 
 
 
 
 
 
 
Capital expenditures - network and other
—

 
—

 
(3,958
)
 
—

 
(3,958
)
Capital expenditures - leased devices
—

 
—

 
(1,724
)
 
—

 
(1,724
)
Expenditures relating to FCC licenses
—

 
—

 
(75
)
 
—

 
(75
)
Proceeds from sales and maturities of short-term investments
—

 
317

 
60

 
—

 
377

Purchases of short-term investments
—

 
(197
)
 
(55
)
 
—

 
(252
)
Change in amounts due from/due to consolidated affiliates
1

 
(568
)
 
—

 
567

 
—

Proceeds from sales of assets and FCC licenses
—

 
—

 
36

 
—

 
36

Proceeds from sale-leaseback transaction
—

 
—

 
1,136

 
—

 
1,136

Intercompany note advance to consolidated affiliate
—

 
(159
)
 
—

 
159

 
—

Proceeds from intercompany note advance to consolidated affiliate
—

 
54

 
—

 
(54
)
 
—

Other, net
—

 
—

 
(25
)
 
—

 
(25
)
Net cash provided by (used in) investing activities
1

 
(553
)
 
(4,605
)
 
672

 
(4,485
)
Cash flows from financing activities:
 
 
 
 
 
 
 
 
 
Proceeds from debt and financings
—

 
250

 
505

 
—

 
755

Repayments of debt, financing and capital lease obligations
—

 
(500
)
 
(227
)
 
—

 
(727
)
Debt financing costs
(1
)
 
—

 
—

 
—

 
(1
)
Intercompany dividends paid to parent
—

 
—

 
(168
)
 
168

 
—

Change in amounts due from/due to consolidated affiliates
—

 
—

 
567

 
(567
)
 
—

Intercompany note advance from parent
—

 
—

 
159

 
(159
)
 
—

Repayments of intercompany not advance from parent
—

 
—

 
(54
)
 
54

 
—

Other, net
—

 
10

 
10

 
—

 
20

Net cash (used in) provided by financing activities
(1
)
 
(240
)
 
792

 
(504
)
 
47

Net decrease in cash and cash equivalents
—

 
(1,822
)
 
(13
)
 
—

 
(1,835
)
Cash and cash equivalents, beginning of period
—

 
3,492

 
518

 
—

 
4,010

Cash and cash equivalents, end of period
$
—

 
$
1,670

 
$
505

 
$
—

 
$
2,175



36



SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 16.
Subsequent Events
New Secured Term Loan and Revolving Credit Facility
On February 3, 2017, we entered into a new credit agreement for $6.0 billion , consisting of a $4.0 billion , seven -year secured term loan that matures in February 2024 and a $2.0 billion secured revolving bank credit facility that expires in February 2021. The term loan has an interest rate equal to LIBOR plus 250 basis points and the bank facility has an interest rate equal to LIBOR plus a spread that varies depending on the Company's leverage ratio. The new credit facility replaced the $3.3 billion unsecured revolving bank credit facility that was due to expire in February 2018.
Insurance Program Master Services Agreement
Effective January 1, 2017, we entered into a new Master Services Agreement with a vendor to provide post-sale device support services (including device insurance) to subscribers. Under the new agreement, the vendor will be the primary obligor and bear the risk of loss with regards to claims and related costs. As a result, revenue will be accounted for and presented on a net basis, whereas historically the amounts were presented on a gross basis. Sprint will remit premiums to the vendor who will pay Sprint a monthly recurring commission per subscriber for the duration of the agreement.
Accounts Receivable Facility
On February 3, 2017, the Company executed certain amendments to the Receivables Facility. The maturity date was extended to November 2018 and Sprint obtained the right to repurchase, under certain conditions, the financial assets transferred to the conduits. As a result of adding the repurchase feature, Sprint gained effective control over the financial assets. Accordingly, all sales of wireless service and installment receivables to the conduits will be reflected as financings. All cash inflows and outflows under the Receivables Facility will be reported as financing activities in the consolidated statements of cash flows prospectively.
     




37

Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations

OVERVIEW
Sprint Corporation, including its consolidated subsidiaries, is a communications company offering a comprehensive range of wireless and wireline communications products and services that are designed to meet the needs of individual consumers, businesses, government subscribers, and resellers. Unless the context otherwise requires, references to "Sprint," "we," "us," "our" and the "Company" mean Sprint Corporation and its consolidated subsidiaries for all periods presented, and references to "Sprint Communications" are to Sprint Communications, Inc. and its consolidated subsidiaries. 
Description of the Company
We are one of the largest wireless communications companies in the U.S., as well as a provider of wireline services. Our services are provided through our ownership of extensive wireless networks, an all-digital global wireline network and a Tier 1 Internet backbone.
We offer wireless and wireline services to subscribers in all 50 states, Puerto Rico, and the U.S. Virgin Islands under the Sprint corporate brand, which includes our retail brands of Sprint ® , Boost Mobile ® , Virgin Mobile ® , and Assurance Wireless ® on our wireless networks utilizing various technologies including third generation (3G) code division multiple access (CDMA) and fourth generation (4G) services utilizing Long Term Evolution (LTE). We utilize these networks to offer our wireless and wireline subscribers differentiated products and services whether through the use of a single network or a combination of these networks.
Wireless
We offer wireless services on a postpaid and prepaid payment basis to retail subscribers and also on a wholesale basis, which includes the sale of wireless services that utilize the Sprint network but are sold under the wholesaler's brand.
Postpaid
In our postpaid portfolio, we offer several price plans for both consumer and business subscribers. Many of our price plans include unlimited talk, text and data or allow subscribers to purchase monthly data allowances. We also offer family plans that include multiple lines of service under one account. We offer these plans with subsidy, installment billing or leasing programs. The subsidy program requires a service contract and allows for a subscriber to purchase a handset at a discount for a new line of service. Our installment billing program does not require a service contract and offers service plans at lower monthly rates compared to subsidy plans, but requires the subscriber to pay full or near full price for the handset over monthly installments. Our leasing program also does not require a service contract, provides for service plans at lower monthly rates compared to subsidy plans and allows qualified subscribers to lease a device and make payments for use of the device over the term of the lease. At the end of the lease term, the subscriber can either turn in the device, continue leasing the device or purchase the device.
Prepaid
Our prepaid portfolio currently includes multiple brands, each designed to appeal to specific subscriber uses and demographics. Sprint Prepaid primarily serves as a complementary offer to our Sprint Postpaid offer for those subscribers who want plans that are affordable, simple and flexible without a long-term commitment. Boost Mobile primarily serves subscribers that are looking for value without data limits. Virgin Mobile primarily serves subscribers that are looking to optimize spend but need solutions that offer control, flexibility and connectivity through various plans with high speed data options. Virgin Mobile is also designated as a Lifeline-only Eligible Telecommunications Carrier in certain states and provides service for the Lifeline program under our Assurance Wireless brand. Assurance Wireless provides eligible subscribers who meet income requirements or are receiving government assistance, with a free wireless phone, 350 free local and long distance voice minutes each month and unlimited free texts under the Lifeline program. The Lifeline program requires applicants to meet certain eligibility requirements and existing subscribers must recertify as to those requirements annually.
Wholesale
We have focused our wholesale business on enabling our diverse network of customers to successfully grow their business by providing them with an array of network, product, and device solutions. This allows our customers to customize this full suite of value-added solutions to meet the growing demands of their businesses. As part of these growing demands, some of our wholesale mobile virtual network operators (MVNO) are also selling prepaid services under the Lifeline program.

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We continue to support the open development of applications, content, and devices on the Sprint platform. In addition, we enable a variety of business and consumer third-party relationships through our portfolio of machine-to-machine solutions, which we offer on a retail postpaid and wholesale basis. Our machine-to-machine solutions portfolio provides a secure, real-time and reliable wireless two-way data connection across a broad range of connected devices.
Wireline
We provide a broad suite of wireline voice and data communication services to other communications companies and targeted business subscribers. In addition, our Wireline segment provides voice, data and IP communication services to our Wireless segment. We provide long distance services and operate all-digital global long distance and Tier 1 IP networks.
Business Strategies and Key Priorities
Our business strategy is to be responsive to changing customer mobility demands of existing and potential customers, and to expand our business into new areas of customer value and economic opportunity through innovation and differentiation. To help lay the foundation for these future growth opportunities, our strategy revolves around targeted investment, in the following key priority areas:
•
Provide a network that delivers the consistent reliability, capacity and speed that customers demand;
•
Achieve a more competitive cost position in the industry through simplification;
•
Increase subscriber acquisition and retention and reduce churn;
•
Create an alternative financial structure to fuel growth and maximize shareholder value;
•
Attract and retain the best talent in the industry; and
•
Deliver a simplified and improved customer experience.    
To provide a network that delivers the consistent reliability, capacity and speed that customers demand, we expect to continue to optimize our 3G data network and invest in LTE deployment across all of our spectrum bands. We also expect to deploy new technologies that will help strengthen our competitive position, including the expected use of Voice over LTE, more extensive use of Wi-Fi and the use of small cells to further densify our network.
To achieve a more competitive cost position, we have established an Office of Cost Management with responsibility for identifying, operationalizing, and monitoring sustained improvements in operating costs and efficiencies. Also, we have deployed new cost management and planning tools across the entire organization to more effectively monitor expenditures.
We are focused on attracting and retaining subscribers by improving our sales and marketing initiatives. We have expanded our direct retail store presence through our relationship with RadioShack, as well as our Direct to You service that brings the Sprint store experience to our customers. We have demonstrated our value proposition through our new price plans, promotions, and payment programs and have deployed new local marketing and civic engagement initiatives in key markets.
Our current strategy also includes transactions that continue to leverage our assets such as the Accounts Receivable Facility, the Handset Sale-Leaseback transactions, as well as the Network Equipment Sale-Leaseback. In October 2016, we also entered into a Spectrum Financing transaction involving a portion of our spectrum holdings. Each of these transactions are described in more detail in "Liquidity and Capital Resources." Additionally, cost reduction initiatives are underway to reduce operating expenses and improve our operating cash flows.
We have built a stronger management team by attracting outside talent with world class experience and credentials while retaining selected members of the incumbent management team. To deliver a simplified and improved customer experience, we are focusing on key subscriber touch points, pursuing process improvements and deploying platforms to simplify and enhance the interactions between us and our customers. In addition, we have established a customer experience team to support our focus on net promoter score as an important key measure of customer satisfaction.
Network
We continue to increase coverage and capacity by densifying and optimizing our existing network. Densification, which includes increasing the number of small cells and antennas, is intended to enhance coverage and capacity across the network. We expect the densification efforts to cost significantly less than our historical macro cell site builds (i.e. adding traditional cell towers). We are also deploying new technologies, such as carrier aggregation, which allows us to move more data at faster speeds over the same spectrum. Additionally, our introduction of tri-band devices, which support each of our spectrum bands, allows us to manage and operate our network more efficiently and at a lower cost. We have continued to see positive results from these infrastructure upgrades in key U.S. markets.

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Today, the 2.5 GHz spectrum band carries the highest percentage of Sprint's LTE data traffic. We have significant additional capacity to grow the use of our 2.5 GHz spectrum holdings into the future. Sprint believes it is well-positioned with spectrum holdings of more than 160 MHz of 2.5 GHz spectrum in the top 100 markets in the U.S.
Overall, our densification and optimization efforts are expected to continue to enhance the customer experience by adding data capacity, increasing the wireless data speeds available to our customers, and improving network coverage for both voice and data services. While circumstances may change in the future, we believe that our substantial spectrum holdings are sufficient to allow us to continue to provide consistent network reliability, capacity, and speed, as well as to provide current and future customers a highly competitive wireless experience. As we continue to refine our network strategy and evaluate other potential network initiatives, we may incur future material charges associated with lease and access exit costs, loss from asset dispositions or accelerated depreciation, among others.
Shentel Transaction
On August 10, 2015, Shenandoah Telecommunications Company (Shentel) entered into a definitive agreement to acquire one of our wholesale partners, NTELOS Holdings Corp (nTelos). In connection with this definitive agreement, we entered into a series of agreements with Shentel to, among other things, acquire certain assets such as spectrum, terminate our existing wholesale arrangement with nTelos, and amend our existing affiliate agreement with Shentel to primarily include the subscribers formerly under the wholesale arrangement with nTelos. The agreements also expanded the area in which Shentel provides wireless service to Sprint customers and provided for more favorable economic terms. In April 2016, we received regulatory approval, and the transaction closed in May 2016. The total consideration for this transaction included $181 million, on a net present value basis, of notes payable to Shentel. Sprint will satisfy its obligations under the notes payable over an expected term of five to six years. FCC licenses acquired from Shentel had a total value of $85 million. $96 million of the total purchase was recorded in “Other, net” in the consolidated statements of comprehensive loss as a contract termination in the quarter ended June 30, 2016, which related to the termination of our pre-existing wholesale arrangement with nTelos.

RESULTS OF OPERATIONS
Consolidated Results of Operations
The following table provides an overview of the consolidated results of operations.
 
Three Months Ended
Nine Months Ended
 
December 31,
December 31,
 
2016
 
2015
2016
 
2015
 
(in millions)
Wireless segment earnings
$
2,397

 
$
1,866

$
7,160

 
$
5,919

Wireline segment earnings
48

 
33

90

 
71

Corporate, other and eliminations
5

 
(1
)
4

 
(2
)
Consolidated segment earnings
2,450

 
1,898

7,254

 
5,988

Depreciation
(1,837
)
 
(1,549
)
(5,227
)
 
(4,202
)
Amortization
(255
)
 
(316
)
(813
)
 
(994
)
Other, net
(47
)
 
(230
)
80

 
(490
)
Operating income (loss)
311

 
(197
)
1,294

 
302

Interest expense
(619
)
 
(546
)
(1,864
)
 
(1,630
)
Other (expense) income, net
(60
)
 
4

(67
)
 
13

Income tax expense
(111
)
 
(97
)
(286
)
 
(126
)
Net loss
$
(479
)
 
$
(836
)
$
(923
)
 
$
(1,441
)

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Depreciation Expense
Depreciation expense increased $288 million , or 19% , and $1.0 billion , or 24% , in the three and nine-month periods ended December 31, 2016 , respectively, compared to the same periods in 2015 , primarily due to increased depreciation on leased devices as a result of the continued growth of the device leasing program. Depreciation expense incurred on all leased devices was $837 million and $2.2 billion for the three and nine-month periods ended December 31, 2016 , respectively, and $535 million and $1.2 billion for the same periods in 2015 , respectively.
Amortization Expense
Amortization expense decreased $61 million , or 19% , and $181 million , or 18% , in the three and nine-month periods ended December 31, 2016 , respectively, compared to the same periods in 2015 , primarily due to customer relationship intangible assets that are amortized using the sum-of-the-months'-digits method, which results in higher amortization rates in early periods that will decline over time.
Other, net
The following table provides additional information regarding items included in "Other, net" for the three and nine-month periods ended December 31, 2016 and 2015 .
 
Three Months Ended
 
Nine Months Ended
 
December 31,
 
December 31,
 
2016
 
2015
 
2016
 
2015
 
(in millions)
Severance and exit costs
$
(19
)
 
$
(209
)
 
$
(30
)
 
$
(247
)
Litigation and other contingencies
—

 
(21
)
 
(103
)
 
(178
)
Loss on disposal of property, plant and equipment
(28
)
 
—

 
(28
)
 
(85
)
Contract terminations
—

 
—

 
(113
)
 
—

Gains from asset dispositions and exchanges
—

 
—

 
354

 
—

Revision to estimate of a previously recorded reserve
—

 
—

 
—

 
20

Total
$
(47
)
 
$
(230
)
 
$
80

 
$
(490
)
Other, net represented an expense of $47 million and a benefit of $80 million in the three and nine-month periods ended December 31, 2016 , respectively. During the three and nine-month periods ended December 31, 2016 , we recognized severance and exit costs expense of $19 million and $30 million , respectively. During the nine-month period ended December 31, 2016 , we recorded a $103 million charge associated with a state tax matter, a $354 million non-cash gain as a result of spectrum license exchanges with other carriers and $113 million of contract terminations that were primarily related to the termination of our pre-existing wholesale arrangement with nTelos as a result of the Shentel transaction. During the three and nine-month periods ended December 31, 2016 , we recorded a $28 million loss on disposal of property, plant and equipment related to cell site construction costs that are no longer recoverable as a result of changes in our network plans.
Other, net represented an expense of $230 million and $490 million in the three and nine-month periods ended December 31, 2015 , respectively. During the three and nine-month periods ended December 31, 2015 , we recognized accruals of $21 million and $178 million, respectively, for ongoing legal matters. In addition, we recognized severance and exit costs in the three and nine-month periods ended December 31, 2015 , which included $176 million and $194 million, respectively, of severance primarily associated with reductions in work force and $33 million and $53 million, respectively, of lease and access exit costs primarily associated with tower and cell sites and backhaul access contracts for which we will no longer be receiving any economic benefit. During the nine-month period ended December 31, 2015 , we recorded an $85 million loss on disposal of property, plant and equipment primarily related to cell site construction costs that are no longer recoverable as a result of changes in our network plans. During the three-month period ended June 30, 2015, we revised our estimate of a previously recorded reserve, resulting in $20 million of income.
Interest Expense
Interest expense increased $73 million , or 13% , and $234 million , or 14% , in the three and nine-month periods ended December 31, 2016 , respectively, compared to the same periods in 2015 , primarily due to interest associated with the Network Equipment Sale-Leaseback, the Handset Sale-Leaseback Tranche 2, the unsecured financing facility and the Spectrum Financing transaction. The effective interest rate, which includes capitalized interest, on the weighted average long-term debt balance of $38.4 billion and $37.1 billion was 6.6% and 6.8% for the three and nine-month periods ended December 31, 2016 , respectively. The effective interest rate, which includes capitalized interest, on the weighted average

41
Table of Contents

long-term debt balance of $33.7 billion and $33.8 billion was 6.6% for both the three and nine-month periods ended December 31, 2015 , respectively. See “Liquidity and Capital Resources” for more information on the Company's financing activities.
Other (expense) income, net
Other (expense) income, net represented an expense of $60 million and $67 million in the three and nine-month periods ended December 31, 2016 , respectively. The expense was primarily due to recognizing the remaining debt finance costs of $74 million associated with the terminated unsecured financing facility in the three-month period ended December 31, 2016 .
Income Taxes
The income tax expense of $111 million and $286 million for the three and nine-month periods ended December 31, 2016 , respectively, represented consolidated effective tax rates of approximately (30)% and (45)% , respectively. Income tax expense for both periods was primarily attributable to tax expense resulting from taxable temporary differences from amortization of FCC licenses and tax expense to increase our deferred tax liability on FCC licenses temporary differences. Income tax expense for the nine-month period ended December 31, 2016 included tax expense on pre-tax gains from spectrum license exchanges during the period, partially offset by tax benefits from the reversal of certain state income tax valuation allowance on deferred tax assets. The income tax expense of $97 million and $126 million for the three and nine-month periods ended December 31, 2015 , respectively, represented consolidated effective tax rates of approximately (13)% and (10)%, respectively. Income tax expense for both periods was primarily attributable to tax expense resulting from taxable temporary differences from amortization of FCC licenses. The income tax expense for the nine-month period ended December 31, 2015 was partially offset by tax benefits from changes in state income tax laws enacted during the periods.

Segment Earnings - Wireless
Wireless segment earnings are a function of wireless service revenue, the sale of wireless devices (handsets and tablets), broadband devices, connected devices and accessories, leasing wireless devices, in addition to costs to acquire subscribers and network and interconnection costs to serve those subscribers, as well as other Wireless segment operating expenses. The costs to acquire our subscribers include the cost at which we sell our devices, as well as the marketing and sales costs incurred to attract those subscribers. Network costs primarily represent switch and cell site costs, backhaul costs, and interconnection costs, which generally consist of per-minute usage fees and roaming fees paid to other carriers. The remaining costs associated with operating the Wireless segment include the costs to operate our customer care organization and administrative support. Wireless service revenue, costs to acquire subscribers, and variable network and interconnection costs fluctuate with the changes in our subscriber base and their related usage, but some cost elements do not fluctuate in the short-term with these changes.
As shown by the table above under "Consolidated Results of Operations," Wireless segment earnings represented almost all of our total consolidated segment earnings for the three and nine-month periods ended December 31, 2016 and 2015. Within the Wireless segment, postpaid wireless services represent the most significant contributors to earnings, and is driven by the number of postpaid subscribers utilizing our services, as well as average revenue per user (ARPU). The wireless industry is subject to competition to retain and acquire subscribers of wireless services. Most markets in which we operate have high rates of penetration for wireless services.
Device Financing Programs
In September 2013, we introduced an installment billing program that allows subscribers to purchase a device by paying monthly installments generally over 24 months. In September 2014, we introduced a leasing program, whereby qualified subscribers can lease a device for a contractual period of time.
Under the installment billing program, we recognize a majority of the revenue associated with future expected installment payments at the time of sale of the device. As compared to our traditional subsidy program, this results in better alignment of the equipment revenue with the cost of the device. The impact to Wireless earnings from the sale of devices under our installment billing program is neutral except for the impact from the time value of money element related to the imputed interest on the installment receivable.
Under the leasing program, qualified subscribers can lease a device for a contractual period of time. At the end of the lease term, the subscriber has the option to turn in their device, continue leasing their device, or purchase the device. As of December 31, 2016 , substantially all of our device leases were classified as operating leases. As a result, at lease inception, the devices are reclassified from inventory to property, plant and equipment when leased through Sprint's direct channels. For

42
Table of Contents

leases in the indirect channel, we purchase the devices at lease inception from the dealer, which is then capitalized to property, plant and equipment. While a majority of the revenue associated with installment sales is recognized at the time of sale along with the related cost of products, lease revenue is recorded monthly over the term of the lease and the cost of the device is depreciated to its estimated residual value generally over the lease term. During the three and nine-month periods ended December 31, 2016 and 2015 , we leased devices through our Sprint direct channels totaling approximately $1.1 billion , $2.3 billion , $1.0 billion and $2.6 billion , respectively. These devices were reclassified from inventory to property, plant and equipment and, as such, the cost of the device was not recorded as cost of products compared to when purchased under the installment billing or the traditional subsidy program, which resulted in a significant positive impact to Wireless segment earnings. Depreciation expense incurred on all leased devices for the three and nine-month periods ended December 31, 2016 and 2015 , was $837 million , $2.2 billion , $535 million and $1.2 billion , respectively. If the mix of leased devices continues to increase, we expect this positive impact on the financial results of Wireless segment earnings to continue and depreciation expense to increase. However, this benefit to Wireless segment earnings was partially offset by the Handset Sale-Leaseback Tranche 1 (Tranche 1) transaction that was consummated in November 2015 whereby we sold and subsequently leased back certain devices leased to our customers (see Handset Sale-Leaseback Tranche 1 in "Liquidity and Capital Resources" for further details). As a result, the cost to us of the devices sold to Mobile Leasing Solutions, LLC (MLS) under Tranche 1 was no longer recorded as depreciation expense, but rather was recognized as rent expense within “Cost of products” in the consolidated statements of comprehensive loss during the leaseback periods until Tranche 1 was terminated in conjunction with the repurchase of devices in December 2016.
Our device leasing and installment billing programs require a greater use of operating cash flows in the earlier part of the device contracts as our subscribers will generally pay less upfront than a traditional subsidy program. The Accounts Receivable Facility and the Handset Sale-Leaseback transactions discussed in "Liquidity and Capital Resources" were designed to mitigate the significant use of cash from purchasing devices from original equipment manufacturers (OEMs) to fulfill our installment billing and leasing programs.
Wireless Segment Earnings Trends
Sprint offers lower monthly service fees without a traditional contract as an incentive to attract subscribers to certain of our service plans. These lower rates for service are available whether the subscriber brings their own handset, pays the full or near full retail price of the handset, purchases the handset under our installment billing program, or leases their handset through our leasing program. As the adoption rates of these plans increase throughout our base of subscribers, we expect our postpaid ARPU to continue to decline as a result of lower pricing associated with our price plans offered in conjunction with device financing options as compared to our traditional subsidy program, which reflect higher service revenue and lower equipment revenue; however, we also expect higher equipment revenue due to the installment billing and leasing programs to substantially offset these declines. Since inception, the combination of lower priced plans, and our installment billing and leasing programs have been accretive to Wireless segment earnings. We expect that trend to continue with the magnitude of the impact being dependent upon the rate of subscriber adoption.
We began to experience net losses of postpaid handset subscribers in mid-2013. Since the release of our price plans offered in conjunction with device financing options, results have shown improvement in trends of handset subscribers; however, there can be no assurance that this trend will continue. We have taken initiatives to provide the best value in wireless service while continuing to enhance our network performance, coverage and capacity in order to attract and retain valuable handset subscribers. In addition, we are evaluating our cost model to operationalize a more effective cost structure.
As a result of canceling our leaseback in connection with the termination of Tranche 1, we expect an increase to wireless segment earnings of approximately $0.2 billion and a neutral impact to net loss during calendar year 2017.



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The following table provides an overview of the results of operations of our Wireless segment.
 
Three Months Ended
 
Nine Months Ended
 
December 31,
 
December 31,
Wireless Segment Earnings
2016
 
2015
 
2016
 
2015
 
(in millions)
Postpaid
$
4,686

 
$
4,813

 
$
14,184

 
$
14,670

Prepaid
1,077

 
1,224

 
3,371

 
3,783

Other (1)
—

 
21

 
—

 
178

Retail service revenue
5,763

 
6,058

 
17,555

 
18,631

Wholesale, affiliate and other
183

 
188

 
509

 
586

Total service revenue
5,946

 
6,246

 
18,064

 
19,217

Cost of services (exclusive of depreciation and amortization)
(1,649
)
 
(2,031
)
 
(5,226
)
 
(6,147
)
Service gross margin
4,297

 
4,215

 
12,838

 
13,070

Service gross margin percentage
72
%
 
67
%
 
71
%
 
68
%
Equipment revenue
2,226

 
1,424

 
5,556

 
3,509

Cost of products (exclusive of depreciation and amortization)
(1,985
)
 
(1,589
)
 
(5,097
)
 
(4,244
)
Selling, general and administrative expense
(2,032
)
 
(2,041
)
 
(5,797
)
 
(6,273
)
Loss on disposal of property, plant and equipment
(109
)
 
(143
)
 
(340
)
 
(143
)
Wireless segment earnings
$
2,397

 
$
1,866

 
$
7,160

 
$
5,919

___________________
(1 )
Represents service revenue primarily related to the acquisition of Clearwire on July 9, 2013.
Service Revenue
Our Wireless segment generates service revenue from the sale of wireless services and the sale of wholesale and other services. Service revenue consists of fixed monthly recurring charges, variable usage charges and miscellaneous fees such as activation fees, directory assistance, roaming, equipment protection, late payment and early termination charges, and certain regulatory related fees, net of service credits.
The ability of our Wireless segment to generate service revenue is primarily a function of:
•
revenue generated from each subscriber, which in turn is a function of the types and amount of services utilized by each subscriber and the rates charged for those services; and
•
the number of subscribers that we serve, which in turn is a function of our ability to retain existing subscribers and acquire new subscribers.
Retail comprises those subscribers to whom Sprint directly provides wireless services, whether those services are provided on a postpaid or a prepaid basis. We also categorize our retail subscribers as prime and subprime based upon subscriber credit profiles. We use proprietary scoring systems that measure the credit quality of our subscribers using several factors, such as credit bureau information, subscriber credit risk scores and service plan characteristics. Payment history is subsequently monitored to further evaluate subscriber credit profiles. Wholesale and affiliates are those subscribers who are served through MVNO and affiliate relationships and other arrangements. Under the MVNO relationships, wireless services are sold by Sprint to other companies that resell those services to subscribers.
Retail service revenue decreased $295 million , or 5% , and $1.1 billion , or 6% , for the three and nine-month periods ended December 31, 2016 , respectively, compared to the same periods in 2015 . The decrease was primarily due to a lower average revenue per postpaid subscriber driven by an increase in subscribers on lower price plans, combined with a decrease in average prepaid subscribers driven by higher churn and the impact of the shutdown of the Clearwire WiMAX network on March 31, 2016. The decrease was partially offset by an increase in average postpaid subscribers.
Effective January 1, 2017, we entered into a new Master Services Agreement with a vendor to provide post-sale device support services (including device insurance) to subscribers. Under the new agreement, the vendor bears the risk of loss with regards to claims and related costs, which Sprint will no longer incur. Sprint will remit premiums to the vendor who will pay Sprint a monthly recurring commission per subscriber for the duration of the agreement. Additionally, under the terms of the new agreement, the vendor will be the primary obligor in the agreement with the subscriber and, as such, revenue will be accounted for and presented on a net basis, whereas historically the amounts were presented on a gross basis. The change is expected to result in reductions in service revenue by approximately $700 million to $800 million in calendar

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year 2017. Because the vendor, not Sprint, will be fulfilling the services, we expect the reductions in service revenue to be more than offset by greater reductions in cost of services expense.
Wholesale, affiliate and other revenues decreased $5 million , or 3% , and $77 million , or 13% , for the three and nine-month periods ended December 31, 2016 , respectively, compared to the same periods in 2015 , primarily due to a decline in Lifeline and prepaid resellers combined with the impact of the shutdown of the Clearwire WiMAX network, partially offset by growth in connected devices in both periods and an increase in imputed interest associated with installment billing on handsets in the three-month period. Approximately 66% of our total wholesale and affiliate subscribers represent connected devices. These devices generate revenue from usage, which varies depending on the solution being utilized.
Average Monthly Service Revenue per Subscriber and Subscriber Trends
The table below summarizes average number of retail subscribers. Additional information about the number of subscribers, net additions (losses) to subscribers, and average rates of monthly postpaid and prepaid subscriber churn for each quarter since the quarter ended June 30, 2015 may be found in the tables on the following pages.
 
Three Months Ended
 
Nine Months Ended
 
December 31,
 
December 31,
 
2016
 
2015
 
2016
 
2015
 
(subscribers in thousands)
Average postpaid subscribers  
31,431

 
30,683

 
31,153

 
30,443

Average prepaid subscribers  
12,997

 
14,966

 
13,662

 
15,442

Average retail subscribers  
44,428

 
45,649

 
44,815

 
45,885

The table below summarizes ARPU. Additional information about ARPU for each quarter since the quarter ended June 30, 2015 may be found in the tables on the following pages.
 
Three Months Ended
 
Nine Months Ended
 
December 31,
 
December 31,
 
2016
 
2015
 
2016
 
2015
ARPU (1) :
 
 
 
 
 
 
 
Postpaid
$
49.70

 
$
52.41

 
$
50.59

 
$
53.86

Prepaid
$
27.61

 
$
27.49

 
$
27.41

 
$
27.89

Average retail
$
43.24

 
$
44.24

 
$
43.53

 
$
45.12

_______________________ 
(1)
ARPU is calculated by dividing service revenue by the sum of the monthly average number of subscribers in the applicable service category. Changes in average monthly service revenue reflect subscribers for either the postpaid or prepaid service category who change rate plans, the level of voice and data usage, the amount of service credits which are offered to subscribers, plus the net effect of average monthly revenue generated by new subscribers and deactivating subscribers.
Postpaid ARPU for the three and nine-month periods ended December 31, 2016 decreased compared to the same periods in 2015 primarily due to the impact of subscriber migration to our service plans associated with device financing options, resulting in lower service fees. We expect Sprint platform postpaid ARPU to continue to decline during fiscal year 2016 as a result of lower service fees associated with our price plans offered in conjunction with device financing options; however, as a result of our installment billing and leasing programs, we expect increasing equipment revenues to more than offset these declines. Prepaid ARPU decreased for the nine-month period ended December 31, 2016 compared to the same period in 2015 primarily due to increased competition resulting in a decline in average subscribers primarily in the Virgin Mobile brand combined with the revenue impact of subscribers choosing lower priced plans in the Boost brand. Prepaid ARPU for the three-month period ended December 31, 2016 increased primarily in the Boost brand.

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The following table shows (a) net additions (losses) of wireless subscribers, (b) our total subscribers, and (c) end of period connected device subscribers as of the end of each quarterly period beginning with the quarter ended June 30, 2015.
 
June 30,
2015
 
Sept 30,
2015
 
Dec 31,
2015
 
March 31,
2016
 
June 30, 2016
 
Sept 30,
2016
 
Dec 31,
2016
Net additions (losses) (in thousands) (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
Sprint platform (2) :
 
 
 
 
 
 
 
 
 
 
 
 
 
Postpaid
310

 
378

 
501

 
56

 
180

 
344

 
405

Prepaid
(366
)
 
(188
)
 
(491
)
 
(264
)
 
(331
)
 
(427
)
 
(501
)
Wholesale and affiliates
731

 
866

 
481

 
655

 
528

 
823

 
673

Total Sprint platform
675

 
1,056

 
491

 
447

 
377

 
740

 
577

Transactions:
 
 
 
 
 
 
 
 
 
 
 
 
 
Postpaid
(60
)
 
(70
)
 
(238
)
 
—

 
—

 
—

 
—

Prepaid
(66
)
 
(64
)
 
(231
)
 
—

 
—

 
—

 
—

Wholesale
(22
)
 
(12
)
 
(241
)
 
—

 
—

 
—

 
—

Total Transactions
(148
)
 
(146
)
 
(710
)
 
—

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total retail postpaid
250

 
308

 
263

 
56

 
180

 
344

 
405

Total retail prepaid
(432
)
 
(252
)
 
(722
)
 
(264
)
 
(331
)
 
(427
)
 
(501
)
Total wholesale and affiliate
709

 
854

 
240

 
655

 
528

 
823

 
673

Total Wireless
527

 
910

 
(219
)
 
447

 
377

 
740

 
577

 
 
 
 
 
 
 
 
 
 
 
 
 
 
End of period subscribers (in thousands) (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
Sprint platform (2) :
 
 
 
 
 
 
 
 
 
 
 
 
 
Postpaid (3)(4)
30,016

 
30,394

 
30,895

 
30,951

 
30,945

 
31,289

 
31,694

Prepaid (3)(5)
15,340

 
15,152

 
14,661

 
14,397

 
13,974

 
13,547

 
11,812

Wholesale and affiliates (3)(4)(5)(6)
11,456

 
12,322

 
12,803

 
13,458

 
14,534

 
15,357

 
16,009

Total Sprint platform
56,812

 
57,868

 
58,359

 
58,806

 
59,453

 
60,193

 
59,515

Transactions (7) :
 
 
 
 
 
 
 
 
 
 
 
 
 
Postpaid
308

 
238

 
—

 
—

 
—

 
—

 
—

Prepaid
295

 
231

 
—

 
—

 
—

 
—

 
—

Wholesale
253

 
241

 
—

 
—

 
—

 
—

 
—

Total Transactions
856

 
710

 
—

 
—

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total retail postpaid (3)(4)
30,324

 
30,632

 
30,895

 
30,951

 
30,945

 
31,289

 
31,694

Total retail prepaid (3)(5)
15,635

 
15,383

 
14,661

 
14,397

 
13,974

 
13,547

 
11,812

Total wholesale and affiliates (3)(4)(5)(6)
11,709

 
12,563

 
12,803

 
13,458

 
14,534

 
15,357

 
16,009

Total Wireless
57,668

 
58,578

 
58,359

 
58,806

 
59,453

 
60,193

 
59,515

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Supplemental data - connected devices
 
 
 
 
 
 
 
 
 
 
 
 
 
End of period subscribers (in thousands) (4)
 
 
 
 
 
 
 
 
 
 
 
 
 
Retail postpaid
1,439

 
1,576

 
1,676

 
1,771

 
1,822

 
1,874

 
1,960

Wholesale and affiliates
6,620

 
7,338

 
7,930

 
8,575

 
9,244

 
9,951

 
10,594

Total
8,059

 
8,914

 
9,606

 
10,346

 
11,066

 
11,825

 
12,554

_______________________ 
(1)
A subscriber is defined as an individual line of service associated with each device activated by a customer. Subscribers that transfer from their original service category classification to another platform, or another service line within the same platform, are reflected as a net loss to the original service category and a net addition to their new service category. There is no net effect for such subscriber changes to the total wireless net additions (losses) or end of period subscribers.
(2)
Sprint platform refers to the Sprint network that supports the wireless service we provide through our multiple brands.
(3)
As part of the Shentel transaction, 186,000 and 92,000 subscribers were transferred from postpaid and prepaid, respectively, to affiliates. An additional 270,000 of nTelos' subscribers are now part of our affiliate relationship with Shentel and are being reported in wholesale and affiliate subscribers during the quarter ended June 30, 2016.
(4)
End of period connected devices are included in total retail postpaid or wholesale and affiliates end of period subscriber totals for all periods presented.
(5)
During the three-month period ended December 31, 2016, the Company aligned all prepaid brands, including prepaid affiliate subscribers, under one churn and retention program. As a result of this change, end of period prepaid and affiliate subscribers as of December 31, 2016 were reduced by 1,234,000 and 21,000, respectively. See "Subscriber Results" below for more information.
(6)
Subscribers through some of our MVNO relationships have inactivity either in voice usage or primarily as a result of the nature of the device, where activity only occurs when data retrieval is initiated by the end-user and may occur infrequently. Although we continue to provide these subscribers access to our network through our MVNO relationships, approximately 1,750,000 subscribers at December 31, 2016 through these MVNO relationships have been inactive for at least six months, with no associated revenue during the six-month period ended December 31, 2016 .
(7)
End of period transactions subscribers reflected postpaid, prepaid and wholesale subscribers acquired as a result of the acquisition of Clearwire. We had no remaining transaction subscribers primarily due to the shutdown of the WiMAX network on March 31, 2016.

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The following table shows our average rates of monthly postpaid and prepaid subscriber churn as of the end of each quarterly period beginning with the quarter ended June 30, 2015.
 
June 30,
2015
 
Sept 30,
2015
 
Dec 31,
2015
 
March 31,
2016
 
June 30,
2016
 
Sept 30,
2016
 
Dec 31,
2016
Monthly subscriber churn rate (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
Sprint platform:
 
 
 
 
 
 
 
 
 
 
 
 
 
Postpaid
1.56
%
 
1.54
%
 
1.62
%
 
1.72
%
 
1.56
%
 
1.52
%
 
1.67
%
Prepaid
5.08
%
 
5.06
%
 
5.82
%
 
5.65
%
 
5.55
%
 
5.63
%
 
5.80
%
Transactions (2) :
 
 
 
 
 
 
 
 
 
 
 
 
 
Postpaid
6.07
%
 
8.55
%
 
NM

 
NM

 
NM

 
NM

 
NM

Prepaid
7.23
%
 
8.51
%
 
NM

 
NM

 
NM

 
NM

 
NM

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total retail postpaid
1.61
%
 
1.61
%
 
1.87
%
 
1.72
%
 
1.56
%
 
1.52
%
 
1.67
%
Total retail prepaid
5.13
%
 
5.12
%
 
6.29
%
 
5.65
%
 
5.55
%
 
5.63
%
 
5.80
%
_______________________ 
(1)
Churn is calculated by dividing net subscriber deactivations for the quarter by the sum of the average number of subscribers for each month in the quarter. For postpaid accounts comprising multiple subscribers, such as family plans and enterprise accounts, net deactivations are defined as deactivations in excess of subscriber activations in a particular account within 30 days. Postpaid and prepaid churn consist of both voluntary churn, where the subscriber makes his or her own determination to cease being a subscriber, and involuntary churn, where the subscriber's service is terminated due to a lack of payment or other reasons.
(2)
Subscriber churn related to the acquisition of Clearwire.
The following table shows our postpaid and prepaid ARPU as of the end of each quarterly period beginning with the quarter ended June 30, 2015.
 
June 30,
2015
 
Sept 30,
2015
 
Dec 31,
2015
 
March 31,
2016
 
June 30,
2016
 
Sept 30,
2016
 
Dec 31,
2016
ARPU
 
 
 
 
 
 
 
 
 
 
 
 
 
Sprint platform:
 
 
 
 
 
 
 
 
 
 
 
 
 
Postpaid
$
55.48

 
$
53.99

 
$
52.48

 
$
51.68

 
$
51.54

 
$
50.54

 
$
49.70

Prepaid
$
27.81

 
$
27.66

 
$
27.44

 
$
27.72

 
$
27.34

 
$
27.31

 
$
27.61

Transactions (1) :
 
 
 
 
 
 
 
 
 
 
 
 
 
Postpaid
$
40.47

 
$
40.62

 
$
31.62

 
$
—

 
$
—

 
$
—

 
$
—

Prepaid
$
46.10

 
$
45.82

 
$
34.61

 
$
—

 
$
—

 
$
—

 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total retail postpaid
$
55.31

 
$
53.87

 
$
52.41

 
$
51.68

 
$
51.54

 
$
50.54

 
$
49.70

Total retail prepaid
$
28.18

 
$
27.97

 
$
27.49

 
$
27.72

 
$
27.34

 
$
27.31

 
$
27.61

_______________________
(1)
Subscriber ARPU related to the acquisition of Clearwire.

Subscriber Results
Sprint Platform Subscribers
Retail Postpaid — During the three-month period ended December 31, 2016 , net postpaid subscriber additions were 405,000 compared to 501,000 in the same period in 2015 . The lower net additions in the current quarter were driven by tablet subscriber losses.
Retail Prepaid — During the three-month period ended December 31, 2016 , we lost 501,000 net prepaid subscribers compared to 491,000 in the same period in 2015 . The net losses in the quarter were primarily due to subscriber losses in Boost and Virgin Mobile due to continued competition in the market. Historically, prepaid and prepaid affiliate subscribers were generally deactivated between 60 and 150 days from the later of the date of initial activation or replenishment; however, prior to account deactivation, targeted retention programs can be offered to qualifying subscribers to maintain ongoing service by providing up to an additional 150 days to make a replenishment. At September 30, 2016, each of our prepaid brands had different churn rules and retention programs. As a part of our ongoing efforts to simplify and drive consistency across our prepaid business, as well as tighten the customer engagement criteria, we have aligned all prepaid brands under one churn and retention program as of December 31, 2016. Therefore, all prepaid and prepaid affiliate subscribers are now deactivated 60 days from the later of the date of initial activation or the most recent replenishment date. As a result of these changes, we have approximately 1.2 million fewer prepaid subscribers and 21,000 fewer prepaid affiliate subscribers in the base as of December 31, 2016. However, because we have deactivated customers with no engagement, we do not expect a material impact to future prepaid revenue. If these changes had been implemented for our prepaid subscriber

47
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base at the beginning of the quarter rather than the end, and thus been in effect for the entire three month period, we estimate churn would have been 5.84% versus 5.80% and ARPU would have been $30.11 versus $27.61.
Wholesale and Affiliate Subscribers — Wholesale and affiliate subscribers represent customers that are served on our networks through companies that resell our wireless services to their subscribers, customers residing in affiliate territories and connected devices that utilize our network. Of the 16.0 million Sprint platform subscribers included in wholesale and affiliates, approximately 66% represent connected devices. Wholesale and affiliate subscriber net additions were 673,000 during the three-month period ended December 31, 2016 compared to 481,000 during the same period in 2015 , inclusive of net additions of connected devices totaling 643,000 and 592,000 , respectively. The increase in net additions in the three-month period ended December 31, 2016 was primarily attributable to growth in connected devices and subscribers under the Lifeline program, partially offset by a decline in subscribers through our prepaid and postpaid resellers.
Transactions Subscribers
As part of the acquisition of Clearwire in July 2013, we acquired 788,000 postpaid subscribers (exclusive of Sprint platform wholesale subscribers acquired through our MVNO relationship with Clearwire that were transferred to postpaid subscribers within Transactions), 721,000 prepaid subscribers, and 93,000 wholesale subscribers. We have no remaining transaction subscribers due to the shutdown of the Clearwire WiMAX network on March 31, 2016.
Cost of Services
Cost of services consists primarily of:
•
costs to operate and maintain our networks, including direct switch and cell site costs, such as rent, utilities, maintenance, labor costs associated with network employees, and spectrum frequency leasing costs;
•
fixed and variable interconnection costs, the fixed component of which consists of monthly flat-rate fees for facilities leased from local exchange carriers and other providers based on the number of cell sites and switches in service in a particular period and the related equipment installed at each site, and the variable component of which generally consists of per-minute usage fees charged by wireline providers for calls terminating on their networks, which fluctuate in relation to the level and duration of those terminating calls;
•
long distance costs paid to the Wireline segment;
•
costs to service and repair devices;
•
regulatory fees;
•
roaming fees paid to other carriers; and
•
fixed and variable costs relating to payments to third parties for the subscriber use of their proprietary data applications, such as messaging, music and cloud services and connected vehicle fees.
Cost of services decreased $382 million , or 19% , and $921 million , or 15% , for the three and nine-month periods ended December 31, 2016 , respectively, compared to the same periods in 2015 , primarily due to decreases in network costs such as rent, utilities, backhaul and labor associated with our network improvements and the shutdown of the WiMAX network on March 31, 2016, combined with decreases in roaming and interconnection costs primarily due to lower rates.
Equipment Revenue and Cost of Products
We recognize equipment revenue and corresponding costs of devices when title and risk of loss passes to the indirect dealer or end-use subscriber, assuming all other revenue recognition criteria are met. Our devices are sold under the subsidy program, the installment billing program, or leased under the leasing program. Under the subsidy program, we offer certain incentives to retain and acquire subscribers such as new devices at discounted prices. The cost of these incentives is recorded as a reduction to equipment revenue upon activation of the device with a service contract. Under the installment billing program, the device is sold at or near full retail price and we recognize most of the future expected installment payments at the time of sale of the device.
Cost of products includes equipment costs (primarily devices and accessories), order fulfillment related expenses, and write-downs of device and accessory inventory related to shrinkage and obsolescence. Additionally, cost of products is reduced by any rebates that are earned from the equipment manufacturers. Cost of products in excess of the net revenue generated from equipment sales is referred to in the industry as equipment net subsidy. As subscribers migrate from acquiring devices through our subsidy program to installment billing or choose to lease under our leasing program, equipment net subsidy continues to decline. We also make incentive payments to certain indirect dealers who purchase devices directly from OEMs or other device distributors. Those payments are recognized as selling, general and administrative expenses when the device is activated with a Sprint service plan because Sprint does not recognize any equipment revenue or cost of products for those transactions. (See Selling, General and Administrative Expense below.)

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The net impact to equipment revenue and cost of products from the sale of devices under our installment billing program is relatively neutral except for the impact from the time value of money element related to the imputed interest on the installment receivables. Under the leasing program, lease revenue is recorded over the term of the lease. The cost of the leased device is depreciated to its estimated residual value generally over the lease term. During the three and nine-month periods ended December 31, 2016 and 2015 , we leased devices through our Sprint direct channels totaling approximately $1.1 billion , $2.3 billion , $1.0 billion and $2.6 billion , respectively, which were reclassified from inventory to property, plant and equipment and, as such, the cost of the device was not recorded as cost of products compared to when purchased under the installment billing or the traditional subsidy programs.
Equipment revenue increased $802 million , or 56% , and $2.0 billion , or 58% , for the three and nine-month periods ended December 31, 2016 , respectively, compared to the same periods in 2015 . The increase in equipment revenue for the three and nine-month periods ended December 31, 2016 was primarily due to higher revenue from the leasing program as more subscribers are choosing to lease their device, combined with higher average sales price per postpaid devices sold and an increase in postpaid devices sold. Cost of products increased $396 million , or 25% , and $853 million , or 20% , for the three and nine-month periods ended December 31, 2016 , respectively, compared to the same periods in 2015 primarily due to an increase in postpaid devices sold combined with lease payments to MLS associated with Handset Sale-Leaseback Tranche 1, partially offset by a decrease in prepaid devices sold.
Selling, General and Administrative Expense
Sales and marketing costs primarily consist of subscriber acquisition costs, including commissions paid to our indirect dealers, third-party distributors and retail sales force for new device activations and upgrades, residual payments to our indirect dealers, commission payments made to OEMs or other device distributors for direct source handsets, payroll and facilities costs associated with our retail sales force, marketing employees, advertising, media programs and sponsorships, including costs related to branding. General and administrative expenses primarily consist of costs for billing, customer care and information technology operations, bad debt expense and administrative support activities, including collections, legal, finance, human resources, corporate communications, and strategic planning.
Sales and marketing expense decreased $30 million , or 2% , and $159 million , or 4% , for the three and nine-month periods ended December 31, 2016 , respectively, compared to the same periods in 2015 . The decrease in the nine-month period was primarily due to lower overall marketing spend as a result of cost reduction initiatives. The decrease in the three-month period was primarily due to lower sales commission expense and a decrease in payments to OEMs for direct source handsets as a result of lower volume of device sales.
General and administrative costs increased $21 million , or 3% , and decreased $317 million , or 13% , for the three and nine-month periods ended December 31, 2016 , respectively, compared to the same periods in 2015 . The decrease in the nine-month period was primarily due to lower customer care costs and other general and administrative costs as a result of cost reduction initiatives, partially offset by higher bad debt expense. The increase in the three-month period was primarily due to higher bad debt expense, partially offset by lower customer care costs as a result of cost reduction initiatives.
Bad debt expense increased $69 million , or 65% , and $29 million , or 8% , for the three and nine-month periods ended December 31, 2016 , respectively. The increase was primarily related to increased installment billing accounts with higher reserve rates, partially offset by aging and rate improvements related to service bad debt. We reassess our allowance for doubtful accounts quarterly.
Loss on Disposal of Property, Plant and Equipment
For the three and nine-month periods ended December 31, 2016 , loss on the disposal of property, plant and equipment, net of recoveries, of $109 million and $340 million , respectively, resulted from the write-off of leased devices associated with lease cancellations prior to the scheduled customer lease terms where customers did not return the devices to us. If customers continue to not return devices, we may continue to have similar losses in future periods. Similar losses are and have been incurred for devices sold under our subsidy program as equipment net subsidy.

Segment Earnings - Wireline
We provide a broad suite of wireline voice and data communications services to other communications companies and targeted business subscribers. In addition, we provide voice, data and IP communication services to our Wireless segment. We provide long distance services and operate all-digital global long distance and Tier 1 IP networks. Our services and products include domestic and international data communications using various protocols such as multiprotocol label switching technologies (MPLS), IP, managed network services, Voice over Internet Protocol (VoIP), Session Initiated Protocol (SIP), and traditional voice services. Our IP services can also be combined with wireless services. Such services

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include our Sprint Mobile Integration service, which enables a wireless handset to operate as part of a subscriber's wireline voice network, and our DataLink SM service, which uses our wireless networks to connect a subscriber location into their primarily wireline wide-area IP/MPLS data network, making it easier for businesses to adapt their network to changing business requirements. In addition to providing services to our business customers, the wireline network is carrying increasing amounts of voice and data traffic for our Wireless segment as a result of growing usage by our wireless subscribers.
We continue to assess the portfolio of services provided by our Wireline business and are focusing our efforts on IP-based data services and de-emphasizing stand-alone voice services and non-IP-based data services. We also continue to provide voice services primarily to business consumers. Our Wireline segment markets and sells its services primarily through direct sales representatives.
Wireline segment earnings are primarily a function of wireline service revenue, network and interconnection costs, and other Wireline segment operating expenses. Network costs primarily represent special access costs and interconnection costs, which generally consist of domestic and international per-minute usage fees paid to other carriers. The remaining costs associated with operating the Wireline segment include the costs to operate our customer care and billing organizations in addition to administrative support. Wireline service revenue and variable network and interconnection costs fluctuate with the changes in our customer base and their related usage, but some cost elements do not fluctuate in the short-term with changes in our customer usage. Our wireline services provided to our Wireless segment are generally accounted for based on market rates, which we believe approximate fair value. The Company generally re-establishes these rates at the beginning of each fiscal year. Over the past several years, there has been an industry wide trend of lower rates due to increased competition from other wireline and wireless communications companies, as well as cable and Internet service providers. Declines in Wireline segment earnings related to intercompany pricing rates do not affect our consolidated results of operations as our Wireless segment benefits from an equivalent reduction in cost of services.
The following table provides an overview of the results of operations of our Wireline segment.
 
Three Months Ended
 
Nine Months Ended
 
December 31,
 
December 31,
Wireline Segment Earnings
2016
 
2015
 
2016
 
2015
 
(in millions)
Voice
$
153

 
$
201

 
$
506

 
$
646

Data
41

 
42

 
127

 
134

Internet
281

 
317

 
871

 
968

Other
22

 
21

 
59

 
72

Total net service revenue
497

 
581

 
1,563

 
1,820

Cost of services (exclusive of depreciation)
(400
)
 
(466
)
 
(1,284
)
 
(1,495
)
Service gross margin
97

 
115

 
279

 
325

Service gross margin percentage
20
%
 
20
%
 
18
%
 
18
%
Selling, general and administrative expense
(49
)
 
(82
)
 
(189
)
 
(254
)
Wireline segment earnings
$
48

 
$
33

 
$
90

 
$
71

Wireline Revenue
Voice Revenues
Voice revenues for the three and nine-month periods ended December 31, 2016 decreased $48 million , or 24% , and $140 million , or 22% , respectively, compared to the same periods in 2015 . The decrease was driven by lower volume and overall rate declines primarily due to decreases in international hubbing volumes as the company continues to de-emphasize certain voice services, combined with the decline in prices for the sale of services to our Wireless segment for the three and nine-month periods ended December 31, 2016 . Voice revenues generated from the sale of services to our Wireless segment represented 40% and 39% of total voice revenues for the three and nine-month periods ended December 31, 2016 , respectively, compared to 41% and 39% , for the same periods in 2015 , respectively.
Data Revenues
Data revenues reflect sales of data services, primarily Private Line and managed network services bundled with non-IP-based data access. Data revenues decreased $1 million , or 2% , and $7 million , or 5% , for the three and nine-month periods ended December 31, 2016 , respectively, compared to the same periods in 2015 as a result of customer churn

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primarily related to Private Line. Data revenues generated from the provision of services to the Wireless segment represented 56% and 53% of total data revenue for the three and nine-month periods ended December 31, 2016 , respectively, and 40% and 41% for the same periods in 2015 , respectively.
Internet Revenue
IP-based data services revenue reflects sales of Internet services, including MPLS, VoIP, SIP, and managed services bundled with IP-based data access. IP-based data services revenue decreased $36 million , or 11% , and $97 million , or 10% , for the three and nine-month periods ended December 31, 2016 , respectively, compared to the same periods in 2015 primarily due to fewer IP customers. In addition, revenue was also impacted by a decline in prices for the sale of services to our Wireless segment. Sale of services to our Wireless segment represented 14% of total Internet revenues for both the three and nine-month periods ended December 31, 2016 , compared to 15% and 14% , respectively, for the same periods in 2015 .
Other Revenues
Other revenues, which primarily consist of sales of customer premises equipment, increased $1 million , or 5% , and decreased $13 million , or 18% , in the three and nine-month periods ended December 31, 2016 , respectively, compared to the same periods in 2015 .
Costs of Services
Costs of services include access costs paid to local phone companies, other domestic service providers and foreign phone companies to complete calls made by our domestic subscribers, costs to operate and maintain our networks, and costs of equipment. Costs of services decreased $66 million , or 14% , and $211 million , or 14% , in the three and nine-month periods ended December 31, 2016 , respectively, compared to the same periods in 2015 . The decrease was primarily due to lower international voice volume and rates combined with lower access expense as the result of savings initiatives and declining voice and IP rate and volumes. Service gross margin percentage stayed relatively flat at 20% and 18% in each of the three and nine-month periods ended December 31, 2016 and 2015 , respectively.
Selling, General and Administrative Expense
Selling, general and administrative expense decreased $33 million , or 40% , and $65 million , or 26% , in the three and nine-month periods ended December 31, 2016 , respectively, compared to the same periods in 2015 . The decrease was primarily due to lower shared administrative and employee-related costs required to support the Wireline segment as a result of the decline in revenue. Total selling, general and administrative expense as a percentage of net services revenue was 10% and 12% for the three and nine-month periods ended December 31, 2016 , respectively, as compared to 14% for each of the same periods in 2015 .

LIQUIDITY AND CAPITAL RESOURCES
Cash Flow  
 
Nine Months Ended
 
December 31,
 
2016
 
2015
 
(in millions)
Net cash provided by operating activities
$
2,900

 
$
2,603

Net cash used in investing activities
$
(5,194
)
 
$
(4,485
)
Net cash provided by financing activities
$
3,360

 
$
47

Operating Activities
Net cash provided by operating activities of $2.9 billion in the nine-month period ended December 31, 2016 increased $297 million from the same period in 2015 . The increase was primarily due to lower vendor and labor-related payments of $1.2 billion, which were primarily due to reduced operating costs resulting from the Company's ongoing cost reduction initiatives, partially offset by $831 million of decreased cash received primarily due to an increase in the deferred purchase price receivable (DPP) as a result of increased accounts receivables sold and a decline in net cash received related to our Accounts Receivable Facility (Receivables Facility). Cash activity related to our Receivables Facility included cash remitted to unaffiliated third parties (Purchasers) for receivables collected in the amount of $185 million and $500 million during the nine-month periods ended December 31, 2016 and 2015 , respectively. In addition, during the nine-month periods ended December 31, 2016 and 2015 , we elected to receive $625 million and $1.2 billion, respectively, related to our Receivables Facility. Also, during the nine-month period ended December 31, 2016 we had increased interest payments of $79 million primarily due to the Network Equipment Sale-Leaseback, the unsecured financing facility and the Spectrum Financing transaction.
Investing Activities
Net cash used in investing activities in the nine-month period ended December 31, 2016 increased by $709 million compared to the same period in 2015 , primarily due to increased net purchases of short-term investments of $2.5 billion. This increase was offset by decreased network and other capital expenditures of approximately $2.5 billion and decreased purchases of $194 million of leased devices from indirect dealers. Included in the purchases of leased devices was $477 million of repurchased devices due to the termination of the Handset Sale-Leaseback Tranche 1. Net cash used in investing activities for the nine-month period ended December 31, 2015 included proceeds of $1.1 billion from Tranche 1.
Financing Activities
Net cash provided by financing activities was $3.4 billion during the nine-month period ended December 31, 2016 , which was primarily due to cash receipts of $2.2 billion , $1.1 billion and $3.5 billion from the Network Equipment Sale-Leaseback, Handset Sale-Leaseback Tranche 2 and Spectrum Financing, respectively. These receipts were partially offset by repayments of $502 million , $220 million and $153 million for the Handset Sale-Leaseback Tranche 2, secured equipment credit facilities and financing of future lease receivables, respectively. We also retired $2.0 billion in principal amount of Sprint Communications, Inc. 6% senior notes due 2016 and $300 million principal amount of Clearwire Communications LLC 14.75% secured notes due 2016. In addition, we paid a total of $272 million in debt finance costs for the unsecured financing facility, Network Equipment Sale-Leaseback and Spectrum Financing transaction.
Net cash provided by financing activities was $47 million during the nine-month period ended December 31, 2015 , which was primarily due to draws of $208 million, $266 million and $32 million on our Finnvera plc (Finnvera), K-sure and Delcredere | Ducroire (D/D) secured equipment credit facilities, respectively. These draws were partially offset by repayments related to our secured equipment credit facilities of $155 million, capital lease repayments of $67 million and a $500 million repayment of the Export Development Canada (EDC) credit facility. In addition, we amended our unsecured EDC agreement to add an additional tranche totaling $250 million due December 2017.
Working Capital
We had negative working capital of $3.1 billion and $5.1 billion as of December 31, 2016 and March 31, 2016 , respectively. The change in working capital was primarily the result of $3.4 billion of net cash provided by financing activities as described above plus approximately $500 million of changes to other working capital items, partially offset by an increase in the current portion of long-term debt, financing and capital lease obligations of $1.9 billion.
Long-Term Debt and Other Funding Sources

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Our device leasing and installment billing programs require a greater use of operating cash flows in the earlier part of the device contracts as our subscribers will generally pay less upfront than a traditional subsidy program. The Receivable Facility and the Handset Sale-Leaseback transactions described below were designed in large part to mitigate the significant use of cash from purchasing devices from OEMs to fulfill our installment billing and leasing programs.
Accounts Receivable Facility
Transaction Overview
Our Receivables Facility provides us the opportunity to sell certain wireless service, installment receivables and future amounts due from customers who lease certain devices from us to the Purchasers. The maximum funding limit under the Receivables Facility is $4.3 billion. The Receivables Facility was amended in November 2016 to, among other things, reallocate the Purchasers' commitments between service, installment and future lease receivables. The amendment was in response to changing trends in the financing methods selected by customers. On February 3, 2017, the Receivables Facility was further amended by the Company to extend the maturity date to November 2018 and obtain the right to repurchase, under certain conditions, the financial assets transferred to the conduits. While we have the right to decide how much cash to receive from each sale, the maximum amount of cash available to us varies based on a number of factors and currently represents approximately 50% of the total amount of the eligible receivables sold to the Purchasers. As of December 31, 2016 , the total amount available to be drawn was $6 million . The proceeds from the sale of these receivables are comprised of a combination of cash and a DPP. The DPP is realized by us upon the ultimate collection of the underlying receivables sold to the Purchasers or upon Sprint's election to receive additional advances in cash from the Purchasers subject to the total availability under the Receivables Facility.
Wireless service and installment receivables sold are treated as a sale of financial assets and Sprint derecognizes these receivables, as well as the related allowances, and recognizes the net proceeds received in cash provided by operating activities on the consolidated statements of cash flows. The net amount drawn for wireless service and installment receivables was $1.8 billion as of December 31, 2016 . The fees associated with these sales are recognized in "Selling, general and administrative" in the consolidated statements of comprehensive loss.
The sale of future lease receivables is treated as a financing transaction. Accordingly, the proceeds received are reflected as cash provided by financing activities on the consolidated statements of cash flows and the fees are recognized as "Interest expense" in the consolidated statements of comprehensive loss. During the nine-month period ended December 31, 2016 , we repaid $153 million to the Purchasers, which reduced the principal amount outstanding to $447 million as of December 31, 2016 .
Transaction Structure
Sprint contributes certain wireless service, installment and future lease receivables, as well as the associated leased devices to Sprint's wholly-owned consolidated bankruptcy-remote special purpose entities (SPEs). At Sprint's direction, the SPEs have sold, and will continue to sell, wireless service, installment and future lease receivables to Purchasers or to a bank agent on behalf of the Purchasers. Leased devices will remain with the SPEs and continue to be depreciated over their estimated useful life. At December 31, 2016 , the net book value of devices contributed to the SPEs was approximately $965 million .
Each SPE is a separate legal entity with its own separate creditors who will be entitled, prior to and upon the liquidation of the SPE, to be satisfied out of the SPE's assets prior to any assets in the SPE becoming available to Sprint. Accordingly, the assets of the SPE are not available to pay creditors of Sprint or any of its affiliates (other than any other SPE), although collections from these receivables in excess of amounts required to repay the advances, yield and fees of the Purchasers and other creditors of the SPEs may be remitted to Sprint during and after the term of the Receivables Facility.
Sprint has no retained interest in the receivables sold, other than collection and administrative responsibilities and its right to the DPP. Sales of eligible receivables by the SPEs generally occur daily and are settled on a monthly basis. Sprint pays a fee for the drawn and undrawn portions of the Receivables Facility. A subsidiary of Sprint services the receivables in exchange for a monthly servicing fee, and Sprint guarantees the performance of the servicing obligations under the Receivables Facility.
DPP
The DPP related to our wireless service and installment receivables, which amounted to approximately $1.4 billion and $1.2 billion as of December 31, 2016 and March 31, 2016 , respectively, is classified as a trading security within "Prepaid expenses and other current assets" in the consolidated balance sheets and is recorded at its estimated fair value. The fair value of the DPP is estimated using a discounted cash flow model, which relies principally on unobservable inputs such

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as the nature and credit class of the sold receivables and subscriber payment history, and for installment receivables sold, the estimated timing of upgrades and upgrade payment amounts for those with upgrade options. Accretable yield on the DPP is recognized as interest revenue within net operating service revenue on the consolidated statements of comprehensive loss and other changes in the fair value of the DPP are recognized in "Selling, general and administrative" in the consolidated statements of comprehensive loss. Changes in the fair value of the DPP did not have a material impact on our statements of comprehensive loss for the three and nine-month periods ended December 31, 2016 . Changes to the unobservable inputs used to determine the fair value did not and are not expected to result in a material change in the fair value of the DPP.
During the nine-month period ended December 31, 2016 , we remitted $185 million of funds to the Purchasers because the amount of cash proceeds received by us under the facility exceeded the maximum funding limit, which increased the total amount of the DPP due to Sprint. We also elected to receive $625 million of cash, which decreased the total amount of the DPP due to Sprint. In addition, during the nine-month period ended December 31, 2016 , sales of new receivables exceeded cash collections on previously sold receivables such that the DPP increased by $660 million .
Handset Sale-Leasebacks
In December 2015 and May 2016, we sold certain iPhone ® devices being leased by our customers to MLS, a company formed by a group of equity investors, including SoftBank Group Corp. (SoftBank), and then subsequently leased the devices back. Under the agreements, Sprint generally maintains the customer leases, continues to collect and record lease revenue from the customer and remits monthly rental payments to MLS during the leaseback periods.
Under the agreements, Sprint contributed the devices and the associated customer leases to wholly-owned consolidated bankruptcy-remote special purpose entities of Sprint (SPE Lessees). The SPE Lessees then sold the devices and transferred certain specified customer lease end rights and obligations, such as the right to receive the proceeds from customers who elect to purchase the device at the end of the customer lease term, to MLS in exchange for a combination of cash and DPP. Settlement for the DPP occurs near the end of the agreement and can be reduced to the extent that MLS experiences a loss on the device (either not returned or sold at an amount less than the expected residual value of the device), but only to the extent of the device's DPP balance. In the event that MLS sells the devices returned from our customers at a price greater than the expected device residual value, Sprint has the potential to share some of the excess proceeds.
The SPE Lessees retain all rights to the underlying customer leases, such as the right to receive the rental payments during the device leaseback period, other than the aforementioned certain specified customer lease end rights. Each SPE Lessee is a separate legal entity with its own separate creditors who will be entitled, prior to and upon the liquidation of the SPE Lessee, to be satisfied out of the SPE Lessee’s assets prior to any assets in the SPE Lessee becoming available to Sprint. Accordingly, the assets of the SPE Lessee are not available to pay creditors of Sprint or any of its affiliates. The SPE Lessees are obligated to pay the full monthly rental payments under each device lease to MLS regardless of whether our customers make lease payments on the devices leased to them or whether the customer lease is canceled. Sprint has guaranteed to MLS the performance of the agreements and undertakings of the SPE Lessees under the transaction documents.
Handset Sale-Leaseback Tranche 1 (Tranche 1)
In December 2015, Sprint transferred devices with a net book value of approximately $1.3 billion to MLS in exchange for cash proceeds totaling $1.1 billion and a DPP of $126 million . We recorded the sale, removed the devices from our balance sheet, and classified the leasebacks as operating leases. The difference between the fair value and the net book value of the devices sold was recognized as a loss on disposal of property, plant and equipment in the amount of $65 million and was included in "Other, net" in the consolidated statements of comprehensive loss for the three and nine-month periods ended December 31, 2015. The cash proceeds received in the transaction were reflected as cash provided by investing activities on the consolidated statements of cash flows and payments made to MLS under the leaseback are reflected as "Cost of products" in the consolidated statements of comprehensive loss. Rent expense related to MLS totaled $117 million and $494 million during the three and nine-month periods ended December 31, 2016 , respectively, and is reflected within cash flows from operations. The monthly rental payments for the devices leased backed by us were expected to approximate the amount of cash received from the associated customer leases during the weighted average leaseback period. In December 2016, Sprint terminated Tranche 1 by repurchasing the devices and related customer lease end rights and obligations from MLS for consideration of $371 million of net cash payments and the DPP of $126 million . As a result of the transaction, Sprint recorded $477 million of property, plant and equipment, $16 million of other assets, and was released from certain liabilities. Additionally, the leaseback was canceled and there will be no future rental payments owed to MLS related to Tranche 1. The impact to the consolidated statements of comprehensive loss as a result of the termination was immaterial.
Handset Sale-Leaseback Tranche 2 (Tranche 2)

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In May 2016, Sprint transferred devices with a net book value of approximately $1.3 billion to MLS in exchange for cash proceeds totaling $1.1 billion and a DPP of $186 million . Unlike Tranche 1, Tranche 2 was accounted for as a financing. Accordingly, the devices remain in "Property, plant and equipment, net" in the consolidated balance sheets and we continue to depreciate the assets to their estimated residual values over the respective customer lease terms. At December 31, 2016 , the net book value of devices transferred to MLS was approximately $725 million .
The proceeds received are reflected as cash provided by financing activities in the consolidated statements of cash flows and payments made to MLS will be reflected as principal repayments and interest expense over the respective terms. We have elected to account for the financing obligation at fair value. Accordingly, changes in the fair value of the financing obligation are recognized in "Other (expense) income, net" in the consolidated statements of comprehensive loss over the course of the arrangement.
Tranche 2 primarily includes devices from our iPhone Forever Program, whereas these devices were specifically excluded from Tranche 1. The iPhone Forever Program provides our leasing customers the ability to upgrade their devices and to enter into a new lease agreement, subject to certain conditions, upon Apple's release of a next generation device. Upon a customer exercising their iPhone Forever upgrade right, Sprint has the option to terminate the existing leaseback by immediately remitting all unpaid device leaseback payments and returning the device to MLS. Alternatively, Sprint is required to transfer the title in the new device to MLS in exchange for the title in the original device (Exchange Option). If Sprint elects the Exchange Option, we are required to continue to pay existing device leaseback rental related to the original device, among other requirements.
To address the introduction of the upgrade feature into the sale-leaseback structure, among other factors, numerous contractual terms from Tranche 1 were modified, which shifted certain risks of ownership in the devices away from MLS to Sprint and resulted in Tranche 2 being accounted for as a financing. For instance, the device leaseback periods are generally longer in Tranche 2 as compared to Tranche 1, and the resulting amounts committed to be paid by the Company represent the initial proceeds received from MLS plus interest. This mitigates MLS's exposure to certain risks for non-returned and damaged devices, as well as to declines in device residual values.
During the nine-month period ended December 31, 2016 , we repaid $502 million to MLS, which reduced the principal amount of the financing obligation to $554 million as of December 31, 2016 .
Network Equipment Sale-Leaseback
In April 2016, Sprint sold and leased back certain network equipment to unrelated bankruptcy-remote special purpose entities (collectively, "Network LeaseCo"). The network equipment acquired by Network LeaseCo was used by them as collateral to raise approximately $2.2 billion in borrowings from external investors, including SoftBank. Sprint's payments to Network LeaseCo during the leaseback period are used by Network LeaseCo to service their debt.
Network LeaseCo is a variable interest entity for which Sprint is the primary beneficiary. As a result, Sprint is required to consolidate Network LeaseCo and our consolidated financial statements include Network LeaseCo's debt and the related financing cash inflows. The network assets included in the transaction, which had a net book value of approximately $3.0 billion and consisted primarily of equipment located at cell towers, remain on Sprint's consolidated financial statements and continue to be depreciated over their respective estimated useful lives. At December 31, 2016 , these network assets had a net book value of approximately $2.5 billion .
The proceeds received were reflected as cash provided by financing activities in the consolidated statements of cash flows and payments made to Network LeaseCo are reflected as principal repayments and interest expense over the respective terms. Sprint has the option to purchase the equipment at the end of the leaseback term for a nominal amount. All intercompany transactions between Network LeaseCo and Sprint are eliminated in our consolidated financial statements. Principal and interest payments on the borrowings from the external investors will be repaid in staggered, unequal payments through January 2018 with the first principal payment of approximately $300 million due in March 2017 followed by the remaining $1.9 billion of principal payments due in fiscal year 2017.
Spectrum Financing
In October 2016, Sprint transferred certain directly held and third-party leased spectrum licenses (collectively, "the Spectrum Portfolio") to wholly-owned bankruptcy-remote special purpose entities (collectively, "the Spectrum Financing SPEs"). The Spectrum Portfolio, which represents approximately 14% of Sprint's total spectrum holdings on a MHz-pops basis, was used as collateral to raise an initial $3.5 billion in senior secured notes at 3.36% from external investors under a $7.0 billion program. Sprint can utilize this financing structure to potentially raise up to an additional $3.5 billion subject to certain conditions. The notes will be repaid over a five -year term, with interest only payments over the first four quarters and amortizing quarterly principal and interest payments thereafter through September 2021.

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Sprint Communications, Inc. simultaneously entered into a long-term lease with the Spectrum Financing SPEs for the ongoing use of the Spectrum Portfolio. Sprint Communications, Inc. is required to make monthly lease payments to the Spectrum Financing SPEs, at a market rate in an amount sufficient to service the notes. As the Spectrum Financing SPEs are wholly-owned Sprint subsidiaries, these entities are consolidated and all intercompany activity has been eliminated.
As of December 31, 2016, approximately $219 million of the total principal outstanding was classified as "Current portion of long-term debt" in the consolidated balance sheets.
As a result of this transaction, our $2.5 billion unsecured financing facility was terminated.
Long-Term Debt
During the three-month period ended December 31, 2016, the Company repaid $2.0 billion aggregate principal upon maturity of its outstanding Sprint Communications, Inc. 6% senior notes and $300 million aggregate principal of its Clearwire Communications LLC 14.75% secured notes.
Credit Facilities
Bank Credit Facility
Our unsecured revolving bank credit facility that expires in February 2018 requires a ratio (Leverage Ratio) of total indebtedness to trailing four quarters earnings before interest, taxes, depreciation and amortization and other non-recurring items, as defined by the credit facility (adjusted EBITDA), not to exceed 6.25 to 1.0 through the quarter ending December 31, 2016 and 6.0 to 1.0 each fiscal quarter ending thereafter through expiration of the facility. The facility allows us to reduce our total indebtedness for purposes of calculating the Leverage Ratio by subtracting from total indebtedness the amount of any cash contributed into a segregated reserve account, provided that, after such cash contribution, our cash remaining on hand for operations exceeds $2.0 billion. Upon transfer, the cash contribution will remain restricted until and to the extent it is no longer required for the Leverage Ratio to remain in compliance.
New Secured Loan and Revolving Credit Facility
On February 3, 2017, we entered into a new credit agreement for $6.0 billion , consisting of a $4.0 billion , seven-year secured term loan that matures in February 2024 and a $2.0 billion secured revolving bank credit facility that expires in February 2021. The term loan has an interest rate equal to LIBOR plus 250 basis points and the bank facility has an interest rate equal to LIBOR plus a spread that varies depending on the Company's leverage ratio. The new credit facility replaced the $3.3 billion unsecured revolving bank credit facility described above that was due to expire in February 2018.
Export Development Canada (EDC) agreement
As of December 31, 2016, the unsecured EDC agreement provided for covenant terms similar to those of the unsecured revolving bank credit facility. However, under the terms of the EDC agreement, repayments of outstanding amounts cannot be re-drawn. As of December 31, 2016 , the total principal amount of our borrowings under the EDC facility was $550 million . On February 3, 2017, we amended the EDC agreement to provide for security and covenant terms similar to our new secured term loan and revolving bank credit facility.
Unsecured Financing Facility
During the three-month period ended June 30, 2016, Sprint Communications entered into an unsecured financing facility for $2.5 billion . In October 2016, this facility was terminated upon entering into the Spectrum Financing transaction in accordance with its terms .
Secured equipment credit facilities
Eksportkreditnamnden (EKN)
In 2013, we had fully drawn and began to repay the EKN secured equipment credit facility totaling $1.0 billion , which was used to finance certain network-related purchases from Ericsson. During the nine-month period ended December 31, 2016 , we made principal repayments totaling $127 million on the facility, resulting in a total principal amount of $127 million outstanding at December 31, 2016 .
Finnvera plc (Finnvera)
The Finnvera secured equipment credit facility provides for the ability to borrow up to $800 million to finance network-related purchases from Nokia Solutions and Networks US LLC, USA. The facility, which initially could be drawn upon as many as three consecutive tranches, now has one tranche remaining and available for borrowing through October 2017. Such borrowings are contingent upon the amount and timing of Sprint's network-related purchases. During the nine-

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month period ended December 31, 2016 , we made principal repayments totaling $28 million on the facility, resulting in a total principal amount of $168 million outstanding at December 31, 2016 .
K-sure
The K-sure secured equipment credit facility provides for the ability to borrow up to $750 million to finance network-related purchases from Samsung Telecommunications America, LLC. The facility can be divided in up to three consecutive tranches of varying size with borrowings available until May 2018, contingent upon the amount of network-related purchases made by Sprint. During the nine-month period ended December 31, 2016 , we made principal repayments totaling $65 million on the facility, resulting in a total principal amount of $258 million outstanding at December 31, 2016 .
Delcredere | Ducroire (D/D)
The D/D secured equipment credit facility provides for the ability to borrow up to $250 million to finance network equipment-related purchases from Alcatel-Lucent USA Inc. The principal balance outstanding at December 31, 2016 was $32 million .
Borrowings under the EKN, Finnvera, K-sure and D/D secured equipment credit facilities are each secured by liens on the respective equipment purchased pursuant to each facility's credit agreement. In addition, repayments of outstanding amounts borrowed under the secured equipment credit facilities cannot be redrawn. Each of these facilities is fully and unconditionally guaranteed by both Sprint Communications, Inc. and Sprint Corporation. As of February 3, 2017, the secured equipment credit facilities have certain key covenants similar to those in our new secured term loan and revolving bank credit facility.
As of December 31, 2016 , our Leverage Ratio, as defined by the revolving bank credit facility, the unsecured EDC Agreement and all other equipment credit facilities, all in accordance with the respective covenants in effect as of that date, was 3.6 to 1.0 . Because our Leverage Ratio exceeded 2.5 to 1.0 at period end, we were restricted from paying cash dividends.
Liquidity and Capital Resources
As of December 31, 2016 , our liquidity, including cash and cash equivalents, short-term investments, available borrowing capacity under our revolving bank credit facility and availability under our Receivables Facility was $9.1 billion . Our cash and cash equivalents and short-term investments totaled $6.1 billion as of December 31, 2016 compared to $2.6 billion as of March 31, 2016 . As of December 31, 2016 , we had availability of approximately $3.0 billion under the revolving bank credit facility. Amounts available under our Receivables Facility as of December 31, 2016 totaled $6 million .
In addition, we had a combined available borrowing capacity of $1.2 billion under our Finnvera, K-sure and D/D secured equipment credit facilities as of December 31, 2016 . However, utilization of these facilities is dependent upon the amount and timing of network-related purchases from the applicable suppliers, as well as the period of time remaining to complete any further borrowings available under each facility.
We offer device financing plans, including the installment billing program and our leasing program, that allow subscribers to forgo traditional service contracts and pay less upfront for devices in exchange for lower monthly service fees, early upgrade options, or both. While a majority of the revenue associated with installment sales is recognized at the time of sale along with the related cost of products, lease revenue is recorded monthly over the term of the lease and the cost of the device is depreciated to its estimated residual value generally over the lease term, which creates a positive impact to Wireless segment earnings. If the mix of leased devices continues to increase, we expect this positive impact on the financial results of Wireless segment earnings to continue and depreciation expense to increase. The installment billing and leasing programs will continue to require a greater use of operating cash flows in the earlier part of the contracts as the subscriber will generally pay less upfront than a traditional subsidy program because they are financing the device. The Receivables Facility and our relationship with MLS were established as mechanisms to mitigate the use of cash from purchasing devices from OEMs to fulfill our installment billing and leasing programs.
To meet our liquidity requirements, we look to a variety of sources. In addition to our existing cash and cash equivalents, short-term investments, and cash generated from operating activities, we raise funds as necessary from external sources. We rely on the ability to issue debt and equity securities, the ability to access other forms of financing, including debt financing, some of which may be secured by our assets, proceeds from the sale of certain accounts receivable and future lease receivables under our Receivables Facility, proceeds from future sale-leaseback transactions, such as spectrum, devices, and equipment, and the borrowing capacity available under our credit facilities to support our short- and long-term liquidity requirements. We believe our existing available liquidity and cash flows from operations will be sufficient to meet our

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funding requirements over the next twelve months, including debt service requirements and other significant future contractual obligations.
To maintain an adequate amount of available liquidity and execute our current business plan, which includes, among other things, network deployment and maintenance, subscriber growth, data usage capacity needs and the expected achievement of a cost structure intended to improve profitability and to meet our long-term debt service requirements and other significant future contractual obligations, we will need to continue to raise additional funds from external sources. Possible future financing sources include additional handset and receivables financing transactions, and raising additional funds through spectrum-backed notes. In addition, we are pursuing extended payment terms and increased facilities with certain vendors. If we are unable to obtain external funding, execute on our cost reduction initiatives, or are not successful in attracting valuable subscribers such as postpaid handset subscribers, our operations would be adversely affected, which may lead to defaults under certain of our borrowings.
Depending on the amount of any difference in actual results versus what we currently expect, it may make it difficult for us to generate sufficient earnings before interest, taxes, depreciation and amortization and other non-recurring items (adjusted EBITDA) to remain in compliance with our financial covenants or be able to meet our debt service obligations, which could result in acceleration of our indebtedness, or adversely impact our ability to raise additional funding through the sources described above, or both. If such events occur, we may engage with our lenders to obtain appropriate waivers or amendments of our credit facilities or refinance borrowings, or seek funding from other external sources, although there is no assurance we would be successful in any of these actions.
A default under certain of our borrowings could trigger defaults under certain of our other debt obligations, which in turn could result in the maturities being accelerated. Certain indentures and other agreements governing our debt obligations require compliance with various covenants, including covenants that limit the Company's ability to sell certain of its assets, limit the Company and its subsidiaries' ability to incur indebtedness and liens, and require that we maintain certain financial ratios, each as defined by the terms of the indentures, related supplemental indentures and other agreements.
In determining our expectation of future funding needs in the next twelve months and beyond, we have made several assumptions regarding:
•
projected revenues and expenses relating to our operations, including those related to our installment billing and leasing programs, along with the success of initiatives such as our expectations of achieving a more competitive cost structure through cost reduction initiatives and increasing our postpaid handset subscriber base;
•
cash needs related to our installment billing and device leasing programs;
•
availability under the Receivables Facility, which terminates in November 2018;
•
continued availability of our new secured term loan that matures in February 2024 and secured revolving bank credit facility, which expires in February 2021 for $6.0 billion less outstanding letters of credit;
•
remaining availability of approximately $1.2 billion of our secured equipment credit facilities for eligible capital expenditures, and any corresponding principal, interest, and fee payments;
•
raising additional funds from external sources;
•
the expected use of cash and cash equivalents in the near-term;
•
anticipated levels and timing of capital expenditures, including assumptions regarding lower unit costs, the capacity additions and upgrading of our networks and the deployment of new technologies in our networks, FCC license acquisitions, and purchases of leased devices from our indirect dealers;
•
any additional contributions we may make to our pension plan;
•
any scheduled principal payments on debt, secured equipment credit facilities and EDC, including approximately $21.8 billion coming due over the next five years;
•
estimated residual values of devices related to our device lease program; and
•
other future contractual obligations and general corporate expenditures.
Our ability to fund our needs from external sources is ultimately affected by the overall capacity of, and financing terms available in the banking and securities markets, and the availability of other financing alternatives, as well as our performance and our credit ratings. Given our recent financial performance, as well as the volatility in these markets, we continue to monitor them closely and to take steps to maintain financial flexibility at a reasonable cost of capital.
The outlooks and credit ratings from Moody's Investor Service, Standard & Poor's Ratings Services, and Fitch Ratings for certain of Sprint Corporation's outstanding obligations were:

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Rating  
Rating Agency
 
Issuer Rating
 
Unsecured  Notes
 
Guaranteed Notes
 
Bank Credit Facility
 
Outlook
Moody's
 
B2
 
B3
 
B1
 
Ba3
 
Stable
Standard and Poor's
 
B
 
B
 
B+
 
B+
 
Stable
Fitch
 
B+
 
B+
 
BB
 
BB
 
Stable



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FUTURE CONTRACTUAL OBLIGATIONS
There have been no significant changes to our future contractual obligations as disclosed in our Annual Report on Form 10-K for the year ended March 31, 2016. Below is a graph depicting our future principal maturities of debt as of December 31, 2016 . DEBTMATURITIES013017A03.JPG * This table excludes (i) our unsecured revolving bank credit facility, which will expire in 2018 and has no outstanding balance, (ii) $274 million in letters of credit outstanding under the unsecured revolving bank credit facility, (iii) $480 million of capital lease and other obligations, and (iv) net premiums and debt financing costs.

OFF-BALANCE SHEET FINANCING
Sprint has a Receivables Facility providing for the sale of eligible wireless service, installment and certain future lease receivables, with a maximum funding limit of $4.3 billion and an expiration date of November 2018. In connection with the Receivables Facility, Sprint formed certain wholly-owned consolidated bankruptcy-remote SPEs. At Sprint's direction, the SPEs sell wireless service and installment receivables to unaffiliated third parties or to a bank agent. Sales of eligible receivables generally occur daily and are settled on a monthly basis. Sprint pays a fee for the drawn and undrawn portions of the Receivables Facility. The net amount drawn for wireless service and installment receivables was $1.8 billion as of December 31, 2016 .
On February 3, 2017, the Company executed certain amendments to the Receivables Facility and obtained the right to repurchase, under certain conditions, the financial assets transferred to the conduits. As a result of adding the repurchase feature, Sprint gained effective control over the financial assets. Accordingly, all sales of wireless service and installment receivables to the conduits will be reflected as financings. All cash inflows and outflows under the Receivables Facility will be reported as financing activities on the consolidated statements of cash flows prospectively.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Sprint applies those accounting policies that management believes best reflect the underlying business and economic events, consistent with U.S. GAAP. Inherent in such policies are certain key assumptions and estimates made by management. Management regularly updates its estimates used in the preparation of the consolidated financial statements based on its latest assessment of the current and projected business and general economic environment. Additional information regarding the Company's Critical Accounting Policies and Estimates is included in Item 7. of the Company's Annual Report on Form 10-K for the year ended March 31, 2016 .


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FINANCIAL STRATEGIES
General Risk Management Policies
Our board of directors has adopted a financial risk management policy that authorizes us to enter into derivative transactions, and all transactions comply with the policy. We do not purchase or hold any derivative financial instruments for speculative purposes with the exception of equity rights obtained in connection with commercial agreements or strategic investments, usually in the form of warrants to purchase common shares.
Derivative instruments are primarily used for hedging and risk management purposes. Hedging activities may be done for various purposes, including, but not limited to, mitigating the risks associated with an asset, liability, committed transaction or probable forecasted transaction. We seek to minimize counterparty credit risk through credit approval and review processes, credit support agreements, continual review and monitoring of all counterparties, and thorough legal review of contracts. Exposure to market risk is controlled by regularly monitoring changes in hedge positions under normal and stress conditions to ensure they do not exceed established limits.

OTHER INFORMATION
We routinely post important information on our website at www.sprint.com/investors . Information contained on or accessible through our website is not part of this report.

FORWARD-LOOKING STATEMENTS
We include certain estimates, projections and other forward-looking statements in our annual, quarterly and current reports, and in other publicly available material. Statements regarding expectations, including performance assumptions and estimates relating to capital requirements, as well as other statements that are not historical facts, are forward-looking statements.
These statements reflect management's judgments based on currently available information and involve a number of risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. With respect to these forward-looking statements, management has made assumptions regarding, among other things, subscriber and network usage, subscriber growth and retention, technologies, products and services, pricing, operating costs, the timing of various events, and the economic and regulatory environment.
Future performance cannot be assured. Actual results may differ materially from those in the forward-looking statements. Some factors that could cause actual results to differ include:
•
our ability to obtain additional financing, including monetizing certain of our assets, including under our existing or future programs to monetize a portion of our network or spectrum holdings, or to modify the terms of our existing financing, on terms acceptable to us, or at all;
•
our ability to continue to receive the expected benefits of our existing financings such as receivable and handset financings, including any future tranches;
•
our ability to retain and attract subscribers and to manage credit risks associated with our subscribers;
•
the ability of our competitors to offer products and services at lower prices due to lower cost structures or otherwise;
•
the effective implementation of our plans to improve the quality of our network, including timing, execution, technologies, costs, and performance of our network;
•
failure to improve subscriber churn, bad debt expense, accelerated cash use, costs and write-offs, including with respect to changes in expected residual values related to any of our service plans, including installment billing and leasing programs;
•
the ability to generate sufficient cash flow to fully implement our plans to improve and enhance the quality of our network and service plans, improve our operating margins, implement our business strategies, and provide competitive new technologies;
•
the effects of vigorous competition on a highly penetrated market, including the impact of competition on the prices we are able to charge subscribers for services and devices we provide and on the geographic areas served by our network;
•
the impact of installment billing and leasing handsets; the impact of increased purchase commitments; the overall demand for our service plans, including the impact of decisions of new or existing subscribers

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between our service offerings; and the impact of new, emerging and competing technologies on our business;
•
our ability to provide the desired mix of integrated services to our subscribers;
•
our ability to continue to access our spectrum and acquire additional spectrum capacity;
•
changes in available technology and the effects of such changes, including product substitutions and deployment costs and performance;
•
volatility in the trading price of our common stock, current economic conditions and our ability to access capital, including debt or equity;
•
the impact of various parties not meeting our business requirements, including a significant adverse change in the ability or willingness of such parties to provide service and products, including distribution, or infrastructure equipment for our network;
•
the costs and business risks associated with providing new services and entering new geographic markets;
•
the effects of any future merger or acquisition involving us, as well as the effect of mergers, acquisitions and consolidations, and new entrants in the communications industry, and unexpected announcements or developments from others in our industry;
•
our ability to comply with restrictions imposed by the U.S. Government as a condition to our merger with SoftBank;
•
the effects of any material impairment of our goodwill or other indefinite-lived intangible assets;
•
the impacts of new accounting standards or changes to existing standards that the Financial Accounting Standards Board or other regulatory agencies issue, including the Securities and Exchange Commission (SEC);
•
unexpected results of litigation filed against us or our suppliers or vendors;
•
the costs or potential customer impact of compliance with regulatory mandates including, but not limited to, compliance with the FCC's Report and Order to reconfigure the 800 MHz band and government regulation regarding "net neutrality";
•
equipment failure, natural disasters, terrorist acts or breaches of network or information technology security;
•
one or more of the markets in which we compete being impacted by changes in political, economic or other factors such as monetary policy, legal and regulatory changes, or other external factors over which we have no control;
•
the impact of being a "controlled company" exempt from many corporate governance requirements of the NYSE; and
•
other risks referenced from time to time in this report and other filings of ours with the SEC, including Part I, Item 1A. "Risk Factors" of our Annual Report on Form 10-K for the year ended March 31, 2016 .
The words "may," "could," "should," "estimate," "project," "forecast," "intend," "expect," "anticipate," "believe," "target," "plan" and similar expressions are intended to identify forward-looking statements. Forward-looking statements are found throughout this Management's Discussion and Analysis of Financial Condition and Results of Operations, and elsewhere in this report. Readers are cautioned that other factors, although not listed above, could also materially affect our future performance and operating results. The reader should not place undue reliance on forward-looking statements, which speak only as of the date of this report. We are not obligated to publicly release any revisions to forward-looking statements to reflect events after the date of this report, including unforeseen events.


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Item 3.
Quantitative and Qualitative Disclosures About Market Risk
We are primarily exposed to the market risk associated with unfavorable movements in interest rates, foreign currencies, and equity prices. The risk inherent in our market risk sensitive instruments and positions is the potential loss arising from adverse changes in those factors. There have been no material changes to our market risk policies or our market risk sensitive instruments and positions as described in our Annual Report on Form 10-K for the year ended March 31, 2016 .

Item 4.
Controls and Procedures
Disclosure controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports under the Securities Exchange Act of 1934, such as this Quarterly Report on Form 10-Q, is reported in accordance with the SEC's rules. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
In connection with the preparation of this Quarterly Report on Form 10-Q as of December 31, 2016 , under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the design and operation of the disclosure controls and procedures were effective as of December 31, 2016 in providing reasonable assurance that information required to be disclosed in reports we file or submit under the Securities Exchange Act of 1934 is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure and in providing reasonable assurance that the information is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms.
Internal controls over our financial reporting continue to be updated as necessary to accommodate modifications to our business processes and accounting procedures. There have been no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


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PART II — OTHER INFORMATION
Item 1.
Legal Proceedings
In March 2009, a stockholder brought suit, Bennett v. Sprint Nextel Corp. , in the U.S. District Court for the District of Kansas, alleging that Sprint Communications and three of its former officers violated Section 10(b) of the Exchange Act and Rule 10b-5 by failing adequately to disclose certain alleged operational difficulties subsequent to the Sprint-Nextel merger, and by purportedly issuing false and misleading statements regarding the write-down of goodwill. The district court granted final approval of a settlement in August 2015, which did not have a material impact to our financial statements. Five stockholder derivative suits related to this 2009 stockholder suit were filed against Sprint Communications and certain of its present and/or former officers and directors. The first, Murphy v. Forsee , was filed in state court in Kansas on April 8, 2009, was removed to federal court, and was stayed by the court pending resolution of the motion to dismiss the Bennett case; the second, Randolph v. Forsee , was filed on July 15, 2010 in state court in Kansas, was removed to federal court, and was remanded back to state court; the third, Ross-Williams v. Bennett, et al. , was filed in state court in Kansas on February 1, 2011; the fourth, Price v. Forsee, et al., was filed in state court in Kansas on April 15, 2011; and the fifth, Hartleib v. Forsee, et al ., was filed in federal court in Kansas on July 14, 2011. These cases were essentially stayed while the Bennett case was pending, and we have reached an agreement in principle to settle the matters, by agreeing to some governance provisions and by paying plaintiffs' attorneys fees in an immaterial amount. The court approved the settlement but reduced the amount of the plaintiffs' attorneys fees; the attorneys fees issue is on appeal.
Sprint Communications, Inc. is also a defendant in a complaint filed by stockholders of Clearwire Corporation asserting claims for breach of fiduciary duty by Sprint Communications, and related claims and otherwise challenging the Clearwire Acquisition.  ACP Master, LTD, et al. v. Sprint Nextel Corp., et al. , was filed April 26, 2013, in Chancery Court in Delaware. Plaintiffs in the ACP Master, LTD suit have also filed suit requesting an appraisal of the fair value of their Clearwire stock. Trial of those cases took place in October and November, 2016, and the parties are in the process of submitting their post-trial briefing. We do not expect the resolution of these matters to have a material adverse effect on our financial position or results of operations.
Various other suits, inquiries, proceedings and claims, either asserted or unasserted, including purported class actions typical for a large business enterprise and intellectual property matters, are possible or pending against us. If our interpretation of certain laws or regulations, including those related to various federal or state matters such as sales, use or property taxes, or other charges were found to be mistaken, it could result in payments by us. While it is not possible to determine the ultimate disposition of each of these proceedings and whether they will be resolved consistent with our beliefs, we expect that the outcome of such proceedings, individually or in the aggregate, will not have a material adverse effect on our financial position or results of operations. During the quarter ended December 31, 2016 , there were no material developments in the status of these legal proceedings.

Item 1A.
Risk Factors
There have been no material changes to our risk factors as described in our Annual Report on Form 10-K for the year ended March 31, 2016 .

Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
None

Item 3.
Defaults Upon Senior Securities
None

Item 4.
Mine Safety Disclosures
None


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Item 5.
Other Information
Disclosure of Iranian Activities under Section 13(r) of the Securities Exchange Act of 1934
Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012 added Section 13(r) to the Securities Exchange Act of 1934. Section 13(r) requires an issuer to disclose in its annual or quarterly reports, as applicable, whether it or any of its affiliates knowingly engaged in certain activities, including, among other matters, transactions or dealings relating to the government of Iran. Disclosure is required even where the activities, transactions or dealings are conducted outside the U.S. by non-U.S. affiliates in compliance with applicable law, and whether or not the activities are sanctionable under U.S. law.
After the merger with SoftBank, SoftBank acquired control of Sprint. During the three-month period ended December 31, 2016 , SoftBank, through one of its non-U.S. subsidiaries, provided roaming services in Iran through Telecommunications Services Company (MTN Irancell), which is or may be a government-controlled entity. During such period, SoftBank had no gross revenues from such services and no net profit was generated. This subsidiary also provided telecommunications services in the ordinary course of business to accounts affiliated with the Embassy of Iran in Japan. During the three-month period ended December 31, 2016 , SoftBank estimates that gross revenues and net profit generated by such services were both under $500. Sprint was not involved in, and did not receive any revenue from, any of these activities. These activities have been conducted in accordance with applicable laws and regulations, and they are not sanctionable under U.S. or Japanese law. Accordingly, with respect to Telecommunications Services Company (MTN Irancell), the relevant SoftBank subsidiary intends to continue such activities. With respect to services provided to accounts affiliated with the Embassy of Iran in Japan, the relevant SoftBank subsidiary is obligated under contract to continue such services.
In addition, during the three-month period ended December 31, 2016, SoftBank, through one of its non-U.S. indirect subsidiaries, provided office supplies to the Embassy of Iran in Japan. SoftBank estimates that gross revenue and net profit generated by such services were under $1,700 and $350, respectively. Sprint was not involved in, and did not receive any revenue from any of these activities. Accordingly, the relevant SoftBank subsidiary intends to continue such activities.

Item 6.
Exhibits
The Exhibit Index attached to this Quarterly Report on Form 10-Q is hereby incorporated by reference.




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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
SPRINT CORPORATION
(Registrant)
 
 
By:
/s/    P AUL  W. S CHIEBER, J R.
 
 
Paul W. Schieber, Jr.
Vice President and Controller
(Principal Accounting Officer)
Date: February 6, 2017


 



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Exhibit Index
Exhibit No.
 
Exhibit Description
 
Form
 
Incorporated by Reference
 
Filed/Furnished
Herewith
 
SEC
File No.
 
Exhibit
 
Filing Date
 
 
 
 
 
 
 
 
 
 
 
 
(3) Articles of Incorporation and Bylaws
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.1
 
Amended and Restated Certificate of Incorporation
 
8-K
 
001-04721
 
3.1

 
7/11/2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.2
 
Amended and Restated Bylaws
 
8-K
 
001-04721
 
3.2

 
8/7/2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(4) Instruments Defining the Rights of Security Holders, including Indentures
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4.1
 
Indenture, dated as of October 27, 2016, by and among Sprint Spectrum Co LLC, Sprint Spectrum Co II LLC, Sprint Spectrum Co III LLC and Deutsche Bank Trust Company Americas, as trustee and securities intermediary
 
8-K
 
001-04721
 
4.1

 
11/2/2016
 
 
4.2
 
Series 2016-1 Supplement, dated as of October 27, 2016, among Sprint Spectrum Co LLC, Sprint Spectrum Co II LLC, Sprint Spectrum Co III LLC and Deutsche Bank Trust Company Americas, as trustee and securities intermediary
 
8-K
 
001-04721
 
4.2

 
11/2/2016
 
 
4.3
 
Form of the Series 2016-1 3.360% Senior Secured Notes, Class A-1 (included in Exhibit 4.2)
 
8-K
 
001-04721
 
4.3

 
11/2/2016
 
 
4.4
 
Tenth Supplemental Indenture, dated as of August 9, 2016, by and among Virgin Mobile USA - Evolution, Inc., as new guarantor, Sprint Communications, Inc., The Bank of New York Mellon Trust Company, N.A., as trustee
 
 
 
 
 
 
 
 
 
*
4.5
 
Eleventh Supplemental Indenture, dated as of November 16, 2016, by and among Sprint Communications, Inc., The Bank of New York Mellon Trust Company, N.A., as trustee and certain subsidiaries of Sprint Corporation as new guarantors
 
 
 
 
 
 
 
 
 
*
 
 
 
 
 
 
 
 
 
 
 
 
 
(10) Material Contracts
 
 
 
 
 
 
 
 
 
 
 
 
 
10.1
 
Sprint Corporation Amended and Restated 2015 Omnibus Incentive Plan
 
 
 
 
 
 
 
 
 
*
10.2
 
Employment Agreement, dated May 31, 2015, by and between Sprint Corporation and Kevin Crull
 
10-Q
 
001-04721
 
10.3

 
8/7/2015
 
 
10.3
 
Retention Award Letter for Roger Sole effective as of January 18, 2017
 
 
 
 
 
 
 
 
 
*
10.4
 
Guarantee and Collateral Agreement, dated October 27, 2016, among Deutsche Bank Trust Company Americas, Sprint Spectrum PledgeCo LLC, Sprint Spectrum PledgeCo II LLC, Sprint Spectrum PledgeCo III LLC, Sprint Spectrum License Holder LLC, Sprint Spectrum License Holder II LLC and Sprint Spectrum License Holder III LLC.
 
8-K
 
001-04721
 
10.1

 
11/2/2016
 
 
10.5
 
Intra-Company Spectrum Lease Agreement, dated as of October 27, 2016, among Sprint Spectrum License Holder LLC, Sprint Spectrum License Holder II LLC and Sprint Spectrum License Holder III LLC, Sprint Communications, Inc., Sprint Intermediate Holdco LLC, Sprint Intermediate Holdco II LLC, Sprint Intermediate Holdco III LLC and the guarantors named therein
 
8-K
 
001-04721
 
10.2

 
11/2/2016
 
 

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Exhibit No.
 
Exhibit Description
 
Form
 
Incorporated by Reference
 
Filed/Furnished
Herewith
 
SEC
File No.
 
Exhibit
 
Filing Date
 
 
 
 
 
 
 
 
 
 
 
 
10.6
 
First Amendment to Second Amended and Restated Receivables Purchase Agreement, dated as of November 18, 2016, by and among Sprint Spectrum L.P., as initial servicer, the Sellers party thereto, the various Conduit Purchasers, Committed Purchasers and Purchaser Agents party thereto, Mizuho Bank, Ltd., as Collateral Agent, The Bank of Tokyo-Mitsubishi UFJ, Ltd., as SCC Administrative Agent, and SMBC Nikko Securities America, Inc. as Lease Administrative Agent
 
 
 
 
 
 
 
 
 
*
10.7
 
Amended and Restated First Step Transfer Agreement (Tranche 2), dated as of December 8, 2016, by and among Sprint Spectrum L.P., the Originators from time to time party thereto, and the Lessees from time to time party thereto
 
 
 
 
 
 
 
 
 
*
10.8
 
Amended and Restated Second Step Transfer Agreement (Tranche 2), dated as of December 8, 2016, by and among Mobile Leasing Solutions, LLC acting for itself and on behalf of Series 2 thereof and the Lessees from time to time party thereto
 
 
 
 
 
 
 
 
 
*
10.9
 
Amended and Restated Master Lease Agreement (Tranche 2), dated as of December 8, 2016, by and among Sprint Spectrum L.P., the Lessees from time to time party thereto, Mizuho Bank, Ltd., and Mobile Leasing Solutions, LLC acting for itself and on behalf of Series 2 thereof
 
 
 
 
 
 
 
 
 
*
 
 
 
 
 
 
 
 
 
 
 
 
 
(12) Statement re Computation of Ratios
 
 
 
 
 
 
 
 
 
 
 
 
 
12
 
Computation of Ratio of Earnings to Fixed Charges
 
 
 
 
 
 
 
 
 
*
 
 
 
 
 
 
 
 
 
 
 
 
 
(31) and (32) Officer Certifications
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
31.1
 
Certification of Chief Executive Officer Pursuant to Securities Exchange Act of 1934 Rule 13a-14(a)
 
 
 
 
 
 
 
 
 
*
 
 
 
 
 
 
 
 
 
 
 
 
 
31.2
 
Certification of Chief Financial Officer Pursuant to Securities Exchange Act of 1934 Rule 13a-14(a)
 
 
 
 
 
 
 
 
 
*
 
 
 
 
 
 
 
 
 
 
 
 
 
32.1
 
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes Oxley Act of 2002
 
 
 
 
 
 
 
 
 
*
 
 
 
 
 
 
 
 
 
 
 
 
 
32.2
 
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes Oxley Act of 2002
 
 
 
 
 
 
 
 
 
*
 
 
 
 
 
 
 
 
 
 
 
 
 
(101) Formatted in XBRL (Extensible Business Reporting Language)
 
 
 
 
 
 
 
 
 
 
 
 
 
101.INS
 
XBRL Instance Document
 
 
 
 
 
 
 
 
 
*
 
 
 
 
 
 
 
 
 
 
 
 
 
101.SCH
 
XBRL Taxonomy Extension Schema Document
 
 
 
 
 
 
 
 
 
*
 
 
 
 
 
 
 
 
 
 
 
 
 
101.CAL
 
XBRL Taxonomy Extension Calculation Linkbase Document
 
 
 
 
 
 
 
 
 
*
 
 
 
 
 
 
 
 
 
 
 
 
 
101.DEF
 
XBRL Taxonomy Extension Definition Linkbase Document
 
 
 
 
 
 
 
 
 
*
 
 
 
 
 
 
 
 
 
 
 
 
 
101.LAB
 
XBRL Taxonomy Extension Label Linkbase Document
 
 
 
 
 
 
 
 
 
*
 
 
 
 
 
 
 
 
 
 
 
 
 
101.PRE
 
XBRL Taxonomy Extension Presentation Linkbase Document
 
 
 
 
 
 
 
 
 
*
_________________
*
Filed or furnished, as required.

67


Exhibit 4.4



TENTH SUPPLEMENTAL INDENTURE
Tenth Supplemental Indenture (this “ Supplemental Indenture ”), dated as of August 9, 2016, by and among Virgin Mobile USA - Evolution, Inc. (the “ New Guarantor ”), Sprint Communications, Inc. (formerly known as Sprint Nextel Corporation), a Kansas corporation (the “ Company ”), and The Bank of New York Mellon Trust Company, N.A. (as successor to The Bank of New York Trust Company, N.A.), as trustee (the “ Trustee ”).
W I T N E S S E T H
WHEREAS, the Company heretofore executed and delivered to the Trustee an indenture, dated as of November 20, 2006, between the Company and the Trustee (the “ Base Indenture ” and as amended, supplemented or otherwise modified as of the date hereof, the “ Indenture ”);
WHEREAS, the Company heretofore executed and delivered to the Trustee a Second Supplemental Indenture, dated as of November 9, 2011, among the Company, the subsidiary guarantors named therein and the Trustee, providing for the issuance of $3,000,000,000 aggregate principal amount of the Company’s 9.000% Guaranteed Notes due 2018 (the “ 2018 Notes ”) and a Fourth Supplemental Indenture, dated as of March 1, 2012, among the Company, the subsidiary guarantors named therein and the Trustee, providing for the issuance of $1,000,000,000 aggregate principal amount of the Company’s 7.000% Guaranteed Notes due 2020 (the “ 2020 Notes ” and, together with the 2018 Notes, the “ Guaranteed Notes ”);
WHEREAS, the parties wish to provide that the New Guarantor will provide an irrevocable and unconditional guarantee in respect of each series of Guaranteed Notes;
WHEREAS, the guarantees of the New Guarantor constitute a benefit to the New Guarantor and will be in furtherance of the corporate purposes of the New Guarantor or necessary or convenient to the conduct, promotion or attainment of the business of the New Guarantor and, accordingly, in consideration therefore, the New Guarantor is willing to guarantee the Guaranteed Notes on the terms set forth herein;
WHEREAS, all acts and requirements necessary to make this Supplemental Indenture the valid and binding obligation of the Company and the New Guarantor have been done; and
WHEREAS, pursuant to Section 901(14) of the Base Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture without the consent of the Holders of the Guaranteed Notes to add a guarantee to each series of the Guaranteed Notes.
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the New Guarantor, the Company and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Guaranteed Notes as follows:
1. CAPITALIZED TERMS. Capitalized terms used herein without definition shall have the meanings assigned to them in the Base Indenture.





2. AGREEMENT TO GUARANTEE. The New Guarantor hereby agrees to jointly and severally irrevocably and unconditionally guarantee, on a senior unsecured basis, the full and punctual payment when due, whether at maturity, by acceleration or otherwise, all payment obligations of the Company under the Guaranteed Notes for the payment of principal of, premium, if any, and interest on the Guaranteed Notes, and all other amounts payable by the Company to the Trustee and the Holders of the Guaranteed Notes under the Guaranteed Notes, the Indenture and this Supplemental Indenture (each a “ Guarantee ” and, together, the “ Guarantees ”). Each Guarantee is limited to the maximum amount that can be guaranteed by law or without resulting in the Guarantee being voidable or unenforceable under applicable laws relating to fraudulent transfer, or under similar laws affecting the rights of creditors generally. The Guarantees shall be automatically and unconditionally released (and thereupon shall terminate and be discharged and be of no further force and effect) upon the Company exercising its legal defeasance or covenant defeasance option pursuant to Article XIII of the Base Indenture or the satisfaction and discharge of the obligations of the Company with respect to the Guaranteed Notes pursuant to Article IV of the Base Indenture, each in compliance with the terms of the Indenture. For the avoidance of doubt, (other than as expressly provided in the Indenture) nothing in this Supplemental Indenture shall prevent the New Guarantor from merging with and into the Company, or the Company from merging with and into the New Guarantor, and in such event the Guarantees shall terminate and the surviving entity shall remain the primary obligor under the Guaranteed Notes, the Indenture and this Supplemental Indenture. The New Guarantor shall be subrogated to all rights of the Holders of the Guaranteed Notes against the Company in respect of any amounts paid by the New Guarantor pursuant to the Guarantees; provided, however, that the New Guarantor shall not be entitled to enforce or to receive any payments arising out of, or based upon, such right of subrogation until the principal of, premium, if any, and interest on all Guaranteed Notes shall have been paid in full or payment thereof shall have been provided for in accordance with the provisions of the Indenture.

3. EFFECT OF SUPPLEMENTAL INDENTURE; CONFLICTS WITH INDENTURE. This Supplemental Indenture is executed by the New Guarantor, the Company and the Trustee upon the Company’s request, pursuant to the provisions of the Indenture, and the terms and conditions hereof shall be deemed to be part of the Indenture for all purposes. The Indenture, as supplemented and amended by this Supplemental Indenture, is in all respects hereby adopted, ratified and confirmed. Notwithstanding the foregoing, to the extent that any of the terms of this Supplemental Indenture are inconsistent with, or conflict with, the terms of the Indenture, the terms of this Supplemental Indenture shall govern.

4. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS OF THE NEW GUARANTOR. No director, officer, employee, incorporator or stockholder of the New Guarantor, as such, shall have any liability for any obligations of the Company, the New Guarantor or any guarantor under any series of Guaranteed Notes, any guarantees under any series of Guaranteed Notes, the Indenture or this Supplemental Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of the Guaranteed Notes by accepting a Guaranteed Note waives and releases all such liability.

5. GOVERNING LAW. THE INTERNAL LAW OF THE STATE OF NEW YORK WILL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL




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INDENTURE WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

6. COUNTERPARTS. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement.

7. EFFECT OF HEADINGS. The headings of the Sections of this Supplemental Indenture have been inserted for convenience of reference only, are not to be considered a part of this Supplemental Indenture and will in no way modify or restrict any of the terms or provisions hereof.

8. THE TRUSTEE. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the New Guarantor and the Company.

[ Signatures on following page ]
































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IN WITNESS WHEREOF, the parties hereto have caused this Tenth Supplemental Indenture to be duly executed, all as of the date first above written.

SPRINT COMMUNICATIONS, INC.
    

By: /s/ Janet M. Duncan     
Name:      Janet M. Duncan
Title:      Vice President and Treasurer

VIRGIN MOBILE USA - EVOLUTION, INC.
    

By: /s/ Janet M. Duncan     
Name: Janet M. Duncan
Title:      Vice President and Treasurer



THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,
As Trustee
    

By: /s/ Valerie Boyd     
Authorized Signatory








Exhibit 4.5

ELEVENTH SUPPLEMENTAL INDENTURE
Eleventh Supplemental Indenture (this “ Supplemental Indenture ”), dated as of November 16, 2016, by and among the subsidiary guarantors appearing on the signature pages hereto (each a “ New Guarantor ” and, collectively, the “ New Guarantors ”), Sprint Communications, Inc. (formerly known as Sprint Nextel Corporation), a Kansas corporation (the “ Company ”), and The Bank of New York Mellon Trust Company, N.A. (f/k/aThe Bank of New York Trust Company, N.A.), as trustee (the “ Trustee ”).
W I T N E S S E T H
WHEREAS, the Company heretofore executed and delivered to the Trustee an indenture, dated as of November 20, 2006, between the Company and the Trustee (the “ Base Indenture ” and as amended, supplemented or otherwise modified as of the date hereof, the “ Indenture ”);
WHEREAS, the Company heretofore executed and delivered to the Trustee a Second Supplemental Indenture, dated as of November 9, 2011, among the Company, the subsidiary guarantors named therein and the Trustee, providing for the issuance of $3,000,000,000 aggregate principal amount of the Company’s 9.000% Guaranteed Notes due 2018 (the “ 2018 Notes ”) and a Fourth Supplemental Indenture, dated as of March 1, 2012, among the Company, the subsidiary guarantors named therein and the Trustee, providing for the issuance of $1,000,000,000 aggregate principal amount of the Company’s 7.000% Guaranteed Notes due 2020 (the “ 2020 Notes ” and, together with the 2018 Notes, the “ Guaranteed Notes ”);
WHEREAS, the parties wish to provide that the New Guarantors will provide an irrevocable and unconditional guarantee in respect of each series of Guaranteed Notes;
WHEREAS, the guarantees of the New Guarantors constitute a benefit to the New Guarantors and will be in furtherance of the corporate purposes of the New Guarantors or necessary or convenient to the conduct, promotion or attainment of the business of the New Guarantors and, accordingly, in consideration therefore, the New Guarantors are willing to guarantee the Guaranteed Notes on the terms set forth herein;
WHEREAS, all acts and requirements necessary to make this Supplemental Indenture the valid and binding obligation of the Company and the New Guarantors have been done; and
WHEREAS, pursuant to Section 901(14) of the Base Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture without the consent of the Holders of the Guaranteed Notes to add a guarantee to each series of the Guaranteed Notes.
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the New Guarantors, the Company and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Guaranteed Notes as follows:
1. CAPITALIZED TERMS. Capitalized terms used herein without definition shall have the meanings assigned to them in the Base Indenture.





2. AGREEMENT TO GUARANTEE. Each New Guarantor hereby agrees to jointly and severally irrevocably and unconditionally guarantee, on a senior unsecured basis, the full and punctual payment when due, whether at maturity, by acceleration or otherwise, all payment obligations of the Company under the Guaranteed Notes for the payment of principal of, premium, if any, and interest on the Guaranteed Notes, and all other amounts payable by the Company to the Trustee and the Holders of the Guaranteed Notes under the Guaranteed Notes, the Indenture and this Supplemental Indenture (each a “ Guarantee ” and, together, the “ Guarantees ”). Each Guarantee is limited to the maximum amount that can be guaranteed by law or without resulting in the Guarantee being voidable or unenforceable under applicable laws relating to fraudulent transfer, or under similar laws affecting the rights of creditors generally. The Guarantees shall be automatically and unconditionally released (and thereupon shall terminate and be discharged and be of no further force and effect) upon the Company exercising its legal defeasance or covenant defeasance option pursuant to Article XIII of the Base Indenture or the satisfaction and discharge of the obligations of the Company with respect to the Guaranteed Notes pursuant to Article IV of the Base Indenture, each in compliance with the terms of the Indenture. For the avoidance of doubt, (other than as expressly provided in the Indenture) nothing in this Supplemental Indenture shall prevent the New Guarantors from merging with and into the Company, or the Company from merging with and into the New Guarantors, and in such event the Guarantees shall terminate and the surviving entity shall remain the primary obligor under the Guaranteed Notes, the Indenture and this Supplemental Indenture. The New Guarantors shall be subrogated to all rights of the Holders of the Guaranteed Notes against the Company in respect of any amounts paid by the New Guarantors pursuant to the Guarantees; provided, however, that the New Guarantors shall not be entitled to enforce or to receive any payments arising out of, or based upon, such right of subrogation until the principal of, premium, if any, and interest on all Guaranteed Notes shall have been paid in full or payment thereof shall have been provided for in accordance with the provisions of the Indenture.

3. EFFECT OF SUPPLEMENTAL INDENTURE; CONFLICTS WITH INDENTURE. This Supplemental Indenture is executed by the New Guarantors, the Company and the Trustee upon the Company’s request, pursuant to the provisions of the Indenture, and the terms and conditions hereof shall be deemed to be part of the Indenture for all purposes. The Indenture, as supplemented and amended by this Supplemental Indenture, is in all respects hereby adopted, ratified and confirmed. Notwithstanding the foregoing, to the extent that any of the terms of this Supplemental Indenture are inconsistent with, or conflict with, the terms of the Indenture, the terms of this Supplemental Indenture shall govern.

4. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS OF THE NEW GUARANTORS. No director, officer, employee, incorporator or stockholder of any of the New Guarantors, as such, shall have any liability for any obligations of the Company, the New Guarantors or any guarantor under any series of Guaranteed Notes, any guarantees under any series of Guaranteed Notes, the Indenture or this Supplemental Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of the Guaranteed Notes by accepting a Guaranteed Note waives and releases all such liability.







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5. GOVERNING LAW. THE INTERNAL LAW OF THE STATE OF NEW YORK WILL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

6. COUNTERPARTS. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement.

7. EFFECT OF HEADINGS. The headings of the Sections of this Supplemental Indenture have been inserted for convenience of reference only, are not to be considered a part of this Supplemental Indenture and will in no way modify or restrict any of the terms or provisions hereof.

8. THE TRUSTEE. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the New Guarantors and the Company.

[ Signatures on following page ]





























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IN WITNESS WHEREOF, the parties hereto have caused this Eleventh Supplemental Indenture to be duly executed, all as of the date first above written.

SPRINT COMMUNICATIONS, INC.
    

By: /s/ Janet M. Duncan
Name:      Janet M. Duncan
Title:      Vice President and Treasurer

Alda Wireless Holdings, LLC
American Telecasting Development, LLC
American Telecasting of Anchorage, LLC
American Telecasting of Bend, LLC
American Telecasting of Columbus, LLC
American Telecasting of Denver, LLC
American Telecasting of Fort Myers, LLC
American Telecasting of Ft. Collins, LLC
American Telecasting of Green Bay, LLC
American Telecasting of Lansing, LLC
American Telecasting of Lincoln, LLC
American Telecasting of Little Rock, LLC
American Telecasting of Louisville, LLC
American Telecasting of Medford, LLC
American Telecasting of Michiana, LLC
American Telecasting of Monterey, LLC
American Telecasting of Redding, LLC
American Telecasting of Santa Barbara, LLC
American Telecasting of Seattle, LLC
American Telecasting of Sheridan, LLC
American Telecasting of Yuba City, LLC
ATI of Santa Rosa, LLC
ATI Sub, LLC
ATL MDS, LLC
Bay Area Cablevision, LLC
Broadcast Cable, LLC
Clear Global Services LLC
Clear Management Services LLC
Clear Partner Holdings LLC
Clear Wireless LLC
Clearwire Communications LLC
Clearwire Corporation
Clearwire Finance, Inc.
Clearwire Hawaii Partners Spectrum, LLC
Clearwire IP Holdings LLC
Clearwire Legacy LLC





Clearwire Spectrum Holdings II LLC
Clearwire Spectrum Holdings III LLC
Clearwire Spectrum Holdings LLC
Clearwire Telecommunications Services, LLC
Clearwire XOHM LLC
Fixed Wireless Holdings, LLC
Fresno MMDS Associates, LLC
Kennewick Licensing, LLC
NSAC, LLC
PCTV Gold II, LLC
PCTV of Salt Lake City, LLC
PCTV Sub, LLC
People’s Choice TV of Albuquerque, LLC
People’s Choice TV of Houston, LLC
People’s Choice TV of St. Louis, LLC
SCC X, LLC
SpeedChoice of Detroit, LLC
SpeedChoice of Phoenix, LLC
Sprint (Bay Area), LLC
TDI Acquisition Sub, LLC
Transworld Telecom II, LLC
Wavepath Sub, LLC
WBS of America, LLC
WBS of Sacramento, LLC
WBSFP Licensing, LLC
WBSY Licensing, LLC
WCOF, LLC
Wireless Broadband Services of America, L.L.C.



By: /s/ Janet M. Duncan     
Name:      Janet M. Duncan
Title:      Vice President and Treasurer



THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,
As Trustee
    

By: /s/ Lawrence M. Kusch         
Authorized Signatory






Exhibit 10.1
SPRINT CORPORATION
AMENDED AND RESTATED 2015 OMNIBUS INCENTIVE PLAN
(AMENDED AND RESTATED EFFECTIVE NOVEMBER 1, 2016)
 
 




SPRINT CORPORATION
AMENDED AND RESTATED 2015 OMNIBUS INCENTIVE PLAN
1. Purpose . The purpose of this Plan is to attract and retain directors, officers, other employees and consultants of the Corporation and its Subsidiaries and to motivate and provide to such persons incentives and rewards for superior performance.
2. Definitions . As used in this Plan:
(a) “Appreciation Right” means a right granted pursuant to Section 5 of this Plan and will include both Free-Standing Appreciation Rights and Tandem Appreciation Rights.
(b) “Authorized Officer” has the meaning specified in Section 11(d) of the Plan.
(c) “Award” means a grant of Option Rights, Appreciation Rights, Performance Shares or Performance Units, or a grant or sale of Restricted Stock, Restricted Stock Units or other awards contemplated by Section 10 of the Plan.
(d) “Base Price” means the price to be used as the basis for determining the Spread upon the exercise of a Free-Standing Appreciation Right or a Tandem Appreciation Right.
(e) “Board” means the Board of Directors of the Corporation and, to the extent of any delegation by the Board to a committee (or subcommittee thereof) pursuant to Section 11 of this Plan, such committee (or subcommittee).
(f) “Business Transaction” has the meaning set forth in Section 2(h)(ii).
(g) “Cause” as a reason for a Participant’s termination of employment shall have the meaning assigned such term in (x) the employment agreement, if any, between the Participant and an Employer, or (y) during the CIC Severance Protection Period (as defined in the CIC Severance Plan), the CIC Severance Plan, if the Participant is a participant in such plan. If the Participant is not a party to an employment agreement with an Employer in which such term is defined, or if during the CIC Severance Protection Period, the Participant is not a participant in the CIC Severance Plan, then unless otherwise defined in the applicable Evidence of Award, “Cause” shall mean:
(i) the intentional engagement in any acts or omissions constituting dishonesty, breach of a fiduciary obligation, wrongdoing or misfeasance, in each case, in connection with a Participant’s duties or otherwise during the course of a Participant’s employment with an Employer;
(ii) the commission of a felony or the indictment for any felony, including, but not limited to, any felony involving fraud, embezzlement, moral turpitude or theft;
(iii) the intentional and wrongful damaging of property, contractual interests or business relationships of an Employer;
(iv) the intentional and wrongful disclosure of secret processes or confidential information of an Employer in violation of an agreement with or a policy of an Employer;
(v) the continued failure to substantially perform the Participant’s duties for an Employer;
(vi) current alcohol or prescription drug abuse affecting work performance;
(vii) current illegal use of drugs; or
(viii) any intentional conduct contrary to an Employer’s announced policies or practices (including, but not limited to, those contained in the Corporation’s Code of Conduct).





 
(h) For purposes of this Plan, except as may be otherwise prescribed by the Compensation Committee in an Evidence of Award, a “Change in Control” of the Corporation shall be deemed to have occurred upon the happening of any of the following events: (1)
(i) any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”), except Softbank Group Corp. or any other entity that “controls,” is “controlled by” or is “under common control” with the Corporation or Softbank Group Corp. within the meaning of Rule 405 of Regulation C under the Securities Act, becomes the beneficial owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of thirty percent (30%) or more of the combined voting power of the then-outstanding Voting Stock of the Corporation; except , that:
(A)
for purposes of this clause (i), the following acquisitions shall not constitute a Change in Control: (1) any acquisition of Voting Stock of the Corporation directly from the Corporation that is approved by a majority of the Incumbent Directors, (2) any acquisition of Voting Stock of the Corporation by the Corporation or any Subsidiary, (3) any acquisition of Voting Stock of the Corporation by the trustee or other fiduciary holding securities under any employee benefit plan (or related trust) sponsored or maintained by the Corporation or any Subsidiary, and (4) any acquisition of Voting Stock of the Corporation by any Person pursuant to a Business Transaction that complies with clauses (A), (B) and (C) of clause (ii) below;
(B)
if any Person becomes the beneficial owner of thirty percent (30%) or more of combined voting power of the then-outstanding Voting Stock of the Corporation as a result of a transaction or series of transactions described in sub-clause (1) of clause (i)(A) above and such Person thereafter becomes the beneficial owner of any additional shares of Voting Stock of the Corporation representing one percent (1%) or more of the then-outstanding Voting Stock of the Corporation, other than as a result of (x) a transaction described in sub-clause (1) of clause (i)(A) above, or (y) a stock dividend, stock split or similar transaction effected by the Corporation in which all holders of Voting Stock are treated equally, then such subsequent acquisition shall be treated as a Change in Control;
(C)
a Change in Control will not be deemed to have occurred if a Person becomes the beneficial owner of thirty percent (30%) or more of the Voting Stock of the Corporation as a result of a reduction in the number of shares of Voting Stock of the Corporation outstanding pursuant to a transaction or series of transactions that is approved by a majority of the Incumbent Directors unless and until such Person thereafter becomes the beneficial owner of additional shares of Voting Stock of the Corporation representing one percent (1%) or more of the then-outstanding Voting Stock of the Corporation, other than as a result of a stock dividend, stock split or similar transaction effected by the Corporation in which all holders of Voting Stock are treated equally; and
(D)
if at least a majority of the Incumbent Directors determine in good faith that a Person has acquired beneficial ownership of thirty percent (30%) or more of the Voting Stock of the Corporation inadvertently, and such Person divests as promptly as practicable, but no later than the date, if any, set by the Incumbent Directors, a sufficient number of shares so that such Person beneficially owns less than thirty percent (30%) of the Voting Stock of the Corporation, then no Change in Control shall have occurred as a result of such Person’s acquisition; or

________________ 
(1)  
Note: As of November 1, 2016, (i.e., the Restatement Effective Date), the Change in Control definition is being amended and will be applied on a prospective basis.





 
(ii) the consummation of a reorganization, merger or consolidation of the Corporation with, or the acquisition of the stock or assets of the Corporation by, another Person, or similar transaction (each, a “Business Transaction”), unless, in each case, immediately following such Business Transaction (A) the Voting Stock of the Corporation outstanding immediately prior to such Business Transaction continues to represent, directly or indirectly, (either by remaining outstanding or by being converted into Voting Stock of the surviving entity or any parent thereof), more than fifty percent (50%) of the combined voting power of the then outstanding shares of Voting Stock or comparable equity interests of the entity resulting from such Business Transaction (including, without limitation, an entity which as a result of such transaction owns the Corporation or all or substantially all of the Corporation’s assets either directly or through one or more subsidiaries), (B) no Person (other than the Corporation or Softbank Group Corp. or any other entity that “controls,” is “controlled by” or is “under common control” with the Corporation or Softbank Group Corp. within the meaning of Rule 405 of Regulation C under the Securities Act, such entity resulting from such Business Transaction, or any employee benefit plan (or related trust) sponsored or maintained by the Corporation or any Subsidiary or such entity resulting from such Business Transaction) beneficially owns, directly or indirectly, thirty percent (30%) or more of the combined voting power of the then outstanding shares of Voting Stock of the entity resulting from such Business Transaction, and (C) at least a majority of the members of the board of directors of the entity resulting from such Business Transaction were Incumbent Directors at the time of the execution of the initial agreement or of the action of the Board providing for such Business Transaction;
(iii) during any consecutive 18-month period, more than fifty percent (50%) of the Board ceases to be comprised of Incumbent Directors; or
(iv) consummation of a transaction that implements in whole or in part a resolution of the stockholders of the Corporation authorizing a sale of all or substantially all of Corporation’s assets or a complete liquidation or dissolution of the Corporation, except pursuant to a Business Transaction that complies with sub-clauses (A), (B) and (C) of clause (ii) above.
(i) “CIC Severance Plan” means the Sprint Corporation Change in Control Severance Plan, as it may be amended from time to time or any successor plan, program, agreement or arrangement.
(j) “CIC Severance Protection Period” means, except as otherwise provided in a Participant’s Evidence of Award, the time period commencing on the date of the first occurrence of a Change in Control and continuing until the earlier of: (i) the 18-month anniversary of such date, and (ii) the Participant’s death. To the extent provided in a Participant’s Evidence of Award, a CIC Severance Protection Period also shall include the time period before the occurrence of a Change in Control for a Participant who is subject to a Pre-CIC Termination.
(k) “Code” means the Internal Revenue Code of 1986, as amended from time to time, including any rules and regulations promulgated thereunder, along with Treasury and IRS interpretations thereof. Reference to any section or subsection of the Code includes reference to any comparable or succeeding provisions of any legislation that amends, supplements or replaces such section or subsection.
(l) “Common Stock” means the common stock, par value $0.01 per share, of the Corporation or any security into which such shares of Common Stock may be changed by reason of any transaction or event of the type referred to in Section 12 of this Plan.
(m) “Compensation Committee” means the Compensation Committee of the Board, or any other committee of the Board or subcommittee thereof authorized to administer this Plan in accordance with Section 11 of the Plan.
 





(n) “Corporation” means Sprint Corporation, a Delaware corporation, and its successors.
(o) “Covered Employee” means a Participant who is determined by the Compensation Committee to be likely to become a “covered employee” within the meaning of Section 162(m) of the Code (or any successor provision).
(p) “Date of Grant” means the date as of which an Award is determined to be effective and designated in a resolution by the Compensation Committee or an Authorized Officer and is granted pursuant to the Plan. The Date of Grant shall not be earlier than the date of the resolution and action therein by the Compensation Committee or an Authorized Officer. In no event shall the Date of Grant be earlier than the Effective Date.
(q) “Detrimental Activity,” except as may be otherwise specified in a Participant’s Evidence of Award, means:
(i) engaging in any activity of competition, as specified in any covenant not to compete set forth in any agreement between a Participant and the Corporation or a Subsidiary, including, but not limited to, the Participant’s Evidence of Award, during the period of restriction specified in the agreement prohibiting the Participant from engaging in such activity;
(ii) engaging in any activity of solicitation, as specified in any covenant not to solicit set forth in any agreement between a Participant and the Corporation or a Subsidiary, including, but not limited to, the Participant’s Evidence of Award, during the period of restriction specified in the agreement prohibiting the Participant from engaging in such activity;
(iii) the disclosure to anyone outside the Corporation or a Subsidiary, or the use in other than the Corporation’s or a Subsidiary’s business, (A) without prior written authorization from the Corporation, of any confidential, proprietary or trade secret information or material relating to the business of the Corporation and its Subsidiaries, acquired by the Participant during his or her service with the Corporation or any of its Subsidiaries, or (B) in violation of any covenant not to disclose set forth in any agreement between a Participant and the Corporation or a Subsidiary, including, but not limited to, the Participant’s Evidence of Award, during the period of restriction specified in the agreement prohibiting the Participant from engaging in such activity;
(iv) the (A) failure or refusal to disclose promptly and to assign to the Corporation or a Subsidiary upon request all right, title and interest in any invention or idea, patentable or not, made or conceived by the Participant during his or her service with the Corporation or any of its Subsidiaries, relating in any manner to the actual or anticipated business, research or development work of the Corporation or any Subsidiary or the failure or refusal to do anything reasonably necessary to enable the Corporation or any Subsidiary to secure a patent where appropriate in the United States and in other countries, or (B) violation of any development and inventions provision set forth in any agreement between a Participant and the Corporation or a Subsidiary, including, but not limited to, the Participant’s Evidence of Award;
(v) if the Participant is or was an officer, activity that the Board determines entitles the Corporation to seek recovery from an officer under any policy promulgated by the Board as in effect when an Award was made or vested under this Plan; or
(vi) activity that results in termination of the Participant’s employment for Cause.
(r) “Director” means a member of the Board.
(s) “Disability” except as may be otherwise specified in a Participant’s Evidence of Award, shall mean, in the case of an Employee, termination of employment under circumstances that would





make the Employee eligible to receive benefits under the Sprint Basic Long-Term Disability Plan, as it may be amended from time to time, or any successor plan, program, agreement or arrangement, and in the case of a Participant who is a Non-Employee Director, termination of service as a Non-Employee Director under circumstances that would make the Non-Employee Director eligible to receive Social Security disability benefits. For purposes of paying an amount that is subject to Section 409A of the Code at a time that references Disability, Disability shall mean Separation from Service under these circumstances.
(t) “Effective Date” means August 7, 2015.
(u) “Employee” means any employee of the Corporation or of any Subsidiary.
(v) “Employer” means the Corporation or any successor thereto or a Subsidiary.
(w) “Evidence of Award” means an agreement, certificate, resolution or other written evidence, whether or not in electronic form, that sets forth the terms and conditions of an Award. Each Evidence of Award shall be subject to this Plan and shall contain such terms and provisions, consistent with this Plan, as the Compensation Committee or an Authorized Officer may approve. An Evidence of Award may be in an electronic medium, may be limited to notation on the books and records of the Corporation and, unless determined otherwise by the Compensation Committee, need not be signed by a representative of the Corporation or a Participant. If an Evidence of Award is limited to notation on the books and records of the Corporation, in the event of any inconsistency between a Participant’s records and the records of the Corporation, the records of the Corporation will control.
(x) “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the regulations promulgated thereunder. Reference to any section or subsection of the Exchange Act includes reference to any comparable or succeeding provisions of any legislation that amends, supplements or replaces such section or subsection.
(y) “Executive Officer” means an officer of the Corporation that is subject to the liability provisions of Section 16 of the Exchange Act.
(z) “Free-Standing Appreciation Right” means an Appreciation Right granted pursuant to Section 5 of this Plan that is not granted in tandem with an Option Right.
(aa) “Good Reason,” except as may be otherwise specified in a Participant’s Evidence of Award, shall have the meaning assigned such term in (i) the employment agreement, if any, between a Participant and an Employer, or (ii) during the CIC Severance Protection Period (as defined in the CIC Severance Plan), the CIC Severance Plan, if a Participant is a participant in such plan.
(bb) “Incentive Stock Options” means Option Rights that are intended to qualify as “incentive stock options” under Section 422 of the Code.
(cc) “Incumbent Directors” means the individuals who, as of the Restatement Effective Date, are Directors of the Corporation, and any individual becoming a Director after the Restatement Effective Date whose election, nomination for election by the Corporation’s stockholders, or appointment, was approved by a vote of at least two-thirds of the then Incumbent Directors (either by a specific vote or by approval of the proxy statement of the Corporation in which such person is named as a nominee for director, without objection to such nomination); provided , however , that an individual shall not be an Incumbent Director if the individual’s election or appointment to the Board occurs as a result of an actual or threatened election contest (as described in Rule 14a-12(c) of the Exchange Act) with respect to the election or removal of Directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board.
 





(dd) “Management Objectives” means the measurable performance objective or objectives established pursuant to this Plan for Participants who have received grants of Performance Shares or Performance Units or, when so determined by the Compensation Committee or an Authorized Officer, Option Rights, Appreciation Rights, Restricted Stock, Restricted Stock Units, other awards contemplated by Section 10 of this Plan or dividend credits pursuant to this Plan. Management Objectives may be described in terms of Corporation-wide objectives or objectives that are related to the performance of one or more joint ventures, Subsidiaries, business units, divisions, departments, business segments, regions or functions and/or that are related to the performance of the individual Participant. The Management Objectives may be made relative to the performance of other companies or subsidiaries, divisions, departments, regions, functions, or other organizational units within such other companies, or an index covering multiple companies. The Compensation Committee may grant Awards to Covered Employees subject to Management Objectives that are either Qualified Performance-Based Awards or are not Qualified Performance-Based Awards. The Management Objectives applicable to any Qualified Performance-Based Award will be based on one or more, or a combination of the following criteria:
(i) net sales;
(ii) revenue;
(iii) revenue growth or product revenue growth;
(iv) operating income (before or after taxes, including operating income before depreciation and amortization);
(v) income (before or after taxes and before or after allocation of corporate overhead and bonus);
(vi) net earnings;
(vii) earnings per share;
(viii) net income (before or after taxes);
(ix) return on equity;
(x) total stockholder return;
(xi) return on assets or net assets;
(xii) appreciation in and/or maintenance of share price;
(xiii) market share;
(xiv) gross profits;
(xv) earnings (including earnings before taxes, earnings before interest and taxes or earnings before interest, taxes, depreciation and amortization);
(xvi) economic value-added models or equivalent metrics;
(xvii) reductions in costs;
(xviii) cash flow or cash flow per share (before or after dividends);
(xix) return on capital (including return on total capital or return on invested capital);
(xx) cash flow return on investment;
(xxi) improvement in or attainment of expense levels or working capital levels;
(xxii) operating, gross, or cash margins;
(xxiii) year-end cash;





 
(xxiv) debt reductions;
(xxv) stockholder equity;
(xxvi) regulatory achievements;
(xxvii) operating performance;
(xxviii) market expansion;
(xxix) customer acquisition;
(xxx) customer satisfaction;
(xxxi) employee satisfaction;
(xxxii) implementation, completion, or attainment of measurable objectives with respect to research, development, products or projects and recruiting and maintaining personnel; or
(xxxiii) a published or a special index deemed applicable by the Compensation Committee or any of the above criteria as compared to the performance of any such index, including, but not limited to, the Dow Jones U.S. Telecom Index.
Any Management Objectives that are financial metrics may be determined in accordance with United States Generally Accepted Accounting Principles (“GAAP”) or may be adjusted when established to include or exclude any items otherwise includable or excludable under GAAP. In the case of Qualified Performance-Based Awards, each Management Objective will be objectively determined to the extent required under Section 162(m) of the Code.
In connection with the establishment of Management Objectives, or with respect to the measurement of achievement with respect to a Management Objective, the Compensation Committee may exclude the impact on performance of extraordinary, unusual, or infrequently occurring items, including charges for restructurings; other non-operating items; acquisitions, divestitures, discontinued operations; and other unusual or non-recurring items and the cumulative effects of changes in tax law or accounting principles, as such are defined by generally accepted accounting principles or the Securities and Exchange Commission and as identified in the Corporation’s audited financial statements, notes to such financial statements or management’s discussion and analysis in the Corporation’s annual report or other filings with the Securities and Exchange Commission. With respect to any grant under the Plan, if the Compensation Committee determines that a change in the business, operations, corporate structure or capital structure of the Corporation, or the manner in which it conducts its business, or other events or circumstances render the Management Objectives unsuitable, the Compensation Committee may in its discretion modify such Management Objectives or the related minimum acceptable level or levels of achievement, in whole or in part, as the Compensation Committee deems appropriate and equitable, except in the case of a Qualified Performance-Based Award when such action would result in the loss of the otherwise available exemption of such Award under Section 162(m) of the Code. In such case, the Compensation Committee will not make any modification of the Management Objectives or the minimum acceptable level or levels of achievement with respect to such Qualified Performance-Based Award. In addition, unless otherwise specified in the Evidence of Award, the Compensation Committee may, in its discretion, increase, reduce or eliminate the amount payable to any Participant with respect to an Award, based on such factors as the Compensation Committee may deem relevant. For purpose of clarity, (i) the amount payable pursuant to performance measures based on qualification of an Award as “qualified performance-based compensation” under Section 162(m) of the Code for any Qualified Performance-Based Award may not be increased when such action would result in the loss of the otherwise available exemption of such Award under Section 162(m) of the Code as described above, and (ii) the Compensation Committee may exercise the discretion in the foregoing sentence in a non-uniform manner among Participants.
 





(ee) “Market Value Per Share” means, as of any particular date the closing sale price of the Common Stock as reported on the New York Stock Exchange Composite Tape or, if not listed on such exchange, on any other national securities exchange on which the Common Stock is listed. If the Common Stock is not traded as of any given date, the Market Value Per Share means the closing price for the Common Stock on the principal exchange on which the Common Stock is traded for the immediately preceding date on which the Common Stock was traded. If there is no regular public trading market for such Common Stock, the Market Value Per Share of the Common Stock shall be the fair market value of the Common Stock as determined in good faith by the Board. The Board is authorized to adopt another fair market value pricing method, provided such method is stated in the Evidence of Award, and is in compliance with the fair market value pricing rules set forth in Section 409A of the Code.
(ff) “Non-Employee Director” means a member of the Board who is not an Employee.
(gg) “Non-Qualified Options” means Option Rights that are not intended to qualify as “incentive stock options” under Section 422 of the Code.
(hh) “Normal Retirement” except as may be otherwise specified in a Participant’s Evidence of Award, means, with respect to any Employee, termination of employment (other than termination for Cause or due to death or Disability) at or after age 65. For purposes of paying an amount that is subject to Section 409A of the Code at a time that references Normal Retirement, Normal Retirement shall mean Separation from Service at or after age 65.
(ii) “Optionee” means the Participant named in an Evidence of Award evidencing an outstanding Option Right.
(jj) “Option Price” means the purchase price payable on exercise of an Option Right.
(kk) “Option Right” means the right to purchase shares of Common Stock upon exercise of a Non-Qualified Option or an Incentive Stock Option granted pursuant to Section 4 of this Plan.
(ll) “Participant” means a person who is selected by the Board, the Compensation Committee or an Authorized Officer to receive benefits under this Plan and who is at the time (i) an Employee or a Non-Employee Director, or (ii) providing services to the Corporation or a Subsidiary, including but not limited to, a consultant, an advisor, independent contractor, or other non-Employee of the Corporation or any one or more of its Subsidiaries (provided that such person satisfies the Form S-8 definition of an “employee”).
(mm) “Performance Period” means, in respect of a Performance Share or Performance Unit, a period of time established pursuant to Section 8 of this Plan within which the Management Objectives relating to such Performance Share or Performance Unit are to be achieved.
(nn) “Performance Share” means a bookkeeping entry that records the equivalent of one share of Common Stock awarded pursuant to Section 8 of this Plan.
(oo) “Performance Unit” means a bookkeeping entry awarded pursuant to Section 8 of this Plan that records a unit equivalent to $1.00 or such other value as is determined by the Compensation Committee.
(pp) “Person” has the meaning set forth in Section 2(h)(i).
(qq) “Plan” means this Sprint Corporation 2015 Omnibus Incentive Plan, as it may be amended from time to time.





 
(rr) “Plan Year” has the meaning set forth in Section 9(g) and (h).
(ss) “Pre-CIC Termination” means the termination of a Participant’s employment without Cause, provided that both (i) the termination was made in the six (6) month period prior to a Change in Control at the request of a third party in contemplation of a Change in Control, and (ii) the Change in Control occurs. For purposes of paying an amount that is subject to Section 409A of the Code at a time that references a Pre-CIC Termination, Pre-CIC Termination shall mean Separation from Service under these circumstances
(tt) “Predecessor Plans” means (i) the Sprint 2007 Plan, and (ii) the Sprint 1997 Plan.
(uu) “Qualified Performance-Based Award” means any award of Performance Shares, Performance Units, Restricted Stock, Restricted Stock Units or other awards contemplated under Section 10 of this Plan, or portion of such award, to a Covered Employee that is intended to satisfy the requirements for “qualified performance-based compensation” under Section 162(m) of the Code.
(vv) “Restatement Effective Date” means the date on which the amended and restated Plan is approved by stockholders.
(ww) “Restricted Stock” means shares of Common Stock granted or sold pursuant to Section 6 of this Plan as to which neither the substantial risk of forfeiture nor the prohibition on transfer has expired.
(xx) “Restricted Stock Unit” means an award granted or sold pursuant to Section 7 of this Plan of the right to receive shares of Common Stock or cash at the end of the Restriction Period.
(yy) “Restriction Period” means the period of time during which Restricted Stock Units are subject to restrictions, as provided in Section 7 of this Plan.
(zz) “Separation From Service” means a “separation from service” as such term is defined under Code Section 409A and the Treasury regulations issued thereunder. Except as otherwise required to comply with Code Section 409A, an Employee shall be considered not to have had a Separation From Service where the level of bona fide services performed continues at a level that is at least 21 percent or more of the average level of service performed by the Employee during the immediately preceding 36-month period (or if providing services for less than 36 months, such lesser period) after taking into account any services that the Employee provided prior to such date or that the Corporation and the Employee reasonably anticipate the Employee may provide (whether as an Employee or independent contractor) after such date.
For purposes of the determination of whether a Participant has had a “separation from service” as described under Code Section 409A and the guidance and Treasury regulations issued thereunder, the terms “Sprint,” “employer” and “service recipient” mean Sprint Corporation and any affiliate with which Sprint Corporation would be considered a single employer under Code Section 414(b) or 414(c), provided that in applying Code Sections 1563(a)(1), (2), and (3) for purposes of determining a controlled group of corporations under Code Section 414(b), the language “at least 50 percent” is used instead of “at least 80 percent”, each place it appears in Code Sections 1563(a)(1), (2) and (3), and in applying Treasury Regulation Section 1.414(c)-2 for purposes of determining trades or businesses (whether or not incorporated) that are under common control for purposes of Code Section 414(c), “at least 50 percent” is used instead of “at least 80 percent” each place it appears in Treasury Regulation Section 1.414(c)-2.
(aaa) “Six-Month Payment Delay” means the required delay in payment to a Participant who is a “specified employee” of amounts subject to Section 409A that are paid upon Separation from





Service, pursuant to Section 409A(a)(2)(B)(i) of the Code. When a Six-Month Payment Delay is required, the payment date shall be not before the date which is six months after the date of Separation from Service or, if earlier, the date of the Participant’s death. The term specified employee shall have the meaning ascribed to this term under Section 409A of the Code.
(bbb) “Spread” means the excess of the Market Value Per Share on the date when an (i) Option Right is exercised over the Option Price, or (ii) Appreciation Right is exercised over the Option Price or Base Price provided for in the related Option Right or Free-Standing Appreciation Right, respectively.
(ccc) “Sprint 1997 Plan” means the 1997 Long-Term Stock Incentive Program, effective April 15, 1997.
(ddd) “Sprint 2007 Plan” means the 2007 Omnibus Incentive Plan, effective May 8, 2007.
(eee) “Subsidiary” means (i) any individual, corporation, partnership, association, joint-stock company, trust, incorporated organization or government or political subdivision thereof, that directly, or through one or more intermediaries, controls, or is controlled by, or is under common control with, the Corporation, or (ii) any entity in which the Corporation has a significant equity interest, as determined by the Compensation Committee except that for purposes of determining whether any person may be a Participant for purposes of any grant of Incentive Stock Options, “Subsidiary” means any corporation in which the Corporation owns or controls, directly or indirectly, more than 50% of the total combined voting power represented by all classes of stock issued by such corporation at the time of grant.
(fff) “Substitute Awards” means Awards that are granted in assumption of, or in substitution or exchange for, outstanding awards previously granted by an entity acquired directly or indirectly by the Corporation or with which the Corporation directly or indirectly combines.
(ggg) “Tandem Appreciation Right” means an Appreciation Right granted pursuant to Section 5 of this Plan that is granted in tandem with an Option Right.
(hhh) “Ten Percent Stockholder” shall mean any Participant who owns more than 10% of the combined voting power of all classes of stock of the Corporation, within the meaning of Section 422 of the Code.
(iii) “Termination Date,” for purposes of this Plan, except as may be otherwise prescribed by the Compensation Committee or an Authorized Officer in an Evidence of Award, shall mean (i) with respect to any Employee, the date on which the Employee ceases to be employed by an Employer, or (ii) with respect to any Participant who is not an Employee, the date on which such Participant’s provision of services to the Corporation or any one or more of its Subsidiaries ends.
(jjj) “Voting Stock” means securities entitled to vote generally in the election of Directors.
3. Shares Subject to this Plan .
(a) Maximum Shares Available Under Plan.
(i) As of the Effective Date of the original Plan, the maximum aggregate number of shares of Common Stock that could be granted under the original Plan were the shares of Common Stock available for grant under the Predecessor Plans as of May 31, 2015. Subject to stockholder approval of this amended and restated Plan, the maximum aggregate number of shares of Common Stock that may be granted under the Plan after the Restatement





Effective Date is the sum of (i) 137,247,553 shares (representing the incremental new shares of Common Stock being authorized under the Plan); and (ii) the number of shares available for grant under the Plan as of the Restatement Effective Date. The foregoing Plan limit shall be subject to adjustment as provided in Section 12 of this Plan. Common Stock to be issued or delivered pursuant to the Plan may be authorized and unissued shares of Common Stock, treasury shares or a combination of the foregoing.
(ii) In addition to the shares of Common Stock authorized in Section 3(a)(i), if:
(A)
any Award (other than an Award that can only be paid in cash) granted pursuant to this Plan (1) that terminates, is forfeited, or expires without having been exercised in full, or (2) is settled in cash, then the underlying shares of Common Stock, to the extent of any such forfeiture, termination, expiration, or cash settlement, again shall be available for grant under this Plan and credited toward the Plan limit as set forth in Section 3(a)(i).
(B)
any option, stock appreciation right, restricted stock, restricted stock unit, or other award (other than an award that can only be paid in cash) granted pursuant to the Predecessor Plans that terminates, is forfeited, or expires without having been exercised in full or is settled in cash, then the underlying shares of Common Stock, to the extent of any such forfeiture, termination or cash settlement, shall be available for grant under this Plan and credited toward the Plan limit as one share of Common Stock for every one share of Common Stock allocable to any such award.
(iii) Shares of Common Stock that are tendered, whether by physical delivery or by attestation, to the Corporation by a Participant or withheld from the Award by the Corporation as full or partial payment of the exercise or purchase price of any Award or in payment of any applicable withholding for Federal, state, city, local or foreign taxes incurred in connection with the exercise, vesting or earning of any Award under the Plan or under the Predecessor Plans will not become available for future grants under the Plan. With respect to an Appreciation Right, when such Appreciation Right is exercised and settled in shares of Common Stock, the shares of Common Stock subject to such Appreciation Right shall be counted against the shares of Common Stock available for issuance under the Plan as one share of Common Stock for every one share of Common Stock subject thereto, regardless of the number of shares of Common Stock used to settle the Appreciation Right upon exercise.
(b) Life-of-Plan Limits. Notwithstanding anything in this Section 3, or elsewhere in this Plan, to the contrary and subject to adjustment pursuant to Section 12 of this Plan, the aggregate number of shares of Common Stock actually issued or transferred by the Corporation upon the exercise of Incentive Stock Options shall not exceed 150,000,000.
(c) Individual Participant Limits. Notwithstanding anything in this Section 3, or elsewhere in this Plan, to the contrary and subject to adjustment pursuant to Section 12 of this Plan:
(i) No Participant shall be granted Option Rights or Appreciation Rights or other awards granted pursuant to Section 10 of this Plan with rights which are substantially similar to Option Rights or Appreciation Rights, in the aggregate, for more than 5,000,000 shares of Common Stock during any fiscal year.
(ii) For grants of Qualified Performance-Based Awards, no Participant shall be granted Restricted Stock, Restricted Stock Units, Performance Shares or other awards granted pursuant to Section 10 of this Plan with rights which are substantially similar to Performance Shares, in the aggregate, for more than 10,000,000 shares of Common Stock during any fiscal year.





 
(iii) For grants of Qualified Performance-Based Awards, no Participant shall be granted Performance Units, cash-denominated awards, or other awards granted pursuant to Section 10 of this Plan with rights which are substantially similar to Performance Units, in the aggregate, for more than $20,000,000 during any fiscal year.
(d) Limits on Awards to Non-Employee Directors. Notwithstanding any other provision of the Plan to the contrary, the aggregate grant date fair value (computed as of the date of grant in accordance with applicable financial accounting rules) of all Awards granted to any Non-Employee Director during any single fiscal year, taken together with any cash fees paid to such Non-Employee Director during such fiscal year, shall not exceed $750,000 ($1,500,000 for the Chairman or Vice-Chairman).
(e) Substitute Awards. Any Substitute Awards granted by the Corporation shall not reduce the shares of Common Stock available for Awards under the Plan and will not count against the limits specified in Sections 3(c) or (d) above.
4. Option Rights . The Compensation Committee or, in accordance with Section 11(d), an Authorized Officer may, from time to time and upon such terms and conditions as it or the Authorized Officer may determine, grant Option Rights to Participants. Each such grant will utilize any or all of the authorizations as specified in the following provisions:
(a) Each grant will specify the number of shares of Common Stock to which it pertains, subject to the limitations set forth in Section 3 of this Plan.
(b) Each Option Right will specify an Option Price per share of Common Stock, which (except with respect to Substitute Awards) may not be less than the Market Value Per Share on the Date of Grant. In the case of an Incentive Stock Option granted to a Ten Percent Stockholder, the Option Price per share of Common Stock shall not be less than one hundred ten percent (110%) of the Market Value Per Share on the Date of Grant.
(c) Each Option Right will specify whether the Option Price will be payable (i) in cash or by check or by wire transfer of immediately available funds, (ii) by the actual or constructive transfer to the Corporation of shares of Common Stock owned by the Optionee (or other consideration authorized pursuant to Section 4(d)) having a value at the time of exercise equal to the total Option Price, (iii) by a combination of such methods of payment and may either grant to the Participant or retain in the Compensation Committee the right to elect among the foregoing alternatives, or (iv) by such other methods as may be approved by the Compensation Committee. No fractional shares of Common Stock will be issued or accepted.
(d) To the extent permitted by law, any grant may permit deferred payment of the Option Price from the proceeds of sale through a bank or broker designated by, and on a date satisfactory to, the Corporation of some or all of the shares of Common Stock to which such exercise relates.
(e) Successive grants may be made to the same Participant whether or not any Option Rights previously granted to such Participant remain unexercised.
(f) Each grant will specify the period or periods of continuous service by the Optionee with the Corporation or any Subsidiary that is necessary before the Option Rights or installments thereof will become exercisable.
(g) Any grant of Option Rights may specify Management Objectives that must be achieved as a condition to the exercise of such rights. Each grant may specify in respect of such Management





Objectives a minimum acceptable level or levels of achievement and may set forth a formula for determining the number of Option Rights that will become exercisable if performance is at or above the minimum level(s), but falls short of full achievement of the specified Management Objectives. The grant will specify that, before the exercise of such Option Rights become exercisable, the Compensation Committee must certify that the Management Objectives have been satisfied.
(h) Any grant of Option Rights may provide for the earlier exercise of such Option Rights or other modifications, including in the event of termination without Cause, resignation for Good Reason, Normal Retirement, termination due to death or Disability of the Participant, a Change in Control, or the grant of a Substitute Award.
(i) Option Rights granted under this Plan may be (i) options, including, without limitation, Incentive Stock Options, (ii) Non-Qualified Options, or (iii) combinations of the foregoing. Incentive Stock Options may be granted only to Participants who meet the definition of “employee” under Section 3401(c) of the Code.
(j) The exercise of an Option Right will result in the cancellation on a share-for-share basis of any related Tandem Appreciation Right authorized under Section 5 of this Plan.
(k) No Option Right will be exercisable more than ten (10) years from the Date of Grant. In the case of an Incentive Stock Option granted to an Employee who is a Ten Percent Stockholder, the Incentive Stock Option will not be exercisable more than five (5) years from the Date of Grant.
(l) An Option Right granted hereunder may be exercisable, in whole or in part, by written notice delivered in person, by mail or by approved electronic medium to the Treasurer of the Corporation at its principal office, or by such other means as the Treasurer or other authorized representative of the Corporation shall designate, specifying the number of shares of Common Stock to be purchased and accompanied by payment thereof and otherwise in accordance with the Evidence of Award pursuant to which the Option Right was granted.
(m) No grant of Option Rights will authorize the payment of dividend equivalents on the Option Right.
(n) Each grant of Option Rights will be evidenced by an Evidence of Award, which Evidence of Award will describe such Option Rights, and contain such other terms as the Compensation Committee or Authorized Officer may approve.
(o) Except as provided in an Evidence of Award, in the event of an Optionee’s termination of employment or service, any Option Rights that have not vested as of the Optionee’s Termination Date will be cancelled and immediately forfeited, without further action on the part of the Corporation or the Compensation Committee, and the Optionee will have no further rights in respect of such Option Rights.
5. Appreciation Rights .
(a) The Compensation Committee or, in accordance with Section 11(d), an Authorized Officer may grant (i) to any Optionee, Tandem Appreciation Rights in respect of Option Rights granted hereunder, and (ii) to any Participant, Free-Standing Appreciation Rights. All grants of Appreciation Rights will specify the number of shares of Common Stock to which the grant pertains, subject to the limitations set forth in Section 3 of this Plan.
(b) A Tandem Appreciation Right will be a right of the Optionee, exercisable by surrender of the related Option Right, to receive from the Corporation an amount determined by the Compensation





Committee or an Authorized Officer, which will be expressed as a percentage of the Spread on the related Option Right (not exceeding 100%) at the time of exercise. Tandem Appreciation Rights must be granted concurrently with the related Option Right.
(c) A Free-Standing Appreciation Right will be a right of the Participant to receive from the Corporation an amount determined by the Compensation Committee or an Authorized Officer, which will be expressed as a percentage of the Spread (not exceeding one hundred percent (100%)) at the time of exercise.
(d) No grant of Appreciation Rights will authorize the payment of dividend equivalents on the Appreciation Right.
(e) Each grant of Appreciation Rights will utilize any or all of the authorizations as specified in the following provisions:
(i) Any grant may specify that the amount payable on exercise of an Appreciation Right may be paid by the Corporation in cash, in shares of Common Stock or in any combination thereof and may either grant to the Participant or retain in the Compensation Committee the right to elect among those alternatives.
(ii) Any grant may specify that the amount payable on exercise of an Appreciation Right may not exceed a maximum specified by the Compensation Committee or an Authorized Officer at the Date of Grant.
(iii) Any grant may specify waiting periods before exercise and permissible exercise dates or periods.
(iv) Any grant of Appreciation Rights may specify Management Objectives that must be achieved as a condition of the exercise of such Appreciation Rights. Each grant may specify in respect of such Management Objectives a minimum acceptable level or levels of achievement and may set forth a formula for determining the number of Appreciation Rights that will become exercisable if performance is at or above the minimum level(s), but falls short of full achievement of the specified Management Objectives. The grant of such Appreciation Rights will specify that, before the exercise of such Appreciation Rights, the Compensation Committee must certify that the Management Objectives have been satisfied.
(v) Any grant of Appreciation Rights may provide for the earlier exercise of such Appreciation Rights or other modifications, including in the event of termination without Cause, resignation for Good Reason, Normal Retirement, termination due to death or Disability of the Participant, a Change in Control, or the grant of a Substitute Award.
(vi) Each grant of Appreciation Rights will be evidenced by an Evidence of Award, which Evidence of Award will describe such Appreciation Rights, identify the related Option Rights (if applicable), and contain such other terms and provisions, consistent with this Plan, as the Compensation Committee or an Authorized Officer may approve.
(vii) Except as provided in an Evidence of Award, in the event of a Participant’s termination of employment or service, any of the Participant’s Appreciation Rights that have not vested as of the Participant’s Termination Date will be cancelled and immediately forfeited, without further action on the part of the Corporation or the Compensation Committee, and the Participant will have no further rights in respect of such Appreciation Rights.
(f) Any grant of Tandem Appreciation Rights will provide that such Tandem Appreciation Rights may be exercised only at a time when the related Option Right is also exercisable (and will





expire when the related Option Right would have expired) and at a time when the Spread is positive, and by surrender of the related Option Right for cancellation. Successive grants of Tandem Appreciation Rights may be made to the same Participant regardless of whether any Tandem Appreciation Rights previously granted to the Participant remain unexercised. In the case of a Tandem Appreciation Right granted in relation to an Incentive Stock Option to an Employee who is a Ten Percent Stockholder on the Date of Grant, the amount payable with respect to each Tandem Appreciation Right shall be equal in value to the applicable percentage of the excess, if any, of the Market Value Per Share on the exercise date over the Base Price of the Tandem Appreciation Right, which Base Price shall not be less than 110 percent of the Market Value Per Share on the date the Tandem Appreciation Right is granted, and the Incentive Stock Option and related Tandem Appreciation Right shall not be exercisable more than five (5) years from the Date of Grant.
(g) Regarding Free-Standing Appreciation Rights only:
(i) Each grant will specify in respect of each Free-Standing Appreciation Right a Base Price, which (except with respect to Substitute Awards) may not be less than the Market Value Per Share on the Date of Grant;
(ii) Successive grants may be made to the same Participant regardless of whether any Free-Standing Appreciation Rights previously granted to the Participant remain unexercised; and
(iii) No Free-Standing Appreciation Right granted under this Plan may be exercised more than ten (10) years from the Date of Grant.
6. Restricted Stock . The Compensation Committee or, in accordance with Section 11(d), an Authorized Officer may grant or sell Restricted Stock to Participants. Each such grant or sale will utilize any or all of the authorizations as specified in the following provisions:
(a) Each such grant or sale will constitute an immediate transfer of the ownership of shares of Common Stock to the Participant in consideration of the performance of services, entitling such Participant to voting, dividend and other ownership rights, but subject to the substantial risk of forfeiture and restrictions on transfer hereinafter referred to.
(b) Each such grant or sale may be made without additional consideration or in consideration of a payment by such Participant, as determined by the Compensation Committee or an Authorized Officer at the Date of Grant.
(c) Each such grant or sale will provide that the Restricted Stock covered by such grant or sale that vests upon the passage of time will be subject to a “substantial risk of forfeiture” within the meaning of Section 83 of the Code, as determined by the Compensation Committee or an Authorized Officer at the Date of Grant and may provide for the earlier lapse of such substantial risk of forfeiture as provided in Section 6(e) below. In the case of grants that are a form of payment for earned Performance Shares or Performance Units or other awards, such grant may provide for no minimum vesting period.
(d) Each such grant or sale will provide that during the period for which such substantial risk of forfeiture is to continue, the transferability of the Restricted Stock will be prohibited or restricted in the manner set forth in this Plan, and to the extent prescribed by the Compensation Committee at the Date of Grant (which restrictions may include, without limitation, rights of repurchase or first refusal in the Corporation or provisions subjecting the Restricted Stock to a continuing substantial risk of forfeiture in the hands of any transferee).
(e) Any grant of Restricted Stock may specify Management Objectives that, if achieved, will result in termination or early termination of the restrictions applicable to such Restricted Stock. Each





grant may specify in respect of such Management Objectives a minimum acceptable level or levels of achievement and may set forth a formula for determining the number of shares of Restricted Stock on which restrictions will terminate if performance is at or above the minimum level(s), but falls short of full achievement of the specified Management Objectives. The grant or sale of Restricted Stock will specify that, before the termination or early termination of the restrictions applicable to such Restricted Stock, the Compensation Committee must certify that the Management Objectives have been satisfied.
(f) Any grant of Restricted Stock may provide for the earlier lapse or other modification, including in the event of termination without Cause, resignation for Good Reason, Normal Retirement, termination due to death or Disability of the Participant, Change in Control, or the grant of a Substitute Award.
(g) Any such grant or sale of Restricted Stock may require that any or all dividends or other distributions paid thereon during the period of such restrictions be automatically deferred and/or reinvested in additional shares of Restricted Stock (which may be subject to the same restrictions as the underlying Award) or be paid in cash on a deferred or contingent basis.
(h) Each grant or sale of Restricted Stock will be evidenced by an Evidence of Award and will contain such terms and provisions, consistent with this Plan, as the Compensation Committee or an Authorized Officer may approve. Unless otherwise directed by the Compensation Committee, (i) all certificates representing shares of Restricted Stock will be held in custody by the Corporation until all restrictions thereon have lapsed, together with a stock power or powers executed by the Participant in whose name such certificates are registered, endorsed in blank and covering such shares of Common Stock, or (ii) all uncertificated shares of Restricted Stock will be held at the Corporation’s transfer agent in book entry form with appropriate restrictions relating to the transfer of such shares of Restricted Stock.
7. Restricted Stock Units . The Compensation Committee or, in accordance with Section 11(d), an Authorized Officer may grant or sell Restricted Stock Units to Participants. Each such grant or sale will utilize any or all of the authorizations as specified in the following provisions:
(a) Each such grant or sale of Restricted Stock Units will constitute the agreement by the Corporation to deliver shares of Common Stock or cash to the Participant in the future in consideration of the performance of services, but subject to the fulfillment of such conditions (which may include the achievement of Management Objectives) during the Restriction Period as the Compensation Committee or an Authorized Officer may specify. Each grant may specify in respect of such Management Objectives a minimum acceptable level or levels of achievement and may set forth a formula for determining the number of shares of Restricted Stock Units on which restrictions will terminate if performance is at or above the minimum level(s), but falls short of full achievement of the specified Management Objectives. The grant or sale of such Restricted Stock Units will specify that, before the termination or early termination of the restrictions applicable to such Restricted Stock Units, the Compensation Committee must certify that the Management Objectives have been satisfied.
(b) Each such grant or sale of Restricted Stock Units may be made without additional consideration or in consideration of a payment by such Participant that is less than the Market Value Per Share at the Date of Grant.
(c) If the Restriction Period lapses only by the passage of time, each such grant or sale will be subject to a Restriction Period (which may include pro-rata, graded or cliff vesting over such period), as determined by the Compensation Committee or an Authorized Officer at the Date of Grant. In the case of grants that are a form of payment for earned Performance Shares or Performance Units or other awards, such grant may provide for no Restriction Period.





 
(d) Each such grant or sale of Restricted Stock Units may provide for the earlier lapse or other modification of such Restriction Period, including in the event of termination without Cause, resignation for Good Reason, Normal Retirement, termination due to death or Disability of the Participant, a Change in Control, or the grant of a Substitute Award and, to the extent that any grant, sale, or Substitute Award is subject to, or determined to be subject to Section 409A of the Code, the time and form of payment shall be indicated in the Evidence of Award as upon one or more of the permissible payment events under Section 409A of the Code and as subject to the Six-Month Payment Delay, if required.
(e) During the Restriction Period, the Participant will have none of the rights of a stockholder of any shares of Common Stock with respect to such Restricted Stock Units, but the Compensation Committee may, at the Date of Grant, authorize the payment of dividend equivalents on such Restricted Stock Units on either a current, deferred or contingent basis, either in cash or in additional shares of Common Stock and, the Evidence of Award shall specify the time of payment of such dividend equivalents and indicate that such payment is subject to the Six-Month Payment Delay, if required.
(f) Each grant or sale of Restricted Stock Units will specify the time and manner of payment of Restricted Stock Units that have been earned and, that such payment is subject to the Six-Month Payment Delay, if required. Any grant or sale may specify that the amount payable with respect thereto may be paid by the Corporation in cash, in shares of Common Stock or in any combination thereof and may either grant to the Participant or retain in the Compensation Committee the right to elect among those alternatives.
(g) Each such grant or sale of Restricted Stock Units will provide that during the period for which such Restriction Period is to continue, the transferability of the Restricted Stock Units will be prohibited or restricted in the manner and to the extent prescribed by the Compensation Committee at the Date of Grant (which restrictions may include, without limitation, rights of repurchase or first refusal in the Corporation or provisions subjecting the Restricted Stock Units to a continuing substantial risk of forfeiture in the hands of any transferee).
(h) Each grant or sale of Restricted Stock Units will be evidenced by an Evidence of Award and will contain such terms and provisions, consistent with this Plan, as the Compensation Committee or an Authorized Officer may approve.
(i) Except as provided in an Evidence of Award, in the event of a Participant’s termination of employment or service, any of the Participant’s Restricted Stock Units that remain subject to the Restriction Period on the Participant’s Termination Date will be cancelled and immediately forfeited without further action on the part of the Corporation or the Compensation Committee, and the Participant will have no further rights in respect of such Restricted Stock Units.
8. Performance Shares and Performance Units . The Compensation Committee or, in accordance with Section 11(d), an Authorized Officer may grant Performance Shares and Performance Units that will become payable to a Participant upon achievement of specified Management Objectives during the Performance Period. Each such grant will utilize any or all of the authorizations as specified in the following provisions:
(a) Each grant will specify the number of Performance Shares or Performance Units to which it pertains, which number may be subject to adjustment to reflect changes in compensation or other factors; provided , however , that no such adjustment will be made in the case of a Qualified Performance-Based Award where such action would result in the loss of the otherwise available exemption of the award under Section 162(m) of the Code.





 
(b) The Performance Period with respect to each Performance Share or Performance Unit will be such period of time, as determined by the Compensation Committee or an Authorized Officer at the Date of Grant.
(c) Any grant of Performance Shares or Performance Units will specify Management Objectives, which, if achieved, will result in payment of the Award, and each grant may specify in respect of such specified Management Objectives a minimum acceptable level or levels of achievement and will set forth a formula for determining the number of Performance Shares or Performance Units that will be earned if performance is at or above the level(s), but falls short of full achievement of the specified Management Objectives. The grant of Performance Shares or Performance Units will specify that, before the Performance Shares or Performance Units will be earned and paid, the Compensation Committee must certify that the Management Objectives have been satisfied.
(d) Any grant of Performance Shares or Performance Units may provide for the earlier lapse or other modification, including in the event of termination without Cause, resignation for Good Reason, Normal Retirement, termination due to death or Disability of the Participant, a Change in Control, or the grant of a Substitute Award and to the extent that any grant or Substitute Award is subject to, or determined to be subject to, Section 409A of the Code, the time and form of payment shall be indicated in the Evidence of Award as upon one or more of the permissible payment events under Section 409A of the Code and, as subject to the Six-Month Payment Delay, if required.
(e) Each grant will specify the time and manner of payment of Performance Shares or Performance Units that have been earned and, that such payment is subject to the Six-Month Payment Delay, if required. Any grant may specify that the amount payable with respect thereto may be paid by the Corporation in cash, in shares of Common Stock, in Restricted Stock or Restricted Stock Units or in any combination thereof and may either grant to the Participant or retain in the Compensation Committee the right to elect among those alternatives; provided , however , that as applicable, the amount payable may not exceed the maximum amount payable, as may be specified by the Compensation Committee or an Authorized Officer on the Date of Grant.
(f) The Compensation Committee may provide for the payment of dividend equivalents to the holder thereof on either a current, deferred or contingent basis, either in cash or in additional shares of Common Stock. In this case, the Evidence of Award will specify, the time of payment of such dividend equivalents and, that such payment is subject to the Six-Month Payment Delay, if required.
(g) Each grant of Performance Shares or Performance Units will be evidenced by an Evidence of Award and will contain such other terms and provisions, consistent with this Plan, as the Compensation Committee or an Authorized Officer may approve.
(h) Except as provided in an Evidence of Award, in the event of a Participant’s termination of employment or service, any of the Participant’s Performance Shares and Performance Units that remain subject to a Performance Period on the Participant’s Termination Date will be cancelled and immediately forfeited, without further action on the part of the Corporation or the Compensation Committee, and the Participant will have no further rights in respect of such Performance Shares or Performance Units.
9. Awards to Non-Employee Directors . The Board may, from time to time and upon such terms and conditions as it may determine, authorize the granting to Non-Employee Directors, Option Rights, Appreciation Rights or other awards contemplated by Section 10 of this Plan and may also authorize the grant or sale of shares of Common Stock, Restricted Stock or Restricted Stock Units to Non- Employee Directors.





 
(a) Each grant of Option Rights awarded pursuant to this Section 9 will be upon terms and conditions consistent with Section 4 of this Plan.
(b) Each grant of Appreciation Rights pursuant to this Section 9 will be upon terms and conditions consistent with Section 5 of this Plan.
(c) Each grant or sale of Restricted Stock pursuant to this Section 9 will be upon terms and conditions consistent with Section 6 of this Plan.
(d) Each grant or sale of Restricted Stock Units pursuant to this Section 9 will be upon terms and conditions consistent with Section 7 of this Plan.
(e) Non-Employee Directors may be granted, sold, or awarded other awards contemplated by Section 10 of this Plan.
(f) If a Non-Employee Director subsequently becomes an employee of the Corporation or a Subsidiary while remaining a member of the Board, any Award held under this Plan by such individual at the time of such commencement of employment will not be affected thereby.
(g) Non-Employee Directors, pursuant to this Section 9, may be awarded, or may be permitted to elect to receive, pursuant to procedures established by the Board or a committee of the Board, all or any portion of their annual retainer, meeting fees or other fees in shares of Common Stock, Restricted Stock, Restricted Stock Units or other Awards contemplated by Section 10 of this Plan in lieu of cash. Any such election shall comply with Section 409A of the Code, if applicable. The election, if subject to Section 409A of the Code, (i) shall apply to the annual retainer, meeting fees, or other fees earned during the period to which it pertains (the “Plan Year”), (ii) must be received in writing by the administrator of the Plan by the established enrollment deadline of any Plan Year, which must be no later than the last business day of the calendar year immediately preceding the calendar year in which that Plan Year commences, in order to cause that Plan Year’s annual retainer, meeting fees, or other fees to be subject to the provision of this Plan, and (iii) must specify the form of distribution (in shares of Common Stock, Restricted Stock, Restricted Stock Units, or other Awards contemplated by Section 10 of the Plan in lieu of cash) to the Non-Employee Director. Any such election is irrevocable on the last day set by the administrator for making elections.
(h) Notwithstanding anything in Section 5, 6 or 7 to the contrary, each grant pursuant to this Section 9 may specify the period or periods of continuous service, if any, by the Non-Employee Director with the Corporation that are necessary before such awards or installments thereof shall become fully exercisable or restrictions thereon will lapse, which shall be determined on the Date of Grant.
10. Other Awards .
(a) The Compensation Committee or an Authorized Officer may, subject to limitations under applicable law, authorize grants or sales to any Participant of other awards that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, (i) shares of Common Stock or factors that may influence the value of such shares, including, without limitation, convertible or exchangeable debt securities, other rights convertible or exchangeable into shares of Common Stock, purchase rights for shares of Common Stock, awards with value and payment contingent upon performance of the Corporation or specified Subsidiaries, affiliates or other business units thereof or any other factors designated by the Compensation Committee, and awards valued by reference to the book value of shares of Common Stock or the value of securities of, or the performance of specified Subsidiaries or affiliates or other business units of, the Corporation, (ii) cash,





or (iii) any combination of the foregoing. The Compensation Committee or an Authorized Officer shall determine the terms and conditions of such awards, which may include the achievement of Management Objectives, which may specify in respect of such Management Objectives a minimum acceptable level or levels of achievement and may set forth a formula for determining the portion or all of the award on which restrictions will terminate if performance is at or above the minimum level(s), but falls short of full achievement of the specified Management Objectives. The grant or sale of such award will specify that, before the termination or early termination of the restrictions applicable to such award, the Compensation Committee must certify that the Management Objectives have been satisfied. Shares of Common Stock delivered pursuant to an award in the nature of a purchase right granted under this Section 10 shall be purchased for such consideration, paid for at such time, by such methods, and in such forms, including, without limitation, cash, shares of Common Stock, other awards, notes or other property, as the Compensation Committee shall determine.
(b) Each grant may specify the period or periods of continuous service, if any, by the Participant with the Corporation or any Subsidiary that are necessary before such awards or installments thereof shall become fully transferable, which shall be determined by the Compensation Committee or an Authorized Officer on the Date of Grant.
(c) Each grant may provide for the earlier termination of the period or periods of continuous service or other modifications, including in the event of termination without Cause, resignation for Good Reason, Normal Retirement, termination due to death or Disability of the Participant, a Change in Control, or the grant of a Substitute Award and, to the extent that any grant or Substitute Award is subject to, or determined to be subject to, Section 409A of the Code, the time and form of payment shall be indicated in the Evidence of Award as upon one or more of the permissible payment events under Section 409A of the Code and, as subject to the Six-Month Payment Delay, if required.
(d) The Compensation Committee may authorize grants or sales of shares of Common Stock as a bonus, or may grant other awards in lieu of obligations of the Corporation or a Subsidiary to pay cash or deliver other property under this Plan or under other plans or compensatory arrangements, subject to such terms as shall be determined by the Compensation Committee.
(e) Each grant or sale pursuant to this Section 10 may be made without additional consideration from the Participant or in consideration of a payment by the Participant that is less than the Market Value Per Share on the Date of Grant; provided , however , that with respect to a payment of an award that is substantially similar to an Option Right, no such payment shall be less than Market Value Per Share on the Date of Grant.
11. Administration of this Plan .
(a) This Plan will be administered by the Compensation Committee. The Board or the Compensation Committee, as applicable, may from time to time delegate all or any part of its authority under this Plan to any other committee of the Board or subcommittee thereof consisting exclusively of not less than two or more members of the Board, each of whom shall be a “non-employee director” within the meaning of Rule 16b-3 of the Securities and Exchange Commission promulgated under the Exchange Act, an “outside director” within the meaning of Section 162(m) of the Code and an “independent director” within the meaning of the rules of the New York Stock Exchange, as constituted from time to time. To the extent of any such delegation, references in this Plan to the Board or the Compensation Committee, as applicable, will be deemed to be references to such committee or subcommittee.
(b) The interpretation and construction by the Compensation Committee of any provision of this Plan or of any agreement, notification or document evidencing the grant of an Award, and any





determination by the Compensation Committee pursuant to any provision of this Plan or of any such agreement, notification or document will be final and conclusive.
(c) To the extent permitted by applicable law, the Board or the Compensation Committee, as applicable, may, from time to time, delegate to one or more of its members or to one or more officers of the Corporation, or to one or more agents or advisors, such administrative duties or powers as it may deem advisable, and the Board, the Compensation Committee, the committee, or any person to whom duties or powers have been delegated as aforesaid, may employ one or more persons to render advice with respect to any responsibility the Board or the Compensation Committee, the committee or such person may have under this Plan.
(d) To the extent permitted by applicable law, the Compensation Committee may, by resolution, authorize one or more Executive Officers of the Corporation (each, an “Authorized Officer”), including the Chief Executive Officer of the Corporation, to do one or both of the following on the same basis as the Compensation Committee: (i) designate Participants to be recipients of Awards under this Plan, (ii) determine the size of any such Awards; provided , however , that (A) the Compensation Committee shall not delegate such responsibilities to any Executive Officer for Awards granted to a Participant who is an Executive Officer, a Director, or a more than 10% beneficial owner of any class of the Corporation’s equity securities that is registered pursuant to Section 12 of the Exchange Act, as determined by the Board in accordance with Section 16 of the Exchange Act, and (B) the resolution providing for such authorization sets forth the total number of shares of Common Stock the Authorized Officer(s) may grant, and (iii) the Authorized Officer(s) shall report periodically to the Compensation Committee, as the case may be, regarding the nature and scope of the Awards granted pursuant to the authority delegated. In no event shall any such delegation of authority be permitted with respect to Awards to any Executive Officer or any person subject to Section 162(m) of the Code.
12. Adjustments . The Board shall make or provide for such adjustments in the numbers of shares of Common Stock covered by outstanding Option Rights, Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units and, if applicable, in the number of shares of Common Stock covered by other awards granted pursuant to Section 10 hereof, in the Option Price and Base Price provided in outstanding Option Rights and Appreciation Rights, and in the kind of shares covered thereby, and in other Award terms, as is equitably required to prevent dilution or enlargement of the rights of Participants or Optionees that otherwise would result from (i) any stock dividend, stock split, combination of shares, recapitalization or other change in the capital structure of the Corporation, or (ii) any merger, consolidation, spin-off, split-off, spin-out, split-up, reorganization, partial or complete liquidation or other distribution of assets, issuance of rights or warrants to purchase securities, or (iii) any other corporate transaction or event having an effect similar to any of the foregoing; however, in the event of any such transaction or event, any adjustments shall be in compliance with or maintain exemption from Section 409A of the Code. Such adjustments shall be made automatically, without the necessity of Board action, on the customary arithmetical basis in the case of any stock split, including a stock split effected by means of a stock dividend, and in the case of any other dividend paid in shares of Common Stock; however, any adjustment shall be in compliance with or maintain exemption from Section 409A of the Code. Moreover, in the event of any such transaction or event specified in this Section 12, the Board, in its discretion, and subject to ensuring compliance with or exemption from Section 409A of the Code, may provide in substitution for any or all outstanding Awards under this Plan such alternative consideration (including cash), if any, as it may determine, in good faith, to be equitable in the circumstances and may require in connection therewith the surrender of all Awards so replaced. In addition, for each Option Right or Appreciation Right with an Option Price or Base Price greater than the consideration offered in connection with any such transaction or event, the Compensation Committee may in its discretion elect to cancel such Option Right or Appreciation Right without any payment to the person holding such Option Right or





Appreciation Right. The Board also shall make or provide for such adjustments in the numbers of shares specified in Section 3 of this Plan as is appropriate to reflect any transaction or event described in this Section 12; provided , however , that any such adjustment to the number specified in Section 3(b) will be made only if and to the extent that such adjustment would not cause any Option Right intended to qualify as an Incentive Stock Option to fail so to qualify.
13. Change in Control .
(a) Except as otherwise provided in an Evidence of Award or by the Compensation Committee at the Date of Grant, to the extent outstanding Awards granted under this Plan are not assumed, converted or replaced by the resulting entity in the event of a Change in Control, all outstanding Awards that may be exercised shall become fully exercisable, all restrictions with respect to outstanding Awards shall lapse and become vested and non-forfeitable, and any specified Management Objectives with respect to outstanding Awards shall be deemed to be satisfied at target. If the Award is considered a “deferral of compensation” (as such term is defined under Code Section 409A), and if the failure of the Award to be assumed, converted or replaced by the resulting entity following the Change in Control would result in a payment of deferred compensation upon the closing of such Change in Control, except as otherwise provided in an Evidence of Award, the payment will occur within 30 days after the Change in Control, provided that such Change in Control may be treated as a change in ownership of the Corporation, a change in the effective control of the Corporation or a change in the effective ownership of a substantial portion of the Corporation’s assets as described in Treasury regulations issued under Code Section 409A (each a “Code Section 409A Change in Control”).
(b) Except as otherwise provided in an Evidence of Award or by the Compensation Committee, to the extent outstanding Awards granted under this Plan are assumed, converted or replaced by the resulting entity in the event of a Change in Control, any outstanding Awards that are subject to Management Objectives shall be converted by the resulting entity, as if target performance had been achieved as of the date of the Change in Control, and each award of: (i) Performance Shares or Performance Units shall continue to vest during the remaining Performance Period, (ii) Restricted Stock shall continue to be subject to a “substantial risk of forfeiture” for the remaining applicable period, (iii) Restricted Stock Units shall continue to vest during the Restriction Period, and (iv) all other Awards shall continue to vest during the applicable vesting period, if any.
(c) Except as otherwise provided in an Evidence of Award or by the Compensation Committee, to the extent outstanding Awards granted under this Plan are either assumed, converted or replaced by the resulting entity in the event of a Change in Control, if a Participant’s service is terminated without Cause by the Corporation, any of its Subsidiaries or the resulting entity or a Participant resigns his or her employment with an Employer for Good Reason, in either case, during the CIC Severance Protection Period, all outstanding Awards held by the Participant that may be exercised shall become fully exercisable and all restrictions with respect to outstanding Awards shall lapse and become vested and non-forfeitable.
(d) Notwithstanding any other provision of the Plan, in the event of a Change in Control, the Board in its discretion, may provide for the cancellation of each outstanding and unexercised Option Right or Appreciation Right in exchange for a cash payment to be made within 60 days of the Change in Control in an amount equal to the amount by which the highest price per share of Common Stock paid for a share of Common Stock in the Change in Control exceeds the Option Price or Base Price, as applicable, multiplied by the number of shares of Common Stock granted under the Option Right or Appreciation Right.
(e) Notwithstanding any provision of this Plan to the contrary, to the extent an Award shall be deemed to be vested or restrictions lapse, expire or terminate upon the occurrence of a Change in





Control and such Change in Control is not a Code Section 409A Change in Control, then even though such Award may be deemed to be vested or restrictions lapse, expire or terminate upon the occurrence of the Change in Control or any other provision of this Plan, payment will be made, to the extent necessary to comply with the provisions of Section 409A of the Code, to the Participant on the earliest of: (i) the Participant’s Separation from Service with the Corporation; provided , however , that if the Participant is a “specified employee” (within the meaning of Section 409A of the Code), the payment date shall be the date that is six (6) months after the date of the Participant’s Separation from Service with the Employer, (ii) the date payment otherwise would have been made in the absence of any provisions in this Plan to the contrary (provided such date is permissible under Section 409A of the Code), or (iii) the Participant’s death. Except as otherwise provided in an Evidence of Award or by the Compensation Committee, if any Person acquires beneficial ownership of the entirety (i.e., 100%) of the Voting Stock of the Corporation, such acquisition shall be treated as a transaction that is governed by this Section 13 with respect to Awards granted after the Restatement Effective Date.
(f) Unless otherwise provided in a Participant’s employment agreement, if any, between the Participant and an Employer or any other arrangement with the Corporation or any of its Subsidiaries to which the Participant is a party or participant, if the acceleration of exercisability under this Section 13, together with all other payments or benefits contingent on the Change in Control within the meaning of Section 280G of the Code, results in any portion of such payments or benefits not being deductible by the Corporation as a result of the application of Section 280G of the Code, the payments or benefits shall be reduced until the entire amount of the payments or benefits is deductible. The reduction shall be effected from Awards made under this Plan by the exclusion, first, of Awards, or portions thereof, that are not permitted to be valued under Treasury Regulation section 1.280G-1, Q&A 24(c), or any successor provision, and, second, of Awards, or portions thereof, that are permitted to be valued under Treasury Regulation section 1.280G-1, Q&A 24(c).
14. Detrimental Activity .
(a) Any Evidence of Award may provide that if the Board or the Compensation Committee determines a Participant has engaged in any Detrimental Activity, either during service with the Corporation or a Subsidiary or within a specified period after termination of such service, then, promptly upon receiving notice of the Board’s finding, the Participant shall:
(i) forfeit that Award to the extent then held by the Participant;
(ii) in exchange for payment by the Corporation or the Subsidiary of any amount actually paid therefor by the Participant, return to the Corporation or the Subsidiary, all shares of Common Stock that the Participant has not disposed of that had been acquired pursuant to that Award;
(iii) with respect to any shares of Common Stock acquired pursuant to that Award that were disposed of, pay to the Corporation or the Subsidiary, in cash, the difference between:
(A)
any amount actually paid by the Participant, and
(B)
the Market Value Per Share of the shares of Common Stock on the date acquired; and
(iv) pay to the Corporation or the Subsidiary in cash the Spread, with respect to any Option Rights or Appreciation Rights exercised where no shares of Common Stock were retained by the Participant upon such exercise.
(b) To the extent that such amounts are not paid to the Corporation or the Subsidiary, the Corporation may seek other remedies, including a set off of the amounts so payable to it against any





amounts that may be owing from time to time by the Corporation or a Subsidiary to the Participant for any reason, including, without limitation, wages, deferred compensation or vacation pay. To the extent that any set off under this section of the Plan causes the Participant to become subject to taxes under Section 409A of the Code, the responsibility for payment of such taxes lies solely with the Participant.
15. Non-U.S. Participants . In order to facilitate the making of any grant or combination of grants under this Plan, the Board or the Compensation Committee may provide for such special terms for awards to Participants who are foreign nationals or who are employed by the Corporation or any Subsidiary outside of the United States of America or who provide services to the Corporation or any Subsidiary under an agreement with a foreign nation or agency, as the Board or the Compensation Committee may consider necessary or appropriate to accommodate differences in local law, tax policy or custom. Moreover, the Compensation Committee may approve such supplements to or amendments, restatements or alternative versions of this Plan (including, without limitation, sub-plans) as it may consider necessary or appropriate for such purposes, without thereby affecting the terms of this Plan as in effect for any other purpose, and the Secretary of the Board or other appropriate officer of the Corporation may certify any such document as having been approved and adopted in the same manner as this Plan. No such special terms, supplements, amendments or restatements, however, will include any provisions that are inconsistent with the terms of this Plan as then in effect unless this Plan could have been amended to eliminate such inconsistency without further approval by the stockholders of the Corporation.
16. Transferability .
(a) Except as otherwise determined by the Board or the Compensation Committee pursuant to the provisions of Section 16(c), no Award or dividend equivalents paid with respect to Awards made under this Plan shall be transferable by the Participant except by will or the laws of descent and distribution, and may be otherwise transferred in a manner that protects the interest of the Corporation as the Board or the Compensation Committee may determine; provided , that if so determined by the Compensation Committee, each Participant may, in a manner established by the Board or the Compensation Committee, designate a beneficiary to exercise the rights of the Participant with respect to any Award upon the death of the Participant and to receive shares of Common Stock or other property issued upon such exercise.
(b) The Compensation Committee or an Authorized Officer may specify at the Date of Grant that part or all of the shares of Common Stock that are (i) to be issued or transferred by the Corporation upon the exercise of Option Rights or Appreciation Rights, upon the termination of the Restriction Period applicable to Restricted Stock Units or upon payment under any grant of Performance Shares or Performance Units or (ii) no longer subject to the substantial risk of forfeiture and restrictions on transfer referred to in Section 6 of this Plan, will be subject to further restrictions on transfer.
(c) Notwithstanding Section 16(a), the Board or the Compensation Committee may determine that Awards (other than Incentive Stock Options) may be transferable by a Participant, without payment of consideration therefor by the transferee, only to any one or more family members (as defined in the General Instructions to Form S-8 under the Securities Act of 1933) of the Participant; provided , however , that (i) no such transfer shall be effective unless reasonable prior notice thereof is delivered to the Corporation and such transfer is thereafter effected in accordance with any terms and conditions that shall have been made applicable thereto by the Board or the Compensation Committee, and (ii) any such transferee shall be subject to the same terms and conditions hereunder as the Participant.
17. Withholding Taxes . To the extent that the Corporation is required to withhold federal, state, local or foreign taxes in connection with any payment made or benefit realized by a Participant or other





person under this Plan, and the amounts available to the Corporation for such withholding are insufficient, it will be a condition to the receipt of such payment or the realization of such benefit that the Participant or such other person make arrangements satisfactory to the Corporation for payment of the balance of such taxes required to be withheld, which arrangements (in the discretion of the Compensation Committee) may include relinquishment of a portion of such benefit. If a Participant’s benefit is to be received in the form of shares of Common Stock, and such Participant fails to make arrangements for the payment of tax, the Corporation shall withhold such shares of Common Stock having a value equal to the amount required to be withheld. Notwithstanding the foregoing, when a Participant is required to pay the Corporation an amount required to be withheld under applicable income and employment tax laws, the Committee may in its discretion permit the Participant to satisfy the obligation, in whole or in part, by electing to have withheld, from the shares required to be delivered to the Participant, shares of Common Stock having a value equal to the amount required to be withheld (except in the case of Restricted Stock where an election under Section 83(b) of the Code has been made), or by delivering to the Corporation other shares of Common Stock held by such Participant. In no event shall the Market Value Per Share of the shares of Common Stock to be withheld pursuant to this section to satisfy applicable withholding taxes in connection with the benefit exceed the minimum amount of taxes required to be withheld or such other amount that will not result in a negative accounting impact. Participants shall also make such arrangements as the Corporation may require for the payment of any withholding tax obligation that may arise in connection with the disposition of shares of Common Stock acquired upon the exercise of Option Rights.
18. Compliance with Section 409A of the Code .
(a) To the extent applicable, it is intended that this Plan and any grants made hereunder are exempt from Section 409A of the Code or are structured in a manner that would not cause a Participant to be subject to taxes and interest pursuant to Section 409A of the Code. This Plan and any grants made hereunder shall be administrated in a manner consistent with this intent, and any provision that would cause this Plan or any grant made hereunder to become subject to taxation under Section 409A of the Code shall have no force and effect until amended to comply with Section 409A of the Code (which amendment may be retroactive to the extent permitted by Section 409A of the Code and may be made by the Corporation without the consent of Participants).
(b) In order to determine for purposes of Section 409A of the Code whether a Participant is employed by a member of the Corporation’s controlled group of corporations under Section 414(b) of the Code (or by a member of a group of trades or businesses under common control with the Corporation under Section 414(c) of the Code) and, therefore, whether the shares of Common Stock that are or have been purchased by or awarded under this Plan to the Participant are shares of “service recipient” stock within the meaning of Section 409A of the Code:
(i) In applying Code Section 1563(a)(1), (2) and (3) for purposes of determining the Corporation’s controlled group under Section 414(b) of the Code, the language “at least 50 percent” is to be used instead of “at least 80 percent” each place it appears in Code Section 1563(a)(1), (2) and (3); and
(ii) In applying Treasury Regulation Section 1.414(c)-2 for purposes of determining trades or businesses under common control with the Corporation for purposes of Section 414(c) of the Code, the language “at least 50 percent” is to be used instead of “at least 80 percent” each place it appears in Treasury Regulation Section 1.414(c)-2.
19. Effective Date and Term of Plan .
(a) This Plan originally became effective as of the Effective Date and, subject to approval by the Company’s stockholders, the amended and restated Plan will become effective as of the





Restatement Effective Date. No grant will be made under this Plan more than ten (10) years after the Restatement Effective Date, but all grants made on or prior to such date will continue in effect thereafter subject to the terms thereof and of this Plan.
(b) Upon the Effective Date, no further grants of awards are permitted under the Predecessor Plans. All awards under the Predecessor Plans that remain outstanding shall be administered and paid in accordance with the provisions of the applicable Predecessor Plan and award agreement.
20. Amendments and Termination .
(a) The Board may at any time and from time to time, to the extent permitted by Section 409A of the Code, amend, suspend or terminate this Plan in whole or in part; provided , however , that if an amendment to this Plan (i) would materially increase the benefits accruing to Participants under this Plan, (ii) would materially increase the number of securities which may be issued under this Plan, (iii) would materially modify the requirements for participation in this Plan, or (iv) must otherwise be approved by the stockholders of the Corporation in order to comply with applicable law or the rules of the New York Stock Exchange or, if the shares of Common Stock are not traded on the New York Stock Exchange, the principal national securities exchange upon which the shares of Common Stock are traded or quoted, then, such amendment will be subject to stockholder approval and will not be effective unless and until such approval has been obtained.
(b) Termination of this Plan will not affect the rights of Participants or their successors under any Awards outstanding hereunder and not exercised in full on the date of termination.
(c) Except in connection with a corporate transaction or event described in Section 12, the Board or the Compensation Committee will not, without the further approval of the stockholders of the Corporation, authorize the amendment of any outstanding Option Right or Appreciation Right to reduce the Option Price or Base Price, respectively. No Option Right or Appreciation Right will be cancelled and replaced with awards having a lower Option Price or Base Price, respectively, or for another award, or for cash without further approval of the stockholders of the Corporation, except in connection with a corporate transaction or event described in Section 12. Furthermore, no Option Right or Appreciation Right will provide for the payment, at the time of exercise, of a cash bonus or grant of Option Rights, Appreciation Rights, Performance Shares, Performance Units, or grant or sale of Restricted Stock, Restricted Stock Units or other awards pursuant to Section 10 of this Plan, without further approval of the stockholders of the Corporation. This Section 20(c) is intended to prohibit the repricing of “underwater” Option Rights or Appreciation Rights without stockholder approval and will not be construed to prohibit the adjustments provided for in Section 12 of this Plan.
(d) If permitted by Section 409A of the Code, in case of termination of service by reason of death, Disability or Normal Retirement, or in the case of unforeseeable emergency or other special circumstances, of a Participant who holds an Option Right or Appreciation Right not immediately exercisable in full, or any shares of Restricted Stock as to which the substantial risk of forfeiture or the prohibition or restriction on transfer has not lapsed, or any Restricted Stock Units as to which the Restriction Period has not been completed, or any Performance Shares or Performance Units which have not been fully earned, or any other awards made pursuant to Section 10 subject to any vesting schedule or transfer restriction, or who holds shares of Common Stock subject to any transfer restriction imposed pursuant to Section 16 of this Plan, the Compensation Committee may, in its sole discretion, accelerate the time at which such Option Right, Appreciation Right or other award may be exercised or the time at which such substantial risk of forfeiture or prohibition or restriction on transfer will lapse or the time when such Restriction Period will end or the time at which such Performance Shares or Performance Units will be deemed to have been fully earned or the time when such transfer restriction will terminate or may waive any other limitation or requirement under any such award,





except in the case of a Qualified Performance-Based Award where such action would result in the loss of the otherwise available exemption of the Award under Section 162(m) of the Code.
(e) Subject to Section 20(c) hereof, the Compensation Committee may amend the terms of any Award theretofore granted under this Plan prospectively or retroactively, except in the case of a Qualified Performance-Based Award where such action would result in the loss of the otherwise available exemption of such Award under Section 162(m) of the Code. In such case, the Compensation Committee will not make any modification of the Management Objectives or the level or levels of achievement with respect to such Qualified Performance-Based Award. Subject to Section 12 above, no amendment shall materially impair the rights of any Participant without his or her consent.
21. Substitute Awards for Awards Granted by Other Entities . Substitute Awards may be granted under this Plan for grants or awards held by Employees of a company or entity who become Employees of the Corporation or a Subsidiary as a result of the acquisition, merger or consolidation of the employer company by or with the Corporation or a Subsidiary. Except as otherwise provided by applicable law and notwithstanding anything in the Plan to the contrary, the terms, provisions and benefits of the Substitute Awards so granted may vary from those set forth in or required or authorized by this Plan to such extent as the Compensation Committee at the time of the grant may deem appropriate to conform, in whole or part, to the terms, provisions and benefits of grants or awards in substitution for which they are granted.
22. Governing Law . This Plan and all grants and Awards and actions taken thereunder shall be governed by and construed in accordance with the internal substantive laws of the State of Delaware.
23. Miscellaneous Provisions .
(a) The Corporation will not be required to issue any fractional shares of Common Stock pursuant to this Plan. The Board or the Compensation Committee may provide for the elimination of fractions or for the settlement of fractions in cash.
(b) This Plan will not confer upon any Participant any right with respect to continuance of employment or other service with the Corporation or any Subsidiary, nor will it interfere in any way with any right the Corporation or any Subsidiary would otherwise have to terminate such Participant’s employment or other service at any time.
(c) To the extent that any provision of this Plan would prevent any Option Right that was intended to qualify as an Incentive Stock Option from qualifying as such, that provision will be null and void with respect to such Option Right. Such provision, however, will remain in effect for other Option Rights and there will be no further effect on any provision of this Plan.
(d) The Compensation Committee or an Authorized Officer may provide for termination of an Award in the case of termination of employment or service of a Participant or any other reason; provided , however , that all Awards of a Participant will be immediately forfeited and cancelled to the extent the Participant’s employment or service has been terminated for Cause, and the Participant will have no further rights in respect of such Awards.
(e) No Award under this Plan may be exercised by the holder thereof if such exercise, and the receipt of cash or stock thereunder, would be, in the opinion of counsel selected by the Compensation Committee, contrary to law or the regulations of any duly constituted authority having jurisdiction over this Plan.





 
(f) Except as required by Section 409A of the Code in connection with a Separation from Service, absence on leave approved by a duly constituted officer of the Corporation or any of its Subsidiaries shall not be considered interruption or termination of service of any Employee for any purposes of this Plan or Awards granted hereunder, except that no Awards may be granted to an Employee while he or she is absent on leave.
(g) Except as specifically provided in Section 9(h), no Participant shall have any rights as a stockholder with respect to any shares of Common Stock subject to Awards granted to him or her under this Plan prior to the date as of which he or she is actually recorded as the holder of such shares upon the stock records of the Corporation.
(h) The Compensation Committee may condition the grant of any Award or combination of Awards authorized under this Plan on the surrender or deferral by the Participant of his or her right to receive a cash bonus or other compensation otherwise payable by the Corporation or a Subsidiary to the Participant.
(i) Except with respect to Option Rights and Appreciation Rights, the Compensation Committee may permit Participants to elect to defer the issuance of shares of Common Stock or the settlement of Awards in cash under this Plan pursuant to such rules, procedures or programs as it may establish for purposes of this Plan. The Compensation Committee also may provide that deferred issuances and settlements include the payment or crediting of dividend equivalents or interest on the deferral amounts. All elections and deferrals permitted under this provision shall comply with Section 409A of the Code, including setting forth the time and manner of the election (including a compliant time and form of payment), the date on which the election is irrevocable, and whether the election can be changed until the date it is irrevocable.
(j) Any Award granted under the terms of this Plan may specify in the Evidence of Award that the Participant is subject to restrictive covenants including, but not limited to, covenants not to compete and covenants not to solicit, unless otherwise determined by the Compensation Committee.
(k) Participants shall provide the Corporation with a completed, written election form setting forth the name and contact information of the person who will have beneficial ownership rights of Awards made to the Participant under this Plan upon the death of the Participant.
(l) If any provision of this Plan is or becomes invalid, illegal or unenforceable in any jurisdiction, or would disqualify this Plan or any Award under any law deemed applicable by the Board or the Compensation Committee, such provision shall be construed or deemed amended or limited in scope to conform to applicable laws or, in the discretion of the Board or the Compensation Committee, it shall be stricken and the remainder of this Plan shall remain in full force and effect.
(m) Clawback/Recoupment of Awards . All Awards granted under the Plan will be subject to deduction, forfeiture, recoupment or similar requirement in accordance with any clawback policy that may be implemented by the Company from time to time, including such policies that may be implemented after the date an Award is granted, pursuant to the listing standards of any national securities exchange or association on which the Company’s securities are listed or as is otherwise required by the Dodd-Frank Wall Street Reform and Consumer Protection Act or other applicable law, or other agreement or arrangement with a Participant.





Exhibit 10.3

SPRINTLOGO1A06.JPG

Sprint - Executive Office


January 18, 2017

Roger Sole-Rafols                 



Dear Roger:

I am pleased to inform you that the Compensation Committee approved you to receive a special retention incentive because of your critical role in the company.

This retention incentive consists of one payment to be made on January 27, 2017 totaling $200,000.

Your signature indicates that you agree to repay the retention incentive if you are no longer employed by the Company (unless employment is terminated by the Company without cause, or is due to death or disability) through the 12-month anniversary of the January 27, 2017 payment date.
 
Please scan and e-mail a signed copy of this letter, confirming your acceptance to me. I look forward to your ongoing contributions toward the company’s success.

Best Regards,


/s/ Marcelo Claure
Marcelo Claure
President & CEO



Accepted by:
Roger Sole-Rafols, CMO



                            
Date








Exhibit 10.6

FIRST AMENDMENT TO
SECOND AMENDED AND RESTATED
RECEIVABLES PURCHASE AGREEMENT

This FIRST AMENDMENT TO SECOND AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT, dated as of November 18, 2016 (this “ Amendment ”), is entered into by and among the following parties:
(a) SPRINT SPECTRUM L.P., as initial Servicer (the “ Servicer ”);
(b) THE PERSONS IDENTIFIED ON THE SIGNATURE PAGES HERETO AS “Sellers” (the “ Sellers ” and together with the Servicer, the “ Sprint Parties ”);
(c) THE PERSONS IDENTIFIED ON THE SIGNATURE PAGES HERETO AS “CONDUIT PURCHASERS” (the “ Conduit Purchasers ”);
(d) THE PERSONS IDENTIFIED ON THE SIGNATURE PAGES HERETO AS “COMMITTED PURCHASERS” (the “ Committed Purchasers ”);
(e) THE PERSONS IDENTIFIED ON THE SIGNATURE PAGES HERETO AS “PURCHASER AGENTS” (the “ Purchaser Agents ”);
(f) MIZUHO BANK, LTD., as the Collateral Agent (in such capacity the “ Collateral Agent ”) and as the ISC Administrative Agent (in such capacity the “ ISC Administrative Agent ”);
(g) THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., NEW YORK BRANCH, as the SCC Administrative Agent (in such capacity the “ SCC Administrative Agent ”), and
(h) SMBC NIKKO SECURITIES AMERICA, INC., as Lease Administrative Agent (in such capacity the “ Lease Administrative Agent ” and, together with the ISC Administrative Agent and the SCC Administrative Agent, the “ Administrative Agents ”).
Capitalized terms used but not otherwise defined herein have the respective meanings assigned thereto in the Receivables Purchase Agreement (as defined below).
RECITALS
WHEREAS, the Sellers, the Servicer, the Conduit Purchasers, the Committed Purchasers, the Purchaser Agents, the Collateral Agent and the Administrative Agents, entered into that certain Second Amended and Restated Receivables Purchase Agreement, dated as of November 19, 2015 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “ Receivables Purchase Agreement ”);




WHEREAS, concurrently herewith, the parties to the Receivables Purchase Agreement are entering into an Amendment Fee Letter Agreement (the “ Amendment Fee Letter ”);
WHEREAS, the parties to the Receivables Purchase Agreement desire to amend the Receivables Purchase Agreement on the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual agreements herein contained, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:
1. Amendments to the Receivables Purchase Agreement . The Receivables Purchase Agreement is hereby amended to reflect the marked changes shown on Exhibit A hereto.
2. Representations and Warranties. Each Sprint Party hereby represents and warrants as of the date hereof as follows:
(a) Representations and Warranties . The representations and warranties made by it in the Receivables Purchase Agreement are true and correct as of the date hereof (unless stated to relate solely to an earlier date, in which case such representations or warranties were true and correct as of such earlier date).
(b) Enforceability . The execution and delivery by such Person of this Amendment, and the performance of each of its obligations under this Amendment and the Receivables Purchase Agreement as amended hereby, are within each of its organizational powers and have been duly authorized by all necessary organizational action on its part. This Amendment and the Receivables Purchase Agreement as amended hereby, are such Person’s valid and legally binding obligations, enforceable in accordance with their respective terms.
(c) No Termination Events . After giving effect to this Amendment and the transactions contemplated hereby, no Event of Termination, Unmatured Event of Termination, Collection Control Event or Non-Reinvestment Event exists or shall exist.
3. Entire Agreement . Except as otherwise amended hereby, all of the other terms and provisions of the Receivables Purchase Agreement are and shall remain in full force and effect and the Receivables Purchase Agreement, as amended and supplemented by this Amendment, is hereby ratified and confirmed by the parties hereto. After this Amendment becomes effective, all references in the Receivables Purchase Agreement (or in any other Transaction Document) to “this Agreement”, “hereof”, “herein” or words of similar effect referring to the Receivables Purchase Agreement shall be deemed to be references to the Receivables Purchase Agreement as amended by this Amendment. This Amendment contains the entire understanding of the parties with respect to the provisions of the Receivables Purchase Agreement amended and supplemented hereby and may not be modified except in writing signed by all parties. This Amendment shall not be deemed, either expressly or impliedly, to waive, amend or supplement any provision of the Receivables Purchase Agreement other than as set forth herein.
4. Effectiveness . This Amendment shall become effective as of the date hereof upon receipt by the Collateral Agent and each Administrative Agent of:

2





(a) duly executed counterparts of this Amendment (whether by facsimile or otherwise) executed by each of the parties hereto;
(b) duly executed counterparts of the Amendment Fee Letter (whether by facsimile or otherwise) executed by each of the parties thereto;
(c) confirmation from each Purchaser Agent that all amounts due and owing under the Amendment Fee letter have been paid in full;
(d) standard corporate and enforceability opinions reasonably required by the Collateral Agent and each Administrative Agent (covering no-conflicts with material agreements); and
(e) such other agreements, documents and instruments as the Administrative Agents shall request.
5. Governing Law . THIS AMENDMENT, INCLUDING THE RIGHTS AND DUTIES OF THE PARTIES HERETO, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, BUT WITHOUT REGARD TO ANY OTHER CONFLICTS OF LAW PROVISIONS THEREOF).
6. Severability. If any one or more of the agreements, provisions or terms of this Amendment shall for any reason whatsoever be held invalid or unenforceable, then such agreements, provisions or terms shall be deemed severable from the remaining agreements, provisions and terms of this Amendment and shall in no way affect the validity or enforceability of the provisions of this Amendment or the Receivables Purchase Agreement, as applicable.
7. Section Headings . The various headings of this Amendment are included for convenience only and shall not affect the meaning or interpretation of this Amendment, the Receivables Purchase Agreement or any provision hereof or thereof.
8. Successors and Assigns . This Amendment shall be binding upon and inure to the benefit of each Sprint Party, and their respective successors and permitted assigns.
9. Counterparts . This Amendment may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same agreement. Delivery of an executed counterpart hereof by facsimile or other electronic means shall be equally effective as delivery of an originally executed counterpart.
 

[Signature Pages Follow]




3






IN WITNESS WHEREOF, the parties have caused this Amendment to be executed by their respective officers thereunto duly authorized as of the date first above written.
SPRINT SPECTRUM L.P.
as Servicer


By: /s/ Janet M. Duncan
Name: Janet M. Duncan     
Title: Treasurer
  


SFE 1, LLC
SFE 2, LLC
SFE 3, LLC
SFE 4, LLC
SFE 5, LLC
SFE 6, LLC
SFE 7, LLC
SFE 8, LLC
SFE 9, LLC
SFE 10, LLC
SFE 11, LLC
SFE 12, LLC
SFE 13, LLC
SFE 14, LLC
SFE 15, LLC , each as a Seller



By: /s/ Janet M. Duncan
Name: Janet M. Duncan
Title: Treasurer













S-1                         First Amendment






THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., NEW YORK BRANCH ,
as the SCC Administrative Agent


By: /s/ Luna Mills                             
Name:    Luna Mills
Title: Managing Director


MIZUHO BANK, LTD. ,
as the ISC Administrative Agent


By: /s/ Daniel Guevara                     
Name: Daniel Guevara
Title: Authorized Signatory


MIZUHO BANK, LTD. ,
as Collateral Agent


By: /s/ Daniel Guevara                     
Name: Daniel Guevara
Title: Authorized Signatory


SMBC NIKKO SECURITIES AMERICA, INC. , as the Lease Administrative Agent


By: /s/ Yukimi Konno                     
Name: Yukimi Konno
Title: Managing Director













S-2                         First Amendment






VICTORY RECEIVABLES CORPORATION ,
as a Conduit Purchaser


By: /s/ David V. DeAngelis             
Name:      David V. DeAngelis
Title: Vice President


THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., NEW YORK BRANCH ,
as a Purchaser Agent for the Victory Purchaser Group


By: /s/ Luna Mills                     
Name:      Luna Mills
Title: Managing Director


THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., CHICAGO BRANCH ,
as a Committed Purchaser for the Victory Purchaser Group


By: /s/ Nobuaki Mori                 
Name:      Nobuaki Mori
Title: Managing Director












S-3                         First Amendment







MIZUHO BANK, LTD. ,
as a Purchaser Agent for Mizuho Bank, Ltd., as Committed Purchaser


By: /s/ Daniel Guevara        
Name:      Daniel Guevara
Title: Authorized Signatory



MIZUHO BANK, LTD. ,
as a Committed Purchaser


By: /s/ Daniel Guevara                 
Name:      Daniel Guevara
Title: Authorized Signatory


































S-4                         First Amendment





MANHATTAN ASSET FUNDING COMPANY LLC ,
as a Conduit Purchaser

By: MAF Receivables Corp., Its Member

By: /s/ Irina Khaimova        
Name:      Irina Khaimova         
Title: Vice President


SMBC NIKKO SECURITIES AMERICA, INC. ,
as a Purchaser Agent for the Manhattan Purchaser Group


By: /s/ Yukimi Konno        
Name:      Yukimi Konno         
Title: Managing Director


SUMITOMO MITSUI BANKING CORPORATION ,
as a Committed Purchaser for the Manhattan Purchaser Group


By: /s/ Koki Harada                          
Name:      Koki Harada
Title: Executive Director













S-5                         First Amendment






LIBERTY STREET FUNDING LLC , as a Conduit Purchaser



By: /s/ Jill A. Russo                 
Name:      Jill A. Russo
Title: Vice President


THE BANK OF NOVA SCOTIA , as a Purchaser Agent for the Liberty Street Purchaser Group


By: /s/ Paula J. Czach                              
Name:      Paula J. Czach
Title: Managing Director


THE BANK OF NOVA SCOTIA , as a Committed Purchaser for the Liberty Street Purchaser Group


By: /s/ Paula J. Czach                 
Name:      Paula J. Czach
Title: Managing Director

























S-6                         First Amendment





ATLANTIC ASSET SECURITIZATION LLC , as a Conduit Purchaser

By:      Crédit Agricole Corporate and Investment Bank,
as attorney-in-fact

        
By: /s/ Kostantina Kourmpetis        
Name: Kostantina Kourmpetis
Title: Managing Director
        
By: /s/ Sam Pilcer            
Name: Sam Pilcer
Title: Managing Director


CRÉDIT AGRICOLE CORPORATE AND INVESTMENT BANK , as a Purchaser Agent for the Atlantic Asset Purchaser Group


By: /s/ Kostantina Kourmpetis             
Name:      Kostantina Kourmpetis
Title: Managing Director

By: /s/ Sam Pilcer            
Name: Sam Pilcer
Title: Managing Director


CRÉDIT AGRICOLE CORPORATE AND INVESTMENT BANK , as a Committed Purchaser for the Atlantic Asset Purchaser Group


By: /s/ Kostantina Kourmpetis             
Name:      Kostantina Kourmpetis
Title: Managing Director

By: /s/ Sam Pilcer            
Name: Sam Pilcer
Title: Managing Director










S-7                         First Amendment





SUMITOMO MITSUI TRUST BANK, LIMITED
as a Purchaser Agent for Sumitomo Mitsui Trust Bank, Limited, as Committed Purchaser


By: /s/ Albert C. Tew II                 
Name:      Albert C. Tew II
Title: Head of Documentation Americas



SUMITOMO MITSUI TRUST BANK , LIMITED ,
as a Committed Purchaser


By: /s/ Albert C. Tew II                 
Name:      Albert C. Tew II
Title: Head of Documentation America






























S-8                         First Amendment





EXHIBIT A
(marked pages)













































Exhibit A                     First Amendment




Exhibit 10.7




_________________________________________________________________________________________________


AMENDED AND RESTATED FIRST STEP TRANSFER AGREEMENT (TRANCHE 2)
dated as of December 8, 2016
among
THE ORIGINATORS FROM TIME TO TIME PARTY HERETO,
as Transferors
THE LESSEES FROM TIME TO TIME PARTY HERETO,
as Transferees

and
SPRINT SPECTRUM L.P.,
as Servicer

_________________________________________________________________________________________________





Table of Contents
Page

ARTICLE I
DEFINITIONS AND RELATED MATTERS .....................................................1
SECTION 1.1
Defined Terms .........................................................................................1
SECTION 1.2
Other Interpretive Matters      ..................................................................................... 3
ARTICLE II
TRANSFER AND CONTRIBUTION ................................................................3
SECTION 2.1
Transfer and Contribution      ..................................................................................... 3
SECTION 2.2
Assignment and Assumption of Related Customer Lease
Obligations ..............................................................................................3
SECTION 2.3
Distributions ............................................................................................4
SECTION 2.4
No Recourse ............................................................................................4
SECTION 2.5
Intention of the Parties ............................................................................4
SECTION 2.6
Like-Kind Exchanges ..............................................................................5
SECTION 2.7
Transfers of Rights in Customer Leases Upon Device Repurchase ........5
SECTION 2.8
Redistribution Upon Upgrade Termination Option Payment ..................5
SECTION 2.9
Redistribution Upon Transfer of Title of Original Device ......................5
ARTICLE III
ADMINISTRATION AND COLLECTION .......................................................5
SECTION 3.1
Servicer ...................................................................................................5
SECTION 3.2
Power of Attorney     .................................................................................................... 5
SECTION 3.3
Actions Evidencing Absolute Assignments ............................................6
SECTION 3.4
Continuation Statements .........................................................................6
ARTICLE IV
REPRESENTATIONS AND WARRANTIES ....................................................6
SECTION 4.1
Mutual Representations and Warranties .................................................6
SECTION 4.2
Additional Representations and Warranties of the Originators ..............8
SECTION 4.3
Breach of Eligibility Representation and Warranty ..............................10
ARTICLE V
GENERAL COVENANTS .............................................................................. 10
SECTION 5.1
Mutual Covenants     .................................................................................................. 10
SECTION 5.2
Additional Covenants ............................................................................11
SECTION 5.3
Negative Covenants of Each Originator ...............................................13
ARTICLE VI
INDEMNIFICATION .......................................................................................14
SECTION 6.1
Each Originator’s Indemnity .................................................................14
SECTION 6.2
Contribution ..........................................................................................15
-i-





ARTICLE VII
MISCELLANEOUS .......................................................................................16
SECTION 7.1
Amendments, etc ................................................................................16
SECTION 7.2
No Waiver; Remedies .........................................................................16
SECTION 7.3
Notices, Etc .........................................................................................16
SECTION 7.4
Binding Effect; Assignment ................................................................16
SECTION 7.5
Survival ...............................................................................................16
SECTION 7.6
Costs and Expenses .............................................................................16
SECTION 7.7
Execution in Counterparts; Integration ...............................................17
SECTION 7.8
Governing Law ....................................................................................17
SECTION 7.9
Waiver of Jury Trial .............................................................................17
SECTION 7.10
Consent to Jurisdiction; Waiver of Immunities ...................................17
SECTION 7.11
Confidentiality .....................................................................................18
SECTION 7.12
No Proceedings ...................................................................................18
SECTION 7.13
No Recourse Against Other Parties .....................................................18
SECTION 7.14
Severability ..........................................................................................18
ANNEX 1          UCC Details Schedule
ANNEX 2          Related Originators; Related Lessees



























-ii-





AMENDED AND RESTATED FIRST STEP TRANSFER AGREEMENT (TRANCHE 2)
This AMENDED AND RESTATED FIRST STEP TRANSFER AGREEMENT (TRANCHE 2), dated as of December 8, 2016 and effective as of the Amendment Closing Date (this “ Agreement ”), is among THE PERSONS IDENTIFIED ON THE SIGNATURE PAGES HERETO AS ORIGINATORS, as transferors (collectively, the “ Originators ” and, each, an “ Originator ”), THE PERSONS IDENTIFIED ON THE SIGNATURE PAGES HERETO AS LESSEES, as transferees (collectively, the “ Lessees ” and, each, a “ LESSEE ”) and SPRINT SPECTRUM L.P., as servicer (in such capacity, the “ Servicer ”).
WHEREAS, the Lessees and Originators are parties to the First Step Transfer Agreement, dated as of April 28, 2016 and effective as of the Lease Closing Date (as amended, supplemented or otherwise modified from time to time prior to the date hereof, the “ Original First Step Transfer Agreement ”);
WHEREAS, it is the intent of the parties hereto that this Agreement amend and restate in its entirety the Original First Step Transfer Agreement;
WHEREAS, pursuant to the Transaction Documents, on the Lease Closing Date, the Originators entered into a sale and leaseback transaction whereby (i) each Originator contributed the Devices and Related Customer Leases owned by such Originator to its Related Lessee, (ii) each Lessee sold the Devices and the Customer Lease-End Rights and Obligations to MLS and distributed the net cash proceeds of such sale to its Related Originator and (iii) MLS leased the Devices to the relevant Lessee;
WHEREAS, the Parties intend that the Transaction Documents create a financing for all U.S. federal, state and local income tax purposes, and thus specifically that (i) the Cash Purchase Price paid under the Second Step Transfer Agreement at closing be treated for such purposes as amounts loaned by MLS for which the Devices provide security and (ii) all Rental Payments to MLS under the Device Leases be treated for such purposes as payments on such indebtedness owed to MLS.
NOW, THEREFORE, the parties hereto agree that the Original First Step Transfer Agreement is amended and restated in its entirety as set forth in this Agreement and further agree as follows:
ARTICLE I

DEFINITIONS AND RELATED MATTERS

SECTION 1.1     Defined Terms . In this Agreement, capitalized terms not otherwise defined herein are defined in that certain Appendix A to the Amended and Restated Master Lease Agreement (Tranche 2), dated as of the date hereof and effective as of the Amendment Closing Date (as amended, supplemented or otherwise modified from time to time, the “ Master Lease Agreement ”), among the Lessees, Mobile Leasing Solutions, LLC, a Delaware limited liability company, acting for itself and on behalf of Series 2 thereof (“ MLS ”), the Servicer and







1




Mizuho Bank, Ltd. (the “ Collateral Agent ”). In addition, the following terms used herein have the meanings indicated below:

“ Agreement ” shall have the meaning provided in the preamble of this Agreement.
“ Amdocs Sub-Servicing Agreement ” shall have the meaning provided in the Servicing Agreement.
“ Collateral Agent ” shall have the meaning provided above in this Section 1.1 .
“ Collections ” shall have the meaning provided in the Servicing Agreement.
“ Devices ” means the Lease Closing Date Devices, the Upgraded Devices and each wireless mobile device contributed to a Lessee in connection with a Like-Kind Exchange for any of the foregoing Devices.
“ Lease Closing Date Devices ” means the wireless mobile devices identified on Schedule I hereto.
“ Lease Closing Date Customer Leases ” means each lease with respect to a Lease Closing Date Device identified on Schedule II hereto.
“ Lessee ” shall have the meaning provided in the preamble of this Agreement.
Master Lease Agreement ” shall have the meaning provided above in this Section 1.1 .
“ MLS ” shall have the meaning provided above in this Section 1.1 .
“ Non-Lockbox Receivables ” shall have the meaning provided in the Servicing Agreement.
“ OFAC ” means the U.S. Department of the Treasury's Office of Foreign Assets Control.
“ Originator ” shall have the meaning provided in the preamble of this Agreement.
“ Originator Indemnified Party ” shall have the meaning provided in Section 6.1 of this Agreement.
“ Patriot Act ” means the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)).
“ Purchase Date ” shall have the meaning provided in the Device Repurchase Agreement.
“ Related Distribution Amount ” means an amount equal to the amount set forth on Schedule III under the heading “Related Distribution Amount.”
“ Related Customer Leases ” means the Lease Closing Date Customer Leases and the Upgraded Customer Leases.




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“ Related Lessee ” means, with respect to any Originator, the Lessee identified as such on Annex 2 .
“ Related Originator ” means, with respect to any Lessee, the Originator identified as such on Annex 2 .
“ SEC ” means the Securities and Exchange Commission.

“ Servicer ” shall have the meaning provided in the preamble of this Agreement.
SECTION 1.2     Other Interpretive Matters . The interpretation of this Agreement, unless otherwise specified, is subject to Section 1.2 of the Master Lease Agreement.

ARTICLE II

TRANSFER AND CONTRIBUTION

SECTION 2.1     Transfer and Contribution . Upon the terms and subject to the conditions set forth in this Agreement, (i) on the Lease Closing Date, each Originator, severally and for itself, hereby absolutely assigns by way of capital contribution to its Related Lessee, and each Lessee hereby accepts such capital contribution and acquires from its Related Originator, all of such Related Originator’s right, title and interest in, to and under the Lease Closing Date Devices and the Lease Closing Date Customer Leases, including, without limitation, all Customer Receivables in connection with such Lease Closing Date Customer Leases, all rights to discontinue the leasing program for such Lease Closing Date Devices under the Lease Closing Date Customer Leases and all servicing rights with respect to such Lease Closing Date Devices and such Lease Closing Date Customer Leases and (ii) subject to Section 2.8, on each Upgrade Date occurring during the Term of a Device Lease for a Device, each relevant Originator, severally and for itself, hereby absolutely assigns by way of capital contribution to its Related Lessee, and each Lessee hereby accepts such capital contribution and acquires from its Related Originator, all of such Related Originator’s right, title and interest in, to and under the relevant Upgraded Device and related Upgraded Customer Lease, including, without limitation, all Customer Receivables in connection with such Upgraded Customer Lease, all rights to discontinue the leasing program for such Upgraded Device under the related Upgraded Customer Lease and all servicing rights with respect to such Upgraded Device and the related Upgraded Customer Lease. All Customer Receivables under the Lease Closing Date Customer Leases billed prior to the Cutoff Date shall not be transferred and shall remain the property of the Related Originator. Any Device the Upgrade Date with respect to which occurs after the end of the Term of the Device Lease for such Device shall not be transferred pursuant to this Agreement and shall remain the property of the Related Originator.

SECTION 2.2.     Assignment and Assumption of Related Customer Lease Obligations . For the purposes of this Agreement, (x) all contributions of contractual and other rights of Originators in connection with Devices and Customer Leases shall be deemed to be absolute and irrevocable assignments thereof and (y) all acquisitions of contractual obligations by Lessees shall be deemed to be assumptions thereof. Subject to the Lessees’ rights of further





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assignment under the Transaction Documents, from and after, in the case of the Lease Closing Date Customer Leases, the Lease Closing Date and, in the case of each Upgraded Customer Lease, the Upgrade Date for the related Upgraded Device, as applicable, (i) the Related Lessees shall have assumed the rights and obligations of the Originators under the relevant Related Customer Leases as lessors thereunder and (ii) each Originator shall relinquish its rights (including the right to discontinue the leasing program for the relevant Devices) and be released from its obligations under the relevant Related Customer Leases.

SECTION 2.3     Distributions . Simultaneously with the absolute and irrevocable assignment by each Originator to its Related Lessee of its right, title and interest in each Lease Closing Date Device and Lease Closing Date Customer Lease, each Lessee agrees to distribute to its Related Originator an amount equal to the Related Distribution Amount. Thereafter, the Lessees agree to distribute to their Related Originators additional amounts of cash proceeds received in accordance with the terms of the Transaction Documents to which any Lessee is a party to the maximum extent permitted by law and such Transaction Documents.

SECTION 2.4     No Recourse . Except as specifically provided in this Agreement, the transfer of the Devices and the Related Customer Leases under this Agreement shall be without recourse to any Originator.

SECTION 2.5     Intention of the Parties. It is the express intent of each of the parties hereto that the transactions hereunder shall constitute absolute and irrevocable assignments (by way of capital contribution) of the Devices and the Related Customer Leases by each Originator to its Related Lessee (such that the Devices and the Related Customer Leases, other than those, if any, subsequently (i) repurchased by the Originators pursuant to the terms of the Transaction Documents or (ii) distributed to the Originators pursuant to Sections 2.6, 2.7, 2.8 or 2.9, would not be property of any Originator’s estate in the event of any Originator’s bankruptcy). As a protective measure in the event that, notwithstanding the foregoing, the conveyance of the Devices and the Related Customer Leases to the Lessees is recharacterized by any third party as a pledge or other grant of security securing a loan, each Originator does hereby grant to its Related Lessee as of, (x) in the case of the Lease Closing Date Devices and Lease Closing Date Customer Leases, the Lease Closing Date, (y) in the case of each Upgraded Device and Upgraded Customer Lease, the Upgrade Date for the related Upgraded Device and (z) in the case of each Like-Kind Exchange Device, the Like-Kind Exchange Transfer Date for such Like-Kind Exchange Device, a security interest in all of such Originator’s now or hereafter existing right, title and interest in, to and under the Devices and the Related Customer Leases and agrees that this Agreement shall constitute a security agreement under applicable Law. Each Originator hereby authorizes its Related Lessee, MLS and the Collateral Agent or their respective designees (i) to file one or more financing or continuation statements, and amendments thereto and assignments thereof, relative to all or any of such Originator’s rights in the Devices and Related Customer Leases now existing or hereafter arising in the name of such Originator and (ii) to the extent permitted by the Servicing Agreement, to notify Customers of the assignment of the Devices and the Related Customer Leases pursuant hereto.

SECTION 2.6     Like-Kind Exchanges . At any time that Servicer (on behalf of the Lessee) does a Like-Kind Exchange under the relevant Related Customer Lease and as permitted





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under the Servicing Agreement, on the Like-Kind Exchange Transfer Date for such Like-Kind Exchange Device, the relevant Lessee’s Related Originator agrees to contribute such Like-Kind Exchange Device to such Lessee. Simultaneously with the contribution of the Like-Kind Exchange Device, the applicable Lessee shall make a distribution to its Related Originator of all of such Lessee’s right, title and interest in and to the original Device.

SECTION 2.7     Transfers of Rights in Customer Leases Upon Device Repurchase . On each Purchase Date, simultaneously with the sale of any Devices by MLS to an Originator pursuant to the Device Repurchase Agreement, the applicable Lessee shall automatically make a distribution to its Related Originator of all of such Lessee’s right, title and interest in and to the Related Customer Lease related to such Device.

SECTION 2.8     Redistribution Upon Upgrade Termination Option Payment . At any time a Device Lease for a Device is terminated pursuant to the exercise by the relevant Lessee of its Upgrade Termination Option with respect to such Device, the contribution in Section 2.1 with respect to the related Upgraded Device and related Upgraded Customer Lease will be deemed not to have occurred. For the avoidance of doubt, to the extent the applicable Lessee has any rights, title or interest in the Upgraded Device and the related Upgraded Customer Lease notwithstanding the preceding sentence, such Lessee shall automatically make a distribution to its Related Originator, effective as of the applicable Upgrade Date, of all of such Lessee’s right, title and interest in and to such Upgraded Device and the related Upgraded Customer Lease.

SECTION 2.9     Redistribution Upon Transfer of Title of Device . At any time that MLS transfers title to a Device to the applicable Lessee pursuant to Sections 2.10(a), 2.11(c), 3.2(b) or 3.2(c) of the Master Lease Agreement, Sections 2.8(b), 2.14(b) or 5.2 of the Servicing Agreement or Section 2.9 of the Second Step Transfer Agreement, the applicable Lessee shall make a distribution to its Related Originator of all of such Lessee’s right, title and interest in and to such Device and the related Customer Lease (if applicable). At any time that MLS transfers title to a Device to the applicable Lessee pursuant to Section 2.16 of the Master Lease Agreement, upon the earlier of (i) termination of the related Customer Lease then in effect and (ii) the return of such Device by the relevant Customer, the applicable Lessee shall make a distribution to its Related Originator of all of such Lessee’s right, title and interest in and to such Device and the related Customer Lease (if applicable).

ARTICLE III
    
ADMINISTRATION AND COLLECTION

SECTION 3.1     Servicer . Pursuant to the Servicing Agreement, Servicer shall be responsible for the servicing, administration and collection of the Devices and Related Customer Leases for the benefit of each Lessee and MLS (and the Collateral Agent as assignee), subject to the terms set out in (including the rights to terminate Sprint Spectrum as Servicer and appoint a successor Servicer pursuant to) the Servicing Agreement.







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SECTION 3.2     Power of Attorney . Each Lessee and each Originator hereby grants to Servicer an irrevocable power of attorney, with full power of substitution, coupled with an interest, to take or cause to be taken in the name of such Lessee or such Originator, as the case may be, any and all steps that are necessary or advisable to endorse, negotiate, enforce, or otherwise realize on any Collections and any checks, instruments, writings, other proceeds of the Devices or Related Customer Leases or other right of any kind held or transmitted by such Lessee or such Originator or transmitted or received by such Lessee or such Originator in connection with any Device or Related Customer Lease.

SECTION 3.3     Actions Evidencing Absolute Assignments . On and following the Lease Closing Date, each Originator shall maintain its accounting records to evidence that as of, (x) in the case of the Lease Closing Date Devices and Lease Closing Date Customer Leases, the Lease Closing Date, (y) in the case of each Upgraded Device and Upgraded Customer Lease, the Upgrade Date for such Upgraded Device (after giving effect to the Customer Upgrade on such Upgrade Date) and (z) in the case of each Like-Kind Exchange Device, the Like-Kind Exchange Transfer Date for such Like-Kind Exchange Device, the relevant Devices and relevant Related Customer Leases (other than Devices and Related Customer Leases deemed not to have been contributed pursuant to Section 2.8) have been absolutely and irrevocably assigned to the Related Lessee in accordance with this Agreement. In addition, each Originator agrees that from time to time, at its expense, it will promptly execute and deliver all further instruments and documents, and take all further action that the Lessees, MLS, the Collateral Agent or any of their respective designees may reasonably request in order to perfect, protect or more fully evidence the absolute assignments hereunder, or to enable the Lessees, MLS or the Collateral Agent to exercise or enforce any of their respective rights with respect to the Devices and the Related Customer Leases. Without limiting the generality of the foregoing, each Originator will upon the request of the Lessees, MLS and/or the Collateral Agent authorize and file such financing or continuation statements, or amendments thereto or assignments thereof, and such other instruments or notices, as may be necessary or appropriate.

SECTION 3.4     Continuation Statements . Without limiting the generality of Section 3.3 above, each Originator shall authorize and deliver and file or cause to be filed appropriate continuation statements not earlier than six months and not later than one month prior to the fifth anniversary of the date of filing of the financing statements filed in connection with the Lease Closing Date or any other financing statement filed pursuant to this Agreement, if the Final Settlement Date shall not have occurred.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

SECTION 4.1     Mutual Representations and Warranties . Each Originator represents and warrants to the Lessees, and each Lessee represents and warrants to the Originators, as of the Lease Closing Date and as of the Amendment Closing Date as follows:

(a) Organization and Good Standing . It has been duly organized or incorporated in, and is validly existing as a corporation, exempted company, partnership





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or limited liability company, as applicable, in good standing under the Laws of its jurisdiction of organization or incorporation, with power and authority to own its properties and to conduct its business as such properties are presently owned and such business is presently conducted and will be conducted except to the extent that such failure could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(b) Due Qualification . It is duly qualified to do business as a foreign organization in good standing, if applicable, and has obtained all necessary qualifications, licenses and approvals, in all jurisdictions in which the ownership or lease of property or the conduct of its business requires such qualifications, licenses or approvals, except where the failure to be in good standing or to hold any such qualifications, licenses and approvals could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(c) Power and Authority; Due Authorization . It (i) has all necessary power and authority to (A) execute and deliver this Agreement and the other Transaction Documents to which it is a party in any capacity and (B) carry out the terms of and perform its obligations under the Transaction Documents applicable to it and (ii) has duly authorized by all necessary corporate, partnership or limited liability company action, as applicable, the execution, delivery and performance of this Agreement and the other Transaction Documents to which it is a party.

(d) Binding Obligations . This Agreement constitutes, and each other Transaction Document to be signed by such party when duly executed and delivered will constitute, a legal, valid and binding obligation of such party, enforceable against such party in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

(e) No Violation . The consummation of the transactions contemplated by this Agreement and the other Transaction Documents to which it is a party and the performance by it of the terms hereof and thereof will not (i) violate or result in a default under (A) its articles or certificate of incorporation, memorandum and articles of association, by‑laws, certificate of formation, limited liability company agreement, partnership agreement or other organizational documents, as applicable, or (B) in the context of the transactions contemplated by this Agreement and the other Transaction Documents applicable to it, any material indenture, agreement or instrument binding on it, (ii) result in the creation or imposition of any Lien upon any of its properties pursuant to the terms of any such indenture, agreement or instrument except for any Lien that could not reasonably be expected to have a Material Adverse Effect or arising under the Transaction Documents, or (iii) violate in any material respect any Law applicable to it or any of its properties.










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(f) Bulk Sales Act . No transaction contemplated hereby requires compliance by it with any bulk sales act or similar Law.

(g) No Proceedings . There are no actions, suits or proceedings by or before any arbitrator or Governmental Authority pending against or, to its actual knowledge, threatened against or affecting it (i) as to which there is a reasonable possibility of an adverse determination and that, if adversely determined, could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect, (ii) seeking to prevent the servicing of the Devices and the Related Customer Leases by Servicer or the consummation of the purposes of this Agreement or of any of the other Transaction Documents to which it is a party, or (iii) that otherwise involve this Agreement or any other Transaction Document to which it is a party.

(h) Governmental Approvals . No authorization or approval or other action by, and no notice to or filing with, any Governmental Authority is required for its due execution, delivery and performance of this Agreement or any other Transaction Document to which it is a party or the transactions contemplated hereby or thereby, except for the filing of the UCC financing statements referred to in such Transaction Documents and filings with the SEC to the extent required by applicable Law.

SECTION 4.2     Additional Representations and Warranties of the Originators . Each Originator represents and warrants to the Lessees (i) as of the Cutoff Date, (ii) as of the Lease Closing Date, (iii) as of each Upgrade Date, and (iv) as of each Like-Kind Exchange Transfer Date, provided, however, (a) in the case of clause (i), each Originator only makes the representation and warranty in Section 4.2(l) and only in respect of the Lease Closing Date Devices and Lease Closing Date Customer Leases, (b) in the case of clause (ii), each Originator does not make the representation in Section 4.2(l), (c) in the case of clause (iii), each Originator makes the representations and warranties in Sections 4.2(a), (c), (l) and (m) only with respect to the Upgraded Devices and related Upgraded Customer Leases transferred pursuant to Section 2.1 as of the applicable Upgrade Date and makes the representations and warranties in Sections 4.2(d) and (k) and (d) in the case of clause (iv), each Originator only makes the representation and warranty in Section 4.2(l)(i) and only in respect of the Like-Kind Exchange Device transferred as of the applicable Like-Kind Exchange Transfer Date, as follows:

(a)     Absolute Assignment . This Agreement constitutes an absolute and irrevocable assignment by way of capital contribution of the Devices and the Related Customer Leases to its Related Lessee.

(b)     Use of Proceeds . The use of all funds obtained by it under this Agreement will not conflict with or contravene any of Regulations T, U and X promulgated by the Board of Governors of the Federal Reserve System.

(c)     Quality of Title . At the time of its assignment to its Related Lessee hereunder, each Device and each Related Customer Lease, is owned by it free and clear of any Liens (other than Permitted Device Liens); when its Related Lessee acquires such Devices and Related Customer Leases hereunder, such Lessee shall have acquired them



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for fair consideration and reasonably equivalent value, free and clear of any Lien (other than Permitted Device Liens); and no valid effective financing statement or other instrument similar in effect covering any Device and any Related Customer Lease is on file in any recording office, except such as may be filed (i) in favor of its Related Lessee in accordance with this Agreement or any other Transaction Document (and assigned to MLS and further assigned to the Collateral Agent) or (ii) in connection with any Permitted Device Lien.

(d)     UCC Details . Its true legal name as registered in the sole jurisdiction in which it is organized and the jurisdiction of such organization are specified in Annex 1 and its chief executive office is at the address specified in Annex 1 (or at such other location, notified to Lessees, MLS and Collateral Agent). Except as described in Annex 1 , it has never had any trade names, fictitious names, assumed names or “doing business as” names and is “located” in the jurisdiction specified in Annex 1 for purposes of Section 9-307 of the UCC. It is organized in only a single jurisdiction.

(e)     Servicer Collection Account . The names and addresses of all banks or financial institutions with Servicer Collection Accounts (“ Collection Account Banks ”), together with the account numbers of the Servicer Collection Accounts at such Collection Account Banks, are specified in Schedule 3 of the Servicing Agreement (or have been notified to and approved by the Collateral Agent and MLS in accordance with Section 2.10(d) of the Servicing Agreement).

(f)     Servicing Programs . No license or approval is required for the Lessees’, the Collateral Agent’s or MLS’s use of any software or other computer program used by such Originator, the Servicer or any Sub-Servicer in the servicing of the Related Customer Leases originated by such Originator, other than under the Amdocs Sub-Servicing Agreement and those which have been obtained and are in full force and effect.

(g)     Adverse Change . Since March 31, 2016, there has been no Material Adverse Effect with respect to such Originator.

(h)     Credit and Collection Policies; Compliance with Law. It has complied with the Credit and Collection Policies in all material respects and such policies have not changed in any material respect since the date of origination. It has complied with all applicable Law except where the failure to do so, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

(i) Investment Company Act . It is not an “investment company” under (and as defined in) the Investment Company Act.

(j) Tax Returns and Payments . It has filed all federal income tax returns and all other material tax returns that are required to be filed by it and has paid all taxes due pursuant to such returns or pursuant to any assessment received by it, except (i) for any such taxes or assessments, if any, that are being appropriately contested in good faith by






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appropriate proceedings and with respect to which adequate reserves in conformity with GAAP have been provided, or (ii) to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Effect. No tax lien has been filed, and, to its actual knowledge, no claim is being asserted, with respect to any such tax or assessment that could reasonably be expected to result in a Material Adverse Effect.

(k) No Sanctions. It is not a Sanctioned Person. To its knowledge after due inquiry, no Customer was a Sanctioned Person at the time of such Originator’s entry into any Related Customer Lease with such Customer. It and its Affiliates: (i) have less than 15% of their assets in Sanctioned Countries and (ii) derive less than 15% of their operating income from investments in, or transactions with, Sanctioned Persons or Sanctioned Countries. Neither it nor any of its Subsidiaries engages in activities related to Sanctioned Countries except for such activities as are (A) specifically or generally licensed by OFAC or (B) otherwise in compliance with OFAC’s sanctions regulations.

(l) Eligible Devices and Related Customer Leases . (i) Each Device is an Eligible Device and (ii) each Related Customer Lease is an Eligible Lease.

(m) Customer Leases and Upgrade Policy . No Customer has a contractual right under its Related Customer Lease with respect to a Device to have payments under such Related Customer Lease waived at the time of a Customer Upgrade or otherwise, and no Sprint Party (other than the Lessee that is lessor under such Related Customer Lease or the Servicer acting on behalf of such Lessee in accordance with the Servicing Agreement) has the right to waive any payments under such Related Customer Lease.

SECTION 4.3     Breach of Eligibility Representation and Warranty . If on any day there is discovered a breach of any of the representations or warranties of any Originator set forth in Section 4.2(l) with respect to any Device or Related Customer Lease as of the date such representations and warranties are made, then, to the extent the Servicer is required to make a payment in a respect of a Deemed Collection pursuant to Section 2.14(b) of the Servicing Agreement, the Related Originator agrees to make such payment to the Servicer on the same terms as the Servicer is required to make a payment to MLS under Section 2.14(b) of the Servicing Agreement.

ARTICLE V

GENERAL COVENANTS

SECTION 5.1     Mutual Covenants . At all times from the Lease Closing Date to the Final Settlement Date, each Lessee and each Originator shall:

(a)     Compliance with Laws, Etc . Comply with all applicable Laws, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

(b)     Preservation of Existence . Except as expressly permitted by Section 5.3(c ) or (d) with respect to the Originators or the Master Lease Agreement with



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respect to the Lessees, preserve and maintain its existence, rights, franchises and privileges in the jurisdiction of its organization, and qualify and remain qualified in good standing in each jurisdiction where the failure to qualify or preserve and maintain such existence, rights, franchises, privileges and qualification could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(c)     Separateness . Not take any actions inconsistent with the terms of Section 6.1 of the Second Step Transfer Agreement or any Lessee’s organizational documents.

(d)     Taxes . The transactions contemplated by this Agreement are intended to be treated for sales and use tax purposes as a financing (so that transfers of Devices hereunder are not taxable sales) and if not so treated each transfer contemplated hereunder is intended to be an exempt sale for resale for such purposes as the purchaser or transferee intends to re-sell or lease each Device in the same form or condition in which it was transferred to others in the normal course of the transferee's business. Each Originator and each Lessee will cooperate to take all steps to timely prepare and secure any exemption certificate, resale certificate or similar documentation requested or required by any jurisdiction for purposes of qualifying for or documenting any such exemption.

SECTION 5.2     Additional Covenants of the Originators . At all times from the Lease Closing Date to the Final Settlement Date, each Originator shall (or shall cause the Servicer to):

(a)     Keeping of Records and Books of Account; Delivery . Maintain and implement, or cause to be maintained and implemented, administrative and operating procedures (including an ability to recreate records evidencing the Devices and the Related Customer Leases in the event of the destruction of the originals thereof, backing up on at least a daily basis on a separate backup computer from which electronic file copies can be readily produced and distributed to third parties being agreed to suffice for this purpose), and keep and maintain, or cause to be kept and maintained (or transferred to Servicer), all documents, books, records and other information necessary or advisable for the collection of all Collections in respect of all Devices and the Related Customer Leases.

(b)     Location of Records . Keep its chief executive office and principal place of business, and the offices where it keeps its Records (and any original documents relating thereto), at the address of such Originator referred to in Annex 1 or, upon thirty (30) days’ prior written notice to the Collateral Agent and MLS, at such other locations in jurisdictions where all action required by Section 5.2(f) shall have been taken and completed.

(c)     Credit and Collection Policies . Until such Device or the Related Customer Lease is contributed to its Related Lessee, comply in all material respects with its Credit and Collection Policy in regard to each Device and the Related Customer Lease.








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(d)     Collections . Except as otherwise permitted under this Agreement, instruct, or cause the Servicer to instruct, all Customers to cause all Collections in respect of Devices and Related Customer Leases to be deposited directly in a Servicer Collection Account covered by an Account Control Agreement. In the event such Originator or any of its Affiliates receives any Collections such Person will promptly (but not later than three (3) Business Days following receipt) deposit such Collections in a Servicer Collection Account covered by an Account Control Agreement, except Non-Lock Box Receivables. The Originators shall cooperate with the Lessees and the Servicer in collecting amounts due from Customers in respect of the Devices and Related Customer Leases. Each Originator hereby grants to the Lessees and the Servicer an irrevocable power of attorney, with full power of substitution, coupled with an interest, to take or cause to be taken in the name of such Originator all steps necessary or advisable to endorse, negotiate or otherwise realize on any Collections and any checks, instruments or other proceeds of the Devices and Related Customer Leases held or transmitted by such Originator or transmitted or received by such Lessee (whether or not from such Originator) in connection with any Device or Related Customer Lease transferred by it hereunder.

(e)     PATRIOT ACT Information . Promptly following a request therefor, provide any documentation or other information that any Lessee, MLS or the Collateral Agent reasonably requests in order to comply with its ongoing obligations under the applicable “know your customer” and anti money laundering rules and regulations, including the PATRIOT Act.

(f)     Further Assurance. From time to time, at its expense, promptly execute and deliver all further instruments and documents, and take all further action that the Lessees, MLS or the Collateral Agent or any of their respective designees may reasonably request, in order to perfect, protect or more fully evidence the assignments and contributions hereunder, or to enable the Lessees, MLS and the Collateral Agent to exercise or enforce any of their respective rights with respect to the Devices and Related Customer Leases. Without limiting the generality of the foregoing, each Originator will upon the request of the Lessees, MLS or the Collateral Agent authorize and file such financing or continuation statements, or amendments thereto or assignments thereof, and such other instruments or notices, as may be necessary or appropriate.

(g)     Agreed Upon Procedures . Cooperate reasonably with Servicer and the designated accountants for each annual agreed-upon procedures report required pursuant to Section 8.1(i) of the Servicing Agreement.

(h)     Location . At all times maintain its jurisdiction of organization and its chief executive office within a jurisdiction in the United States in which Article Nine of the UCC (2001 or later revision) is in effect.

(i)     Tax Matters . Pay all applicable taxes required to be paid by it when due and payable in connection with the transfer hereunder of the Devices and Related Customer Leases, and acknowledges that neither the Collateral Agent nor MLS shall





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have any responsibility with respect thereto. Each Originator shall pay and discharge, or cause the payment and discharge of, all federal income taxes (and all other material taxes) of such Originator when due and payable, except (i) such as may be paid thereafter without penalty, (ii) such as may be contested in good faith by appropriate proceedings and for which an adequate reserve has been established and is maintained in accordance with GAAP or (iii) where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

(j)     Provision of Wireless Services . Provide or cause one or more of its Affiliates to provide wireless network services to Customers in accordance with each Related Customer Lease or other agreement, contract or other document (including any purchase order or invoice) related to any rights or obligations of any party under a Related Customer Lease, subject to the Credit and Collection Policy.

SECTION 5.3     Negative Covenants of Each Originator . From the Lease Closing Date until the Final Settlement Date, each Originator shall not:

(a)     Liens, Etc . Except as otherwise explicitly provided herein and in the other Transaction Documents, create or suffer to exist any Lien, other than Permitted Device Liens, upon or with respect to, any Device or Related Customer Lease or any interest therein (other than Devices and Related Customer Leases, if any, subsequently (i) repurchased by the Originators pursuant to the terms of the Transaction Documents or (ii) distributed to the Originators pursuant to Sections 2.6, 2.7, 2.8 or 2.9), or any Servicer Collection Account to which any Collections of any of the foregoing are sent, or any right to receive income or proceeds (other than distributions made to such Originator in accordance with the Transaction Documents or any proceeds of Collections remitted to such Originator hereunder to the extent such Originator owes no other amounts hereunder) from or in respect of any of the foregoing or, prior to the Final Settlement Date, its equity interest in it Related Lessee, if any.

(b)     Nondisturbance of Devices or Customer Leases . Claim ownership in or otherwise interfere with a Lessee’s (or the Servicer’s, MLS’ or the Collateral Agent’s) rights in the Devices or any Related Customer Lease, except if such Originator repurchases such Device pursuant to the Device Repurchase Agreement or if such Device or Related Customer Lease is distributed to such Originator pursuant to Sections 2.6, 2.7, 2.8 or 2.9.

(c)     Mergers, Sales, Etc . Consolidate or merge with or into any other Person or sell, lease or transfer all or substantially all of its property and assets, or agree to do any of the foregoing, unless (i) no Lease Event of Default has occurred and is continuing or would result immediately after giving effect thereto, (ii) if such Originator is not the surviving entity or if such Originator sells, leases or transfers all or substantially all of its property and assets, the surviving entity or the Person purchasing or being leased the assets is a Subsidiary of Sprint and agrees to be bound by the terms and provisions applicable to such Originator hereunder, (iii) Sprint reaffirms in a writing, in form and substance reasonably satisfactory to MLS and the Collateral Agent, that its obligations





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under the Performance Support Agreement shall apply to the surviving entity and (iv) each of MLS and the Collateral Agent receives such additional certifications and opinions of counsel as it shall reasonably request.

(d)     Change in Organization, Etc . Change its jurisdiction of organization or its name, identity or corporate organization structure or make any other change such that any financing statement filed or other action taken to perfect its Related Lessee’s or MLS’s interests hereunder and under the Second Step Transfer Agreement, as applicable, would become seriously misleading or would otherwise be rendered ineffective, unless such Originator shall have given its Related Lessee, MLS and the Collateral Agent not less than 30 days’ prior written notice of such change and shall have cured such circumstances.

(e)     Actions Impairing Quality of Title . Take any action that could reasonably be expected to cause a Related Lessee (or a transferee of a Related Lessee) not to have valid ownership, free and clear of any Lien (other than any Permitted Device Lien), of the Devices and Related Customer Leases transferred under this Agreement (other than Devices and Related Customer Leases, if any, subsequently (i) repurchased by the Originators pursuant to the terms of the Transaction Documents or (ii) distributed to the Originators pursuant to Sections 2.6, 2.7, 2.8 or 2.9).

(f)     Customer Upgrades . Waive payments under or terminate a Related Customer Lease in connection with a Customer Upgrade (or permit any such waiver or termination), during the Term of a Device Lease for such Device unless, simultaneously with the Customer Upgrade, the related Upgraded Device and Upgraded Customer Lease are contributed in accordance with this Agreement and such Upgraded Device and the Customer-Lease End Rights and Obligations with respect to such Upgraded Customer Lease are transferred to MLS pursuant to the Second Step Transfer Agreement.

(g)     Assigned Lease Upgrade Policy Provision .      Not amend or otherwise modify (or permit to be amended or otherwise modified) the Assigned Lease Upgrade Policy Provision, for any Device subject to a Customer Lease during the Term of a Device Lease for such Device, including any modification to any portion of the Upgrade Policy that has the effect of modifying the Assigned Lease Upgrade Policy Provision, unless otherwise consented to by MLS and the Collateral Agent (such consent not to be unreasonably withheld or delayed).

ARTICLE VI

INDEMNIFICATION

SECTION 6.1     Each Originator’s Indemnity . Without limiting any other rights that any such Person may have hereunder or under applicable Law, each Originator severally but not jointly, hereby agrees to indemnify and hold harmless its Related Lessee, such Lessee’s Affiliates and all of their respective successors, transferees, participants and assigns, all Persons referred to in Section 7.4 hereof, and all officers, members, managers, directors, shareholders,






14




employees and agents of any of the foregoing (each an “ Originator Indemnified Party ”), forthwith on demand, from and against any and all damages, losses, claims, liabilities and related costs and expenses, including reasonable and documented attorneys’ fees and disbursements but excluding Taxes (all of the foregoing being collectively referred to as “ Originator Indemnified Amounts ”) awarded against or incurred by any of them arising out of the ownership, assignment or lease, as applicable, of the Devices and the Related Customer Leases pursuant to the Transaction Documents or arising out of or relating to or resulting from the actions or inactions of the Originators; provided , however , notwithstanding anything to the contrary in this Article VI , Originator Indemnified Amounts shall be excluded to the extent (w) resulting from the gross negligence or willful misconduct on the part of such Originator Indemnified Party as determined by a final non-appealable judgment by a court of competent jurisdiction, (x) resulting from a claim brought by any Person against an Originator Indemnified Party (other than any Sprint Party) for breach of such Originator Indemnified Party’s (other than any Sprint Party’s) obligations under any Transaction Document as determined by a final non-appealable judgment by a court of competent jurisdiction, (y) constituting recourse with respect to the market or residual value of a Device or the value of a Customer Lease or a Customer Receivable by reason of bankruptcy or insolvency, or the financial or credit condition or financial default, of the related Customer or as a result of an Insolvency Event with respect to any Lessee and (z) resulting from a claim that Lessees are not required to indemnify under Article IV of the Master Lease Agreement. Without limiting the foregoing, each Originator shall indemnify, subject to the limits set forth in this Section 6.1 , and hold harmless each Originator Indemnified Party for any and all Originator Indemnified Amounts arising out of, relating to or resulting from:

(i) the transfer by any Originator of any interest in any Device or Related Customer Lease;

(ii) any representation or warranty made by any Originator under or in connection with any Transaction Document to which it is a party, or any other information or report delivered by or on behalf of any Originator pursuant hereto, that shall have been untrue, false or incorrect when made or deemed made;

(iii) the failure of any Originator to comply with the terms of any Transaction Document applicable to it or any applicable Law (including with respect to any Device or Related Customer Lease), or the nonconformity of any Device or Related Customer Lease with any such Law;

(iv) the lack of an enforceable ownership interest or a first priority perfected security interest in the Devices or Related Customer Leases transferred, or purported to be transferred, to any Lessee pursuant to this Agreement against all Persons (including any bankruptcy trustee or similar Person);

(v) the failure to file, or any delay in filing of, financing statements or other similar instruments or documents under the UCC of any applicable jurisdiction or other applicable Laws with respect to any Device or Related Customer Lease transferred by any Originator, or purported to be transferred by





15




any Originator, to any Lessee pursuant to this Agreement whether at the time of any purchase or acquisition, as applicable, or at any time thereafter;

(vi) any suit or claim related to the Devices or Related Customer Leases transferred, or purported to be transferred, to any Lessee pursuant to this Agreement (including any products liability or environmental liability claim arising out of or in connection with the Devices or Related Customer Leases);

(vii) failure by any Originator to comply with the “bulk sales” or analogous Laws of any jurisdiction; or

(viii) any commingling by such Originator of any funds relating to the Customer Receivables with any of its own funds or the funds of any other Person other than Non-Lockbox Receivables.

SECTION 6.2     Contribution . If for any reason the indemnification provided above in this Article VI is unavailable to an Originator Indemnified Party or is insufficient to hold an Originator Indemnified Party harmless, then each Originator shall contribute to the amount paid or payable by such Originator Indemnified Party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect not only the relative benefits received by such Originator Indemnified Party on the one hand and such Originator on the other hand but also the relative fault of such Originator Indemnified Party as well as any other relevant equitable considerations.

ARTICLE VII

MISCELLANEOUS

SECTION 7.1     Amendments, etc. No amendment or waiver of any provision of this Agreement or consent to any departure by any Originator therefrom shall in any event be effective unless the same shall be in writing and signed by the Lessee Representative, MLS and the Collateral Agent and (if an amendment) the Originators, and if such amendment or waiver affects the obligations of Sprint, Sprint consents in writing thereto, and then any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. Each Originator may not amend or otherwise modify any other Transaction Document executed by it without the written consent of the Lessee Representative, MLS and the Collateral Agent, and if such amendment or waiver affects the obligations of Sprint, unless Sprint consents in writing thereto.

SECTION 7.2     No Waiver; Remedies . No failure on the part of any Lessee or any Originator Indemnified Party to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or remedy hereunder preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The rights and remedies herein provided are cumulative and not exclusive of any rights or remedies provided by Law.






16





SECTION 7.3     Notices, Etc. The provisions of Section 21 ( Notices ) of the MLS Intercreditor Agreement shall apply as if fully set forth herein.

SECTION 7.4     Binding Effect; Assignment . Each Originator acknowledges that MLS may rely upon the terms of this Agreement. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Except as provided below, no party may assign its rights and obligations hereunder in whole or in part without the prior written consent of each of the other parties (not to be unreasonably withheld or delayed). Each Originator acknowledges that Lessees’ rights under this Agreement and rights in the Devices and Related Customer Leases may be sold outright or assigned as collateral to MLS under the Second Step Transfer Agreement and may be further assigned as collateral to the Collateral Agent on behalf of the Financing Parties, and the Originators consent to such assignments. The parties hereto agree that MLS and the Collateral Agent (and any assignee of any of them) is each an intended third-party beneficiary of this Agreement and is entitled to enforce the rights of Lessees arising hereunder, including requiring payment of any amounts required to be paid to MLS or any other Originator Indemnified Party to be paid directly to the MLS Collection Account (Tranche 2).

SECTION 7.5     Survival . The rights and remedies with respect to any breach of any representation and warranty made by any Originator or any Lessee pursuant to Article IV , the indemnification provisions of Article VI , and the provisions of Sections 7.4 , 7.5 , 7.6 , 7.8 , 7.9 , 7.10 , 7.11 , 7.12 and 7.14 shall survive any termination of this Agreement.

SECTION 7.6     Costs and Expenses . In addition to its obligations under Article VI , each Originator agrees to pay on demand all reasonable and documented out-of-pocket costs and expenses incurred by Lessees and any other Originator Indemnified Party in connection with the negotiation, preparation, execution and delivery of any amendment of or consent or waiver under this Agreement (whether or not consummated), or the enforcement of, or any actual or reasonably claimed breach of, this Agreement, including reasonable and documented accountants’, auditors’, consultants’ and attorneys’ fees and expenses to any of such Persons and the fees and charges of any nationally recognized statistical rating agency or any independent accountants, auditors, consultants or other agents incurred in connection with any of the foregoing or in advising such Persons as to their respective rights and remedies under this Agreement in connection with any of the foregoing.

SECTION 7.7     Execution in Counterparts; Integration . This Agreement may be executed in any number of counterparts and by the different parties in separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same Agreement. Executed counterparts may be delivered electronically. This Agreement, together with the other Transaction Documents, contains a final and complete integration of all prior expressions by the parties hereto with respect to the subject matter hereof and shall constitute the entire understanding among the parties hereto with respect to the subject matter hereof, superseding all prior oral or written understandings.

SECTION 7.8     Governing Law . THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (INCLUDING SECTIONS 5-1401 AND 5-





17




1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW, BUT WITHOUT REGARD TO ANY OTHER CONFLICT OF LAWS PROVISIONS THEREOF).

SECTION 7.9     Waiver of Jury Trial . EACH ORIGINATOR AND EACH LESSEE HEREBY EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR ANY AMENDMENT, INSTRUMENT OR DOCUMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR ARISING FROM ANY BANKING OR OTHER RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT A JURY.

SECTION 7.10     Consent to Jurisdiction; Waiver of Immunities . EACH ORIGINATOR AND EACH LESSEE HEREBY ACKNOWLEDGES AND AGREES THAT:

(a)    IT IRREVOCABLY (i) SUBMITS TO THE JURISDICTION, FIRST, OF ANY UNITED STATES FEDERAL COURT, AND SECOND, IF FEDERAL JURISDICTION IS NOT AVAILABLE, OF ANY NEW YORK STATE COURT, IN EITHER CASE SITTING IN NEW YORK CITY, NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT, (ii) AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED ONLY IN SUCH NEW YORK STATE OR FEDERAL COURT AND NOT IN ANY OTHER COURT, AND (iii) WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING.

(b)    TO THE EXTENT THAT IT HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM THE JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID TO EXECUTION, EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, IT HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER OR IN CONNECTION WITH THIS AGREEMENT.

SECTION 7.11     Confidentiality . Each party hereto agrees to comply with, and be bound by, the confidentiality provisions of Section 20 ( Confidential Information ) of the MLS Intercreditor Agreement as if fully set forth herein.

SECTION 7.12     No Proceedings . The provisions of Section 24.2 ( No Proceedings Against MLS ) of the MLS Intercreditor Agreement shall apply as if fully set forth herein.

SECTION 7.13     No Recourse Against Other Parties . No recourse under any obligation, covenant or agreement of any Lessee contained in this Agreement shall be had






18




against any stockholder, employee, officer, director, member, manager incorporator or organizer of any Lessee.

SECTION 7.14     Severability . Any provisions of this Agreement which are 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.

[SIGNATURE PAGES FOLLOW]






































19







IN WITNESS WHEREOF , the parties have caused this Agreement to be executed by their respective duly authorized signatories, as of the date first above written.

SPRINT SPECTRUM L.P.
SPRINTCOM, INC.
NORTHERN PCS SERVICES, LLC
SPRINT TELEPHONY PCS, LLC
AMERICAN PCS COMMUNICATIONS, LLC
PHILLIECO, LLC
TEXAS TELECOMMUNICATIONS, LLC
ALAMOSA WISCONSIN, LLC
AIRGATE PCS, INC.
LOUISIANA UNWIRED, LLC
GEORGIA PCS MANAGEMENT, L.L.C.
INDEPENDENT WIRELESS ONE, LLC
SOUTHWEST PCS, LLC
ALAMOSA MISSOURI, LLC
WASHINGTON OREGON WIRELESS, LLC
IPCS WIRELESS, LLC
GULF COAST WIRELESS, LLC
HORIZON PERSONAL COMMUNICATIONS, INC.
BRIGHT PERSONAL COMMUNICATIONS      SERVICES, LLC ,
ENTERPRISE COMMUNICATIONS, LLC
each an Originator


By:      /s/ Janet M. Duncan              
Name: Janet M. Duncan     
Title: Vice President and Treasurer















S-1                  First Step Transfer Agreement






TEXAS UNWIRED
an Originator

By: Louisiana Unwired LLC, as Partner

By: /s/ Janet M. Duncan        
Name: Janet M. Duncan
Title: Vice President and Treasurer

By: SprintCom, Inc., as Partner

By: /s/ Janet M. Duncan        
Name: Janet M. Duncan
Title: Vice President and Treasurer
































S-2                  First Step Transfer Agreement





    
SPRINT SPECTRUM L.P. , as Servicer


By:      /s/ Janet M. Duncan                  
Name: Janet M. Duncan     
Title: Vice President and Treasurer








































S-3                  First Step Transfer Agreement





For and on behalf of each of:
SLV - I LLC
SLV - II LLC
SLV - III LLC
SLV - IV LLC
SLV - V LLC
SLV - VI LLC
SLV - VII LLC
SLV - VIII LLC
SLV - IX LLC
SLV - X LLC
SLV - XI LLC
SLV - XII LLC
SLV - XIII LLC
SLV - XIV LLC
SLV - XV LLC
SLV - XVI LLC
SLV - XVII LLC
SLV - XVIII LLC
SLV - XIX LLC
SLV - XX LLC
SLV - XXI LLC
SLV - XXII LLC , each a Lessee



By: /s/ Stefan K. Schnopp        
Name: Stefan K. Schnopp     
Title: Director


















S-4                  First Step Transfer Agreement





    
ANNEX 1

UCC DETAILS

Legal Name
Other Names
Jurisdiction of Organization / Entity Type
Chief Executive Office
SprintCom, Inc.
None
Kansas corporation
6200 Sprint Parkway
Overland Park, KS 66251
Enterprise Communications, LLC
None
Georgia limited liability company
6200 Sprint Parkway
Overland Park, KS 66251
Sprint Spectrum L.P.
None
Delaware limited partnership
6200 Sprint Parkway
Overland Park, KS 66251
Northern PCS Services, LLC
None
Minnesota limited liability company
6200 Sprint Parkway
Overland Park, KS 66251
Sprint Telephony PCS, LLC
None
Delaware limited liability company
6200 Sprint Parkway
Overland Park, KS 66251
American PCS Communications, LLC
None
Delaware limited liability company
6200 Sprint Parkway
Overland Park, KS 66251
PhillieCo, LLC
None
Delaware limited liability company
6200 Sprint Parkway
Overland Park, KS 66251
Texas Telecommunications, LLC
None
Texas limited liability company
6200 Sprint Parkway
Overland Park, KS 66251
Alamosa Wisconsin, LLC
None
Wisconsin limited liability company
6200 Sprint Parkway
Overland Park, KS 66251
AirGate PCS, Inc.
None
Delaware corporation
6200 Sprint Parkway
Overland Park, KS 66251


















Page 1




Legal Name
Other Names
Jurisdiction of Organization / Entity Type
Chief Executive Office
Louisiana Unwired, LLC
None
Louisiana limited liability company
6200 Sprint Parkway
Overland Park, KS 66251
Georgia PCS Management, L.L.C.
None
Georgia limited liability company
6200 Sprint Parkway
Overland Park, KS 66251
Texas Unwired
None
Louisiana general partnership
6200 Sprint Parkway
Overland Park, KS 66251
Independent Wireless One, LLC
None
Delaware limited liability company
6200 Sprint Parkway
Overland Park, KS 66251
Southwest PCS, LLC
None
Oklahoma limited liability company
6200 Sprint Parkway
Overland Park, KS 66251
Alamosa Missouri, LLC
None
Missouri limited liability company
6200 Sprint Parkway
Overland Park, KS 66251
Washington Oregon Wireless, LLC
None
Oregon limited liability company
6200 Sprint Parkway
Overland Park, KS 66251
iPCS Wireless, LLC
None
Delaware limited liability company
6200 Sprint Parkway
Overland Park, KS 66251
Gulf Coast Wireless, LLC
None
Louisiana limited liability company
6200 Sprint Parkway
Overland Park, KS 66251
Horizon Personal Communications, Inc.
None
Ohio corporation
6200 Sprint Parkway
Overland Park, KS 66251
Bright Personal Communications Services, LLC
None
Ohio limited liability company
6200 Sprint Parkway
Overland Park, KS 66251

























Annex 1, Page 2










ANNEX 2

RELATED ORIGINATORS AND RELATED LESSEES


Related Originator
Related Lessee
SprintCom, Inc.
SLV- I LLC
Enterprise Communications, LLC
SLV- II LLC
Sprint Spectrum L.P.
SLV- III LLC
Northern PCS Services, LLC
SLV- IV LLC
Sprint Telephony PCS, LLC
SLV- V LLC
American PCS Communications, LLC
SLV- VI LLC
PhillieCo, LLC
SLV- VII LLC
Texas Telecommunications, LLC
SLV- VIII LLC
Alamosa Wisconsin, LLC
SLV- IX LLC
AirGate PCS, Inc.
SLV- X LLC
SprintCom, Inc.
SLV- XI LLC
Louisiana Unwired, LLC
SLV- XII LLC
Georgia PCS Management, L.L.C.
SLV- XIII LLC
Texas Unwired
SLV- XIV LLC
Independent Wireless One, LLC
SLV- XV LLC
Southwest PCS, LLC
SLV- XVI LLC
Alamosa Missouri, LLC
SLV- XVII LLC
Washington Oregon Wireless, LLC
SLV- XVIII LLC
iPCS Wireless, LLC
SLV- XIX LLC
Gulf Coast Wireless, LLC
SLV- XX LLC
Horizon Personal Communications, Inc.
SLV- XXI LLC
Bright Personal Communications Services, LLC
SLV- XXII LLC




Annex 2, Page 1






Exhibit 10.8






______________________________________________________________________________________________________








AMENDED AND RESTATED SECOND STEP TRANSFER AGREEMENT
(TRANCHE 2)


dated as of December 8, 2016

among

THE LESSEES FROM TIME TO TIME PARTY HERETO,

as Sellers

and

MOBILE LEASING SOLUTIONS, LLC,

as Buyer










______________________________________________________________________________________________________




TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND RELATED MATTERS ....................................................2
SECTION 1.1
Defined Terms ............................................................................................2
SECTION 1.2
Other Interpretive Matters ........................................................................11
ARTICLE II
AGREEMENT TO PURCHASE AND SELL ..................................................11
SECTION 2.1
Purchase and Sale .....................................................................................11
SECTION 2.2
Assignment and Assumption of Customer Lease-End Rights and Obligations ...............................................................................................12
SECTION 2.3
Lease Closing Date Purchase Price    ..........................................................12
SECTION 2.4
Purchase Price Upgrade Date ...................................................................13
SECTION 2.5
No Recourse     .............................................................................................13
SECTION 2.6
Intention of the Parties .............................................................................13
SECTION 2.7
Like-Kind Exchanges ...............................................................................14
SECTION 2.8
Transfer Upon Upgrade Termination Option Payment ............................14
SECTION 2.9
Transfer Upon Upgrade Exchange Option ...............................................14
SECTION 2.10
Proceeds from Sale of Exchanged Devices Exchanged Under Upgrade Exchange Option ......................................................................................15
ARTICLE III
PAYMENT OF DEFERRED PURCHASE PRICE AMOUNT,
EXCESS DEVICE PURCHASE PRICE AMOUNT AND
CONTINGENT PURCHASE PRICE ..............................................................15

SECTION 3.1
Deferred Purchase Price Amount ............................................................15
SECTION 3.2
Excess Device Purchase Price Amount ...................................................15
SECTION 3.3
Contingent Purchase Price ......................................................................15
ARTICLE IV
REPRESENTATIONS AND WARRANTIES ................................................16
SECTION 4.1
Mutual Representations and Warranties .................................................16
SECTION 4.2
Additional Representations and Warranties of the Lessees ....................17
SECTION 4.3
Additional Representations and Warranties of the Buyer ......................19
ARTICLE V
GENERAL COVENANTS .............................................................................19
SECTION 5.1
Mutual Covenants ..................................................................................19
SECTION 5.2
Additional Covenants of the Lessees .....................................................21
SECTION 5.3
Additional Covenants of the Buyer ........................................................23
ARTICLE VI
CORPORATE SEPARATENESS ...................................................................25
i




TABLE OF CONTENTS
(continued)
Page

SECTION 6.1
Corporate Separateness ............................................................................25
ARTICLE VII
INVESTMENT COMPANY ACT PROVISIONS ...........................................29
SECTION 7.1
Representations and Agreements of the Lessees .....................................29
SECTION 7.2
Representations and Agreements of the Buyer ........................................30
ARTICLE VIII
MISCELLANEOUS .........................................................................................31
SECTION 8.1
Amendments, etc .....................................................................................31
SECTION 8.2
No Waiver; Remedies ..............................................................................31
SECTION 8.3
Notices, Etc ..............................................................................................31
SECTION 8.4
Binding Effect; Assignment     ....................................................................31
SECTION 8.5
Survival ...................................................................................................31
SECTION 8.6
Costs and Expenses .................................................................................31
SECTION 8.7
Execution in Counterparts; Integration ...................................................32
SECTION 8.8
Governing Law ........................................................................................32
SECTION 8.9
Waiver of Jury Trial    .................................................................................32
SECTION 8.10
Consent to Jurisdiction; Waiver of Immunities .......................................32
SECTION 8.11
Confidentiality .........................................................................................33
SECTION 8.12
No Proceedings ........................................................................................33
SECTION 8.13
Severability ..............................................................................................33
SECTION 8.14
Lessee Representative ..............................................................................33
SECTION 8.15
Mobile Leasing Solutions as Series LLC .................................................34
SECTION 8.16
Limited Recourse .....................................................................................34










ii






AMENDED AND RESTATED SECOND STEP TRANSFER AGREEMENT (TRANCHE 2)
This AMENDED AND RESTATED SECOND STEP TRANSFER AGREEMENT (TRANCHE 2), dated as of December 8, 2016 and effective as of the Amendment Closing Date (this “ Agreement ”), is among THE PERSONS IDENTIFIED ON THE SIGNATURE PAGES HERETO AS LESSEES, as sellers (collectively, the “ Lessees ” and, each, a “ Lessee ”), and MOBILE LEASING SOLUTIONS, LLC, a Delaware limited liability company, acting for itself and on behalf of Series 2 thereof, as buyer (the “ Buyer ”).
W I T N E S S E T H:
WHEREAS, the Lessees and the Buyer are parties to the Second Step Transfer Agreement (Tranche 2), dated as of April 28, 2016 and effective as of the Lease Closing Date (as amended, supplemented or otherwise modified from time to time prior to the date hereof, the “ Original Second Step Transfer Agreement ”);
WHEREAS, it is the intent of the parties hereto that this Agreement amend and restate in its entirety the Original Second Step Transfer Agreement;
WHEREAS, pursuant to that certain Amended and Restated First Step Transfer Agreement (Tranche 2), dated as of the date hereof and effective as of the Amendment Closing Date (as amended, supplemented or otherwise modified from time to time, the “ First Step Transfer Agreement ”), among the Originators and the Lessees, on the Lease Closing Date the Originators contributed and from time to time the Originators will contribute Devices and Related Customer Leases to the Lessees as further described in the First Step Transfer Agreement;
WHEREAS, each Lessee wishes to sell and the Buyer wishes to purchase the Devices and the Customer Lease-End Rights and Obligations under the Related Customer Leases pursuant to and in accordance with the terms hereof;
WHEREAS, the Devices and the Customer Lease-End Rights and Obligations under the Related Customer Leases will be held in the name of Mobile Leasing Solutions on behalf of Series 2;
WHEREAS, the Buyer has agreed to pay to the Lessees the Cash Purchase Price, the Deferred Purchase Price Amount and the Contingent Purchase Price, in each case, in accordance with the terms hereof;
WHEREAS, pursuant to that certain Amended and Restated Master Lease Agreement (Tranche 2), dated as of the date hereof and effective as of the Amendment Closing Date (as amended, supplemented or otherwise modified from time to time, the “ Master Lease Agreement” ), by and among the Lessees, Servicer, the Buyer and Collateral Agent, as supplemented by each Device Lease Schedule agreed as of the Lease Closing Date by the Lessees and the Buyer and, if applicable, amended pursuant to Section 2.14 of the Master Lease Agreement (the Master Lease Agreement, together with each Device Lease Schedule,




collectively, the “ Device Leases ” and, each, a “ Device Lease ”), on the Lease Closing Date the Buyer commenced leasing the Lease Closing Date Devices to the relevant Lessee;
WHEREAS, Servicer is servicing the Devices and Related Customer Leases for Lessees and the Buyer pursuant to the Servicing Agreement;
WHEREAS, the Parties intend that the Transaction Documents create a financing for all U.S. federal, state and local income tax purposes, and thus specifically that (i) the Cash Purchase Price paid under this Agreement at closing be treated for such purposes as amounts loaned by the Buyer for which the Devices provide security and (ii) the Rental Payments payable to the Buyer under the Device Leases be treated for such purposes as payments on such indebtedness owed to the Buyer;
NOW, THEREFORE, in consideration of the premises set forth above, the terms and conditions contained herein and other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree that the Original Second Step Transfer Agreement is amended and restated in its entirety as set forth in this Agreement and hereby further agree as follows:
ARTICLE I

DEFINITIONS AND RELATED MATTERS

SECTION 1.1         Defined Terms . In this Agreement, capitalized terms not otherwise defined herein have the meaning provided for such terms in Appendix A to the Master Lease Agreement. In addition, the following terms used herein have the meanings indicated below:

“ Agreement ” shall have the meaning provided in the preamble of this Agreement.
“ Available Funds ” shall have the meaning provided in the Servicing Agreement.
“ Buyer ” shall have the meaning provided in the preamble of this Agreement.
“ Buyer Obligations ” shall have the meaning provided in Section 7.1(b) of this Agreement.
“ Buyer Permitted Lien ” means

(a) Liens created under the Transaction Documents;

(b) Liens securing Debt under any Permitted Additional Tranche and “Permitted Liens” or “Buyer Permitted Liens” as defined in the transaction documents relating to any Permitted Additional Tranche;

(c) Liens for taxes not yet due or that are being contested in good faith by appropriate proceedings diligently conducted, provided that adequate reserves with respect thereto are maintained on the books of the Buyer in conformity with GAAP;

2





(d) pledges or deposits in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other social security legislation;

(e) Liens on insurance policies and proceeds thereof securing the financing of the premiums with respect thereto;

(f) Liens on equipment arising from precautionary UCC financing statements regarding operating leases of equipment;

(g) (i) Liens that are contractual or common law rights of set-off relating to (A) the establishment of depository relations in the ordinary course of business with banks not given in connection with the issuance of Debt or (B) pooled deposit or sweep accounts of the Buyer to permit satisfaction of overdraft or similar obligations incurred in the ordinary course of business of the Buyer and (ii) other Liens securing cash management obligations (that do not constitute Debt) in the ordinary course of business;

(h) Liens of a collecting bank arising under Section 4‑208 or Section 4‑210 of the UCC on items in the course of collection; or

(i) nonrecourse Liens on and purchase money security interests in immaterial assets of Mobile Leasing Solutions arising in the ordinary course of business.

“ Cash Purchase Price ” shall have the meaning provided in Section 2.3(a) of this Agreement.
“ Collections ” shall have the meaning provided in the Servicing Agreement.
“ Contingent Device Purchase Price ” means an amount (which may be less than zero) equal to:

(a)    the sum of:

(i) the aggregate Device Net Sale Proceeds in respect of all Device disposals on or prior to the Final Settlement Date; plus

(ii) the sum of all Device Dilution Payments on or prior to the Final Settlement Date; plus

(iii) the sum of all Customer Purchase Price Amounts on or prior to the Final Settlement Date; plus

(iv) the aggregate Sprint Net Sale Proceeds in respect of all Device disposals on or prior to the Final Settlement Date; plus

(v) the sum of all Forward Purchase Price Amounts in respect of all Device disposals on or prior to the Final Settlement Date; minus

(b)    the sum of:



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(i)    the aggregate Device Residual Values for each Lease Closing Date Device as of the applicable Expected Sales Date of such Device; plus

(ii)    the sum of all Supplemental Fixed Amounts;
provided, any transfers or sale of Devices under Sections 2.8 , 2.9 and, for the avoidance of doubt, 2.10 , shall not be included in the calculation of clause (a) and provided, further, the deductions in clause (b) shall be without duplication of any amounts deducted from the calculation of Deferred Purchase Price Amount.
“ Contingent Rent Purchase Price ” means an amount (which may be less than zero) equal to

(a)    the sum of:

(i)    all Excess Rental Payments on or prior to the Final Settlement Date; plus

(ii)    all Other Payments on or prior to the Final Settlement Date; plus

(iii)    the MLS Collection Account Interest; minus

(b)    the sum of:

(i)    the sum of all Rental Payments and other amounts due and owing to the Buyer by any Lessee, Servicer or Guarantor as of the Final Settlement Date; plus

(ii)    the aggregate additional interest expense incurred by the Buyer in respect of the Facilities as a result of the Buyer not receiving Device Net Sale Proceeds (or Device Dilution Payments, Customer Purchase Price Amounts, Sprint Net Sale Proceeds or Forward Purchase Price Amounts in lieu thereof) for a Device on or prior to the applicable Expected Sales Date of such Device; provided such interest expense with respect to each applicable Device shall be calculated for the period between the Expected Sales Date of such Device and the earlier of (x) the Final Settlement Date and (y) the date on which the Device Net Sale Proceeds (or Device Dilution Payments, Customer Purchase Price Amounts, Sprint Net Sale Proceeds or Forward Purchase Price Amounts in lieu thereof) for such Device are actually received by the Buyer at the rate set forth in the applicable Financing Document on an amount equal to the Device Residual Value of such Device as of the Expected Sales Date; provided, further, this clause (ii) shall exclude additional interest expense with respect to any Device returned to the Buyer (or its Nominated Agent) that satisfies the Device Return Condition for any period after the Device Disposal Period for such Device; provided further, this clause (ii) shall be inapplicable to any Exchanged Device where the related Upgraded Device has been sold to Buyer pursuant to Section 2.1 ; plus

(iii)    all unreimbursed costs and fees of the Buyer (or its Nominated Agent) as of the Final Settlement Date to repair and restore Devices that when returned were not in Device Return Condition; provided any such repair cost or expense was incurred by the Buyer (or its Nominated Agent) in accordance with the Transaction Documents;




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provided, however, the deductions in (b)(i)-(iii) shall be without duplication of any amounts deducted from the calculation of Deferred Purchase Price Amount.
“ Contingent Purchase Price ” means an aggregate amount (which shall not be less than zero) equal to (a) the sum of the Contingent Device Purchase Price plus the Contingent Rent Purchase Price minus (b) the sum of all Excess Device Purchase Price Amounts paid to the Lessee Representative.
“ Customer Lease-End Rights and Obligations ” means, with respect to any Related Customer Lease for a Device, (a) during the Term of a Device Lease for such Device, (i) the right to receive possession of such Device if returned by the Customer, (ii) the right to receive purchase price payments or payments in lieu of delivery by Customers under such Related Customer Lease, (iii) the obligation to deliver title to such Device to the relevant Customer free and clear of any Adverse Claims arising by and through the Buyer upon payment of the purchase price or payment in lieu of delivery and all other amounts due and owing for such Device under such Related Customer Lease, (iv) the right to terminate such Related Customer Lease in accordance with the early termination provisions thereof if the Sprint Parties discontinue the Sprint Parties’ leasing program for Devices and (v) the right to set the fair market value of such Device under such Related Customer Lease in relation to the Customer’s purchase option in respect of such Device after the Customer Lease Term and (b) at all times after the Term of a Device Lease for such Device, solely to the extent that the relevant Lessee does not exercise the Purchase Option with respect to such Device, all rights and obligations under such Related Customer Lease other than the right to receive all Customer Receivables attributable to any period during the Term of such Device Lease.
“ Customer Purchase Price Amounts ” means with respect to any Device, all purchase price payments and payments in lieu of delivery of such Device received by the Buyer, directly or indirectly from the relevant Customers under the applicable Related Customer Lease. For the avoidance of doubt this amount shall not include payments on account of scheduled Customer Receivables.
“ Debt ” means, at any time, indebtedness of any Person at any time, without duplication, all obligations of such Person for money borrowed or raised, all obligations (other than accounts payable and other similar items arising in the ordinary course of business) of such Person for the deferred payment of the purchase price of property, and all capital lease obligations or other obligations which, in each case, in accordance with GAAP, would be included in determining total liabilities as shown on the liability side of the balance sheet of such Person and all guarantees (whether contingent or otherwise) of such Person guaranteeing the Debt of any other Person, whether directly or indirectly (other than endorsements for collection or deposit in the ordinary course of business).
“ Deemed Collections ” shall have the meaning provided in the Servicing Agreement.
“ Deferred Purchase Price ” shall have the meaning provided in Section 2.3(b) of this Agreement.




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“ Deferred Purchase Price Amount ” shall have the meaning provided in Section 3.1 of this Agreement.
“ Deferred Purchase Price Interest ” shall have the meaning provided in Schedule VI of this Agreement.
“ Delivery Costs ” shall have the meaning provided in the Device Repurchase Agreement.
“ Device Dilution Payment ” means with respect to any Device, (i) any payment to the Buyer on account of Dilutions in respect of the Device Residual Value for such Device pursuant to Sections 2.14(b)(ii) of the Servicing Agreement, Sections 2.9(a)(ii)(3), 2.9(a)(iii)(3) or 2.9(d) (solely to the extent Servicer is required to and makes a payment under clause (iii) of the definition of “Upgrade Termination Option Payment”) of the Master Lease Agreement, or the exercise by any Lessee of the Upgrade Termination Option and payment of any amounts under clause (a)(iii) of the definition of Upgrade Termination Option Payment and (ii) any Upgrade Dilution deposited into the Upgrade Reserve Account and distributed to the MLS Collection Account (Tranche 2) or to the Forward Purchaser pursuant to Sections 2.9(c)(i) or 2.9(c)(iii) of the MLS Intercreditor Agreement.
“ Device Disposal Period ” means, with respect to a Device, the period from the return of the Device to the Buyer (or its Nominated Agent) to the earlier of (a) in the case of a Device (other than a Reparable Device or Incremental Device), 30 days thereafter, in the case of a Reparable Device, 45 days thereafter and in the case of an Incremental Device, 60 days thereafter and (b) the date such Device is disposed of.
“ Device Handling Fee ” shall have the meaning provided in the Support Services Agreement.
“ Device Losses ” means with respect to a Device, an amount (which may be less than zero) equal to (a) the sum of (i) the Device Net Sale Proceeds in respect of the disposal of such Device on or prior to the Final Settlement Date, (ii) any Device Dilution Payment in respect of such Device on or prior to the Final Settlement Date, (iii) any Customer Purchase Price Amount in respect of such Device on or prior to the Final Settlement Date, (iv) the Sprint Net Sale Proceeds in respect of the disposal of such Device on or prior to the Final Settlement Date and (v) the Forward Purchase Price Amount in respect of the disposal of such Device on or prior to the Final Settlement Date; minus (b) the sum of (i) the Device Residual Value for such Device as of the applicable Expected Sales Date of such Device plus (ii) the sum of all Rental Payments and other amounts due and owing to the Buyer by any Lessee, Servicer or Guarantor as of the Final Settlement Date in respect of such Device; plus (iii) the aggregate additional interest expense incurred by the Buyer in respect of the Facilities as a result of the Buyer not receiving Device Net Sale Proceeds (or Device Dilution Payments, Customer Purchase Price Amounts, Sprint Net Sale Proceeds or Forward Purchase Price Amounts in lieu thereof) in respect of such Device on or prior to the applicable Expected Sales Date of such Device, provided such interest expense with respect to such Device shall be calculated for the period between the Expected Sales Date of such Device and the earlier of (x) the Final Settlement Date and (y) the date on which the Device Net Sale Proceeds (or Device Dilution Payments, Customer Purchase Price Amounts, Sprint Net Sale Proceeds or Forward Purchase Price Amounts in lieu thereof) for such



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Device are actually received by the Buyer at the rate set forth in the applicable Financing Document on an amount equal to the Device Residual Value of such Device as of the Expected Sales Date; provided, further, this clause (b)(iii) shall exclude additional interest expense with respect to a Device that is returned to the Buyer (or its Nominated Agent) and satisfies the Device Return Condition for any period after the Device Disposal Period for such Device; plus (iv) all unreimbursed costs and fees of the Buyer (or its Nominated Agent) as of the Final Settlement Date to repair and restore such Device that when returned was not in the Device Return Condition, provided any such repair cost or expense was incurred by the Buyer (or its Nominated Agent) in accordance with the Transaction Documents, provided, however, the deductions in (b)(i)-(iv) shall be without duplication of any amounts deducted from the calculation of Contingent Purchase Price and clause (b)(i) of Section 3.1.
“ Device Net Sale Proceeds ” means, with respect to a Device sold by the Buyer (or its Nominated Agent) in the secondary market, the Device Sale Proceeds for such Device less the Device Handling Fee payable with respect to such sale.
“ Device Repayment Purchase Price ” shall have the meaning provided in the Servicing Agreement.
“ Devices ” means the Lease Closing Date Devices, the Upgraded Devices and each wireless mobile device received by the Buyer in connection with a Like-Kind Exchange for any of the foregoing Devices.
“ Device Sale Proceeds ” means, with respect to a Device sold by the Buyer (or its Nominated Agent), the gross proceeds of sale of such Device.
“ Excess Device Purchase Price Amount ” means, on any Settlement Date, an amount (which may not be less than zero) equal to:
(a)    the sum of:

(i)    the aggregate Device Net Sale Proceeds in respect of all Device disposals during the calendar month then most recently ended; plus

(ii)    the sum of all Device Dilution Payments during the calendar month then most recently ended; plus

(iii)    the sum of all Customer Purchase Price Amounts during the calendar month then most recently ended; plus

(iv)    the aggregate Sprint Net Sale Proceeds in respect of all Device disposals during the calendar month then most recently ended; plus

(v)    the sum of all Forward Purchase Price Amounts in respect of all Device disposals during the calendar month then most recently ended; minus

(b)    the sum of:





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(i)    the aggregate Device Residual Values for each of the Devices referred to in clause (a)(i), (ii), (iii), (iv) and (v) as of the applicable Expected Sales Date of such Device; provided, however the Device Residual Value for a Device shall only be counted once in determining the amount of this clause (b)(i); plus

(ii)    the sum of all Supplemental Fixed Amounts during the calendar month then most recently ended;

provided, any transfers or sale of Devices under Sections 2.8 , 2.9 and, for the avoidance of doubt, 2.10 , shall not be included in the calculation of clauses (a) or (b).
“ Excess Rental Payment ” means (i) with respect to a Customer Lease, all monthly Customer Receivables paid by Customers in respect of any period after the Scheduled Customer Lease Term of such Customer Lease, (ii) with respect to the exercise of any Upgrade Termination Option and without duplication of any amounts in clause (i), all Customer Receivables (including down payments) transferred to the MLS Collection Account (Tranche 2) on account of an Upgraded Customer Lease allocable to the period after the Upgrade Date other than any amounts deducted from the related Upgrade Termination Option Payment pursuant to clause (b) of the definition thereof and (iii) without duplication of any amounts in clauses (i) or (ii), all monthly Customer Receivables, Rent Dilutions and payments under the Sprint Guarantee transferred by Servicer or Guarantor to the MLS Collection Account (Tranche 2) in respect of a Device Lease Payment Date in excess of the Rental Payment due on such Device Lease Payment Date (excluding applied Carryover Amounts and applied Excess Amounts).
“ Facilities ” means the Senior Loans and the Senior Subordinated Loans.
“ Financing Documents ” means each of the documents evidencing the Facilities.
“ Forward Purchase Price Amount ” means, with respect to a Device sold by the Buyer (or its Nominated Agent) to Forward Purchaser under the Forward Purchase Agreement, the Fixed Price (as defined in the Forward Purchase Agreement) for such Device as of the Sale Date (as defined in the Forward Purchase Agreement) of such Device less the Originator Charge.
“ Income Tax ” means any tax imposed on the net income or profits of any Person and any similar Taxes, including any minimum Tax, net worth Tax, capital stock Tax or similar Tax.
“ Incremental Device ” shall have the meaning provided in the Support Services Agreement.
“ Independent Director ” means a natural person who (I) is not at the time of initial appointment, or at any time while serving as Independent Director of a Lessee, and has not been at any time during the preceding five (5) years: (a) a stockholder, member, director, manager (with the exception of serving as an independent manager or independent director of any Lessee), officer, employee, partner, attorney or counsel of such Lessee or Guarantor or any of their respective Affiliates (other than the other Lessees); (b) a supplier or other Person who derives any of its purchases or revenues from its activities with such Lessee or Guarantor or any of their respective Affiliates (except in such person’s capacity as an independent manager or independent director of any Lessee); or (c) a member of the immediate family of any such

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supplier, stockholder, member, director, manager, officer, employee, partner, attorney, counsel or other Person described in clauses (a) or (b) above and (II) (1) has prior experience as an independent manager or independent director for a company whose charter documents required the unanimous consent of all independent managers or independent directors thereof before such company could consent to the institution of bankruptcy or insolvency proceedings against it or could file a petition seeking relief under any applicable federal or state law relating to bankruptcy and (2) has at least three years of relevant employment experience.
“ Investment Company Act ” means the Investment Company Act of 1940, as amended.
“ Lease Closing Date Devices ” means the wireless mobile devices identified on Schedule I hereto.
“ Lease Closing Date Customer Leases ” means each Customer Lease with respect to a Lease Closing Date Device identified on Schedule II hereto.
“ Lessee Permitted Additional Tranche ” means, in respect of any Lessee, any transaction or arrangement whereby (i) such Lessee sells (directly or indirectly) mobile wireless devices and rights in customer leases to Mobile Leasing Solutions acting for itself and/or on behalf of any Series (other than Series 2) and leases back (directly or indirectly) such devices from Mobile Leasing Solutions acting for itself and/or on behalf of any Series (other than Series 2) and (ii) Mobile Leasing Solutions acting for itself and/or on behalf of any Series finances such sale pursuant to a Permitted Additional Tranche.
“ Lessee Permitted Additional Tranche Transaction Documents ” means the documents mutually agreed to by the relevant Lessees and Mobile Leasing Solutions acting for itself and/or on behalf of any Series evidencing a Lessee Permitted Additional Tranche.
“ Lessee Representative ” shall have the meaning provided in Section 8.14 of this Agreement.
“ MLS Collection Account Interest ” means, as of the Final Settlement Date, the sum of (i) the aggregate amount of interest payments on or credited to the MLS Collection Account (Tranche 2) accrued to such date minus (ii) the aggregate amount of interest payments on or credited to the MLS Collection Account (Tranche 2) paid to the Lessee Representative pursuant to the Waterfall to such date.
“ Mobile Leasing Solutions ” means Mobile Leasing Solutions, LLC, a Delaware limited liability company.
“ Net Device Losses ” means, with respect to any Device for which the calculation of Device Losses resulted in an amount less than zero, an amount equal to the lesser of (i) the Deferred Purchase Price with respect to such Device and (ii) the Device Losses with respect to such Device (assuming the Device Losses are expressed as a positive amount solely for purposes of this clause (ii)). As an example, if Device Losses are -50, for purposes of clause (ii), Device Losses would be expressed as 50.
“ OFAC ” shall have the meaning provided in the First Step Transfer Agreement.



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“ Originator Charge ” shall have the meaning provided in the Support Services Agreement.
“ Originator Device Fee ” shall have the meaning provided in the Device Repurchase Agreement.
“ Other Payments ” means the sum of all Collections received by the Buyer, directly or indirectly, from Customers under the Related Customer Leases (other than scheduled Customer Receivables and Customer Purchase Price Amounts).
“ PATRIOT Act ” shall have the meaning provided in the First Step Transfer Agreement.
“ Permitted Additional Tranches ” means any transaction entered into by Mobile Leasing Solutions acting for itself and/or on behalf of any Series (other than Series 2) constituting non-recourse secured debt of Mobile Leasing Solutions and/or such Series secured by mobile wireless devices and customer leases of such Series (whether held by such Series directly or held in the name of Mobile Leasing Solutions on behalf of such Series) arising from a mobile telephony operator’s cellular telephony business and which may also be secured by the membership interests in such Series and/or other assets of such Series (whether held by such Series directly or held in the name of Mobile Leasing Solutions on behalf of such Series), which collateral does not constitute collateral securing any other financing of Mobile Leasing Solutions (acting on behalf of itself or any Series) and in respect of which the Persons providing such financing in connection with such transaction and their agents have entered into intercreditor arrangements containing the Required Intercreditor Provision limiting the rights of such Persons and their agents to the specific collateral securing such non-recourse debt.
“ Purchase Price ” means the Lease Closing Date Purchase Price as adjusted pursuant to Section 2.4.
“ Qualified Purchaser ” means a “qualified purchaser” within the meaning of Section 2(a)(51) of the Investment Company Act.
“ Related Customer Leases ” means the Lease Closing Date Customer Leases and the Upgraded Customer Leases.
“ Related Originator ” shall have the meaning provided in the First Step Transfer Agreement.
“ Related Lease Closing Date Purchase Price ” shall have the meaning provided in Section 2.3 of this Agreement.
“ Related Upgrade Purchase Price ” shall have the meaning provided in Section 2.4 of this Agreement.
“ Rent Dilution ” means a Dilution in respect of a scheduled Customer Receivable.
“ Rent Payment Shortfall ” means, as of any date of determination, the sum of all accrued and unpaid Rental Payments as of such date.



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“ Required Intercreditor Provision ” shall have the meaning provided in the MLS Intercreditor Agreement.
“ Senior Loan Lenders ” shall have the meaning provided in the Servicing Agreement.
“ Servicer Report ” shall have the meaning provided in the Servicing Agreement.
“ Sprint Net Sale Proceeds ” means, with respect to (i) a Device sold by the Buyer (or its Nominated Agent) to any Originator under the Device Repurchase Agreement, the Device Sale Proceeds for such Device less the Originator Device Fee less, to the extent not included in the Originator Device Fee, Delivery Costs and sales and transfer Taxes (not including any Income Taxes), if any, payable with respect to such transfer incurred in connection with such sale, (ii) a Device for which any Lessee has made payment under Section 2.11(c) of the Master Lease Agreement, the amount paid under Section 2.11(c)(ii) of the Master Lease Agreement, (iii) a Device for which the Servicer has made payment under Section 5.2 of the Servicing Agreement, without duplication of any amounts in clause (ii), the amount paid under Section 5.2(ii) of the Servicing Agreement or (iv) a Purchase Option Device, the Purchase Option Price paid under Section 2.16 of the Master Lease Agreement.
“ Supplemental Fixed Amount ” shall have the meaning provided in the Forward Purchase Agreement.
“ Support Services Agreement ” shall have the meaning provided in the Servicing Agreement.
“ Transfer ” shall have the meaning provided in Section 7.1(b) of this Agreement.
“ Upgrade Exchange Option Transfer Date ” shall have the meaning provided in Section 2.9 of this Agreement.
SECTION 1.2         Other Interpretive Matters . The interpretation of this Agreement, unless otherwise specified, is subject to Section 1.2 of the Master Lease Agreement.

ARTICLE II

AGREEMENT TO PURHCASE AND SELL

SECTION 2.1         Purchase and Sale . Upon the terms and subject to the conditions set forth in this Agreement, (i) on the Lease Closing Date, each Lessee, severally and for itself, hereby sells to the Buyer, and, in consideration of the payment of the Lease Closing Date Purchase Price in accordance with Section 2.3, the Buyer hereby purchases from the relevant Lessee, all of such Lessee’s right, title and interest in, to and under (a) each Lease Closing Date Device and (b) the Customer Lease-End Rights and Obligations under each Lease Closing Date Customer Lease and (ii) subject to Section 2.8, on each Upgrade Date occurring during the Term of a Device Lease for a Device, each Lessee, severally and for itself, hereby sells to the Buyer, and, in consideration of the payment of the Related Upgrade Purchase Price in accordance with Section 2.4, the Buyer hereby purchases from the relevant Lessee, all of such Lessee’s right, title and interest in, to and under (a) each Upgraded Device subject to a Customer Upgrade on such



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Upgrade Date and (b) the Customer Lease-End Rights and Obligations under each Upgraded Customer Lease related to such Upgraded Devices. For the avoidance of doubt, any Device the Upgrade Date with respect to which occurred after the end of the Term of a Device Lease for such Device shall not be transferred pursuant to this Agreement.

SECTION 2.2         Assignment and Assumption of Customer Lease-End Rights and Obligations . For the purposes of this Agreement, (x) all sales of contractual and other rights of Lessees in connection with Devices and Related Customer Leases shall be deemed to be absolute and irrevocable assignments thereof and (y) all purchases of contractual obligations by the Buyer shall be deemed to be assumptions thereof. From and after the Lease Closing Date (i) the Buyer shall have assumed the Customer Lease-End Rights and Obligations under the Lease Closing Date Customer Leases and (ii) each Lessee shall have relinquished its rights and be released from its obligations under the Customer Lease-End Rights and Obligations under the Lease Closing Date Customer Leases. From and after any Upgrade Date for an Upgraded Device (i) the Buyer shall have assumed the Customer Lease-End Rights and Obligations under the Upgraded Customer Lease for such Upgraded Device and (ii) each Lessee shall have relinquished its rights and be released from its obligations under the Customer Lease-End Rights and Obligations under such Upgraded Customer Lease. For the avoidance of doubt, in the case of each Lease Closing Date Customer Lease, from and after the Lease Closing Date, and, in the case of any Upgraded Device, from and after the Upgrade Date for such Upgraded Device, until the Term of a Device Lease for such Device has terminated or expired, the relevant Lessee shall be the lessor of record of the Device under the Related Customer Lease and own the right to receive all scheduled Customer Receivables in connection with such Related Customer Lease. Furthermore, for the avoidance of doubt, except for the obligations assigned to the Buyer herein, nothing herein shall relieve the relevant Lessee (or the Servicer on its behalf) from performing its obligations under the relevant Customer Leases.

SECTION 2.3         Lease Closing Date Purchase Price . The purchase price for the Lease Closing Date Devices and the Customer Lease-End Rights and Obligations under the Lease Closing Date Customer Leases sold by each Lessee to the Buyer on the Lease Closing Date (each, a “ Related Lease Closing Date Purchase Price ” and, in the aggregate, the “ Lease Closing Date Purchase Price ”) shall be payable by the Buyer as follows:

(a)    first, on the Lease Closing Date, the Buyer shall pay to the Lessee Representative, on behalf of the Lessees, a portion of the Related Lease Closing Date Purchase Price in cash (in immediately available funds) in the amount set forth on Schedule III under the heading “Cash Purchase Price” (the “ Cash Purchase Price ”);

(b)    second, a portion of such Related Lease Closing Date Purchase Price in the amount set forth on Schedule III under the heading “Deferred Purchase Price” shall be deferred (the “ Deferred Purchase Price ”) and paid to the Lessee Representative, on behalf of the Lessees, in accordance with Section 3.1; and

(c)    third, the remaining portion of such Related Lease Closing Date Purchase Price shall be deferred and paid to the Lessee Representative, on behalf of the Lessees, on the Final Settlement Date in accordance with Section 3.3 as the Contingent Purchase Price.





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SECTION 2.4         Purchase Price Upgrade Date . The consideration for any Upgraded Device and the Customer Lease-End Rights and Obligations under the related Upgraded Customer Lease sold by the relevant Lessee to the Buyer on the applicable Upgrade Date (each, a “ Related Upgrade Purchase Price ”) shall consist of (a) a purchase price equal to the Related Lease Closing Date Purchase Price (or, if the Exchanged Device was originally an Upgraded Device, the Related Upgrade Purchase Price) that was or would have been payable in respect of the Exchanged Device without giving effect to any Upgrade Exchange and (b) delivery to the Lessee of the Exchanged Device (or net sale proceeds thereof) subject to the conditions set forth in Sections 2.9 and 2.10; provided, however, the Contingent Purchase Price calculation for net disposal proceeds shall be made using the net disposal proceeds relating to the Upgraded Device and not the Exchanged Device and the calculation of Excess Rental Payments in the Contingent Purchase Price Calculation shall account for Customer Receivables paid in respect of the Upgraded Customer Lease related to such Upgraded Device. Any amount paid or payable by the Buyer in respect of the Exchanged Device shall be deemed paid or payable by the Buyer in respect of such Upgraded Device except the Contingent Purchase Price shall be adjusted as described above. Nothing in this Section 2.4 shall operate as to require the Buyer to pay any additional amounts of Cash Purchase Price or Deferred Purchase Price on account of the Upgraded Device that would not otherwise have been payable by the Buyer under the Transaction Documents with respect to the Exchanged Device. For the avoidance of doubt, at the time of any Upgrade Exchange, any amounts of the Related Lease Closing Date Purchase Price (or, if the Exchanged Device was an Upgraded Device, the Related Upgrade Purchase Price) previously paid in respect of the Exchanged Device will be deemed to have been paid in respect of the Related Upgrade Purchase Price of the Upgraded Device.

SECTION 2.5         No Recourse . Except as specifically provided in this Agreement, the purchase and sale of the Devices and the Customer Lease-End Rights and Obligations under this Agreement shall be without recourse to any Lessee.

SECTION 2.6         Intention of the Parties . It is the express intent of each of the parties hereto that each purchase and sale hereunder shall (except for U.S. federal, state and local income tax purposes) each severally constitute a true sale and absolute assignment of the Devices and the Customer Lease-End Rights and Obligations by each Lessee to the Buyer (such that the Devices and the Customer Lease-End Rights and Obligations, other than those, if any, subsequently transferred pursuant to Section 2.8, repurchased by or transferred to the Lessees pursuant to the terms of the Transaction Documents or exchanged pursuant to a Like-Kind Exchange, would not be property of any Lessee’s estate in any Insolvency Event relating to any Lessee). As a protective measure in the event that, notwithstanding the foregoing, the conveyance of the Devices and the Customer Lease-End Rights and Obligations to the Buyer is recharacterized by any third party as a pledge securing a loan, each Lessee does hereby grant to Mobile Leasing Solutions for the benefit of Series 2 as of, (x) in the case of the Lease Closing Date Devices and Customer Lease-End Rights and Obligations in respect of the Lease Closing Date Customer Leases, the Lease Closing Date, (y) in the case of each Upgraded Device and Customer Lease-End Rights and Obligations with respect to each Upgraded Customer Lease, the Upgrade Date for the related Upgraded Device and (z) in the case of each Like-Kind Exchange Device, the Like-Kind Exchange Transfer Date for such Like-Kind Exchange Device, a security interest in all of such Lessee’s now or hereafter existing right, title and interest in, to and under the Devices and the Customer Lease-End Rights and Obligations and agrees that this Agreement




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shall constitute a security agreement under applicable law. Each Lessee hereby authorizes the Buyer, or its respective designees (i) to file one or more financing or continuation statements, and amendments thereto and assignments thereof, relative to all or any of the Devices and the Customer Lease-End Rights and Obligations now existing or hereafter arising in the name of such Lessee and (ii) to the extent permitted by Law and the Servicing Agreement, to notify Customers of the assignment of the Devices and related Customer Lease-End Rights and Obligations pursuant hereto.

SECTION 2.7         Like-Kind Exchanges . At any time that Servicer (on behalf of the Lessee) does a Like-Kind Exchange under the relevant Customer Lease and as permitted under the Servicing Agreement, the Lessee shall be deemed to have sold to the Buyer the Device subject to the Like-Kind Exchange (“ Like-Kind Exchange Device ”) on the Like-Kind Exchange Transfer Date for such Like-Kind Exchange Device in exchange for the Related Lease Closing Date Purchase Price or, in the case of an Upgraded Device, the Related Upgrade Purchase Price, as applicable, for such Device that was or would have been payable in respect of the original Device, provided, however, the Contingent Purchase Price calculation for net disposal proceeds shall be made using the net disposal proceeds relating to the Like-Kind Exchange Device and not the original Device. Any amount payable by the Buyer in respect of the original Device shall instead be payable by the Buyer in respect of such Like-Kind Exchange Device except the Contingent Purchase Price shall be adjusted as described above. Nothing in this Section 2.7 shall operate as to require the Buyer to pay any additional amounts of Cash Purchase Price or Deferred Purchase Price on account of the Like-Kind Exchange Device that would not otherwise have been payable by the Buyer under the Transaction Documents with respect to the original Device. For the avoidance of doubt, at the time of any Like-Kind Exchange, any amounts of the Related Lease Closing Date Purchase Price (or, if the original Device was an Upgraded Device, the Related Upgrade Purchase Price) previously paid in respect of the original Device will be deemed to have been paid in respect of the Related Upgrade Purchase Price of the Like-Kind Exchange Device.

SECTION 2.8         Transfer Upon Upgrade Termination Option Payment . At any time a Device Lease for a Device is terminated pursuant to the exercise by the relevant Lessee of its Upgrade Termination Option with respect to such Device in accordance with Section 2.13(b)(ii) of the Master Lease Agreement, the transfer in Section 2.1 with respect to the related Upgraded Device will be deemed not to have occurred. For the avoidance of doubt, to the extent the Buyer has any rights, title or interest in the Upgraded Device and the Customer Lease-End Rights and Obligations in respect of the related Upgraded Customer Lease notwithstanding the preceding sentence, the Buyer shall transfer to the relevant Lessee, effective as of the Upgrade Date for such Device, all of the Buyer’s right, title and interest in and to such Upgraded Device and such Customer Lease-End Rights and Obligations. In connection with any exercise by a Lessee of its Upgrade Termination Option, the Buyer shall have the rights and obligations that it would otherwise have had with respect to the Exchanged Device without giving effect to any Upgrade Exchange.

SECTION 2.9         Transfer Upon Upgrade Exchange Option . Following any Upgrade Exchange of a Device during the Term of the Device Lease for such Device and if (i) the relevant Lessee has not elected the Upgrade Termination Option with respect to the Upgraded Device within the Upgrade Termination Option Period or, during the Upgrade Termination






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Option Period, has notified the Buyer that it waives its right to elect the Upgrade Termination Option with respect to such Upgraded Device (which notice and waiver shall be irrevocable) and (ii) the Servicer has paid to the Buyer any Upgrade Dilution with respect to such Upgrade Exchange by the Upgrade Dilution Payment Date, if applicable, in accordance with Section 2.13(b)(i) of the Master Lease Agreement (the date conditions (i) and (ii) are satisfied, the “ Upgrade Exchange Option Transfer Date ”), the Buyer shall be deemed to have transferred to the relevant Lessee on the Upgrade Exchange Option Transfer Date title to the Exchanged Device subject to the Upgrade Exchange.

SECTION 2.10     Proceeds from Sale of Exchanged Devices Exchanged Under Upgrade Exchange Option . Following any Upgrade Exchange of a Device during the Term of the Device Lease for such Device for which (i) the relevant Lessee does not elect the Upgrade Termination Option with respect to the Upgraded Device within the Upgrade Termination Option Period or, during the Upgrade Termination Option Period, has notified the Buyer that it waives its right to elect the Upgrade Termination Option with respect to such Upgraded Device (which notice and waiver shall be irrevocable) and (ii) the Servicer fails to pay the Upgrade Dilution with respect to the Upgrade Exchange by the Upgrade Dilution Payment Date, if applicable, the Buyer shall sell the Exchanged Device subject to the Upgrade Exchange and apply the Device Net Sale Proceeds or Forward Purchase Price Amount, as applicable, first, in satisfaction of any unpaid Upgrade Dilution with respect to the Upgrade Exchange and, second, any remainder, to the Lessee Representative (on behalf of the relevant Lessee).

ARTICLE III

PAYMENT OF DEFERRED PURCHASE PRICE AMOUNT, EXCESS DEVICE PURCHASE PRICE AMOUNT AND CONTINGENT PURCHASE PRICE

SECTION 3.1         Deferred Purchase Price Amount . The Buyer shall pay the Lessee Representative, on behalf of the Lessees, on any Settlement Date in accordance with the Waterfall, an aggregate amount (which shall not be less than zero) (the “ Deferred Purchase Price Amount ”) equal to (I)(a) the sum of (i) the aggregate Deferred Purchase Price plus (ii) the remainder of (x) the aggregate amount of Deferred Purchase Price Interest accrued to such date minus (y) the aggregate amount of Deferred Purchase Price Interest paid to the Lessees to such date minus (b) the sum of (i) the aggregate amount of Rent Payment Shortfalls to such date without duplication of any amounts deducted from the calculation of Contingent Rent Purchase Price and Net Device Losses plus (ii) the sum of all Supplemental Fixed Amounts plus (iii) the aggregate Net Device Losses to such date; provided, however, in determining the aggregate Net Device Losses the calculation shall exclude each Exchanged Device where the related Upgraded Device is sold to the Buyer pursuant to Section 2.1 minus (II) the aggregate amount paid to such date pursuant to clause (I).

SECTION 3.2         Excess Device Purchase Price Amount. The Buyer shall pay the Lessee Representative, on behalf of the Lessees, on any Settlement Date in accordance with the Waterfall, the Excess Device Purchase Price Amount.

SECTION 3.3         Contingent Purchase Price . On the Final Settlement Date, the Buyer shall pay the Lessee Representative, on behalf of the Lessees, in accordance with the Waterfall,





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the Contingent Purchase Price. In the event the Buyer does not have sufficient Available Funds to pay the Contingent Purchase Price solely as a result of (i) Marketing Services Provider’s failure to timely pay to the Buyer the Device Net Sale Proceeds in accordance with the Support Services Agreement or in respect of Marketing Services Provider’s collection of Device Net Sale Proceeds occurring after the Final Settlement Date and/or (ii) Forward Purchaser’s failure to timely pay to the Buyer all amounts due and owing under the Forward Purchase Agreement (the “ Insufficient Amount ”), the Lessees hereby agree that the Contingent Purchase Price shall be reduced by the Insufficient Amount (so long as the Contingent Purchase Price shall not be less than zero after giving effect to such reduction) and the Buyer shall transfer any claim it has to the Insufficient Amount to the Lessee Representative and agrees to cooperate with Lessee Representative in connection with pursuing any claim for the Insufficient Amount as reasonably requested by Lessee Representative from time to time.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

SECTION 4.1         Mutual Representations and Warranties . Each Lessee represents and warrants to the Buyer, and the Buyer represents and warrants to the Lessees, as of the Lease Closing Date and as of the Amendment Closing Date, as follows:

(a)     Power and Authority; Due Authorization . It (i) has all necessary power and authority to (A) execute and deliver this Agreement and the other Transaction Documents to which it is a party in any capacity and (B) carry out the terms of and perform its obligations under the Transaction Documents applicable to it and (ii) has duly authorized by all necessary corporate or limited liability company action, as applicable, the execution, delivery and performance of this Agreement and the other Transaction Documents to which it is a party.

(b)     Binding Obligations . This Agreement constitutes, and each other Transaction Document to be signed by such party when duly executed and delivered by it will constitute, a legal, valid and binding obligation of such party, enforceable against such party in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

(c)     No Violation . The consummation of the transactions contemplated by this Agreement and the other Transaction Documents to which it is a party and the performance by it of the terms hereof and thereof will not (i) violate or result in a default under (A) its articles or certificate of incorporation, memorandum and articles of association, by‑laws, certificate of formation, limited liability company agreement, or other organizational documents, as applicable, or (B) any material indenture or other material agreement or instrument binding on it, (ii) result in the creation or imposition of any Lien upon any of its properties pursuant to the terms of any such indenture, agreement or instrument except for any Lien that could not reasonably be expected to have a Material Adverse Effect or arising under the Transaction Documents, or (iii) violate in any material respect any Law applicable to it or any of its properties.






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(d)     Bulk Sales Act . No transaction contemplated hereby requires compliance by it with any bulk sales act or similar Law.

(e)     No Proceedings . There are no actions, suits or proceedings by or before any arbitrator or Governmental Authority pending against or, to its Knowledge, threatened against or affecting it (i) as to which there is a reasonable possibility of an adverse determination and that, if adversely determined, could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect, (ii) seeking to prevent the consummation of the transactions contemplated by this Agreement or any of the other Transaction Documents, or (iii) that otherwise involve this Agreement or any other Transaction Document to which it is a party.

(f)     Governmental Approvals . No authorization or approval or other action by, and no notice to or filing with, any Governmental Authority is required for its due execution, delivery and performance of this Agreement or any other Transaction Document to which it is a party or the transactions contemplated hereby or thereby, except, as applicable, for the filing of UCC financing statements required under the Transaction Documents and filings with the Securities Exchange Commission to the extent required by applicable Law.

SECTION 4.2         Additional Representations and Warranties of the Lessees . Each Lessee represents and warrants to the Buyer (i) as of the Cutoff Date, (ii) as of the Lease Closing Date, (iii) as of the Amendment Closing Date, (iv) as of each Upgrade Date, and (v) as of each Like-Kind Exchange Transfer Date, provided, however, (a) in the case of clause (i), each Lessee only makes the representation and warranty in Section 4.2(k) and only in respect of the Lease Closing Date Devices and Lease Closing Date Customer Leases, (b) in the case of clauses (ii) and (iii), each Lessee does not make the representation in Section 4.2(k), (c) in the case of clause (iv), each Lessee makes the representations and warranties in Section 4.2(c), (e), (k) and (l) only with respect to the Upgraded Devices and related Upgraded Customer Leases transferred pursuant to Section 2.1 as of the applicable Upgrade Date and makes the representations and warranties in Sections 4.2(f) and (j) and (d) in the case of clause (v), each Lessee only makes the representation and warranty in Section 4.2(k)(i) and only in respect of the Like-Kind Exchange Device transferred as of the applicable Like-Kind Exchange Transfer Date, as follows:

(a)     Organization and Good Standing . It has been duly organized or incorporated in, and is validly existing as a corporation, exempted company or limited liability company, as applicable, in good standing under the Laws of its jurisdiction of organization or incorporation (where applicable), with power and authority to own its properties and to conduct its business as such properties are presently owned and such business is presently conducted and will be conducted, except to the extent that such failure could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(b)     Due Qualification . It is duly qualified to do business as a foreign organization in good standing, if applicable, and has obtained all necessary qualifications, licenses and approvals, in all jurisdictions in which the ownership or lease of its property or the conduct of its business requires such qualifications, licenses or approvals, except where the failure to be in good standing or to hold any such qualifications, licenses and approvals could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.



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(c)     Valid Sale . This Agreement constitutes an absolute and irrevocable valid sale of the Devices and the Customer Lease-End Rights and Obligations to the Buyer.

(d)     Use of Proceeds . The use of all funds obtained by it under this Agreement will not conflict with or contravene any of Regulations T, U and X promulgated by the Board of Governors of the Federal Reserve System.

(e)     Quality of Title . At the time of its sale to the Buyer hereunder, each Device and the Customer Lease-End Rights and Obligations in respect of each Related Customer Lease, is owned by it free and clear of any Adverse Claim (other than Permitted Device Liens); when the Buyer purchases such Devices and Customer Lease-End Rights and Obligations, the Buyer shall have acquired them for fair consideration and reasonably equivalent value, free and clear of any Adverse Claims (other than Permitted Device Liens) and no valid effective financing statement or other instrument similar in effect covering any Device and any Customer Lease-End Rights and Obligations is on file in any recording office, except such as may be filed (i) in favor of the relevant Lessee in accordance with the First Step Transfer Agreement or any other Transaction Document (and assigned to Mobile Leasing Solutions for the benefit of Series 2 and further assigned to the Collateral Agent) or (ii) in connection with any Permitted Device Lien.

(f)     UCC Details . Its true legal name as registered in the sole jurisdiction in which it is organized and the jurisdiction of such organization are specified in Schedule IV and its chief executive office is at the address specified in Schedule IV (or at such other location notified to the Buyer and Collateral Agent). Except as described in Schedule IV , it has never had any trade names, fictitious names, assumed names or “doing business as” names and is “located” in the jurisdiction specified in Schedule IV for purposes of Section 9-307 of the UCC. It is organized in only a single jurisdiction.

(g)     Adverse Change . Since the date of their formation, there has been no change in the financial condition, business or prospects of the Lessees, taken as a whole, that could reasonably be expected to result in a Material Adverse Effect.

(h)     Investment Company Act . It is not an “investment company” under (and as defined in) the Investment Company Act.

(i)     Tax Returns and Payments . It has filed all federal income tax returns and all other material tax returns that are required to be filed by it and has paid all taxes due pursuant to such returns or pursuant to any assessment received by it, except (i) for any such taxes or assessments, if any, that are being appropriately contested in good faith by appropriate proceedings and with respect to which adequate reserves in conformity with GAAP have been provided or (ii) to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Effect. No tax lien has been filed, and, to its Knowledge, no claim is being asserted, with respect to any such tax or assessment that could reasonably be expected to result in a Material Adverse Effect.

(j)     No Sanctions . It is not a Sanctioned Person. To its knowledge after due inquiry, no Customer was a Sanctioned Person at the time of the relevant Originator’s entry into any Related Customer Lease with such Customer. It and its Affiliates: (i) have less than 15% of



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their assets in Sanctioned Countries and (ii) derive less than 15% of their operating income from investments in, or transactions with, Sanctioned Persons or Sanctioned Countries. Neither it nor any of its Affiliates engages in activities related to Sanctioned Countries, except for such activities as are (A) specifically or generally licensed by OFAC or (B) otherwise in compliance with OFAC’s sanctions regulations.

(k)     Eligible Devices and Related Customer Leases . (i) Each Device is an Eligible Device and (ii) each Related Customer Lease is an Eligible Lease.

(l)     Customer Leases and Upgrade Policy . No Customer has a contractual right under its Related Customer Lease with respect to a Device to have payments under such Related Customer Lease waived at the time of a Customer Upgrade or otherwise, and no Sprint Party (other than the Lessee that is lessor under such Related Customer Lease or the Servicer acting on behalf of such Lessee in accordance with the Servicing Agreement) has the right to waive any payments under such Related Customer Lease.

SECTION 4.3         Additional Representations and Warranties of the Buyer . The Buyer represents and warrants to the Lessees as of Lease Closing Date, as of the Amendment Closing Date , and, in the case of Section 4.3(c), as of each Upgrade Date as follows:

(a)     Organization and Good Standing . (i) Mobile Leasing Solutions is a limited liability company duly constituted, validly existing as a limited liability company and in good standing under the Laws of its jurisdiction of organization, (ii) Series 2 is a series of Mobile Leasing Solutions duly constituted and validly existing under the Laws of its jurisdiction of organization and (iii) the Buyer has the limited liability company power and authority to own its properties and to conduct its business as such properties are presently owned and such business is presently conducted and will be conducted, except to the extent that such failure could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(b)     Due Qualification . Mobile Leasing Solutions is duly qualified to do business as a foreign organization in good standing, if applicable, and has obtained all necessary qualifications, licenses and approvals, in all jurisdictions in which the ownership or lease of its property or the conduct of its business requires such qualifications, licenses or approvals, except where the failure to be in good standing or to hold any such qualifications, licenses and approvals could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(c)     Investment Company Act . It is not an “investment company” under (and as defined in) the Investment Company Act.

ARTICLE V

GENERAL COVENANTS
SECTION 5.1         Mutual Covenants . At all times from the Lease Closing Date to the Final Settlement Date, each Lessee and the Buyer shall:







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(a)     Compliance with Laws, etc . Comply with all applicable Laws, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

(b)     Preservation of Existence . Except as expressly permitted by Sections 5.2(h) or 5.2(i) with respect to the Lessees, preserve and maintain its existence, rights, franchises and privileges in the jurisdiction of its organization, and qualify and remain qualified in good standing in each jurisdiction where the failure to qualify or preserve and maintain such existence, rights, franchises, privileges and qualification could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(c)     Tax .

(i)    Agree for all U.S. federal, state and local income tax purposes, (x) to treat the Cash Purchase Price paid hereunder as amounts loaned by the Buyer for which the Devices transferred hereunder provide security, and to treat the Rental Payments payable to the Buyer under the Device Leases as payments on such indebtedness owed to the Buyer, (y) to treat any proceeds from any sale of a Device and any Excess Rental Payments as income of the Lessees, with the Buyer retaining the related cash only to secure payment of amounts due under such indebtedness and (z) not to treat the Buyer as the owner of the Devices, unless, after the Lease Closing Date, a Change in Law occurs and, as confirmed by an Opinion of Counsel and after consultation in good faith with the other Parties and their respective tax advisors, there is no substantial authority, within the meaning of Section 6662 of the Code, for such treatment, or there is a Final Determination of such treatment.

(ii)    The Parties acknowledge that the Buyer has entered into the Tax Services Agreement with the Servicer and Sprint, which will govern responsibility for filing any Tax Returns and paying any Taxes that are due with respect to any payment made or any transfer of Devices or Customer Lease-End Rights and Obligations hereunder. All payments made, or deemed made, pursuant to this Agreement shall be made free and clear of, and without deduction for, any Taxes except to the extent required by applicable Law. The Parties do not expect payments made pursuant to this Agreement to be subject to withholding or other deduction of Taxes. Prior to withholding any Taxes from any payment hereunder, the Buyer and the Lessee Representative shall consult in good faith as to the withholding to be made.

(iii)    The transactions contemplated by this Agreement are intended to be treated for sales and use tax purposes as a financing (so that transfers of Devices hereunder are not taxable sales) and if not so treated each transfer of the Devices contemplated hereunder is intended to be an exempt sale for resale for such purposes as the purchaser or transferee intends to re-sell or lease each Device in the same form or condition in which it was purchased to others in the normal course of the purchaser or transferee’s business. The Parties will cooperate to take all steps to timely prepare and secure any exemption certificate, resale certificate or similar documentation requested or required by any jurisdiction for purposes of qualifying for or documenting any such exemption.





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SECTION 5.2         Additional Covenants of the Lessees . At all times from the Lease Closing Date to the Final Settlement Date, each Lessee shall:

(a)     Evidence of Purchase . Maintain its records (other than accounting records) to evidence that as of (x) in the case of the Lease Closing Date Devices and Lease Closing Date Customer Leases, the Lease Closing Date, (y) in the case of each Upgraded Device and Upgraded Customer Lease, the Upgrade Date for such Upgraded Device (after giving effect to the Upgrade Exchange on such Upgrade Date) and (z) in the case of each Like-Kind Exchange Device, the date the Like-Kind Exchange for such Like-Kind Exchange Device occurs, the relevant Devices and relevant Related Customer Leases (other than Devices and Related Customer Lease-End Rights and Obligations deemed not to have been sold by a Lessee pursuant to Section 2.8 in connection with such Lessee’s exercise of its Upgrade Termination Option) have been irrevocably transferred to the Buyer as in accordance with this Agreement.

(b)     Keeping of Records and Books of Account; Delivery . Maintain and implement, or cause to be maintained and implemented, administrative and operating procedures (including an ability to recreate records evidencing the Devices and the Related Customer Leases in the event of the destruction of the originals thereof, backing up on at least a daily basis on a separate backup computer from which electronic file copies can be readily produced and distributed to third parties being agreed to suffice for this purpose), and keep and maintain, or cause to be kept and maintained (or transferred to Servicer), all documents, books, records and other information necessary or advisable for the collection of all Collections in respect of all Devices and the Related Customer Leases.

(c)     Location of Records . Keep its chief executive office and principal place of business at the address of such Lessee referred to in Schedule IV or, upon thirty (30) days’ prior written notice to the Collateral Agent and the Buyer, at such other locations in jurisdictions where all action required under the Master Lease Agreement shall have been taken and completed.

(d)     PATRIOT ACT Information . Promptly following a request therefor, provide any documentation or other information that the Buyer or any of its assignees under the Transaction Documents reasonably requests in order to comply with its ongoing obligations under the applicable “know your customer” and anti-money laundering rules and regulations, including the PATRIOT Act.

(e)     Continuation Statements . Authorize and deliver and file or cause to be filed appropriate continuation statements not earlier than six months and not later than one month prior to the fifth anniversary of the date of filing of the financing statements filed in connection with the Lease Closing Date or any other financing statement filed pursuant to this Agreement, in each case naming such Lessee as debtor, if the Final Settlement Date shall not have occurred.

(f)     Further Assurances. From time to time, at its expense, promptly execute and deliver all further instruments and documents, and take all further action that the Buyer or any of its assignees under the Transaction Documents may reasonably request in order to perfect, protect or more fully evidence the purchases, sales and assignments and security interests hereunder, or to enable the Buyer or any such assignee to exercise or enforce any of their




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respective rights with respect to the Devices and the Related Customer Leases. Without limiting the generality of the foregoing, each Lessee will upon the request of the Buyer or any of its assignees under the Transaction Documents authorize and file such financing or continuation statements, or amendments thereto or assignments thereof, and such other instruments or notices, as may be necessary or appropriate.

(g)     Tax Matters . Pay and discharge, or cause the payment and discharge of, all federal income taxes (and all other material taxes) of such Lessee when due and payable, except (x) such as may be paid thereafter without penalty, (y) such as may be contested in good faith by appropriate proceedings and for which an adequate reserve has been established and is maintained in accordance with GAAP or (z) where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

(h)     Mergers, Sales, etc . Not consolidate or merge with or into any other Person or sell, lease or transfer all or substantially any portion of its property and assets, or agree to do any of the foregoing, unless (i) the Buyer shall have received 30 days’ prior notice thereof, (ii) no Lease Event of Default or Lease Default has occurred and is continuing or would result immediately after giving effect thereto, (iii) the Buyer shall have consented in writing thereto, if the resulting entity following such merger, consolidation or other restructuring is any Person other than a Lessee, (iv) Guarantor reaffirms in a writing, in form and substance reasonably satisfactory to the Buyer, that its obligations under the Sprint Guarantee and the Performance Support Agreement shall apply to the surviving entity and (v) the Buyer receives such additional certifications and opinions of counsel as it shall reasonably request.

(i)     Change in Organization, etc . Not change its jurisdiction of organization or incorporation or its name, identity or corporate organization structure or make any other change such that (i) any financing statement filed or other action taken to perfect the Buyer’s interests hereunder would become seriously misleading or would otherwise be rendered ineffective unless such Lessee shall have given the Buyer and the Collateral Agent not less than 30 days’ prior written notice of such change or (ii) it would no longer be a special purpose entity or would result in a violation of its corporate separateness covenants in Section 6.1.

(j)     Customer Upgrades . Not terminate or waive any payments under a Related Customer Lease in connection with a Customer Upgrade during the Term of a Device Lease for a Device unless, simultaneously with the Customer Upgrade, the Upgraded Device and Upgraded Customer Lease are contributed in accordance with the First Step Transfer Agreement, and the Upgraded Device and the Customer-Lease End Rights and Obligations with respect to the Upgraded Customer Lease are transferred to the Buyer pursuant to this Agreement.

(k)     Assigned Lease Upgrade Policy Provision . Not amend or otherwise modify (or permit to be amended or otherwise modified) the Assigned Lease Upgrade Policy Provision, for any Device subject to a Customer Lease during the Term of a Device Lease for such Device, including any modification to any portion of the Upgrade Policy that has the effect of modifying the Assigned Lease Upgrade Policy Provision unless otherwise consented to by Buyer and Collateral Agent (such consent not to be unreasonably withheld or delayed).






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SECTION 5.3         Additional Covenants of the Buyer . At all times from the Lease Closing Date to the Final Settlement Date, the Buyer shall:

(a)     Notices . Promptly (but in any event within three (3) Business Days after obtaining Knowledge thereof) notify the Lessee Representative of the existence of any Default or Event of Default (or the equivalent thereof) under and as defined in the applicable Financing Documents describing with particularity the nature of such event.

(b)     Books and Records . Maintain proper books of record and account, in which full, true and correct entries in conformity with tax-based accounting consistently applied will be made of all financial transactions and matters involving the assets and business of the Buyer.

(c)     Inspection Rights . Permit representatives and independent contractors of the Lessees, at their own expense, to visit and inspect any of its offices, to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with its officers having direct knowledge or responsibility of the subject matter in order to confirm the Buyer’s performance of its obligations under this Agreement, provided, however, that such visits, inspections or examinations will be made at a reasonable time during normal business hours with due regard for, and minimal disruption of, the business of the Buyer, and will not (a) occur more frequently than once in any 12-month period and (b) be made without five (5) Business Days’ prior written notice. For the avoidance of doubt, nothing in this Section 5.3(c) shall permit any representative or independent contractor of any Lessee to make any such visits, inspections or examinations in respect of the corporate, financial and operating records or the affairs, finances and accounts of any Series of Mobile Leasing Solutions other than Series 2 thereof.

(d)     Enforcement of Support Services Agreement . Promptly enforce the obligations of Marketing Services Provider under the Support Services Agreement to cause the resale of Devices in accordance with the Support Services Agreement and the deposit of proceeds in respect thereof, in accordance with the terms of such agreement and the other Transaction Documents.

(e)     Replacement of Logistics Services Provider and/or Marketing Services Provider . If a termination event has occurred and is continuing under Section 10.1 of the Support Services Agreement, upon one (1) Business Day prior written notice of any Sprint Party to the Buyer requesting termination of the Support Services Agreement, deliver written notice to the Logistics Services Provider and Marketing Services Provider terminating the Support Services Agreement.

(f)     Fair Market Value under Customer Leases for Devices . Promptly (and in no event later than one (1) Business Day) after request by any Sprint Party, provide such Sprint Party with the fair market value in relation to a Customer’s purchase option of a Device under a Related Customer Lease for any period after the relevant Customer Lease Term, provided, however, the Buyer’s determination of the fair market value of such Device shall be the higher of (x) the Secondary Market Value of such Device on the basis that such Device is a Grade B Device and (y) the fair market value of such Device determined by the relevant Sprint Party acting reasonably provided in writing by a Sprint Party to the Buyer at the time of or prior to any Sprint Party’s request under this Section 5.3(f).




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(g)     Customer Upgrades after Term of a Device Lease . At any time any Sprint Party performs a Customer Upgrade of a Device after the Term of the Device Lease for such Device for which the Buyer has Customer Lease-End Rights and Obligations in the related Customer Lease, on the Upgrade Date, automatically authorize the Servicer in accordance with Section 2.7(b) of the Servicing Agreement to terminate the Related Customer Lease with respect to the Exchanged Device and waive all remaining Customer Receivables with respect to such Customer Lease.

(h)    [Reserved].

(i)    [Reserved].

(j)     Special Purpose Entity/Bankruptcy Remoteness . Comply with the special purpose entity and bankruptcy remoteness provisions set forth in Schedule V.

(k)     Indebtedness Covenant . Except for Debt incurred in respect of the Transaction, not create, incur, assume, guarantee, permit to exist or otherwise become directly or indirectly liable for or in respect of any Debt or other obligation or purchase any asset (whether or not pursued for gain or other pecuniary advantage), except in accordance with or as permitted by the Transaction Documents.

(l)     Liens . Not create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, other than Buyer Permitted Liens.

(m)     Application of Collections . Not declare or make or permit any other Person to declare or make, directly or indirectly, any payment or distribution of cash constituting Collections or Rental Payments other than in accordance with the Waterfall or Section 2.9 of the MLS Intercreditor Agreement.

(n)     Amendment or Waiver of Transaction Documents . Not cause, consent to, or permit, any termination, modification, amendment, variance or waiver of timely compliance with any term or condition of any of the Transaction Documents (other than the Sprint Transaction Documents) without (i) first providing five (5) Business Days’ prior notice to the Lessee Representative along with a copy of or the terms of the proposed modification, amendment, variance or waiver and (ii) in the case of any modification, amendment, variance or waiver that would reasonably be expected to be materially adverse to any Sprint Party (provided, that any modification or amendment intended to facilitate a Permitted Additional Tranche shall not be deemed to be materially adverse to any Sprint Party solely because such Permitted Additional Tranche is intended to provide financing to a mobile telephony carrier other than a Sprint Party) first obtaining the prior written consent of the Lessee Representative; provided, however, the Buyer shall promptly provide the Lessee Representative with a copy of any such modification, amendment, variance or waiver.

(o)     Actions Under Related Customer Leases . Not take enforcement actions or exercise remedies or take any other action under the Related Customer Leases other than through the Servicer.







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(p)     Information . Provide and cause Marketing Services Provider to provide (i) to the Servicer all data and other information necessary to permit the Servicer to prepare and deliver each Servicer Report in accordance with and at the times required under the Servicing Agreement and (ii) such other data and information reasonably available to such parties and reasonably requested by any Sprint Party in connection with performing its obligations under the Transaction Documents; provided, however, the Buyer shall have no obligation to provide any data or information from Marketing Services Provider that the Buyer does not receive from Marketing Services Provider or is not permitted to be provided to a Sprint Party by Marketing Services Provider.

(q)     Further Assurances . From time to time, at the expense of the Lessees, promptly execute and deliver all further instruments and documents, and take all further action that the Lessee Representative may reasonably request, in order to perfect, protect or more fully evidence the purchases, sales and assignments and security interests hereunder or under the other Transaction Documents, or to enable the Lessees or any Affiliate thereof to exercise or enforce any of their respective rights hereunder and under the other Transaction Documents. Without limiting the generality of the foregoing, the Buyer will upon the request of the Lessee Representative authorize and file such financing or continuation statements, or amendments thereto or assignments thereof, and such other instruments or notices, and take such other actions, as may be necessary or appropriate to perfect and protect any Liens granted by the Buyer to the Lessees.

ARTICLE VI

CORPORATE SEPARATENESS

SECTION 6.1         Corporate Separateness . Each Lessee hereby acknowledges that the Buyer is entering into the transactions contemplated by this Agreement and the other Transaction Documents in reliance upon each Lessee’s identity as a legal entity separate from Guarantor, the Servicer, the Originators and their respective Affiliates. In addition to and consistent with the other covenants set forth herein, each Lessee shall take such actions as shall be required in order that:

(a)     Special Purpose Entity . Each Lessee will be a special purpose limited liability company whose primary activities are restricted in its memorandum and articles of association to: (i) acquiring, owning, holding or selling interests in (x) the Devices and Related Customer Leases in accordance with the Transaction Documents and (y) any wireless mobile devices and related customer leases in accordance with any Lessee Permitted Additional Tranche Transaction Documents, (ii) granting security interests in (x) the Devices, the Related Customer Leases and any of its other assets in respect of which a security interest is required to be granted by it under the Transaction Documents and (y) any wireless mobile devices, related customer leases and any of its other assets in respect of which a security interest is required to be granted by it under any Lessee Permitted Additional Tranche Transaction Documents, (iii) entering into and exercising its rights and performing its obligations under (x) the Related Customer Leases and the other Transaction Documents and (y) any customer lease subject to a Lessee Permitted Additional Tranche to which it is a party and any other Lessee Permitted Additional Tranche Transaction Document to which it is a party, (iv) acting as (x) lessor under Related Customer Leases and any





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other customer leases subject to any Lessee Permitted Additional Tranche to which it is a party and (y) lessee under the Device Leases and any other device leases subject to any Lessee Permitted Additional Tranche to which it is a party, (v) receiving amounts due to it under the Transaction Documents and any Lessee Permitted Additional Tranche Transaction Document and declaring and paying dividends and distributions to its Related Originator from such amounts, (vi) paying amounts due by it under the Transaction Documents and any Lessee Permitted Additional Tranche Transaction Document and (vii) conducting such other activities as it deems necessary or appropriate to carry out the primary activities described above or as otherwise contemplated by the Transaction Documents or any Lessee Permitted Additional Tranche Transaction Document.

(b)     Commingling . Except as otherwise expressly permitted by the Originator Intercreditor Agreement, no Lessee shall commingle any of its assets or funds with those of any of its Affiliates (other than any other Lessee);

(c)     Independent Director . At least one member of each Lessee’s board of directors shall be an Independent Director and the memorandum and articles of association of such Lessee shall provide: (i) for the same definition of “Independent Director” as used herein, (ii) that such Lessee’s board of directors shall not approve, or take any other action to cause the filing of, a voluntary bankruptcy petition with respect to such Lessee unless the Independent Director shall approve the taking of such action in writing before the taking of such action and (iii) that the provisions required by clauses (i) and (ii) of this sentence cannot be amended (x) except in accordance with this Agreement and (y) without the prior written consent of the Independent Director and the Buyer;

(d)     Corporate Formalities . Each Lessee will strictly observe corporate formalities in its dealings with the Servicer, the Originators and any Affiliates thereof (other than any other Lessee). Except as permitted under the Transaction Documents or any Lessee Permitted Additional Tranche Transaction Document, the Lessees shall not maintain joint bank accounts or other depository accounts to which the Servicer, the Originators and any Affiliates (other than any other Lessee) thereof has independent access, other than the Servicer’s right to access such accounts in accordance with the Transaction Documents or any Lessee Permitted Additional Tranche Transaction Document. Each Lessee shall procure that its Related Originator maintain such Lessee’s memorandum and articles of association and other organizational documents in conformity with this Agreement;

(e)     Conduct of Business . Each Lessee shall conduct its affairs strictly in accordance with its organizational documents and observe all necessary, appropriate and customary company formalities, including, but not limited to, holding all regular and special members’ and board of directors’ (or managers’) meetings appropriate to authorize all corporate action, keeping separate and accurate minutes of its meetings, passing all resolutions or consents necessary to authorize actions taken or to be taken, and maintaining accurate and separate books, records and accounts, including, but not limited to, intercompany transaction accounts;

(f)     No Other Business or Debt . No Lessee shall engage in any business or activity except as set forth in the Transaction Documents to which it is a party or any Lessee Permitted Additional Tranche Transaction Document to which it is a party nor incur any indebtedness or




26




liability other than as expressly permitted by the Transaction Documents to which it is a party or any Lessee Permitted Additional Tranche Transaction Document to which it is a party.

(g)     Books and Records . Each Lessee’s books and records will be maintained separately from those of the Servicer, the Originators and any of their Affiliates (other than any other Lessee) and in a manner such that it will not be difficult or costly to segregate, ascertain or otherwise identify the assets and liabilities of such Lessee from the assets and liabilities of the Servicer, the Originators and any of their Affiliates (other than any other Lessee);

(h)     Operating Expenses . Each Lessee’s operating expenses will not be borne by the Servicer, any Originator or any of their Affiliates (other than any other Lessee), except to the extent paid from capital contributions from its equity holders or as expressly contemplated by the Transaction Documents or any Lessee Permitted Additional Tranche Transaction Document.

(i)     Disclosure of Transactions . All financial statements of the Servicer, the Originators, and any of their Affiliates that are consolidated to include any Lessee will disclose that (i) such Lessee’s sole business consists of the purchase or acceptance through capital contributions of wireless mobile devices and related customer leases from its Related Originator, the subsequent retransfer to Mobile Leasing Solutions or any Series thereof of, or granting of a security interest to Mobile Leasing Solutions for the benefit of any Series thereof in, such devices and certain rights and obligations under the related customer leases, the subsequent lease back of such devices from Mobile Leasing Solutions or any Series thereof, and performing its obligations under (x) the Related Customer Leases and the other Transaction Documents to which it is a party and (y) any other customer lease subject to a Lessee Permitted Additional Tranche to which it is a party and Lessee Permitted Additional Tranche Transaction Document to which it is a party, (ii) such Lessee is a separate legal entity with its own separate creditors who will be entitled, upon its liquidation, to be satisfied out of the Lessee’s assets prior to any assets or value in the Lessee becoming available to the Lessee’s equity holders and (iii) the assets of the Lessee are not available to pay creditors of the Servicer, any Originator or any Affiliate thereof (other than any other Lessee);

(j)     Arm’s-Length Relationships . Each Lessee shall maintain an arm’s-length relationship with the Servicer, each Originator, and its other Affiliates (other than the other Lessees). Except as expressly contemplated by the Transaction Documents or any Lessee Permitted Additional Tranche Transaction Document, no Lessee, on the one hand, or the Servicer, any Originator, or any of its other Affiliates, on the other hand, will be or will hold itself out to be responsible for the debts of the other (other than any other Lessee) or the decisions or actions respecting the daily business and affairs of the other. Each Lessee, the Servicer, any Originators, and the Lessee’s other Affiliates will immediately correct any known misrepresentation with respect to the foregoing, and they will not operate or purport to operate as an integrated single economic unit with respect to each other or in their dealings with any other entity (other than among the Lessees);

(k)     Allocation of Overhead . To the extent that any Lessee, on the one hand, and the Servicer, any Originator or any Affiliate thereof, on the other hand, have offices in the same location, there shall be a fair and appropriate allocation of overhead costs between them, and





27




such Lessee shall bear its fair share of such expenses, which may be paid through the Servicing Fee or otherwise;

(l)     Identification . Each Lessee shall at all times hold itself out to the public under such Lessee’s own name as a legal entity separate and distinct from its equity holders, members, managers, the Servicer, any Originator or any Affiliate thereof (other than any other Lessee);

(m)     Capital . Each Lessee shall maintain adequate capital in light of its contemplated business operations;

(n)     Additional Agreements . Each Lessee also agrees that:

(i)    no Lessee shall issue any security of any kind except certificates evidencing equity interests issued to its Related Originator in connection with its formation, or incur, assume, guarantee or otherwise become directly or indirectly liable for or in respect of any obligation other than (i) such Lessee’s liability for obligations under the Transaction Documents and any Lessee Permitted Additional Tranche Transaction Document to which it is a party, (ii) as otherwise expressly permitted or contemplated by the Transaction Documents or any Lessee Permitted Additional Tranche Transaction Document to which it is a party and (iii) ordinary course operating expenses;

(ii)    no Lessee shall sell, pledge or dispose of any of its assets, except as permitted by, or as provided in, the Transaction Documents or any Lessee Permitted Additional Tranche Transaction Document to which it is a party;

(iii)    no Lessee shall purchase any asset (or make any investment, by share purchase, loan or otherwise) except as specifically permitted by, or as provided in, the Transaction Documents or any Lessee Permitted Additional Tranche Transaction Document to which it is a party;

(iv)    no Lessee shall make any payment, directly or indirectly, to, or for the account or benefit of, any owner of any security interest or equity interest in such Lessee or any Affiliate of any such owner (except, in each case, as expressly permitted by, or as provided in, the Transaction Documents or any Lessee Permitted Additional Tranche Transaction Document to which it is a party);

(v)    no Lessee shall make, declare or otherwise commence or become obligated in respect of, any dividend, stock or other security redemption or purchase from, or any distribution or other payment to, or for the account or benefit of, any owner of any equity interest in such Lessee or any Affiliate of any such owner other than from funds received by it under Transaction Documents or Lessee Permitted Additional Tranche Transaction Documents to which it is a party and so long as, in any case, the result would not directly or indirectly cause such Lessee to be considered insolvent;

(vi)    no Lessee shall have any employees; and

(vii)    each Lessee will provide for not less than ten (10) Business Days’ prior written notice to the Buyer of any removal, replacement or appointment of any director




28




that is currently serving or is proposed to be appointed as an Independent Director of such Lessee, such notice to include the identity of the proposed replacement Independent Director, together with a certification that such replacement satisfies the requirements for an Independent Director set forth in this Agreement and the memorandum and articles of association of such Lessee.


ARTICLE VII

INVESTMENT COMPANY ACT PROVISIONS

SECTION 7.1         Representations and Agreements of the Lessees . Each Lessee makes the representations and warranties in Section 7.1(a), (c), (d), (e) and (f) to the Buyer as of the Lease Closing Date, as of the Amendment Closing Date and as of each Upgrade Date and makes the agreements in Section 7.1(b) and (f) from the Lease Closing Date to the Final Settlement Date.

(a)    Assuming the correctness of the representations and agreements of the Buyer in Section 7.2, each Lessee represents that it is a Qualified Purchaser.

(b)    Each Lessee understands and agrees that, if in the future it decides to sell, transfer, assign, pledge or otherwise dispose of in whole or in part (each, a “ Transfer ”) its interest in the Deferred Purchase Price Amount or the Contingent Purchase Price (collectively, the “ Buyer Obligations ”), such Lessee will only Transfer such Buyer Obligations to a Qualified Purchaser (it being understood and agreed that any subsequent Transfers of such Buyer Obligations shall only be made to a Qualified Purchaser).

(c)    Each Lessee is acquiring the Buyer Obligations for its own account, for investment purposes only and not with a view to distribute or resell such Buyer Obligations in whole or in part.

(d)    Each Lessee was offered the Buyer Obligations through private negotiations, not through any general solicitation or general advertising, or through any solicitation by a person not previously known to such Lessee in connection with investments generally.

(e)    Each Lessee has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of its investment in the Buyer Obligations and is able to bear such risks, and has obtained, in its judgment, sufficient information from the Buyer or its authorized representatives to evaluate the merits and risks of such investment. Each Lessee has evaluated the risks of investing in the Buyer Obligations and has determined that the Buyer Obligations is a suitable investment for it. Each Lessee can afford a complete loss of the investment in the Buyer Obligations and can afford to hold the investment in the Buyer Obligations for an indefinite period of time.

(f)    Assuming the correctness of the representations and agreements of the Buyer in Section 7.2, if any Lessee would be an “investment company” under the Investment Company Act but for the exceptions provided by section 3(c)(1) or 3(c)(7) thereof, then it hereby: (i) represents and warrants that it has obtained the consent to its treatment as a Qualified Purchaser from the appropriate beneficial owners of its securities in accordance with the requirements of




29




Section 2(a)(51)(C) of, and Rule 2a51-2 promulgated under, the Investment Company Act; (ii) consents to the treatment of the Buyer as a Qualified Purchaser; and (iii) represents and warrants that it has obtained the consent to such treatment from the appropriate beneficial owners of its securities in accordance with the requirements of Section 2(a)(51)(C) of, and Rule 2a51-2 promulgated under, the Investment Company Act.

SECTION 7.2         Representations and Agreements of the Buyer . The Buyer makes the representations and warranties in Section 7.2(a), (c), (d), (e) and (f) to the Lessees as of the Lease Closing Date, as of the Amendment Closing Date and as of each Upgrade Date and makes the agreements in Section 7.2(b) and (f) from the Lease Closing Date to the Final Settlement Date.

(a)    Assuming the correctness of the representations and agreements of the Lessees in Section 7.1, the Buyer represents that it is a Qualified Purchaser.

(b)    The Buyer understands and agrees that, if in the future it decides to Transfer any Device Lease, the Buyer will only Transfer such Device Lease to a Qualified Purchaser (it being understood and agreed that any subsequent Transfers of such Device Lease shall only be made to a Qualified Purchaser).

(c)    The Buyer is acquiring the Device Leases for its own account, for investment purposes only and not with a view to distribute or resell such Device Leases in whole or in part.

(d)    The Buyer was offered the Device Leases through private negotiations, not through any general solicitation or general advertising, or through any solicitation by a person not previously known to the Buyer in connection with investments generally.

(e)    The Buyer has such knowledge and experience in financial and business matters that the Buyer is capable of evaluating the merits and risks of its investment in the Device Leases and is able to bear such risks, and has obtained, in the Buyer’s judgment, sufficient information from the Lessees or their authorized representatives to evaluate the merits and risks of such investment. The Buyer has evaluated the risks of investing in the Device Leases and has determined that the Device Leases are a suitable investment for the Buyer. The Buyer can afford a complete loss of the investment in the Device Leases and can afford to hold the investment in the Device Leases for an indefinite period of time.

(f)    Assuming the correctness of the representations and agreements of the Lessees in Section 7.1 and that the Senior Loan Lenders and the Senior Subordinated Loan Creditors have obtained and given the consents described in this Section 7.2(f) to the extent applicable to such Senior Loan Lenders and such Senior Subordinated Loan Creditors for purposes of this Section 7.2(f), if the Buyer would be an “investment company” under the Investment Company Act but for the exceptions provided by section 3(c)(1) or 3(c)(7) thereof, then the Buyer hereby: (i) represents and warrants that it has obtained the consent to its treatment as a Qualified Purchaser from the appropriate beneficial owners of its securities in accordance with the requirements of Section 2(a)(51)(C) of, and Rule 2a51-2 promulgated under, the Investment Company Act; (ii) consents to the treatment of the Lessees as Qualified Purchasers; and (iii) represents and warrants that it has obtained the consent to such treatment from the appropriate beneficial owners of its






30




securities in accordance with the requirements of Section 2(a)(51)(C) of, and Rule 2a51-2 promulgated under, the Investment Company Act.

ARTICLE VIII

MISCELLANEOUS

SECTION 8.1         Amendments, etc. No amendment or waiver of any provision of this Agreement or consent to any departure by any Lessee therefrom shall in any event be effective unless the same shall be in writing and signed by the Buyer and the Lessee Representative and, if such amendment or waiver affects the obligations of Guarantor or any of its Affiliates (other than the Lessees), Guarantor consents in writing thereto, and then any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

SECTION 8.2         No Waiver; Remedies . No failure on the part of the Buyer or any Lessee to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or remedy hereunder preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The rights and remedies herein provided are cumulative and not exclusive of any rights or remedies provided by Law.

SECTION 8.3         Notices, Etc. The provisions of Section 21 of the MLS Intercreditor Agreement shall apply as if fully set forth herein.

SECTION 8.4         Binding Effect; Assignment . This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Each Lessee acknowledges that the Buyer’s rights under this Agreement may be assigned as collateral to the Collateral Agent for the benefit of the Finance Parties, and Lessees consent to such assignment; provided that such assignment shall neither release the Buyer from the performance of its obligations under this Agreement nor impair any Lessee’s rights under this Agreement. The parties hereto agree that the Collateral Agent (and any of its assignees) is an intended third-party beneficiary of this Agreement and is entitled to enforce the rights of the Buyer arising hereunder.

SECTION 8.5         Survival . The rights and remedies with respect to any breach of any representation and warranty made by any Lessee or the Buyer pursuant to Article IV and the provisions of Sections 8.4 , 8.5 , 8.6 , 8.8 , 8.9 , 8.10 , 8.11 , 8.12 and 8.14 shall survive any termination of this Agreement.

SECTION 8.6         Costs and Expenses . Each party agrees to pay on demand all reasonable and documented out-of-pocket costs and expenses incurred by the other party in connection with the negotiation, preparation, execution and delivery of any amendment of or consent or waiver under this Agreement (whether or not consummated) requested by such party, or the enforcement of, or any actual or reasonably claimed breach of, this Agreement, including reasonable and documented accountants’, auditors’, consultants’ and attorneys’ fees and expenses to any of such Persons and the reasonable and documented fees and charges of any independent accountants, auditors, consultants or other agents incurred in connection with any of





31




the foregoing or in advising such Persons as to their respective rights and remedies under this Agreement in connection with any of the foregoing.

SECTION 8.7         Execution in Counterparts; Integration . This Agreement may be executed in any number of counterparts and by the different parties in separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same Agreement. Executed counterparts may be delivered electronically. This Agreement, together with the other Transaction Documents, contains a final and complete integration of all prior expressions by the parties hereto with respect to the subject matter hereof and shall constitute the entire understanding among the parties hereto with respect to the subject matter hereof, superseding all prior oral or written understandings.

SECTION 8.8         Governing Law . THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW, BUT WITHOUT REGARD TO ANY OTHER CONFLICT OF LAWS PROVISIONS THEREOF).

SECTION 8.9         Waiver of Jury Trial . EACH LESSEE AND THE BUYER HEREBY EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR ANY AMENDMENT, INSTRUMENT OR DOCUMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR ARISING FROM ANY BANKING OR OTHER RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT A JURY.

SECTION 8.10     Consent to Jurisdiction; Waiver of Immunities . EACH LESSEE AND THE BUYER HEREBY ACKNOWLEDGES AND AGREES THAT:

(a)    IT IRREVOCABLY (i) SUBMITS TO THE JURISDICTION, FIRST, OF ANY UNITED STATES FEDERAL COURT, AND SECOND, IF FEDERAL JURISDICTION IS NOT AVAILABLE, OF ANY NEW YORK STATE COURT, IN EITHER CASE SITTING IN NEW YORK CITY, NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT, (ii) AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED ONLY IN SUCH NEW YORK STATE OR FEDERAL COURT AND NOT IN ANY OTHER COURT, AND (iii) WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING.

(b)    TO THE EXTENT THAT IT HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM THE JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID TO EXECUTION, EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, IT HEREBY IRREVOCABLY WAIVES





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SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER OR IN CONNECTION WITH THIS AGREEMENT.

SECTION 8.11     Confidentiality . Each party hereto agrees to comply with, and be bound by, the confidentiality provisions of Section 20 of the MLS Intercreditor Agreement as if they were set forth herein.

SECTION 8.12     No Proceedings . The provisions of Section 24.2 of the MLS Intercreditor Agreement shall apply as if fully set forth herein.

SECTION 8.13     Severability . Any provisions of this Agreement that are 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.

SECTION 8.14     Lessee Representative .

(a)    Each Lessee hereby irrevocably appoints and constitutes SLV-III LLC (“ Lessee Representative ”) as its agent and attorney-in-fact to (i) provide all notices and instructions to be given by the Lessees or any thereof under this Agreement and the other Transaction Documents (and any notice or instruction provided by Lessee Representative shall be deemed to be given by the applicable Lessee and shall bind such Lessee), (ii) receive notices and instructions to be given to the Lessees or any thereof under this Agreement and the other Transaction Documents (and any notice or instruction provided to the Lessee Representative shall be deemed to have been given to the applicable Lessee), (iii) make payments required to be paid by the Lessees or any thereof under this Agreement and the other Transaction Documents (and any payment made by Lessee Representative shall be deemed to be paid by the applicable Lessee), (iv) receive payments and disbursements to be made to the Lessees or any thereof under this Agreement and the other Transaction Documents (and any payment made to Lessee Representative shall be deemed to be paid to the applicable Lessee), (v) grant any security interest required to be granted by any Lessee under the Transaction Documents, including any security interest in the Servicer Collection Accounts, and execute and deliver any deposit account control agreement with respect to any such security interest granted by a Lessee in the Servicer Collection Accounts or other deposit accounts in the name of any Lessee, (vi) take any such action on behalf of the Lessees as the Lessee Representative deems appropriate to effectuate the sale and leaseback arrangements contemplated under the Transaction Documents and to exercise such other powers as are reasonably incidental thereto to carry out the purposes of this Agreement and the other Transaction Documents (and any action by Lessee Representative shall be deemed to be made by the applicable Lessee and shall bind such Lessee) and (vii) execute and deliver any amendments, consents, waivers or other instruments related to this Agreement and the other Transaction Documents on behalf of the other Lessees (and any such amendment, consent, waiver or other instrument shall be binding upon and enforceable against each other Lessee to the same extent as if made directly by such Lessee).

(b)    Lessee Representative hereby accepts the appointment by the Lessees to act as the agent and attorney-in-fact of the Lessees pursuant to this Section 8.14. Lessee Representative




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shall ensure that the disbursement of any payments to any Lessee paid to or for the account of Lessee Representative shall be paid to or for the account of such Lessee.

(c)    No resignation or termination of the appointment of Lessee Representative as agent as aforesaid shall be effective, except after ten (10) Business Days’ prior written notice to the Buyer. If Lessee Representative resigns under this Agreement, the Lessees shall be entitled to appoint a successor Lessee Representative (which shall be a Lessee). Upon the acceptance of its appointment as successor Lessee Representative hereunder, such successor Lessee Representative shall succeed to all the rights, powers and duties of the retiring Lessee Representative and the term “Lessee Representative” shall mean such successor Lessee Representative and the retiring or terminated Lessee Representative’s appointment, powers and duties as Lessee Representative shall be terminated.

SECTION 8.15     Mobile Leasing Solutions as Series LLC . Each Party hereto hereby acknowledges and agrees that Mobile Leasing Solutions is a series limited liability company, and that accordingly the obligations and liabilities of the Buyer hereunder and under the other Transaction Documents are and will be enforceable against the Buyer solely to the extent of the Series 2 Assets, and not against any other assets of Mobile Leasing Solutions or against any other Series of Mobile Leasing Solutions or any assets of any such other Series (whether held directly by such other Series or by Mobile Leasing Solutions on behalf of such other Series).

SECTION 8.16     Limited Recourse . Notwithstanding anything to the contrary contained in this Agreement or any other Transaction Document, the obligations and liabilities of the Buyer under each of the Transaction Documents to which it is a party are solely the obligations and liabilities of the Buyer and shall be payable solely to the extent of the Series 2 Pledged Assets, and the proceeds of the realization thereof from whatever means, applied in accordance with this Agreement and the other Transaction Documents. If the Series 2 Pledged Assets and the proceeds of the realization thereof from whatever means, including pursuant to the enforcement of the MLS Security Documents, applied in accordance with the MLS Intercreditor Agreement and the other Transaction Documents, are insufficient to discharge in full the obligations and liabilities of the Buyer under the MLS Intercreditor Agreement and the other Transaction Documents, the rights of the Sprint Parties to receive any further amounts in respect of such obligations and liabilities shall be extinguished and none of the Sprint Parties may take any further action to recover such amounts. For the avoidance of doubt, no recourse shall be had to the assets of Mobile Leasing Solutions or the assets of any Series of Mobile Leasing Solutions other than the Series 2 Pledged Assets to satisfy the obligations and liabilities of the Buyer under this Agreement or any other Transaction Document.
[ SIGNATURE PAGES FOLLOW ]













34







IN WITNESS WHEREOF , the parties have caused this Agreement to be executed by their respective duly authorized signatories, as of the date first above written.
For and on behalf of each of:
SLV - I LLC
SLV - II LLC
SLV - III LLC
SLV - IV LLC
SLV - V LLC
SLV - VI LLC
SLV - VII LLC
SLV - VIII LLC
SLV - IX LLC
SLV - X LLC
SLV - XI LLC
SLV - XII LLC
SLV - XIII LLC
SLV - XIV LLC
SLV - XV LLC
SLV - XVI LLC
SLV - XVII LLC
SLV - XVIII LLC
SLV - XIX LLC
SLV - XX LLC
SLV - XXI LLC
SLV - XXII LLC , each a Lessee


By: /s/ Stefan K. Schopp             
Name: Stefan K. Schnopp
Title: Director

SLV- III LLC , as Lessee Representative
By: /s/ Stefan K. Schnopp         
Name: Stefan K. Schnopp
Title: Director





MOBILE LEASING SOLUTIONS, LLC,
a Delaware limited liability company,
acting for itself and on behalf of Series 2 thereof, as Buyer
By: /s/ Jeff Krisel                 
Name Jeff Krisel
Title: President





Exhibit 10.9







AMENDED AND RESTATED MASTER LEASE AGREEMENT (TRANCHE 2)
Dated as of December 8, 2016
among
MOBILE LEASING SOLUTIONS, LLC,
as Lessor
and
LESSEES FROM TIME TO TIME PARTY HERETO,
as Lessee
and
SPRINT SPECTRUM L.P.
as Servicer
and
Mizuho Bank, LTD.
as Collateral Agent

COUNTERPART NO. [____] OF 5 SERIALLY NUMBERED MANUALLY EXECUTED COUNTERPARTS. TO
THE EXTENT (IF ANY) THAT THIS DOCUMENT CONSTITUTES CHATTEL PAPER UNDER THE
UNIFORM COMMERCIAL CODE, NO SECURITY INTEREST IN THIS DOCUMENT MAY BE CREATED
THROUGH THE TRANSFER AND POSSESSION OF ANY COUNTERPART OTHER THAN COUNTERPART
NO. 1.






TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS AND INTERPRETATION ...................................................................1
SECTION 1.1
Defined Terms .........................................................................................1
SECTION 1.2
Interpretation ...........................................................................................1
ARTICLE II DEVICE LEASES .......................................................................................................3
SECTION 2.1
Agreement to Lease .................................................................................3
SECTION 2.2
Deemed Delivery .....................................................................................4
SECTION 2.3
Ownership of the Devices      ..................................................................................... 4
SECTION 2.4
Subleasing      .................................................................................................................. 4
SECTION 2.5
Software and Other Rights ......................................................................5
SECTION 2.6
Approved Devices ...................................................................................5
SECTION 2.7
Term ........................................................................................................6
SECTION 2.8
Rent and Other Payments .......................................................................6
SECTION 2.9
Termination of a Device Lease ...............................................................8
SECTION 2.10
Title Transfer .........................................................................................10
SECTION 2.11
Returned Devices ..................................................................................10
SECTION 2.12
Non-Return Remedies ...........................................................................11
SECTION 2.13
Like-Kind and Upgrade Exchanges ......................................................12
SECTION 2.14
Updates to Devices Subject to Device Leases ......................................13
SECTION 2.15
Quiet Enjoyment ...................................................................................14
SECTION 2.16
Purchase Option ....................................................................................14
ARTICLE III LEASE EVENTS OF DEFAULT .............................................................................15
SECTION 3.1
Lease Events of Default ........................................................................15
SECTION 3.2
Remedies ...............................................................................................16
ARTICLE IV INDEMNITIES ........................................................................................................17
SECTION 4.1
Indemnities ............................................................................................17
ARTICLE V CONDITIONS PRECEDENT ...................................................................................18
ARTICLE VI REPRESENTATIONS AND WARRANTIES ..........................................................19
SECTION 6.1
Organization and Good Standing ..........................................................20
SECTION 6.2
Due Qualification ..................................................................................20
SECTION 6.3
Power and Authority; Due Authorization ..............................................20
SECTION 6.4
Binding Obligations ..............................................................................20
SECTION 6.5
No Violation ..........................................................................................20
SECTION 6.6
No Proceedings .....................................................................................21
SECTION 6.7
Licenses and approvals .........................................................................21

i





SECTION 6.8
Software licenses ..................................................................................21
ARTICLE VII COVENANTS ........................................................................................................21
SECTION 7.1
Affirmative Covenants .........................................................................21
SECTION 7.2
Negative Covenants .............................................................................24
ARTICLE VIII EXCLUSION OF LIABILITY; ACKNOWLEDGEMENT ................................24
SECTION 8.1
Exclusion of Liability ..........................................................................24
SECTION 8.2
Acknowledgments ...............................................................................25
ARTICLE IX COLLATERAL ......................................................................................................26
SECTION 9.1
Granting Clause ..................................................................................26
SECTION 9.2
Granting Clause to Collateral Agent ...................................................26
SECTION 9.3
UCC Financing Statements .................................................................26
SECTION 9.4
No Assumption of Liability .................................................................27
SECTION 9.5
Further Assurances ..............................................................................27
SECTION 9.6
Power of Attorney      ............................................................................................... 27
SECTION 9.7
Release of Devices ..............................................................................27
ARTICLE X ..................................................................................................................................27
TAXES ..........................................................................................................................................27
SECTION 10.1
Consistency of Treatment ...................................................................27
SECTION 10.2
Taxes ...................................................................................................28
SECTION 10.3
Payments .............................................................................................28
SECTION 10.4
Gross Up .............................................................................................28
SECTION 10.5
Non-Duplication .................................................................................28
ARTICLE XI MISCELLANEOUS ..............................................................................................28
SECTION 11.1
Amendments, etc. ...............................................................................28
SECTION 11.2
No Waiver ...........................................................................................29
SECTION 11.3
Notices ................................................................................................29
SECTION 11.4
Data File .............................................................................................29
SECTION 11.5
Binding Effect ....................................................................................29
SECTION 11.6
Third Party Rights      .............................................................................................. 29
SECTION 11.7
Execution in Counterparts; Integration ..............................................29
SECTION 11.8
Governing Law ..................................................................................30
SECTION 11.9
Waiver of Jury Trial ...........................................................................30
SECTION 11.10
Consent to Jurisdiction; Waiver of Immunities .................................30
SECTION 11.11
No Proceedings ..................................................................................30
SECTION 11.12
Severability ........................................................................................31
SECTION 11.13
Mobile Leasing Solutions as Series LLC ..........................................31
SECTION 11.14
Limited Recourse ..............................................................................31

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AMENDED AND RESTATED MASTER LEASE AGREEMENT (TRANCHE 2)
This AMENDED AND RESTATED MASTER LEASE AGREEMENT (TRANCHE 2), dated as of December 8, 2016 and effective as of the Amendment Closing Date, (this “ Agreement ”) is among MOBILE LEASING SOLUTIONS, LLC, a Delaware limited liability company, acting for itself and on behalf of Series 2 thereof (“ Lessor ”), THE PERSONS IDENTIFIED ON THE SIGNATURE PAGES HERETO AS LESSEES (collectively, “ Lessees ” and, each, a “ Lessee ”), Sprint Spectrum L.P. , a Delaware limited partnership (“ Sprint Spectrum ” or “ Servicer ”), and Mizuho Bank, Ltd. , as collateral agent for the Finance Parties (“ Collateral Agent ”).
W I T N E S S E T H:
WHEREAS, Lessor, Lessees, Sprint Spectrum and Collateral Agent are parties to that certain Master Lease Agreement dated as of April 28, 2016 and effective as of the Lease Closing Date (as amended, supplemented or otherwise modified from time to time prior to the date hereof, the “ Existing Master Lease ”).
WHEREAS, the parties hereto are entering into this Agreement to amend and restate the Existing Master Lease Agreement in its entirety with this Agreement for the purpose of establishing the terms and conditions by which Lessor will lease Devices from time to time to the relevant Lessee;
WHEREAS, the Devices and the Customer Lease-End Rights and Obligations under the Related Customer Leases will be held in the name of Mobile Leasing Solutions on behalf of Series 2; and
WHEREAS, the leasing of the Devices shall be governed by the terms and conditions in this Agreement, as well as the terms and conditions set forth in the relevant Device Lease Schedule and any related documentation.
NOW, THEREFORE, in consideration of the premises and the mutual promises contained in this Agreement, the parties hereto agree that the Existing Master Lease Agreement is amended and restated in its entirety as set forth in this Agreement and hereby further agree as follows:
ARTICLE I

DEFINITIONS AND INTERPRETATION

SECTION 1.1         Defined Terms . Capitalized terms used and not otherwise defined in this Agreement are used as defined in (or by reference in) Appendix A ( Definitions ).

SECTION 1.2         Interpretation . For purposes of this Agreement and the other Sprint Transaction Documents, unless the context otherwise requires:







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(a)    accounting terms not otherwise defined herein, and accounting terms partly defined herein to the extent not defined, shall have the respective meanings given to them under, and shall be construed in accordance with, GAAP;

(b)    terms used in Article 9 of the UCC in the State of New York, and not specifically defined herein, are used herein as defined in such Article 9;

(c)    the words “hereof”, “herein” and “hereunder” and words of similar import used in this Agreement or in any other Sprint Transaction Document refer to this Agreement (or the certificate or other document in which they are used) as a whole and not to any particular provision of this Agreement (or such certificate or document);

(d)    references to any clause, section, schedule or exhibit are references to clauses, sections, schedules and exhibits in or to this Agreement (or the certificate or other document in which the reference is made) and references to any paragraph, subsection, clause or other subdivision within any section or definition refer to such paragraph, subsection, clause or other subdivision of such section or definition;

(e)    the term “including” means “including without limitation”;

(f)    references to any Law refer to that Law as amended from time to time and include any successor Law;

(g)    references to any agreement or other document refer to that agreement or other document as from time to time amended or supplemented, or as the terms of such agreement are waived or modified, in each case in accordance with the terms of such agreement or document;

(h)    references to any Party include that Party’s successors and permitted assigns;

(i)    headings in this Agreement or in any other Sprint Transaction Document are for purposes of reference only and shall not otherwise affect the meaning or interpretation of any provision thereof;

(j)    unless otherwise specifically provided with respect to any computation of a period of time, in the computation of a period of time from a specified date to a later specified date, the word “from” means “from and including”, the words “to” and “until” each means “to but excluding”, and the word “within” means “from and excluding a specified date and to and including a later specified date”;

(k)    a reference to assets includes present and future properties, undertakings, revenues, rights and benefits of every description;

(l)    a reference to an authorization includes an approval, authorization, consent, exemption, filing, license, notarization, registration and resolution;

(m)    a reference to a disposal of any asset, undertaking or business includes a sale, lease, license, transfer, loan or other disposal by a person of that asset, undertaking or business (whether by a voluntary or involuntary single transaction or series of transactions);


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(n)    unless otherwise defined, capitalized terms defined in this Agreement in the singular form shall have a corresponding meaning when used in the plural form, and vice versa; and

(o)    “$”, “USD” and “dollars” denote the lawful currency of the United States of America.

ARTICLE II

DEVICE LEASES

SECTION 2.1         Agreement to Lease

(a)     Agreement to Lease . Upon satisfaction of all conditions precedent set out in Article V ( Conditions Precedent ) and the transfer of title to the Devices from Lessees to Lessor pursuant to the Second Step Transfer Agreement, Lessor hereby agrees to lease such Devices to Lessees and Lessees hereby agree to lease such Devices from Lessor, from time to time, on the terms and conditions set forth in this Agreement and the Device Lease Schedule with respect to the relevant Devices being leased (this Agreement together with a Device Lease Schedule, each a “ Device Lease ” and, collectively, the “ Device Leases ”). This Agreement is intended to be incorporated by reference into each Device Lease Schedule agreed to from time to time as particular Devices are leased by Lessor to the relevant Lessee. Each Device Lease is intended to be a separate instrument of lease. As to Devices leased pursuant to any such individual Device Lease, the terms of the applicable Device Lease Schedule shall control over the terms of this Agreement in the event of conflict. The rights, remedies, powers and privileges of Lessor and the relevant Lessee under each Device Lease shall be interpreted separately and apart from any other Device Lease.

(b)     Acceptance of each Device Lease . Entry into each Device Lease is subject to the relevant Lessee and Lessor agreeing to a Device Lease Schedule. The relevant Lessee agrees to initially provide or cause to be provided to Lessor the information required by each Device Lease Schedule, and to provide or cause to be provided any updated information required pursuant to Section 2.13(b)(iii), in each case, to the extent such information is available to such Lessee. Lessor agrees to evaluate the information provided by the relevant Lessee, work with the relevant Lessee to reconcile any discrepancies and provide or cause to be provided any additional information required for each Device Lease Schedule, in each case, as promptly as possible.

(c)     Intention of the Parties . It is the express intent of each of the parties hereto that each Device Lease constitute a true lease and not a sale of the Devices. As a protective measure in the event that, notwithstanding the foregoing, the lease of the Devices to Lessees is recharacterized by any third party as a sale, then solely in that event and for the expressly limited purposes thereof, each Lessee does hereby grant to Mobile Leasing Solutions for the benefit of Series 2 a security interest in all of such Lessee’s now or hereafter existing right, title and interest to, and under the Devices and agrees that this Agreement shall constitute a security agreement under applicable Law. Each Lessee hereby authorizes Lessor or its respective designee to file one or more financing or continuation statements, and amendments thereto and assignments






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thereof, relative to all or any of such Lessee’s rights in the Devices now existing or hereafter arising in the name of such Lessee.

SECTION 2.2         Deemed Delivery

(a)    Upon the relevant Lessee and Lessor agreeing to a Device Lease on the Lease Closing Date, Lessor shall be deemed to have delivered the relevant Device under such Device Lease to the relevant Lessee and the relevant Lessee will be deemed to have accepted such Device. On each Upgrade Date or Like-Kind Exchange Transfer Date occurring during the Term of a Device Lease for a Device, Lessor shall be deemed to have delivered the relevant Upgraded Device or Like-Kind Exchange Device, as applicable, under such Device Lease to the relevant Lessee and the relevant Lessee will be deemed to have accepted such Upgraded Device or Like-Kind Exchange Device, as applicable.

(b)    Each Lessee accepts the leasing of the Devices by it and receives the Devices on an “as-is where-is” basis.

SECTION 2.3         Ownership of the Devices

(a) Ownership . At all times during the Term of each Device Lease, full legal title to the Device subject to such Device Lease will remain vested in Lessor to the exclusion of Lessees, notwithstanding the possession and use thereof by Lessees or any Customers. At all times during each Upgrade Holding Period, if any, full legal title to the relevant Exchanged Device will remain vested in Lessor to the exclusion of Lessees, notwithstanding the termination of the Exchanged Customer Lease with respect to such Exchanged Device. Lessees and Servicer each agree that at all times (x) during the Term of each Device Lease for each Device and (y) during each Upgrade Holding Period, if any, with respect to an Exchanged Device, it shall not (i) imply or represent that any Person other than Lessor owns the Devices, (ii) sell or dispose of or directly or indirectly attempt to sell or dispose of the Devices in any way other than to a Customer pursuant to a Customer Lease, (iii) part with possession of the Devices without the prior written consent of Lessor other than pursuant to Section 2.4 (Subleasing) or as otherwise contemplated herein, or (iv) place on the Devices any plates, stickers or marks that are inconsistent with the ownership of the Devices by Lessor. For the avoidance of doubt, and without limiting the obligations of Servicer under the Servicing Agreement, Lessees shall have no obligation with respect to a Customer’s use or stewardship of a Device.

(b) Liens . At all times during the Term of each Device Lease, Lessees and Servicer shall not directly or indirectly give or allow another Person to give any interest in or Lien over the Device subject to such Device Lease or over such Device Lease, other than Permitted Device Liens. At all times during the Upgrade Holding Period, if any, with respect to each Exchanged Device, Lessees and Servicer shall not directly or indirectly give or allow another Person to give any interest in or Lien over such Exchanged Device, other than Permitted Device Liens. Lessees shall promptly, at their own cost and expense, take such action as may be necessary to duly discharge or eliminate any such Liens (other than Permitted Device Liens) upon obtaining Knowledge thereof.

SECTION 2.4         Subleasing





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(a)    Lessor acknowledges that the relevant Lessee is subleasing each Device subject to a Device Lease to a Customer. The relevant Lessee agrees to ensure that:

(i)    at such time that a Customer Lease is in effect, the Customer is legally and contractually bound by the terms of such Customer Lease with respect to a relevant Device;

(ii)    no Customer Lease prevents such Lessee from complying with its obligations under a Device Lease to which it is a party or any other Transaction Document to which it is a party;

(iii)    neither such Lessee, nor any Customer Lease, shall directly or indirectly give any impression or confirmation or otherwise provide that the relevant Customer shall be or may become the legal and beneficial owner of any Device at any time other than if the Customer exercises any option to purchase the Device under such Customer Lease as permitted thereby;

(iv)    such Lessee shall not represent or assert that any Customer has any contractual right to complete a Customer Upgrade or to have such Customer’s payment obligations under a Customer Lease waived in connection with a Customer Upgrade;

(v)    such Lessee has all material licenses and authorizations necessary in connection with such Lessee’s subleasing of the Devices to the Customers pursuant to the Customer Leases; and

(vi)    the Customer Leases will be administered in accordance with this Agreement and the Servicing Agreement.

SECTION 2.5         Software and Other Rights

The Devices may contain software in which none of the parties hereto have ownership or other proprietary rights. Where required by a software owner or manufacturer, the relevant Lessee will enter into a license or other agreement for the use of the software. Any such agreement will be separate and distinct from each Device Lease, and Lessor will have no rights or obligations thereunder unless otherwise agreed by it in writing. To the extent that Lessor is the owner or has rights in software related to the Devices and such rights are transferable by Lessor, Lessor hereby grants to Lessees such rights that Lessor has (if any) to use such software during the Term of the applicable Device Lease. No separate license fee is payable by Lessees to Lessor in relation to such software. Lessee acknowledges that Lessor has made no representation or warranty to Lessees as to Lessor’s title to or ability to grant rights to Lessees for any software available on any Device.
SECTION 2.6         Approved Devices

(a)    Lessor and Lessees acknowledge and agree that a full list of Approved Devices as at the date hereof is set out on Schedule 3 ( Schedule of Approved Devices ) to this Agreement (“ Schedule of Approved Devices ”).





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(b)    Lessor and Lessees acknowledge and agree that on each launch date of a Next Generation Device, the Schedule of Approved Devices shall be deemed automatically amended to add such Next Generation Device. Lessor and Lessees may make such other amendments to the Schedule of Approved Devices as agreed by Lessor, Lessees and Collateral Agent, in each case, acting reasonably.

(c)    Following any amendment (or deemed amendment) of the Schedule of Approved Devices in accordance with Section 2.6(b) ( Approved Devices ), at the request of any Lessee, Lessor shall provide Lessees with a new Schedule of Approved Devices (in the form set out in Schedule 3 ( Schedule of Approved Devices )). The Approved Devices following such amendment (or deemed amendment) shall be the Devices listed on such new Schedule of Approved Devices and such new Schedule of Approved Devices shall replace all previous schedules, provided, however, any amendment of the Schedule of Approved Devices shall not adversely affect any Device Leases which are in place prior to such amendment of the Schedule of Approved Devices.

SECTION 2.7         Term

(a)    The term (the “ Term ”) of each Device Lease shall commence on the relevant Device Lease Commencement Date and, subject to paragraph (b) below, end on the Device Lease Expiration Date, which shall be set for each Device Lease as a date no earlier than the date on which the aggregate Rental Payments to be made under such Device Lease through such date will be greater than or equal to the sum of (i) all scheduled Customer Receivables under such Device Lease during the Scheduled Customer Lease Term and (ii) the Device Residual Value of the Device subject to such Device Lease as of its Expected Sales Date.

(b)    Each Device leased under a Device Lease shall be leased for the Term of such Device Lease, subject to termination of the Device Lease with respect to a particular Device in accordance with Section 2.9 ( Termination of a Device Lease ).

SECTION 2.8         Rent and Other Payments

(a)     Rent . Lessees will pay or cause to be paid to Lessor or its Nominated Agent (by paying into the MLS Collection Account (Tranche 2), or any other bank account as notified by Lessor) on each Device Lease Payment Date, throughout the Term of each Device Lease, the Rental Payments for each Device subject to a Device Lease. Rental Payments for each Device subject to a Device Lease are payable for each calendar month (or the relevant portion thereof) on the Device Lease Payment Date until the Device Lease for such Device terminates. The Lessor will deliver an invoice to Lessees in the amount of the Rental Payments due for each month on the 5 th Business Day of such month beginning May 6, 2016. Once paid, each Rental Payment is not refundable for any reason unless such Rental Payment has been paid in error or when not actually due and payable. Each transfer of Available Funds into the MLS Collection Account (Tranche 2) during the calendar month of the applicable Device Lease Payment Date (or, in the case of the first Device Lease Payment Date, during the period from the Lease Closing Date through such Device Lease Payment Date) (other than any transfer of Available Funds by Sprint or an Originator in respect of Rental Payments due on a preceding Device Lease





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Payment Date pursuant to the Sprint Guarantee or otherwise) and any Carryover Amount with respect to such Device Lease Payment Date shall be applied as follows:

(i)    first, (A) all such Available Funds attributable to Customer Rentals in payment of amounts invoiced to the relevant Customer prior to, or during, the calendar month immediately preceding such Device Lease Payment Date (B) all such Available Funds attributable to down payments made by the relevant Customers during the relevant period and (C) any Carryover Amount with respect to such Device Lease Payment Date shall be applied in satisfaction of Lessees’ obligation to make a scheduled Rental Payment on such Device Lease Payment Date (the excess of the amounts described in clauses (A), (B) and (C) over the amount of the scheduled Rental Payment due on such Device Lease Payment Date, the “ Excess Amount ”);

(ii)    second, (A) all such Available Funds attributable to Customer Rentals in payment of amounts invoiced to the relevant Customer during the calendar month in which such Device Lease Payment Date occurs, or in payment of amounts that were scheduled to be invoiced during a future calendar month, shall be applied in satisfaction of Lessees’ obligations to make a scheduled Rental Payment on the Device Lease Payment Date in the calendar month following the calendar month during which such amounts are or would have been invoiced to the relevant Customer, and (B) the Excess Amount (other than any portion of the Excess Amount to be applied pursuant to clause (iii) below as determined by the Servicer and as set forth in the Servicer Report (as defined in the Servicing Agreement) relating to such Device Lease Payment Date) shall be applied in satisfaction of Lessees’ obligations to make a scheduled Rental Payment on each succeeding Device Lease Payment Date in an aggregate amount equal to the Excess Amount applied consecutively to each succeeding Device Lease Payment Date (the portion of such Available Funds and any Excess Amount to be applied (including pursuant to clause (iii) below) in respect of a subsequent Device Lease Payment Date, the “ Carryover Amount ” with respect to such subsequent Device Lease Payment Date); and

(iii)    third, (A) any portion of the Excess Amount attributable to Customer Receivables that were received after any Sprint Party made a payment in respect thereof pursuant to the Sprint Guarantee or otherwise that the Servicer elects to apply pursuant to this clause (iii), (B) any portion of the Excess Amount attributable to down payments made by Customers under Upgraded Customer Leases for which the monthly rent under such Upgraded Customer Leases equals or exceeds the monthly rent under the related Exchanged Customer Lease that the Servicer elects to apply pursuant to this clause (iii) and (C) all remaining Available Funds paid into the MLS Collection Account (Tranche 2) during the relevant period shall be applied in satisfaction of any other payment due and owing or elected to be paid under any Sprint Transaction Document by any Sprint Party that is payable to the MLS Collection Account (Tranche 2), including under Section 2.9.

Promptly following each Device Lease Payment Date, to the extent that there were insufficient Available Funds (after giving effect to application thereof in accordance with the immediately preceding sentence) available to be applied to satisfy the scheduled Rental Payment on such Device Lease Payment Date, the Lessor shall make a demand under the Sprint Guarantee in the amount of such shortfall.



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(b)     [Reserved]

(c) Electronic Fund Transfers . Lessees shall take all necessary actions so that all payments under each Device Lease will be made by electronic funds transfer.

(d) Obligations Absolute . During the Term of each Device Lease, Lessees’ obligation to make the Rental Payments and other payments due under such Device Lease is absolute and unconditional and is not affected or reduced by:

(i) any Lessee or any Customer being unable to use the relevant Devices;

(ii) the failure by any Customer (x) to make any payment under a Customer Lease or otherwise or (y) to return a Device to the relevant Lessee or Lessor;

(iii) the relevant Devices being damaged, lost, stolen or not in the possession of any Lessee or any Customer, or not working at any time;

(iv) any set-off, counterclaim or other right any Lessee has or claims to have against Lessor or another Person;

(v) Lessor’s title to or ability to grant rights to use software being defective for any reason, or the unavailability of any required software to any Lessees or any Customer;

(vi) the failure of the Servicer, any Lessee or any other party to perform its obligations with respect to a Customer Upgrade, including the failure to obtain any rights under a replacement Customer Lease for an Upgraded Device; or

(vii) any waiver of payment under or termination of an Exchanged Customer Lease in breach of any Sprint Transaction Document.

Notwithstanding any other provision of this Agreement or any Device Lease to the contrary, no Lessee shall be impaired in the exercise of any right it may have to assert and sue upon any claim it may have against Lessor in a separate action.
SECTION 2.9         Termination of a Device Lease . The Device Lease with respect to a Device will be terminated upon the occurrence of any of the following:

(a)     Servicer Termination of the Customer Lease . Servicer may at its option, if requested by the relevant Lessee prior to the Device Lease Expiration Date, terminate a Customer Lease with respect to a Device on the below terms and, upon such termination of the relevant Customer Lease, the Device Lease with respect to such Device will be terminated:

(i)     Return Device Satisfying the Device Return Condition but Customer has not paid all Customer Receivables . If at any time during the Term of the Device Lease for such Device, the relevant Customer returns such Device satisfying the Device Return Condition but has not paid all amounts due and owing under the related Customer Lease, (A) such Device is delivered to Lessor (or its Nominated Agent) and (B) payment is

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made by the Servicer to Lessor of (1) all previously accrued and unpaid Rental Payments, if any, plus (2) the Rental Payments that would have accrued under the Device Lease during the remainder of the Scheduled Device Lease Term, if any.

(ii)     Return Device Not Satisfying the Device Return Condition. If the relevant Customer returns such Device not satisfying the Device Return Condition, (A) such Device is delivered to Lessor (or its Nominated Agent) and (B) payment is made by the Servicer to Lessor of the sum of (1) all previously accrued and unpaid Rental Payments, if any, plus (2) the Rental Payments that would have accrued under the Device Lease during the remainder of the Scheduled Device Lease Term, if any, plus (3) the Device Residual Value for such Device as of the Expected Sales Date.

(iii)     Non-Returned Device. If the Customer has not returned such Device (other than as a result of an exercise by the Customer of its purchase option or by making a payment in lieu of delivery of the Device), payment is made by the Servicer to Lessor of the sum of (1) all previously accrued and unpaid Rental Payments, if any, plus (2) the Rental Payments that would have accrued during the remainder of the Scheduled Device Lease Term, if any, plus (3) the Device Residual Value for such Device as of the Expected Sales Date.

(b)     Termination of the Customer Lease By Customer Performance . If the Customer Lease terminates in accordance with its terms under the following scenarios:

(i)    if the relevant Customer returns such Device satisfying the Device Return Condition prior to the last day of the Customer Lease Term of the related Customer Lease, (A) such Device is delivered to Lessor (or its Nominated Agent) and (B) payment is made to Lessor of the sum of (1) all previously accrued and unpaid Rental Payments, if any, plus (2) the Rental Payments that would have accrued during the remainder of the Scheduled Device Lease Term, if any;

(ii)    if the relevant Customer returns such Device satisfying the Device Return Condition on or at any time after the last day of the Customer Lease Term, (A) such Device is delivered to Lessor (or its Nominated Agent) and (B) payment is made to Lessor of all previously accrued and unpaid Rental Payments, if any;

(iii)    if prior to the last day of the Customer Lease Term the Customer has made a payment in lieu of delivery of such Device, payment is made to Lessor of the sum of (A) all previously accrued and unpaid Rental Payments, if any, plus (B) the Rental Payments that would have accrued during the remainder of the Scheduled Device Lease Term, if any, plus (C) the required purchase price payment under the Customer Lease;

(iv)    if on the last day of the Customer Lease Term of the related Customer Lease the Customer exercises a purchase option in relation to such Device under the Customer Lease, payment is made to Lessor of the purchase option price under the Customer Lease plus all previously accrued and unpaid Rental Payments, if any; or

(v)    if at any time after the last day of the Customer Lease Term of the related Customer Lease the Customer exercises a purchase option in relation to such Device



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under the Customer Lease, payment is made to Lessor of the purchase option price as of the purchase option exercise date plus all previously accrued and unpaid Rental Payments, if any.

(c)     Originator Repurchase Event . If the relevant Originator purchases a Rent Shortfall Returned Device in accordance with the Device Repurchase Agreement.

(d)     Upgrade Termination Option . If the relevant Lessee exercises the Upgrade Termination Option in respect of any Device and pays the applicable Upgrade Termination Option Payment in accordance with Section 2.13(b)(ii).

Notwithstanding anything in this Agreement or any other Transaction Document to the contrary, no termination or deemed termination of a Customer Lease pursuant to this Agreement or any other Transaction Document shall impair the relevant Lessee from the exercise of any right it may have to assert and sue upon any claim it may have against a Customer. For the avoidance of doubt, after the termination of a Device Lease with respect to a Device in accordance with this Section 2.9, all Customer Lease-End Rights and Obligations under the relevant Customer Lease shall hereby pass from Lessor to the relevant Lessee on an as-is basis without any warranty whatsoever from Lessor and any amount received by any Sprint Party from the relevant Customer or any other Person on account of the related Customer Lease for such Device shall be the property of such Sprint Party and may be retained by such Sprint Party.
SECTION 2.10     Title Transfer .
 
(a)    Upon a Customer Lease termination under Section 2.9(a)(ii) or (iii) ( Servicer Termination of the Customer Lease ) or Section 2.9(d) ( Upgrade Termination Option ) solely to the extent the Servicer is required to and makes a payment under clause (iii) of the definition of “Upgrade Termination Option Payment”, Lessor shall transfer to the relevant Lessee title to the relevant Device (and all Customer Lease-End Rights and Obligations) free and clear of all Liens by and through Lessor and any obligation such Lessee or any other Sprint Party would otherwise have had to return such Device to Lessor shall be terminated.

(b)    Upon a Customer Lease termination under Section 2.9(b)(iii), (iv) or (v) ( Termination of the Customer Lease by Customer Performance ) Lessor shall transfer to the relevant Customer title to the relevant Device free and clear of all Liens (including any rights of the relevant Lessee therein which such Lessee agrees to automatically and concurrently release) by and through Lessor.

SECTION 2.11     Returned Devices

(a)     Returned Devices . Except as otherwise set forth in the Sprint Transaction Documents, Lessees covenant and agree to return or cause the return of each Device (including each Exchanged Device and each Device exchanged for a Like-Kind Exchange Device) to the Device Return Address of Lessor (or its Nominated Agent) within the Required Return Period to the extent it has received such Device from the relevant Customer. For the avoidance of doubt, Lessees’ obligation under this Section 2.11 ( Returned Devices ) is not in any way conditional upon returned Devices satisfying the Device Return Condition.






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(b)     Procedure for Returned Devices . Upon the return of a Device by the relevant Customer during the Term, the relevant Lessee will or will cause Servicer to:

(i)    at Lessor’s expense (which includes all transport, insurance and related costs within its jurisdiction), ship such Device within the Required Return Period to the Device Return Address of Lessor (or its Nominated Agent);

(ii)    ensure that such Device is packed in a manner normally used for the transportation of similar Devices;

(iii)    use commercially reasonable efforts to procure that the Device contains no network block, barring or password protection and in particular, Lessee shall ensure that the Devices will be unlocked by Servicer for use on any wireless network;

(iv)    use commercially reasonable efforts to procure that the Customer disables the “Find My iPhone” feature at the time of the Customer’s return of such Device and, if the Customer does not disable the “Find My iPhone” feature, carry out the Non-Return Remedies in respect of that Customer (other than a Protected Customer) and such Device shall be treated as a Non-Returned Device for the purposes of this Transaction;

(v)    provide the PUK for each Device to Lessor; and

(vi)    pay, or reimburse the Lessor for, any shipping costs and expenses incurred pursuant to Section 2.11(b)(i) ( Procedure for Returned Devices ) above within 5 Business Days of shipping such Devices.

(c)     Lessee Failure to Return . If any Lessee (or its Nominated Agent) fails to return to Lessor (or its Nominated Agent), by the earlier of (x) the Final Settlement Date and (y) the later of the end of the applicable Required Return Period and the applicable Device Lease Expiration Date, any Device returned to any Sprint Party by a Customer that is required to be returned to Lessor (or its Nominated Agent), the relevant Lessee shall pay to Lessor the sum of (i) if such Device is not returned as a result of any Sprint Party’s willful misconduct or gross negligence, an amount equal to the Originator Device Fee (as defined in the Device Repurchase Agreement) and (ii) the higher of (A) the Device Residual Value for such Device as of the Expected Sales Date, or (B) the Secondary Market Value for such Device, or if such Device is an Upgraded Device, the Secondary Market Value for the Related Original Device, as of the Expected Sales Date on the basis that such Device is a Grade B Device, no later than the earlier of (1) the Final Settlement Date and (2) 5 Business Days after Lessee having Knowledge of such failure to return unless Servicer has already paid such amount. Upon payment of the amounts set forth in this Section 2.11(c) and all other amounts owed by any Sprint Party to Lessor with respect to the relevant Device, title free and clear of all Liens by and through Lessor to such Device (and all Customer Lease-End Rights and Obligations) shall hereby pass from Lessor to the relevant Lessee on an as-is basis without any warranty whatsoever from Lessor and no further Rental Payments shall be payable by the relevant Lessee in respect of such Device and the Device Lease for such Device shall terminate and any obligation such Lessee or any other Sprint Party would otherwise have had to return such Device to Lessor shall be terminated.


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SECTION 2.12     Non-Return Remedies

If a Customer (other than a Protected Customer) is in breach of a payment or a delivery obligation under its Customer Lease which has not been remedied by the Customer, Servicer, any Lessee or any other Person (other than the Guarantor) by the Non-Return Remedies Commencement Date:
(a)    Servicer shall use commercially reasonable efforts to collect, without incurring any obligation to the extent that (notwithstanding its commercially reasonable efforts) it does not collect, the Customer’s payment under the Customer Lease (and all further payments made by the Customer thereunder, including the Customer’s payment for or in respect of the Device) and shall remit any such Customer payments it does collect (i) to the extent such amount has not been previously remitted to Lessor as a regularly scheduled Rental Payment or another payment due and owing to Lessor under this Agreement, to Lessor and (ii) otherwise to the relevant Lessee; and

(b)    neither Servicer nor any other Sprint Party will provide any new or incremental device, accessory, network service (or other asset or service) which it is not already providing (or already obligated to provide, or will be obligated to provide with the passage of time and/or a payment or performance by Customer which Servicer or other Sprint Party is obligated to accept) as of the date of such breach under contract (including pursuant to applicable terms and conditions) to such Customer (by sale, lease or otherwise) until such breach is remedied (the “ Non-Return Remedies ”),

provided that paragraphs (a) and (b) above shall not apply if Servicer terminates the Customer Lease in accordance with Section 2.7 ( Right to Terminate Customer Leases ) of the Servicing Agreement.
SECTION 2.13     Like-Kind and Upgrade Exchanges .

(a)     Like-Kind Exchanges . If at any time during the Term of a Device Lease, the Servicer performs a Like-Kind Exchange, the Like-Kind Exchange Device shall be automatically substituted for the original Device and such Like-Kind Exchange Device shall be subject to the relevant Device Lease to the same extent and on the same terms as the original Device, including the Rental Payments, which shall be the same as the Rental Payments that would otherwise have been due with respect to the original Device. Lessor agrees that, upon consummation of the Like-Kind Exchange, title to the original Device free and clear of all Liens by and through Lessor shall pass automatically from Lessor to Lessee on an as-is basis without any warranty whatsoever from Lessor.

(b)     Upgrade Exchanges .

(i)    Subject to Section 2.13(b)(ii), if at any time during the Term of a Device Lease a Customer Upgrade occurs and title to the Upgraded Device is sold or transferred to Lessor under Section 2.1 of the Second Step Transfer Agreement, (x) on and from the Upgrade Date, the Upgraded Device shall be automatically substituted for the related Exchanged Device and such Upgraded Device shall be subject to the relevant Device Lease to the same extent and on the same terms as the related Exchanged Device,



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including (1) the Rental Payments for the Upgraded Device, which shall be equal to the Rental Payments that would otherwise have been due with respect to the related Exchanged Device, (2) the Device Lease Expiration Date of the Device Lease for the Upgraded Device, which shall be the same as the Device Lease Expiration Date of the Device Lease for the Exchanged Device and (3) the Device Residual Value, the Expected Sales Date and the Scheduled Customer Lease Term for the Upgraded Device, which, in each case, shall be the same as the Device Residual Value, Expected Sales Date and Scheduled Customer Lease Term, respectively, for the Exchanged Device; provided, however, the Customer Lease Term for the Upgraded Device shall be the Customer Lease Term for the Upgraded Customer Lease and not the Exchanged Customer Lease and (y) Servicer shall pay by the Business Day prior to the first Scheduled Monthly Reporting Date occurring at least one full calendar month following the related Upgrade Exchange (the “ Upgrade Dilution Payment Date ”), the Upgrade Dilution, if any, in accordance with Section 2.14 of the Servicing Agreement. In the event that Servicer does not pay the Upgrade Dilution by the Upgrade Dilution Payment Date in accordance with Section 2.14(d) of the Servicing Agreement, Lessor shall sell the Exchanged Device in accordance with Section 2.10 of the Second Step Transfer Agreement and apply the proceeds of such sale in accordance with Section 2.10 of the Second Step Transfer Agreement. Lessor agrees that, following any Upgrade Exchange (1) for which the relevant Lessee does not elect the Upgrade Termination Option with respect to the Upgraded Device within the Upgrade Termination Option Period or, during the Upgrade Termination Option Period, has irrevocably notified the Buyer that it waives its right to elect the Upgrade Termination Option with respect to such Upgraded Device and (2) for which the Upgrade Dilution, if any, is paid pursuant to this Section 2.13(b)(i), (x) title to the Exchanged Device free and clear of all Liens by and through Lessor shall pass automatically from Lessor to the relevant Lessee on an as-is basis without any warranty whatsoever from Lessor in accordance with Section 2.9 of the Second Step Transfer Agreement and (y) if such Exchanged Device was initially an Upgraded Device and the Servicer deposited amounts into the Upgrade Reserve Account (Tranche 2) in accordance with Section 2.14(d) of the Servicing Agreement in respect of such Exchanged Device, such amounts shall be paid to the Lessee Representative in accordance with Section 2.9(c)(iv) of the MLS Intercreditor Agreement.

(ii)    By the Business Day prior to the first Scheduled Monthly Reporting Date occurring at least one full calendar month after the occurrence of the relevant Upgrade Exchange (the “ Upgrade Termination Option Period ”), the applicable Lessee has the option (the “ Upgrade Termination Option ”) to terminate the relevant Device Lease by (A) notifying Lessor in writing that it is exercising the Upgrade Termination Option with respect to such Exchanged Device, provided, such notice may be in the form of a list of Customer Leases, specifying, as applicable, the relevant customer lease number or IMEI number, that will be early terminated by the relevant Lessee under Section 2.9, this Section 2.13(b)(ii) or otherwise during the relevant period, (B) if the relevant Customer has returned such Device, returning such Exchanged Device to Lessor in accordance with the terms hereof and (C) Servicer paying Lessor the Upgrade Termination Option Payment. Upon effective exercise by Lessee of the Upgrade Termination Option in accordance with the immediately preceding sentence, the Device Lease with respect to the Exchanged Device shall terminate effective as of the Upgrade Date and the Upgrade






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Exchange with respect to the Upgraded Device shall be deemed not to have occurred and from and after the Upgrade Date no amounts shall be payable by any Sprint Party in connection with the Upgraded Device, the Exchanged Device, the Device Lease with respect to the Exchanged Device or the Upgrade Exchange, including any Rental Payments or any Upgrade Dilution (without prejudice to any indemnity or other obligations that survive termination of any Device Lease).

(iii)    In connection with an Upgrade Exchange, the relevant Lessee shall provide Lessor with the following information:

(A)    a description of the Upgraded Device;

(B)    the Customer Lease Term for such Upgraded Device; and

(C)    the Customer Receivables due under the relevant Upgraded Customer Lease.

SECTION 2.14     Updates to Devices Subject to Device Leases and Data File . The Devices subject to the relevant Device Lease shall be deemed to be automatically amended without further action upon a Like-Kind-Exchange, an Upgrade Exchange or the termination of any Device Lease with respect to any Device.  Upon an Upgrade Exchange, (i) the relevant Device Lease Schedule shall be deemed to be automatically amended to reflect the terms of the Upgraded Device and Upgraded Customer Lease in accordance with Section 2.13(b)(i) and (ii) Lessor and Lessee shall cooperate to update the Data File to reflect the terms of the Upgraded Device and Upgraded Customer Lease. Upon the request of any Lessee or Lessor, Servicer shall provide a status report reflecting the Devices then leased pursuant to any Device Lease. Upon the request of Collateral Agent, Servicer or any Lessee, Lessor shall provide updated Device Lease Schedules and an updated Data File.

SECTION 2.15     Quiet Enjoyment .

Lessor covenants that during the Term of a Device Lease, so long as no Lease Event of Default shall have occurred and be continuing, neither Lessor nor any Person claiming any interest in the Devices by, through or under Lessor shall disturb Lessees’ quiet enjoyment of the Devices and the Customer Leases under such Device Lease. Collateral Agent covenants that during the Term of a Device Lease, so long as no Lease Event of Default shall have occurred and be continuing, Collateral Agent shall not disturb Lessees’ quiet enjoyment of the Devices and the Customer Leases under such Device Lease
SECTION 2.16     Purchase Option .

Upon the expiration of the Device Lease with respect to any Device on its Device Lease Expiration Date and payment of all amounts owing by the applicable Lessee under such Device Lease, such Lessee shall have the option to purchase (the “ Purchase Option ”) such Device from Lessor for a purchase price of $0.01 per Device (the “ Purchase Option Price ”). The Purchase Option with respect to a Device shall be deemed to be exercised by the applicable Lessee unless such Lessee notifies Lessor that it does not wish to exercise such Purchase Option on or before the 10th Business Day following the expiration of the applicable Device Lease. Upon the


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exercise (or deemed exercise) by any Lessee of the Purchase Option with respect to any Device, (i) title to the relevant Device (and all Customer Lease-End Rights and Obligations) shall pass from Lessor to such Lessee on an as-is basis without any warranty whatsoever from Lessor and (ii) any obligation such Lessee or any other Sprint Party would otherwise have had to return such Device to Lessor shall be terminated; provided, however, notwithstanding the transfer of title of any Device to the relevant Lessee under this Section 2.16 ( Purchase Option ), such Device and the related Customer Lease shall remain Lessee Collateral until such time as released in accordance with Section 9.7 ( Release of Devices ). The relevant Lessee shall pay or cause Servicer to pay the Purchase Option Price for each Purchase Option Device by the Business Day prior to the first Scheduled Monthly Reporting Date occurring at least one full calendar month following the expiration or termination of the Device Lease with respect to such Purchase Option Device
If Lessee purchases a Purchase Option Device with respect to which the Servicer has deposited amounts into the Upgrade Reserve Account (Tranche 2) in accordance with Section 2.14(d) of the Servicing Agreement, such amounts shall be released to the Lessee Representative in accordance with Section 2.9(c) of the MLS Intercreditor Agreement.
ARTICLE III

LEASE EVENTS OF DEFAULT

SECTION 3.1         Lease Events of Default

A Lease Event of Default occurs if:
(a)    (i) any Lessee (or the Servicer on its behalf) fails to pay to the MLS Collection Account (Tranche 2) all Customer Receivables received and permitted to be paid to the MLS Collection Account (Tranche 2) by such Lessee in satisfaction of any Rental Payment obligation on the due date thereof or (ii) any Lessee (or the Guarantor on its behalf) fails to make any Rental Payment on or before the Business Day prior to the Scheduled Monthly Reporting Date immediately following the due date thereof;

(b)    any Lessee (or the Guarantor on its behalf) fails to pay any other amount (other than as set forth in Section 3.1(a) ( Lease Events of Default )) due and payable under this Agreement or a Device Lease unless such breach is remedied within 10 Business Days following the date of receipt of a written notice from Lessor specifying the breach;

(c)    any Lessee breaches Section 2.3(b) ( Liens) , Section 2.12 ( Non-Return Remedies ), Section 2.13(b) ( Upgrade Exchanges ), Section 4.1(a) ( Indemnities ), Section 6.7 ( Licenses and approvals ), Section 7.1(i) ( Notification of Default ), Section 7.2(b) ( No Modification of Customer Leases ), or Section 7.2(c) ( Change in Credit and Collection Policy, Upgrade Policy or Business ) of this Agreement, and such breach is not remedied within 10 Business Days of the date of receipt of written notice from Lessor specifying the breach;

(d)    any Lessee breaches any other representation, warranty, covenant or other provision of this Agreement or any other Transaction Document in any material respect (other




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than as specified in paragraphs (a), (b) and (c) above), and such breach is not remedied within 10 Business Days of the date of receipt of written notice from Lessor specifying the breach;

(e)    any Originator breaches any provision of any Transaction Document to which it is a party in any material respect and such breach is not remedied within 10 Business Days of the date of receipt of written notice from Lessor specifying the breach;

(f)    [reserved];

(g)    a Servicer Replacement Event occurs;

(h)    Sprint’s license to provide wireless telephony services is terminated and not replaced;

(i)    the occurrence of an Insolvency Event with respect to a Sprint Party;

(j)    the Guarantor fails to pay any amount due and payable under the Sprint Guarantee, or the Sprint Guarantee is terminated or ceases to be in full force and effect for any reason (other than termination in accordance with its terms) before the Final Settlement Date, unless such breach is remedied within 5 Business Days of the date of receipt of a written notice from Lessor specifying the breach;

(k)    a Change of Control has occurred; or

(l)    the Performance Support Provider fails to perform any of its obligations under the Performance Support Agreement, or the Performance Support Agreement is terminated or ceases to be in full force and effect for any reason before the Final Settlement Date, unless such breach is remedied within 5 Business Days of the date of receipt of a written notice from Lessor specifying the breach.

SECTION 3.2         Remedies

(a)    Upon the occurrence and continuance of a Lease Event of Default, Lessor may terminate this Agreement and/or any one or more (including all) of the Device Leases (or any portion thereof) by providing written notice of termination to the relevant Lessees. Lessor shall be deemed to have given each Lessee a notice terminating all relevant Device Leases immediately upon the occurrence of an Insolvency Event with respect to any Lessee or the Guarantor. For the avoidance of doubt, the occurrence of a Lease Event of Default under a Device Lease will trigger a Lease Event of Default under all Device Leases entered into under this Agreement (regardless of the identity of the Lessee under a particular Device Lease and whether a Lease Event of Default has occurred under a particular Device Lease) unless otherwise waived by Lessor.

(b)    If this Agreement or any Device Lease hereunder (or any portion thereof) has been terminated pursuant to paragraph (a) above:

(i)    in relation to the occurrence of the Lease Event of Default under Section 3.1(d) ( Lease Events of Default ) above then Lessees shall pay only the Present Value





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Device Lease Amount for the relevant Devices within 5 Business Days of receipt of an invoice from Lessor. Upon payment of the Present Value Device Lease Amount, title free and clear of all Liens arising by and through Lessor to the relevant Devices (and all Customer Lease-End Rights and Obligations) shall hereby pass from Lessor to the relevant Lessee on an as-is basis without any warranty whatsoever from Lessor and no further Rental Payments shall be payable by the relevant Lessee in respect of such Devices and the Device Leases for such Devices shall terminate;

(ii)    subject to Section 3.2(c) ( Remedies ), in relation to the occurrence of any Lease Events of Defaults (other than the Lease Event of Default under Section 3.1(d) ( Lease Events of Default )) prior to the end of the Term, then Lessees must pay the Device Lease Early Termination Amount for the relevant Devices to Lessor within 5 Business Days of receipt of an invoice from Lessor. Upon payment of the Device Lease Early Termination Amount, title free and clear of all Liens by and through Lessor to the relevant Devices (and all Customer Lease-End Rights and Obligations) shall hereby pass from Lessor to the relevant Lessee on an as-is basis without any warranty whatsoever from Lessor and no further Rental Payments shall be payable by the relevant Lessee in respect of such Devices and the Device Leases for such Devices shall terminate.

(c)    Notwithstanding anything herein to the contrary, upon the occurrence and continuance of any Lease Event of Default which does not satisfy the below criteria, the sole remedy shall be that Lessees pay the Present Value Device Lease Amount for the relevant Devices within 5 Business Days of receipt of an invoice from Lessor:

(i)    the default covenant provision is customary in financing arrangements;

(ii)    the occurrence of the Lease Event of Default is objectively determinable (for example, subjective acceleration clauses would not satisfy this condition);

(iii)    predefined criteria, related solely to any Sprint Party and their operations, have been established for the determination of the Lease Event of Default; and

(iv)    it is reasonable to assume, based on the facts and circumstances that exist at Device Lease inception, that the Lease Event of Default will not occur. In applying this condition, it is expected that any Person making such determination would consider recent trends in Lessees’ operations.

Upon payment of the Present Value Device Lease Amount in accordance with this Section 3.2(c) ( Remedies ), title free and clear of all Liens by and through Lessor to the relevant Devices (and all Customer Lease-End Rights and Obligations) shall hereby pass from Lessor to the relevant Lessee on an as-is basis without any warranty whatsoever from Lessor and no further Rental Payments shall be payable by the relevant Lessee in respect of such Devices and the Device Leases for such Devices shall terminate.




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ARTICLE IV

INDEMNITIES

SECTION 4.1         Indemnities

(a)    Lessees hereby indemnify Lessor and the Series 2 Members (each a “ Lessee Indemnitee ”) and hold any Lessee Indemnitee harmless from, any and all losses, claims, damages, liabilities, charges, Lessee Covered Taxes, penalties, levies and related expenses (including the reasonable and documented fees and expenses of counsel for Lessor), including, on account of funds borrowed, contracted for or used to fund any amount payable by a Lessee Indemnitee in connection with the purchase or the lease of any Devices subject to a Device Lease or proceedings related thereto (the “ Liabilities ”) incurred by any Lessee Indemnitee, without duplication of any other amount paid, as a result of:

(i)    a Device Lease (or any part of it) being void, voidable or unenforceable for any reason;

(ii)    the Devices being lost, stolen, damaged, or destroyed by, or confiscated from, in each case, any Lessee;

(iii)    the sublease of any Devices to a Customer;

(iv)    any information provided by or on behalf of a Sprint Party or any Affiliate for inclusion in a Device Lease Schedule being incorrect;

(v)    a Device Lease terminating in relation to some or all of the Devices before the end of the Term of that Device Lease, except as otherwise expressly contemplated under this Agreement;

(vi)    any failure by a Lessee to comply with its obligations in the Transaction Documents to which it is a party; or

(vii)    any Lease Event of Default other than (x) a Lease Event of Default under Section 3.1(d) ( Lease Events of Default ) or (y) a Lease Event of Default that does not satisfy the criteria in Section 3.2(c) ( Lease Events of Default );

provided, however, Lessees’ indemnity will not extend to (x) any Liability to the extent determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence, fraud or willful misconduct of any Lessee Indemnitee, or (y) any Liability arising as a result of a Device being a Non-Returned Device; provided that for purposes of clause (x) above, no Lessee Indemnitee shall have a duty to (1) undertake an independent investigation into facts not disclosed to Lessor because of gaps in Servicer’s information tracking and (2) know and comply with consumer leasing regulations (or industry custom) in connection with the Devices and Customer Leases.
(b)     Indemnity Continuing . Lessees’ indemnity is a continuing obligation, separate and independent from Lessees’ other obligations. Lessees’ indemnity continues after a Device


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Lease ends or is terminated and it is not necessary for Lessor to incur an expense or cost or make a payment before it enforces a right of indemnity.

(c)     Waiver of Consequential Damages, Etc. To the fullest extent permitted by applicable Law, the parties hereto shall not assert, and each party hereto hereby waives, any claim against any other party hereto, on any theory of liability, for special, indirect, consequential (including lost profits) or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Transaction Document or any agreement or instrument contemplated hereby, or the transactions contemplated hereby or thereby (save for claims in connection with breaches of confidentiality).

ARTICLE V

CONDITIONS PRECEDENT

The purchase from, and lease to Lessees of, the Lease Closing Date Devices on the Lease Closing Date, shall be subject to the satisfaction of, or the waiver in writing by (i) Lessor of, each of the conditions precedent set forth below and (ii) Lessees of, the conditions in clauses (i) and (k) below:
(a)    Lessee has provided the Agreed Schedule Information with respect to all Lease Closing Date Devices subject to the Device Leases;

(b)    the Device Lease Schedules contain with respect to each Lease Closing Date Device to be leased, the information set out in Schedule 1 ( Device Lease Schedule );

(c)    all Lease Closing Date Devices that are to be subject to such Device Lease are Approved Devices;

(d)    at the time of its contribution under the First Step Transfer Agreement, each Originator is the owner of unencumbered legal and beneficial title to each Lease Closing Date Device that is to be subject to such Device Lease (other than the rights of Customers under the Customer Leases);

(e)    as of the Cutoff Date, the Lease Closing Date Devices were Eligible Devices and the Customer Leases were Eligible Leases;

(f)    the representations and warranties of each Sprint Party set forth in Article VI or in any other Transaction Document are true and correct in all material respects on and as of the Lease Closing Date with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date, in which case, such representations and warranties shall have been true and correct as of such earlier date;

(g)    no Lease Event of Default has occurred and is continuing;

(h)    all documents (including Customer Leases) required to be in effect with respect to the relevant Devices are duly executed by each party other than Lessor;




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(i)    all Transaction Documents have been executed and delivered to Lessor and Lessees;

(j)    receipt of evidence that all Agreed Start-Up Costs have been paid or will be paid simultaneously with the consummation of the Transaction;

(k)    receipt by Lessor and Lessees of the Data File which contains all information for each Device Lease Schedule to which each Lessee and Lessor agree; and

(l)    Lessees shall have obtained any approvals, legal opinions, filings or other documents reasonably requested by Lessor.

Lessees acknowledge and agree that this Agreement is not a committed facility and that Lessor is not obligated to purchase any Devices, lease any Devices to Lessee or enter into any Device Lease.
ARTICLE VI

REPRESENTATIONS AND WARRANTIES

Each Lessee represents and warrants to Lessor that, as of the Lease Closing Date and as of the Amendment Closing Date (with reference to the circumstances existing on each such date):
SECTION 6.1         Organization and Good Standing

It has been duly organized or incorporated in, and is validly existing as a corporation, exempted company, partnership or limited liability company, as applicable, in good standing under, the Laws of its jurisdiction of organization or incorporation, with power and authority to own its properties and to conduct its business as such properties are presently owned and such business is presently conducted and will be conducted, except to the extent that such failure could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
SECTION 6.2         Due Qualification

It is duly qualified to do business as a foreign organization in good standing, if applicable, and has obtained all necessary qualifications, licenses and approvals, in all jurisdictions in which its ownership or lease of property or the conduct of its business (including its obligations under this Agreement) requires such qualifications, licenses or approvals, except where the failure to be in good standing or to hold any such qualifications, licenses and approvals could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
SECTION 6.3         Power and Authority; Due Authorization

It (i) has all necessary power and authority to (A) execute and deliver this Agreement and (B) carry out the terms of and perform its obligations under this Agreement, and (ii) has duly


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authorized by all necessary corporate, partnership or limited liability company action, as applicable, the execution, delivery and performance of this Agreement.
SECTION 6.4         Binding Obligations

This Agreement constitutes a legal, valid and binding obligation of such party, enforceable against such party in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.
SECTION 6.5         No Violation

The due execution, delivery and performance by it of this Agreement shall not (i) violate or result in a default under, (A) its articles or certificate of incorporation, memorandum and articles of association, by-laws, certificate of formation, limited liability company agreement, partnership agreement or other organizational documents, as applicable, or (B) in the context of the transactions contemplated by this Agreement and the other Transaction Documents, any material indenture, agreement or instrument binding on it, (ii) result in the creation or imposition of any Lien upon any of its properties pursuant to the terms of any such indenture, agreement or instrument, except for any Lien that could not reasonably be expected to have a Material Adverse Effect or that arises under the Transaction Documents, or (iii) violate in any material respect any Law applicable to it or any of its properties.
SECTION 6.6         No Proceedings

There are no actions, suits or proceedings by or before any arbitrator or governmental authority pending against or, to its Knowledge, threatened against or affecting it (i) as to which there is a reasonable possibility of an adverse determination and that, if adversely determined, could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect, (ii) seeking to prevent the consummation of the purposes of this Agreement or the transactions contemplated hereby or (iii) that involve this Agreement.
SECTION 6.7         Licenses and approvals

No license, authorization or approval or other action by, and no notice to or filing with, any Governmental Authority is required for its due execution, delivery and performance of this Agreement or the transactions contemplated hereby, in each case, that has not been made or obtained other than registrations and notifications that are permitted to be obtained after the Lease Closing Date, which Servicer shall obtain or cause to be obtained within the statutorily prescribed timeframe.
SECTION 6.8         Software licenses

The execution and performance of the First Step Transfer Agreement and the Second Step Transfer Agreement do not infringe any licenses or other agreements for the use of the software connected to the Devices.


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ARTICLE VII

COVENANTS

At all times from the Lease Closing Date to the Final Settlement Date, unless Lessor shall otherwise consent in writing:
SECTION 7.1         Affirmative Covenants

(a)     Reporting Requirements. Each Lessee will furnish to Lessor promptly following a request therefor, any documentation Lessor reasonably requests relating to such Lessee, the transactions contemplated hereby or the Lessee Collateral in order to comply with its obligations under the Transaction Documents, protect Lessor’s interest as contemplated by this Agreement or any other Transaction Document or to comply with applicable Law; provided, Lessees shall not be required to furnish any information to the extent that any Lessee has determined in good faith it is prohibited from furnishing such other information by any Law or a Contractual Obligation or because such information is Relevant Personal Data subject to Section 7.1(h) ( Personal Data ) (it being understood and agreed that this Section 7.1(a) ( Reporting Requirements ) shall not be applied to augment the periodic reporting obligations of Sprint under Section 4(e) of the Performance Support Agreement).

(b)     Change in Accountants . Promptly after the occurrence thereof, each Lessee shall provide the Lessor notice of any change in the accountants of such Lessee.

(c)     Preservation of Existence . Except as expressly permitted by Sections 5.2(h) or 5.2(i) of the Second Step Transfer Agreement, each Lessee shall (i) do all things necessary to remain duly organized, validly existing and qualified in good standing in its jurisdiction of organization, except where the failure to qualify or be in good standing could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect and (ii) maintain all requisite authority to conduct its business in each jurisdiction in which its business is conducted, except where the failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(d)     Compliance with Laws, Etc. Each Lessee shall comply with all applicable Laws, regulations and standards of all jurisdictions applicable to each party’s performance under this Agreement (including, without limitation, consumer protection requirements, the U.S. Foreign Corrupt Practices Act and international anti-money laundering laws applicable to it) except where the failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each Lessee shall also comply with all applicable international export laws and sanctions regulations applicable to it with respect to the export of the Devices except where the failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(e) Keeping of Records and Books of Account . Lessees shall (and shall cause Servicer to) maintain and implement administrative and operating procedures (including an ability to recreate records evidencing Customer Receivables and any related contract in the event of the destruction of the originals thereof), and keep and maintain, all documents, books,


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computer tapes, disks, Records and other information reasonably necessary or advisable for the collection and administration of all Customer Receivables (including records adequate to permit the daily identification of each new Customer Receivable and all Collections of and adjustments to each existing Customer Receivable). Lessees shall give Lessor prompt notice of any material change in its administrative and operating procedures referred to in the previous sentence.

(f) Furnishing of Information . Subject to any limitation in Section 7.1(h) ( Personal Data ), Lessees shall furnish or cause to be furnished to Lessor from time to time such information with respect to the Customer Receivables and other Lessee Collateral as Lessor may reasonably request (it being understood and agreed that this Section 7.1(f) ( Furnishing of Information ) shall not be applied to augment or duplicate the reporting obligations of Servicer under the Servicing Agreement).

(g) Inspection of Records . Upon reasonable advance notice by Lessor to Lessees, Lessees shall, at any time and from time to time during regular business hours, as requested by Lessor permit Lessor, or its agents or representatives, at the expense of Lessees ( provided that unless a Lease Event of Default shall have occurred and be continuing, Lessees shall not be responsible for the expense of any such inspections other than one inspection per year by Lessor) (i) to examine and make copies of and take abstracts from all books, records and documents (including computer tapes and disks) reasonably related to Lessee Collateral, including any related Customer Leases, and (ii) to visit the offices and properties of Lessees for the purpose of examining such materials described in clause (i), and to discuss matters reasonably related to the Customer Leases and Device Leases or Lessees’ performance hereunder, and under the other Transaction Documents to which any Lessee is a party, with any of the officers, directors, relevant employees or independent public accountants of the relevant Lessee having Knowledge of such matters. Subject to Section 20 ( Confidential Information ) of the MLS Intercreditor Agreement, Lessor and such agents and representatives shall be bound to treat any information received pursuant to this paragraph (g) as confidential.

(h) Personal Data . Notwithstanding anything in any Transaction Document to the contrary, each Lessee shall ensure that no Relevant Personal Data is transmitted or delivered to, or otherwise received by, Lessor if such transmission, delivery or receipt would result in the violation by such Person of any Applicable Data Protection Laws or any Contractual Obligation; provided that, upon the request of Lessor at any time after a Lease Event of Default has occurred and is continuing, the relevant Lessee shall, in each case, at its own expense, co-operate, assist and otherwise take all necessary actions as may be required to ensure that all Relevant Personal Data is transferred to Lessor (or such other Person as Lessor may direct) in accordance with all applicable Law and any Contractual Obligations, including entering into any further deeds or documents which may be required to comply with any such legislation or regulations relating to data protection.

(i) Notification of Default. Lessees shall furnish to Lessor and Collateral Agent as soon as possible and in any event within two (2) Business Days after any Lessee obtains Knowledge of (A) the occurrence of any Lease Event of Default or Lease Default, a statement by an appropriate officer of the relevant Lessee setting forth details of such Lease Event of Default or Lease Default and the action which it proposes to take with respect thereto, which information shall be updated promptly from time to time; (B) any litigation, investigation, proceeding or fact





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or circumstance that may exist at any time between it and any Person that could reasonably be expected to result in a Material Adverse Effect or any litigation or proceeding to which it is a party relating to any Transaction Document, notice of such litigation, investigation, proceeding, fact or circumstance; and (C) the existence of a Material Adverse Effect, notice of such Material Adverse Effect.

(j) Audit. In relation to the administration of Devices and the Device Leases, each Lessee shall upon reasonable advance notice provide access to its databases to Deloitte or another independent accounting firm selected by Lessor not more than twice per calendar year, on a confidential basis, at the expense of Lessor, to confirm compliance in all material respects of certain procedures with respect to certain documents and records relating to the administration of Device, Customer and Customer Lease information, including without limitation the following:

(i) access to database to confirm, among others, the identity, ownership, pricing and status of the Devices,

(ii) access to database to confirm, among others, the name and contact details of the Customers, control compliance with underwriting standards, and compliance with relevant policies and laws, and

(iii) access to database to confirm the existence and details of the Customer Leases.

SECTION 7.2         Negative Covenants

At all times from the Lease Closing Date to the Final Settlement Date, unless Lessor (and, with respect to Section 7.2(c)(ii), the Collateral Agent) shall otherwise consent in writing:
(a)     No Modification of a Device . Lessees will not modify, alter or change the Devices in any Lessee’s possession, and will not permit the Devices in any Lessee’s possession to be modified, altered or changed; provided, however, none of the Lessees shall be responsible for any modifications, alterations or changes made by Customers or for any repairs made by a third-party maintenance provider on behalf of any Customer; provided, further, this Section 7.2(a) shall not restrict Like-Kind Exchanges or Customer Upgrades.

(b)     No Modification of Customer Leases . Lessees shall not amend, waive or otherwise modify any term or condition of any Customer Lease, other than for the avoidance of doubt, any amendments, waivers and modifications made by Servicer in accordance with the Servicing Agreement or this Agreement and any amendments, waivers or modifications made by Lessees in accordance with Section 5.2(j) of the Second Step Transfer Agreement.

(c)     Change in Credit and Collection Policy, Upgrade Policy or Business . Lessees shall not (i) make or consent to any change or amendment to the Credit and Collection Policy, other than for the avoidance of doubt, any changes or amendments made by Servicer in accordance with the Servicing Agreement, (ii) amend or otherwise modify (or permit to be amended or otherwise modified) the Assigned Lease Upgrade Policy Provision for any Device subject to a Customer Lease during the Term of a Device Lease for such Device, including any




24




modification to any portion of the Upgrade Policy that has the effect of modifying the Assigned Lease Upgrade Policy Provision (provided that Lessor’s and Collateral Agent’s consent to any such waiver or modification shall not be unreasonably withheld or delayed) or (iii) make any change in the character of their business.

(d)     Dilution. No Lessee shall take any action or omit to take any action that is within the relevant Lessee’s control that would cause a Dilution (if taken by Servicer, any Sub-Servicer or any of their agents or representatives); provided that this Section 7.2(d) ( Dilution ) shall not limit Servicer’s ability to take actions and pay Dilutions under Section 2.9 ( Termination of a Device Lease ) or Section 2.13(b) ( Upgrade Exchanges ) or under the Servicing Agreement.

ARTICLE VIII
EXCLUSION OF LIABILITY; ACKNOWLEDGEMENT

SECTION 8.1         Exclusion of Liability

(a)    To the full extent permitted by any applicable Law, each party excludes all express or implied terms, conditions and warranties other than those set out herein and in each Device Lease.

(b)    Except as expressly provided for under the Transaction Documents, Lessor shall have no liability for:

(i)    replacing the relevant Devices with the same or similar Devices, or paying the cost of replacing the relevant Devices, such obligation to remain at all times with the relevant Lessee under the relevant Customer Lease; or

(ii)    repairing the relevant Devices or paying for their repair, such obligation to remain at all times with the relevant Lessee in accordance with the relevant Customer Lease.

(c)    If the supplier or manufacturer of Devices has given Lessor warranties for those Devices then, to the full extent permitted by Law, the relevant Lessee or Servicer may during the Term make any claim on the supplier or manufacturer that Lessor could have made.

(d)    Lessees shall not be liable for any default or other underperformance by any Customer under its Customer Lease.

SECTION 8.2         Acknowledgments . Each Lessee acknowledges that:

(a)    it has not relied on Lessor’s skill or judgment in deciding to enter into any Device Lease;

(b)    it has taken its own advice as to the taxation, accounting and financial consequences of entering into any Device Lease, and has not relied on Lessor in relation to any of these matters;

(c)    it does not enter into any Device Lease as trustee of any trust or settlement;





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(d)    it alone is responsible for examining the Devices before accepting them and for satisfying itself of, among other things:

(i)    their compliance with their description;

(ii)    their condition, suitability and fitness for Lessee’s purposes; and

(iii)    the validity of any supplier’s, manufacturer’s or dealer’s warranties or guarantees and entitlements to patents or other intellectual property rights;

(e)    except for any representation, warranty or undertaking that may be implied by Law, Lessor has not made any representation, warranty or undertaking about the condition or quality of any Devices, their suitability or fitness for purpose, or their safety; and

(f)    Lessor may (but is not obliged to) do anything which should have been done by a Lessee under a Device Lease but which Lessor reasonably considers the relevant Lessee has not done properly.

ARTICLE IX
COLLATERAL

SECTION 9.1         Granting Clause to Lessor . In order to secure the prompt and full payment and performance as and when due of any and all obligations and indebtedness of Lessees to Lessor under this Agreement, now existing or hereafter created, each Lessee hereby collaterally assigns to Mobile Leasing Solutions for the benefit of Series 2, and grants to Mobile Leasing Solutions for the benefit of Series 2 a security interest in, all of such Lessee’s right, title and interest in, to and under all of the following personal property, whether now owned by or owing to, or hereafter acquired by or arising in favor of such Lessee, and regardless of where located, in each case, solely to the extent relating to the Devices and the Customer Leases (all of which will be collectively referred to as the “ Lessee Collateral ”):

(1) all Accounts;

(2) all Chattel Paper;

(3) all Documents;

(4) all Deposit Accounts (including the Servicer Collection Accounts);

(5) all Commercial Tort Claims (now or hereafter arising);

(6) all Customer Leases;

(7) all Devices;

(8) the Transfer Agreements; and

(9) all accessions to, substitutions for and replacements, proceeds, insurance proceeds and products of the foregoing, together with all books and records, customer lists,
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credit files, computer files, programs, printouts and other computer materials and records related thereto.

SECTION 9.2         Granting Clause to Collateral Agent. Additionally, (i) each Lessee hereby grants to Collateral Agent a security interest, solely to the extent relating to the Devices and the Customer Leases, in all of such Lessee’s right, title and interest in, to and under the Servicer Collection Accounts and all proceeds of the foregoing and (ii) the Lessee Representative hereby grants to Collateral Agent a security interest in all of such Lessee Representative’s right, title and interest in, to and under the Lessee Representative Account (Tranche 2) and the Upgrade Reserve Account (Tranche 2) and all proceeds of the foregoing.

SECTION 9.3         UCC Financing Statements . Each Lessee authorizes Lessor to file, transmit, or communicate, as applicable, from time to time, Uniform Commercial Code financing statements, along with amendments and modifications thereto, in all filing offices reasonably selected by Lessor, listing the applicable Lessee as the debtor and Mobile Leasing Solutions for the benefit of Series 2 as the secured party, and describing the collateral covered thereby in such manner as Lessor may elect, in each case without such Lessee’s signature. Each Lessee also hereby ratifies its authorization for Lessor to have filed in any filing office any financing statements filed prior to the date hereof.

SECTION 9.4         No Assumption of Liability . The Lien on Lessee Collateral granted hereunder is given as security only and shall not subject Lessor to, or in any way modify, any obligation or liability of Lessees relating to any Lessee Collateral.

SECTION 9.5         Further Assurances . Promptly upon request, but not later than three Business Days thereafter, each Lessee shall deliver such instruments, assignments, or other documents or agreements, and shall take such actions, as Lessor reasonably deems appropriate under applicable Law to evidence or perfect its Lien on any Lessee Collateral, or otherwise to give effect to the intent of this Agreement.

SECTION 9.6         Power of Attorney. In addition to all of the powers granted to Lessor in this Article IX, each Lessee hereby appoints and constitutes Lessor as such Lessee’s attorney-in-fact to sign such Lessee’s name on any documents, instruments and other items consistent with the terms of this Agreement and the other Sprint Transaction Documents which Lessor may deem necessary or advisable to accomplish the purposes hereof (but Lessor shall not be obligated to and shall have no liability to any Lessee or any third party for failure to so do or take action), and, upon the occurrence and during the continuance of a Lease Event of Default, (i) to convey any item of Lessee Collateral to any purchaser thereof and (ii) to make any payment or take any act necessary or desirable to protect, collect or preserve any Lessee Collateral. Lessor’s authority hereunder shall include, without limitation, the authority to execute and give receipt for any certificate of ownership or any document, to transfer title to any item of Lessee Collateral and to take any other actions arising from or incident to the powers granted to Lessor under this Agreement. This power of attorney is coupled with an interest and is irrevocable.

SECTION 9.7         Release of Devices .Upon the termination of a Device Lease with respect to a Device (other than a Purchase Option Device), all Liens created by this Agreement that are applicable to such Device (and the related Customer Lease-End Rights and Obligations,






27




if any) shall be automatically and immediately released. In the case of a Purchase Option Device, upon the earlier of (i) termination of the related Customer Lease then in effect for such Purchase Option Device and (ii) the return of such Purchase Option Device by the relevant Customer, all Liens created by this Agreement that are applicable to such Purchase Option Device (and the related Customer Lease-End Rights and Obligations, if any) shall be automatically and immediately released.

ARTICLE X

TAXES
SECTION 10.1     Consistency of Treatment. Lessor, Servicer, and Lessees acknowledge and agree, for all U.S. federal, state and local income tax purposes, the parties intend (i) to treat the Cash Purchase Price under the Second Step Transfer Agreement at closing as amounts loaned by Lessor for which the Devices provide security, and to treat the Rental Payments payable to Lessor under the Device Leases created by this Agreement and each Device Lease Schedule as payments on such indebtedness owed to the Lessor, and (ii) not to treat such Device Leases as "true leases" or treat the Lessor as the owner of the Devices. The Lessor, Servicer, and Lessees agree not to take any position on any federal, state or local income tax return or filing that is inconsistent with the previous sentence unless, after the Lease Closing Date, a Change in Law occurs and, as confirmed by an Opinion of Counsel and after consultation in good faith with Lessor, Servicer and Lessees and their respective tax advisors, there is no substantial authority, within the meaning of Section 6662 of the Code, for such treatment, or there is a Final Determination of such treatment.

SECTION 10.2     Taxes . The Lessees will be responsible for Taxes with respect to the Device Leases as provided in the Tax Services Agreement.

SECTION 10.3     Payments . All payments made, or deemed made, pursuant to this Agreement shall be made free and clear of, and without deduction for, any Taxes except to the extent required by applicable law. Prior to withholding any Taxes other than Lessee Covered Taxes from any payment hereunder, Lessee(s) and/or Servicer shall consult with Lessor in good faith as to the withholding to be made.

SECTION 10.4     Gross Up. If a withholding or deduction of Lessee Covered Taxes is required by law, with respect to any payment made to Lessor under a Device Lease during the Term of such Device Lease, Servicer and/or relevant Lessee(s) shall:

(a)    withhold or deduct the required amount from the covered payment;

(b)    pay (or procure the payment of) directly to the relevant authority the full amount required to be so withheld or deducted;

(c)    promptly forward to the recipient, with a copy to Lessor, an official receipt or other documentation reasonably satisfactory to Lessor evidencing such payment to such authority; and







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(d)    pay (or procure the payment of) to Lessor such additional amount or amounts as is necessary to ensure that the net amount actually received by Lessor will equal the full amount Lessor would have received had no such withholding or deduction of Lessee Covered Taxes been required.

SECTION 10.5     Non-Duplication . The parties acknowledge that Lessor (and the Series 2 Members) have entered into the Tax Services Agreement with Servicer and Sprint and that such agreement addresses matters covered by this Agreement, and, specifically, provides an indemnity to Lessor for Lessee Covered Taxes. The Parties agree that indemnities calculated in respect of the Tax Services Agreement shall take into account any gross-up made under Section 10.4 ( Gross Up ) to the extent required to avoid duplication.

ARTICLE XI
MISCELLANEOUS

SECTION 11.1     Amendments, etc.

No amendment or other modification of any provision of this Agreement shall be effective unless the same shall be in writing and signed by the parties hereto and, if such amendment or other modification has the effect of changing Section 2.11(c)(i) of this Agreement, this Section 11.1, Section 11.6 or Schedule 6 to this Agreement, consented to by Brightstar (such consent not to be unreasonably withheld or delayed). No waiver of an obligation of any party hereto shall be effective unless in writing and signed by the other parties hereto.

SECTION 11.2     No Waiver

No failure on the part of any party hereto to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or remedy hereunder preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The rights and remedies herein provided are cumulative and not exclusive of any rights or remedies provided by Law.

SECTION 11.3     Notices

Section 21 ( Notices ) of the MLS Intercreditor Agreement is incorporated into this Agreement by way of reference.

SECTION 11.4     Data File

The parties agree that the Data File to be delivered on or about the Lease Closing Date shall become an integral part of this Agreement on the Lease Closing Date.

SECTION 11.5     Binding Effect

The parties to this Agreement may not assign any rights under this Agreement, except with the consent of the other parties to this Agreement except Lessor may collaterally assign its rights under this Agreement for the benefit of the Finance Parties.


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SECTION 11.6     Third Party Rights

This Agreement shall, to the extent provided herein, inure to the benefit of the Finance Parties. Each party hereto acknowledges that Lessor’s rights under this Agreement may be assigned to Collateral Agent and consents to such assignment and to the exercise of those rights directly by Collateral Agent. Each party hereto acknowledges that Brightstar is an express third party beneficiary of Section 2.11(c)(i), Section 11.1, this Section 11.6 and Schedule 6 to this Agreement.

SECTION 11.7     Execution in Counterparts; Integration

This Agreement may be executed in any number of counterparts and by the different parties in separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same Agreement. Executed counterparts may be delivered electronically. This Agreement, together with the other Transaction Documents, contains a final and complete integration of all prior expressions by the parties hereto with respect to the subject matter hereof and shall constitute the entire understanding among the parties hereto with respect to the subject matter hereof, superseding all prior oral or written understandings with respect hereto.

SECTION 11.8     Governing Law

THIS AGREEMENT AND THE DEVICE LEASES SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW, BUT WITHOUT REGARD TO ANY OTHER CONFLICT OF LAWS PROVISIONS THEREOF).

SECTION 11.9     Waiver of Jury Trial

EACH PARTY HEREBY EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, THE DEVICE LEASES, ANY OTHER TRANSACTION DOCUMENT OR UNDER ANY AMENDMENT, INSTRUMENT OR DOCUMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT A JURY.

SECTION 11.10     Consent to Jurisdiction; Waiver of Immunities

EACH PARTY HERETO HEREBY ACKNOWLEDGES AND AGREES THAT:

(a)    IT IRREVOCABLY (i) SUBMITS TO THE JURISDICTION, FIRST, OF ANY UNITED STATES FEDERAL COURT, AND SECOND, IF FEDERAL JURISDICTION IS NOT AVAILABLE, OF ANY NEW YORK STATE COURT, IN EITHER CASE SITTING IN NEW YORK CITY, NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT,


30




(ii) AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED ONLY IN SUCH NEW YORK STATE OR FEDERAL COURT AND NOT IN ANY OTHER COURT, AND (iii) WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING.

(b)    TO THE EXTENT THAT IT HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM THE JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID TO EXECUTION, EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, IT HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER OR IN CONNECTION WITH THIS AGREEMENT.

SECTION 11.11     No Proceedings

The provisions of Section 24.2 ( No Proceedings against MLS ) of the MLS Intercreditor Agreement shall apply as if fully set forth herein.

SECTION 11.12     Severability

Any provisions of this Agreement which are 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.

SECTION 11.13     Mobile Leasing Solutions as Series LLC

Each Party hereto hereby acknowledges and agrees that Mobile Leasing Solutions is a series limited liability company, and that accordingly the obligations and liabilities of Lessor hereunder and under the other Transaction Documents are and will be enforceable against Lessor solely to the extent of the Series 2 Assets, and not against any other assets of Mobile Leasing Solutions or against any other Series of Mobile Leasing Solutions or any assets of any such other Series (whether held directly by such Series or by Mobile Leasing Solutions on behalf of such other Series).

SECTION 11.14     Limited Recourse .
  
Notwithstanding anything to the contrary contained in this Agreement or any other Transaction Document, the obligations and liabilities of Lessor under each of the Transaction Documents to which it is a party are solely the obligations and liabilities of Lessor and shall be payable solely to the extent of the Series 2 Pledged Assets, and the proceeds of the realization thereof from whatever means, applied in accordance with the MLS Intercreditor Agreement and the other Transaction Documents. If the Series 2 Pledged Assets and the proceeds of the realization thereof from whatever means, including pursuant to the enforcement of the MLS Security Documents, applied in accordance with the MLS Intercreditor Agreement and the other




31




Transaction Documents, are insufficient to discharge in full the obligations and liabilities of Lessor under this Agreement and the other Transaction Documents, the rights of the other Parties to receive any further amounts in respect of such obligations and liabilities shall be extinguished and none of the other Parties may take any further action to recover such amounts. For the avoidance of doubt, no recourse shall be had to the assets of Mobile Leasing Solutions or the assets of any Series of Mobile Leasing Solutions other than the Series 2 Pledged Assets to satisfy the obligations and liabilities of Lessor under this Agreement or any other Transaction Document.
























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SIGNATURE PAGE (MASTER LEASE AGREEMENT)
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized signatories as of the day and year first above written.

For and on behalf of:  

SLV - I LLC
SLV - II LLC
SLV - III LLC
SLV - IV LLC
SLV - V LLC
SLV - VI LLC
SLV - VII LLC
SLV - VIII LLC
SLV - IX LLC
SLV - X LLC
SLV - XI LLC
SLV - XII LLC
SLV - XIII LLC
SLV - XIV LLC
SLV - XV LLC
SLV - XVI LLC
SLV - XVII LLC
SLV - XVIII LLC
SLV - XIX LLC
SLV - XX LLC
SLV - XXI LLC
SLV - XXII LLC , each a Lessee



By: /s/ Stefan K. Schnopp        

Name: Stefan K. Schnopp        

Title: Director            


This is Counterpart No. [ ] of a total of 5 counterparts. Only Counterpart No. 1 shall be
considered chattel paper for purposes of the Uniform Commercial Code and a security interest may be perfected only by Counterpart No.1.






[S-1 Signature Page to the Master Lease Agreement]






MOBILE LEASING SOLUTIONS, LLC,
a Delaware limited liability company,
acting for itself and on behalf of Series 2 thereof,
as Lessor



By: /s/ Jeff Krisel        
Name: Jeff Krisel         
Title: President            


This is Counterpart No. [ ] of a total of 5 counterparts. Only Counterpart No. 1 shall be
considered chattel paper for purposes of the Uniform Commercial Code and a security interest may be perfected only by Counterpart No.1.


































[S-2 Signature Page to the Master Lease Agreement]







SPRINT SPECTRUM L.P.
as Servicer


By: /s/ Janet M. Duncan        
Name: Janet M. Duncan
Title: Vice President and Treasurer


This is Counterpart No. [ ] of a total of 5 counterparts. Only Counterpart No. 1 shall be
considered chattel paper for purposes of the Uniform Commercial Code and a security interest may be perfected only by Counterpart No.1.





































[S-3 Signature Page to the Master Lease Agreement]






MIZUHO BANK, LTD.
as Collateral Agent



By: /s/ Richard A. Burke        

Name: Richard A. Burke         

Title:      Managing Director        

    
This is Counterpart No. [ ] of a total of 5 counterparts. Only Counterpart No. 1 shall be considered chattel paper for purposes of the Uniform Commercial Code and a security interest may be perfected only by Counterpart No.1.



































[S-4 Signature Page to the Master Lease Agreement]







SLV - III LLC , as Lessee Representative



By: /s/ Stefan K. Schnopp        
Name: Stefan K. Schnopp        
Title: Director                



This is Counterpart No. [ ] of a total of 5 counterparts. Only Counterpart No. 1 shall be
considered chattel paper for purposes of the Uniform Commercial Code and a security interest may be perfected
only by Counterpart No.1.

































[S-5 Signature Page to the Master Lease Agreement]





APPENDIX A

DEFINITIONS

“ 1934 Act ” means the Securities Exchange Act of 1934;

“ Account Bank ” has the meaning given to that term in the Servicing Agreement;

“ Account Control Agreement ” has the meaning given to that term in the Servicing Agreement;

“ Actual Repair Costs ” means the amounts specified in Schedule 6 ( Repair Costs ) or any updated amounts provided by the Lessee Representative from time to time reflecting the actual repair costs generally charged by Sprint for repairs of the Eligible Devices;

“ Affiliate ” means, with respect to any Person, another Person that, directly or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified; provided, however, for purposes of the Sprint Transaction Documents, neither Brightstar nor any of its Subsidiaries shall be considered Affiliates of any Sprint Party;

“ Agreed Schedule Information ” means, with respect to a Device Lease:

(a)
a description of the Device to be subject to such Device Lease;

(b)
the Device Lease Commencement Date;

(c)
the Scheduled Customer Lease Term and the Customer Lease Term;

(d)
whether the related Customer Lease is subject to the iPhone Forever Program;

(e)
the Device Lease Expiration Date;

(f)
the Device Lease Payment Dates;

(g)
the Rental Payments due under the Device Lease; and

(h)
the Device Residual Values for the Device subject to the Device Lease.

“ Agreed Start-Up Costs ” means all costs and expenses which Lessor is responsible to pay in the amount agreed between the Lessor and the relevant provider of services and consented to by the Lessees;

“ Agreement ” has the meaning given to that term in the preamble of this Agreement;

“ Amendment Closing Date ” has the meaning given to that term in the Omnibus Amendment;

“ Applicable Data Protection Law ” means all relevant provisions of the Data Protection Act 1998 and any other applicable data protection legislation, guidelines and industry
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standards (to the extent applicable) in the jurisdictions from which and to which the relevant Services are to be performed;

“ Approved Devices ” means each of the devices listed on the Schedule of Approved Devices as the same may be updated and amended (or deemed updated or amended) from time to time in accordance with Section 2.6 ( Approved Devices ) of this Agreement;

“ Assigned Lease Upgrade Policy Provision ” has the meaning given to that term in the Servicing Agreement;

“ Available Funds ” has the meaning given to that term in the Servicing Agreement;

“ Bankruptcy Code ” means Title 11 of the United States Code;

“ Brightstar ” means Brightstar Corp., a Delaware corporation;

“Business Day ” means a day other than Saturday or Sunday on which commercial banks in New York City, New York are not authorized or required to be closed for business;

“ Carryover Amount ” has the meaning given to that term under Section 2.8 ( Rent and Other Payments ) of this Agreement;

“ Cash Purchase Price ” has the meaning given to that term in the Second Step Transfer Agreement;

“ Change in Law ” means any amendment to or change in the Tax laws (or any regulations or rulings thereunder) of a jurisdiction or any political subdivision thereof, or any amendment or change in the administrative or judicial interpretation of such laws, which becomes legally effective with respect to the relevant documents or transactions, and which occurs or is announced after the date of this Agreement. For the purpose of this definition "change" includes the introduction of a new law or interpretation, but does not include as of any date a proposal that is not effective;

“ Change of Control ” means the occurrence of any of the following:

(a)
SoftBank ceases to own (directly or indirectly) more than 50% of the Voting Securities of Sprint;

(b)
the occurrence of any of the following: (i) the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of Sprint's and its Subsidiaries' properties or assets, taken as a whole, to any “person” (as that term is used in Section 13(d)(3) of the 1934 Act) other than to one or more Permitted Holders or (ii) the adoption of any plan relating to Sprint's liquidation or dissolution;

(c)
Sprint shall cease to own (directly) 100% of the Voting Securities of SCI;




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(d)
SCI shall cease to own (directly or indirectly) 100% of the Voting Securities of Sprint Spectrum and each Originator; or

(e)
Sprint shall cease to own (directly or indirectly) 100% of the Voting Securities of Lessees;

“ Collateral Agent ” has the meaning given to that term in the preamble of this Agreement;

“ Contractual Obligation ” means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound which has been entered into in good faith;

“ Control ” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise, and “ Controlling ” and “ Controlled ” have meanings correlative thereto ;

“ Credit and Collection Policy ” has the meaning given to that term in the Servicing Agreement;

“ Customer ” means the “lessee” of a Device under a Customer Lease and an obligor on a related Customer Receivable;

“ Customer Lease ” means a contract originally entered into between an Originator and a Customer,
(i) in substantially the form attached as Schedule 4 of this Agreement or (ii) solely with respect to an Upgraded Customer Lease, in substantially such other form as Servicer provides Lessor; provided that, without the prior written consent of Lessor (such consent not to be unreasonably withheld or delayed), such other form of lease shall not vary from the form attached as Schedule 4 of this Agreement in any manner that could have a material adverse effect on Lessor, its creditors or the Series 2 Members;

“ Customer Lease-End Rights and Obligations ” has the meaning given to that term in the Second Step Transfer Agreement;

“ Customer Lease Term ” means, with respect to any Customer Lease, the period beginning at the time such Customer Lease and the associated Device are contributed by an Originator to a Lessee and ending on the last day of the relevant Customer’s obligatory monthly rental payment obligations under such Customer Lease as set forth in the relevant Device Lease Schedule;

“ Customer Receivable ” means all rental and other payment obligations of a Customer under the relevant Customer Lease attributable to any date on or after the Cutoff Date (excluding any amounts billed prior to the Cutoff Date); provided that, for purposes of determining whether such Customer Receivable is a Defaulted Customer Receivable or Delinquent Receivable or whether the relevant Customer Lease is an Eligible Lease, “Customer Receivable” shall mean all rental and other payment obligations of a






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Customer under the relevant Customer Lease attributable to any date during the term of such Customer Lease;

“ Customer Rentals ” means all Customer rental payments under the relevant Customer Lease (and Rent Dilutions in respect thereof) transferred by Servicer to the MLS Collection Account (Tranche 2);

“ Customer Upgrade ” means any exchange of a Device for a Next Generation Device pursuant to the iPhone Forever Program;

“ Cutoff Date ” means February 29, 2016;

“ Data File ” means the Adobe Acrobat pdf-file in read-only format with file name “Device Lease ScheduleTranche2.pdf” on a CD ROM identified and agreed to by Lessees and Lessor on the Lease Closing Date as the same may be amended from time to time in accordance with Section 2.14 ( Updates to Devices Subject to Device Leases and Data File) of this Agreement;

“ Defaulted Customer Receivable ” means any Customer Receivable, or any part thereof, which is written off or remains unpaid for more than sixty (60) days or for which any Lessee or Servicer has any Knowledge that the Customer thereon is subject to an Insolvency Event;

“ Defaulted Device Return ” means (a) the failure by a Customer to timely return a Device pursuant to the terms of the Customer Lease on or prior to the Required Return Date therefor and such Customer’s Customer Lease represents a Defaulted Customer Receivable; or (b) the return of a Device by a Customer not in the Device Return Condition;

“ Delinquent Receivables ” means any Customer Receivable that is considered in collections pursuant to the Credit and Collections Policy, provided, that upon such Customer Receivable being written off in accordance with the Credit and Collections Policy, such Customer Receivable shall not be considered a Delinquent Receivable;
“ Device ” means a mobile wireless handset that is subject to a Device Lease at the time such handset is initially acquired by Lessor;

“ Device Lease ” has the meaning given to that term under Section 2.1(a) ( Agreement to Lease ) of this Agreement;

“ Device Lease Commencement Date ” means with respect to a Device Lease, the commencement date of such Device Lease as specified in the relevant Device Lease Schedule;

“ Device Lease Early Termination Amount ” means with respect to a Device under a Device Lease that has been terminated prior to the end of the Term, an amount equal to the sum of (a) any previously unpaid Rental Payments, (b) the Rental Payments that would have accrued under such Device Lease during the remainder of the Scheduled




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Customer Lease Term, if any, plus (c) the Device Residual Value of such Device as of the Expected Sales Date of such Device;

“ Device Lease Expiration Date” means with respect to a Device Lease, the scheduled expiration date of such Device Lease as set forth in the relevant Device Lease Schedule;

“ Device Lease Payment Date ” means the last Business Day of a calendar month (commencing May 31, 2016) unless otherwise provided in the Device Lease Schedules;

“ Device Lease Schedule ” means a schedule substantially in the form of Schedule 1 to this Agreement and initially included in the Data File, as the same may be amended from time to time in accordance with Section 2.14 ( Updates to Devices Subject to Device Lease and Data File ) of this Agreement;

“ Device Repurchase Agreement ” means the Amended and Restated Device Repurchase Agreement (Tranche 2), dated as of the date hereof and effective as of the Amendment Closing Date, between the Originators and Lessor;

“ Device Residual Value ” means the device residual value as set forth in Schedule 2 (Device Residual Values);

“ Device Return Address ” means the following address:

(a)
Mobile Leasing Solutions, LLC, Dept 5001, 1950 USG Drive, Libertyville, IL 60048; or

(b)
any other address in the continental United States that Lessor designates by written notice to Lessees and Servicer;

“ Device Return Condition ” means with respect to a Device, the return conditions described below:

(a)
such Device is fully functional with no technical problems, with only reasonable wear and tear due to normal use.

(b)
Functional Criteria

(i)
such Device must be in a standard “working” condition, able to charge and power on and perform all core functions;

(ii)
such Device has no activation locks (i.e. not network or iCloud locked);

(iii)    Customer data must be cleared;

(iv)
such Device’s LCD display must be functional with no visible damage; and

(v)
such Device’s external ports and buttons are free from damage, and are fully functional.




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(c)
Cosmetic Criteria

(i)
such Device may have scratches on the front glass; provided that each scratch is reasonably consistent with normal use and are less than 50mm in length and 2mm in width, but no cracks on the front glass;

(ii)
such Device may have unlimited scratches on housing; provided that each scratch is reasonably consistent with normal use and are less than 80mm in length and 2mm in width;

(iii)
such Device housing may have reasonable dents associated with normal wear, but no cracks;

(iv)
such Device does not have any missing parts that would render it unfit to function; and

(v)
such Device’s external liquid indicators may be tripped but there must be no visible water damage or corrosion.

“ Dilution ” means (i) an Upgrade Dilution or (ii) a reduction in the Unpaid Balance attributable to any modification of any Customer Lease by Servicer (or any Sub-Servicer or any agent or representative of either thereof) after the contribution thereof to the relevant Lessee, including as a result of any non cash items including credits, rebates, billing errors, cash discounts, volume discounts, allowances, disputes, set offs, counterclaims, charge-backs, returned or repossessed goods, sales and marketing discounts, warranties, any unapplied credit memos and other adjustments that are made in respect of a Customer Lease and shall include, but not be limited to, circumstances in which Servicer (or any Sub-Servicer or any agent or representative of either thereof):

(a)
specifies (including by posting to its website) a purchase option price for a Device less than the fair market value notified by Lessor in writing to any Sprint Party upon request in accordance with Section 5.3(f) ( Fair Market Value under Customer Leases for Devices ) of the Second Step Transfer Agreement;

(b)
other than in connection with an Upgrade Exchange effected in accordance with the Transaction Documents, forgives or reduces prior to the expiry of the Scheduled Customer Lease Term, any monthly Customer Receivable, retrospectively or prospectively, in the monthly invoice or otherwise, to an amount which is lower than that set out in the Data File;

(c)
other than in connection with an Upgrade Exchange effected in accordance with the Transaction Documents, reduces, after the expiry of the Scheduled Customer Lease Term, a monthly Customer Receivable to an amount less than the monthly Customer Receivable payable during the Scheduled Customer Lease Term;

(d)
other than in connection with an Upgrade Exchange effected in accordance with the Transaction Documents, modifies the rental payments, or any other payment


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amount or obligation of a Customer, or the timing thereof, in a manner that is economically less favorable to Lessor;

(e)
charges a customer for repairs in an amount less than the Actual Repair Costs;

(f)
charges a customer for unreasonable wear and tear in an amount less than the Actual Repair Costs;

(g)
discontinues the leasing program and forgives the Customer any or all remaining rental payments under any Customer Lease; and

(h)
agrees to the terms of a return that are less favorable to Lessor than as set out in the returns policy at www.sprint.com/returns (as in existence on the Lease Closing Date);

“ Eligible Devices ” means any Approved Device;

“ Eligible Leases ” means, initially as of the Cutoff Date, and thereafter as of any date of determination (unless otherwise specified below), a Customer Lease:

(a)
(i) which represents the lease of goods initially leased by an Originator and the Customer Receivables in respect of which are billed to the related Customer in the ordinary course of business, (ii) with respect to which (x) all obligations of the Originator in connection with which have been fully performed, and (y) not more than thirty-one (31) days have passed since such Customer Receivable was billed to the related Customer, (iii) the Customer Receivables with respect to which, no portion of which is in respect of any amount as to which the related Customer is permitted to withhold payment until the occurrence of a specified event or condition, (iv) the Customer Receivables with respect to which, is not owed to any Originator or any Lessee as a bailee or consignee for another Person, and (v) the Customer Receivables with respect to which, is not issued under cash-in-advance or cash-on-account terms;

(b)
which constitutes either “chattel paper”, "electronic chattel paper" or an “account” as defined in Section 9-102(a) of the UCC;

(c)
the Customer Receivable with respect to which, is not a Defaulted Customer Receivable or a Delinquent Receivable;

(d)
under which the Customer is not a Governmental Authority; provided, that any Customer Lease under which the lessee is a Governmental Authority but an employee of such Governmental Authority is personally liable for the Customer Receivables related to such Customer Lease shall not be excluded from the definition of “Eligible Lease” under this clause (d);

(e)
the transfer of which pursuant to the Transfer Agreements does not violate or contravene any Law or any related Transaction Document;




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(f)
which is denominated and payable only in U.S. Dollars in the United States to any Sprint Party;

(g)
that (i) is in full force and effect and constitutes the legal, valid and binding obligation of the related Customer to pay lease payments and other amounts to a Sprint Party enforceable against such Customer in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or similar laws relating to and limiting creditors’ rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or in law), (ii) is not subject to any dispute, offset, netting, litigation, counterclaim or defense whatsoever (including defenses arising out of violations of usury Laws) (other than potential discharge in a bankruptcy of the related Customer), (iii) is not subject to any Lien (other than Permitted Device Liens), and (iv) the Unpaid Balance of which is not subject to reduction, cancellation, setoff, special refunds or credits for any reason, including without limitation as a result of defective or rejected goods (other than in connection with an Upgrade Exchange effected in accordance with the Transaction Documents);

(h)
that does not contravene any Law applicable thereto (including Laws relating to usury, consumer protection, truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy) in any respect which could, individually or in the aggregate, reasonably be expected to have a material adverse effect on the validity, collectability or enforceability of the related Customer Receivable or would or could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect and with respect to which the origination thereof did not violate any such Law in any such respect;

(i)
which (i) was originated by the applicable Originator in the ordinary course of its business, (ii) satisfies the requirements of the Credit and Collections Policy in all material respects and (iii) has been acquired by the applicable Lessee from its Related Originator pursuant to and in accordance with the terms of the First Step Transfer Agreement;

(j)
the Customer under which is not (i) the Lessor or any of the Members, or (ii) Sprint, any Originator, the Servicer or a Subsidiary of any of them or identified on Sprint's or the Servicer's records as an employee of Sprint, the Servicer of any of their respective Subsidiaries;

(k)
the Customer under which is not a Sanctioned Person;

(l)
the Customer under which is required to make payments no less frequently than monthly under such Customer Lease;

(m)
the Customer under which is either (i) a Customer of an Originator or any of its Affiliates (prior to the transfer of the Customer Lease or, in the case of a Customer Lease that is an Upgraded Customer Lease, prior to the transfer of the Related Original Customer Lease, to the relevant Lessee) that is a Prime



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Customer, or (ii) a Customer of an Originator or any of its Affiliates (prior to the transfer of the Customer Lease or, in the case of a Customer Lease that is an Upgraded Customer Lease, prior to the transfer of the Related Original Customer Lease, to the relevant Lessee) that is a Near Prime Customer;

(n)
which (i) satisfies the definition of “Customer Lease” and (ii) relates to an Eligible Device which is compatible with market technology and service platforms;

(o)
the Customer under which is an active paying subscriber of Sprint’s or any of its Affiliates’ wireless services;

(p)
(i) except if such Customer Lease is an Upgraded Customer Lease, that has been outstanding beyond the date that is one payment after the origination date of such Customer Lease or (ii) except if such Customer Lease is an Upgraded Customer Lease, the Customer under which has been an active paying subscriber of Sprint's or any of its Affiliates' wireless services for a minimum of thirteen (13) months immediately before the origination date of such Customer Lease;

(q)
except if such Customer Lease is an Upgraded Customer Lease, which has aged past any return period or term of any guarantee provided by Sprint, the Originators or the Servicer to a Customer, which return period or guarantee provides the Customer with the option to cancel a Customer Lease;

(r)
with respect to which all sales taxes to be paid in connection with the origination of the related Customer Receivable have been fully paid or will be scheduled to be fully paid upon payment of installments on such Customer Lease to the extent required by applicable Laws;

(s)
the Customer Receivable with respect to which, as of any date of determination, is not a Non Lock-Box Receivable (as defined in the Servicing Agreement) comprising any part of any amount in excess of 6.00% of the Unpaid Balance of all Eligible Leases;

(t)
which, as of any date of determination when aggregated with all other Customer Leases no Customer’s aggregate Unpaid Balance for all such Customer’s Customer Leases exceeds 1.00% of the aggregate balance of the Unpaid Balance of all Eligible Leases, provided , that in the event that two or more Customers are Affiliates with respect to each other, all such Customers that are Affiliates with respect to each other shall be considered a single Customer for purposes of this clause (t);

(u)
which, if originated under the "iPhone for Life" program, has an initial term of twenty-four (24) or thirty (30) months;

(v)
which, if originated under the "iPhone Forever" program (i) prior to January 8, 2016, has an initial term of twenty-one (21) or twenty-two (22) months, or (ii) on or after January 8, 2016 but prior to the Cutoff Date has an initial term of eighteen (18) months; and




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(w)
with respect to any Customer Lease under which the Customer has been a subscriber of wireless telephony services from Sprint or any of its Affiliates for less than twelve (12) consecutive monthly billing cycles, was not originated through online or telephone sales origination channels.

“ Excess Amount ” has the meaning given to that term under Section 2.8(a)(i) of this Agreement;

“ Exchanged Customer Lease ” means the Customer Lease with respect to an Exchanged Device;

“ Exchanged Device ” means a Device exchanged by a Customer for an Upgraded Device in connection with a Customer Upgrade;

“ Expected Sales Date ” means, with respect to a Device, the expected sales date of such Device as of the commencement of the Device Lease, in each case, as specified in the relevant Device Lease Schedule;

“ Final Determination ” means the final resolution of liability for any Lessee Covered Tax, for any issue and for any taxable period, by or as a result of (i) IRS Form 870-AD (or any similar or successor IRS form) or a comparable form under any state, local or foreign law on the date of acceptance by or on behalf of the relevant Tax Authority, except that a Form 870-AD or comparable form that reserves the right of the taxpayer to file a claim for refund and/or the right of the Tax Authority to assert a further deficiency shall not constitute a Final Determination with respect to the item or items so reserved, (ii) a final decision, judgment, decree or other order by any court of competent jurisdiction that can no longer be appealed or reheard (except that a decision of a U.S. Court of Appeals or highest state court shall be considered final notwithstanding the possibility of an application for a writ of certiorari can be made to the U.S. Supreme Court, unless such a writ has been applied for and granted), (iii) a closing agreement or similar agreement entered into with a Tax Authority in connection with an administrative or judicial proceeding, (iv) an allowance of a refund or credit in respect of an overpayment of Tax, but only after the expiration of all periods of limitations during which such refund or credit may be recovered by the jurisdiction imposing the Tax, (v) any other final resolution, including by reason of the expiration of the applicable period of limitations or the execution of a pre-filing agreement with the applicable Tax Authority, or (vi) the occurrence of any event which the Servicer and Lessor agree in writing is a Final Determination;

“ Final Settlement Date ” means, initially July 28, 2018, or if such date is not a Business Day, the immediately following Business Day; provided that, if the MLS Series A-2 Member Amount and the MLS Series B-2 Member Amount are not paid in full on such date (or a subsequent Final Settlement Date) (for the avoidance of doubt, after giving effect to the application of the proceeds of all purchases made under the Device Repurchase Agreement on or prior to such date), the “Final Settlement Date” shall automatically be extended to, and shall be deemed to be, the next succeeding Settlement Date; provided further that, if the Lessees, Lessor, the Senior Agent (to the extent any Senior Loans are outstanding) and each Senior Subordinated Loan Creditor (to the extent




A-10




any Senior Subordinated Loans are outstanding) agree on an earlier date than any such Final Settlement Date, such earlier date shall be the “Final Settlement Date”;

“ Finance Parties ” has the meaning given to that term in the Servicing Agreement;

“ First Step Transfer Agreement ” means the Amended and Restated First Step Transfer Agreement (Tranche 2), dated as of the date hereof and effective as of the Amendment Closing Date among Lessees and each other Person party thereto as an Originator;

“ Fixed Price ” means, with respect to any Exchanged Device, the “Fixed Price” applicable to such Exchanged Device under the Forward Purchase Agreement (without giving effect to the exchange of such Exchanged Device in connection with a Customer Upgrade);

“ Forward Purchase Agreement ” means the Forward Purchase Agreement (Tranche 2), dated as of April 28, 2016, between Lessor, as seller and the Forward Purchaser;

“ Forward Purchaser ” means Hon Hai Precision Ind. Co., Ltd. as purchaser;

“ GAAP ” means, generally accepted accounting principles in the United States of America;

“ Governmental Authority ” means any federal, state, regional or local government or political subdivision thereof and any Person exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government;

“ Grade A ” means with respect to a Device, such Device is like new.

“ Grade B ” means with respect to a Device, such Device is fully functional with no technical problems, but does not satisfy Grade A.

“ Guarantor ” means Sprint;

“ Incremental Rate ” has the meaning given to that term in Schedule 5 ( Additional Information );

“ Insolvency Event ” shall be deemed to have occurred with respect to a Person if either:

(a)      (i) a case or other proceeding shall be commenced, without the application or consent of such Person, in any court, seeking the liquidation, reorganization, debt arrangement, dissolution, winding up, or composition or readjustment of debts of such Person, the appointment of a trustee, receiver, custodian, liquidator, assignee, sequestrator (or other similar official) for such Person or all or substantially all of its assets, or any similar action with respect to such Person under any Law relating to bankruptcy, insolvency, reorganization, winding up or composition or adjustment of debts, and such case or proceeding shall continue unstayed or undismissed for a period of sixty (60) days; or (ii) an order for relief in respect of such Person shall be entered in an involuntary case under federal bankruptcy laws or other similar Laws now or hereafter in effect; or




A-11





(b)    such Person (i) shall commence a voluntary case or other proceeding under any applicable bankruptcy, insolvency, reorganization, debt arrangement, dissolution or other similar Law now or hereafter in effect, (ii) shall consent to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) for, such Person or for any substantial part of its property, or (iii) shall make any general assignment for the benefit of creditors, or shall fail to, or admit in writing its inability to, pay its debts generally as they become due, or, if a corporation or similar entity, its board of directors (or any board or Person holding similar rights to control the activities of such Person) shall vote to implement any of the foregoing;

“ iPhone Forever Program ” means the program offered by Sprint and its Affiliates pursuant to which a Customer may, subject to Sprint’s Upgrade Policy as of any applicable date of determination, elect to trade in the Apple iPhone Device subject to such Customer’s Customer Lease for a Next Generation Device;

“ Knowledge ” means, with respect to any Person (other than an individual) as to any event or circumstance, the actual knowledge of a Responsible Officer of such Person (without independent investigation or inquiry and without imputing to such Responsible Officer the knowledge of any third party) or receipt by such Person of written notice of such event or circumstance;

“ Laws ” means, collectively, all international, foreign, federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law;

“ Lease Closing Date ” means May 11, 2016;

“ Lease Closing Date Customer Leases ” has the meaning given to that term under the Second Step Transfer Agreement;

“ Lease Closing Date Devices ” has the meaning given to that term under the Second Step Transfer Agreement;

“ Lease Default ” means an event or circumstance which, after the giving of notice or lapse of time, or both, would become a Lease Event of Default;

“ Lease Event of Default ” has the meaning given to that term under Section 3.1 ( Lease Events of Default ) of this Agreement;

“ Lessee ” has the meaning given to that term in the preamble of this Agreement;

“ Lessee Collateral ” has the meaning given to that term under Section 9.1 ( Granting Clause to Lessee ) of this Agreement;



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“ Lessee Covered Taxes ” has the meaning given that term under the Tax Services Agreement;

“Lessee Indemnitee” has the meaning given to that term under Section 4.1(a) ( Indemnities ) of this Agreement;

“ Lessee Representative ” has the meaning given to that term under the Second Step Transfer Agreement;

“ Lessee Representative Account (Tranche 2) ” has the meaning given to that term under the Servicing Agreement;

“Lessor” has the meaning given to that term in the preamble of this Agreement;

“ Lessor’s Liens ” means (a) any Lien arising out of a voluntary or involuntary transfer by Lessor of any of its rights, title or interest in the Devices or the Device Leases (other than (i) this Lease or any Transaction Document, (ii) any transfer to any Sprint Party, as a result of a Lease Event of Default or in connection with the exercise by the relevant Sprint Party of any rights or options under the Transaction Documents or (iii) any Lien arising by, through or under any Lessee) or (b) any Lien of any Person arising by, through or under Lessor, not based upon or relating to the Transaction Documents or the transactions contemplated thereby;

“ Liabilities ” has the meaning given to that term under Section 4.1(a) ( Indemnities ) of this Agreement;

“ Lien ” means any mortgage, deed of trust, pledge, security interest, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever, including any conditional sale or other title retention agreement and any financing lease having substantially the same economic effect as any of the foregoing;
“ Like-Kind Exchange ” means, with respect to a Customer Lease, an exchange of a Device pursuant to which the replacement Device is a Type of Device that is currently an Approved Device that satisfies the Device Return Condition, is the same Type (or a Type with a higher Device Residual Value) as the exchanged Device, and with respect to which the scheduled Customer Receivables under the modified Customer Lease are not less in amount, frequency and number than under the Customer Lease immediately prior to such modification;
“ Like-Kind Exchange Device ” means a replacement Device subject to a Like-Kind Exchange;
“ Like-Kind Exchange Transfer Date ” means the date a Like-Kind Exchange occurs;
“ Logistics Services Provider ” has the meaning given to that term under the Servicing Agreement;



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“ Material Adverse Effect ” means, with respect to any event or circumstance, a material adverse effect on:
(a)
if a particular Person is specified, (i) the ability of such Person to perform its obligations under any Transaction Document to which it is a party or (ii) if a particular Person is not specified, the ability of any Originator, Servicer, any Lessee or Sprint to perform its obligations under any Transaction Document to which it is a party;

(b)
(i) the validity or enforceability of any Sprint Transaction Document or (ii) the value, validity, enforceability or collectability of any material portion of Lessee Collateral; or

(c)
the status, existence, perfection, priority, enforceability or other rights and remedies of Collateral Agent or Lessor associated in respect of its interest in Lessee Collateral;

“ Members ” has the meaning given to that term in the MLS LLC Agreement;

“ MLS Collection Account (Tranche 2) ” means the account notified by the Lessor in writing to Servicer, Lessees and Collateral Agent;

“ MLS Intercreditor Agreement ” means the Amended and Restated Intercreditor Agreement (Tranche 2) dated on or about the date hereof and effective as of the Amendment Closing Date among the Lessee Representative, the Senior Agent, the Senior Subordinated Loan Creditors, Lessor and the other parties thereto;

“ MLS LLC Agreement ” means the Second Amended and Restated Limited Liability Company Agreement of Mobile Leasing Solutions, dated on or about April 28, 2016, between the Members, as amended, amended and restated, supplemented or otherwise modified from time to time;

“ MLS Security Documents ” has the meaning set forth in the MLS Intercreditor Agreement;

“ MLS Series A-2 Member Amount ” has the meaning set forth in the MLS Intercreditor Agreement;

“ MLS Series B-2 Member Amount ” has the meaning set forth in the MLS Intercreditor Agreement;
“ Mobile Leasing Solutions ” means Mobile Leasing Solutions, LLC, a Delaware limited liability company;

" Near Prime Customer " means any Customer under a Customer Lease that was not a Prime Customer as of the date of origination of the relevant Lease Closing Date Customer Lease or, in the case of a Customer Lease that is an Upgraded Customer Lease, as of the date of origination of the Related Original Customer Lease, and which as of the




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date of origination of the relevant Lease Closing Date Customer Lease or, in the case of a Customer Lease that is an Upgraded Customer Lease, as of the date of origination of the Related Original Customer Lease (i) had a credit class designation of “Q2”, “H1”, “S5” or “T4”, or any equivalent credit class as set forth in the Credit and Collection Policies, and (ii) required a down payment of less than 35% of the device manufacturer's suggested retail price, by the internal scoring system of the Servicer or an Originator;

“ Next Generation Device ” means (i) with respect to a Lease Closing Date Device, any new model (other than an entry model (i.e., with a “C” or “SE” designation)) of Apple iPhone launched after the Lease Closing Date and (ii) with respect to an Upgraded Device, any new model (other than an entry model (i.e., with a “C” or “SE” designation)) of Apple iPhone launched after the relevant Upgrade Date.

“ Nominated Agent ” means, with respect to a Party, a Person appointed to act as that Party’s agent with respect to that Party’s obligations and rights under the Transaction Documents;

“ Non-Return Remedies ” has the meaning given to that term under Section 2.12(b) ( Non-Return Remedies ) of this Agreement;

“ Non-Return Remedies Commencement Date ” means:
(a)
in relation to a non-payment of any amount due under a Customer Lease, the date on which Servicer suspends service to the relevant Customer in accordance with the Credit and Collection Policies;

(b)
in relation to Device that is Non-Returned Device pursuant to Section (a) of the definition of Defaulted Device Returns, the Required Return Date therefor; and

(c)
in relation to a Device that, at the time of its return did not satisfy the Device Return Condition, the date on which the Device was returned to a Sprint Party;

“ Non-Returned Device ” means any Device that is subject to a Defaulted Device Return;

“ Omnibus Amendment ” means the Omnibus Consent Agreement (Tranche 2), dated as of the date hereof and effective as of the Amendment Closing Date, among Sprint, MLS, Lessees, Originators, the Senior Agent, the Senior Subordinated Loan Creditors, the MLS Series 2 Members, Brightstar, Servicer and the other parties thereto;

“ Opinion of Counsel ” means the written opinion of a nationally or internationally recognized counsel that is selected by a Party to decide questions of law raised by Transaction Documents;

“ Originators ” has the meaning given to that term under the First Step Transfer Agreement;

“ Party ” and “ Parties ” means, with respect to any Transaction Document, each party to the relevant agreement;



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“ Performance Support Agreement ” means the Performance Support Agreement (Tranche 2), dated as of April 28, 2016 and effective as of the Lease Closing Date, between Sprint and Lessor;

“ Performance Support Provider ” means Sprint;

“ Permitted Device Liens ” means

(a)
Liens arising pursuant to any Transaction Document;

(b)
Liens of Customers under the Customer Leases;

(c)
Lessor’s Liens;

(d)
Liens for taxes not yet due or that are being contested in good faith by appropriate proceedings diligently conducted and inchoate materialmen’s, mechanic’s, workmen’s, repairmen’s, employee’s, or other like Liens arising in the ordinary course of business of Lessee for sums not yet due or that are being contested in good faith by appropriate proceedings diligently conducted, provided that adequate reserves with respect thereto are maintained in conformity with GAAP; and

(e)
any customary rights of setoff, revocation, refund or chargeback and, as applicable, statutory or common law liens, in each case, of any Account Bank under the applicable Account Control Agreement.

“ Permitted Holder ” means SoftBank and its Affiliates;

“ Person ” means a natural individual, partnership, sole proprietorship, limited liability company, corporation (including a business trust), joint stock company, trust, unincorporated association, joint venture, Governmental Authority or any other entity of whatever nature;

“ Present Value Device Lease Amount ” means an amount equal to the sum of (a) all previously accrued and unpaid Rental Payments, if any, plus (b) the remaining Rental Payments that would have accrued during the remainder of the Scheduled Customer Lease Term, if any, discounted to present value at the Incremental Rate;

" Prime Customer " means any Customer that was categorized as "Prime" by the internal scoring system of the Servicer or an Originator as of the date of origination of the relevant Lease Closing Date Customer Lease or, in the case of a Customer Lease that is an Upgraded Customer Lease, as of the date of origination of the Related Original Customer Lease, or had graduated to such status as of the Cutoff Date;

“ Protected Customers ” means any current or former Customer that (i) is or has been subject to protections under the Servicemembers Civil Relief Act (the “ SCRA ”), but only with respect to, and to the extent of, Customer Receivables that are subject to the protections of the SCRA, or (ii) is a debtor in a bankruptcy proceeding, to the extent that


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the automatic stay applies to such debtor’s Customer Receivables under Section 362 of the Bankruptcy Code;

“ PUK ” means personal identification number unlock key;

“ Purchase Option ” has the meaning given to that term under Section 2.16 ( Purchase Option ) of this Agreement;

“ Purchase Option Device ” means a Device purchased by a Lessee pursuant to the Purchase Option;

“ Purchase Option Price ” has the meaning given to that term under Section 2.16 ( Purchase Option ) of this Agreement;

“ Records ” means all contracts (including the Customer Lease), if any, and other documents, purchase orders, invoices, agreements, books, records and any other media, materials or devices for the storage of information (including tapes, disks, punch cards, computer programs and databases and related property) maintained by Servicer or Lessees with respect to the Customer Receivables;

“ Related Original Customer Lease ” means, in respect of any Upgraded Customer Lease of an Upgraded Device, the Lease Closing Date Customer Lease of the Related Original Device with respect to such Upgraded Device;

“ Related Original Device ” means, in respect of any Upgraded Device, the respective corresponding Lease Closing Date Device leased by Lessor to the relevant Lessee on the Lease Closing Date without taking into account any Customer Upgrades;

“ Related Originator ” has the meaning given to that term under Annex 2 ( Related Originators; Related Lessees ) of the First Step Transfer Agreement;

“ Relevant Personal Data ” has the meaning given to that term under Section 8.1(l) of the Servicing Agreement;

“ Rent Dilution ” means a Dilution in respect of a scheduled Customer Receivable;

“ Rent Shortfall Returned Device ” means a Returned Device in respect of which the Customer has not paid all accrued and unpaid Customer Receivables with respect to such Device during the Scheduled Customer Lease Term;

“ Rental Payment ” means, with respect to each Device Lease, the rental payments specified in the relevant Device Lease Schedule;

“ Reparable Device ” has the meaning given to that term under the Device Repurchase Agreement;

“ Required Return Date ” means the date a Customer is required to return a Device, which is promptly following the termination of a Customer Lease and in any event not later than 30 calendar days following the termination of the Customer Lease;


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“ Required Return Period ” means to the extent a Sprint Party has received a Device from a Customer, the period ending 30 days after the earlier of (a) the last day of the Customer Lease Term for such Device, and (b) the actual receipt by a Sprint Party of such Device;

“ Responsible Officer ” means, as applicable, (i) an authorized officer of Lessor, or (ii) an authorized officer of any Sprint Party. Any document delivered hereunder that is signed by a Responsible Officer of Lessor or any Sprint Party, as applicable, will be conclusively presumed to have been authorized by all necessary corporate, limited liability company, partnership and/or other action on the part of Lessor or such Sprint Party, as applicable, and such Responsible Officer will be conclusively presumed to have acted on behalf of Lessor or such Sprint Party, as applicable;

“ Returned Device ” has the meaning given to that term under Section 2.3(a) of the Device Repurchase Agreement;

" Sanctions " means economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by any Sanctions Authority;

" Sanctions Authorities " has the meaning given to it in the definition of Sanctioned Person;

" Sanctioned Country " means, at any time, a country which is itself the subject or target of any country-wide Sanctions;

" Sanctioned Person " means, at any time:

(a)
any person listed in any Sanctions-related list of designated persons maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State (" Sanctions Authorities ");

(b)
any person operating, organized or resident in a Sanctioned Country; or

(c)
any person owned or controlled by any such person or persons.

“ Scheduled Customer Lease Term ” means, (i) with respect to any Lease Closing Date Customer Lease, the period beginning at the time such Lease Closing Date Customer Lease and the associated Lease Closing Date Device are contributed by an Originator to a Lessee and ending on the last day of the relevant Customer’s obligatory monthly rental payment obligations under such Lease Closing Date Customer Lease as set forth in the relevant Device Lease Schedule and (ii) with respect to any Upgraded Customer Lease, the period beginning at the time the Related Original Customer Lease and the associated Related Original Device were contributed by an Originator to a Lessee and ending on the last day of the relevant Customer’s obligatory monthly rental payment obligations under the Related Original Customer Lease (without giving effect to any waivers thereunder in connection with a Customer Upgrade) as set forth in the relevant Device Lease Schedule;





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“ Scheduled Device Lease Term ” means, with respect to any Device Lease, the period commencing on the Device Lease Commencement Date and ending on the last day of the Scheduled Customer Lease Term;

“ Scheduled Monthly Reporting Date ” has the meaning given to that term under the Servicing Agreement;

“ Schedule of Approved Devices ” has the meaning given to that term under Section 2.6(a) ( Approved Devices ) of this Agreement;

“ SCI ” means Sprint Communications, Inc;

“ Second Step Transfer Agreement ” means the Amended and Restated Second Step Transfer Agreement (Tranche 2), dated as of the date hereof and effective as of the Amendment Closing Date, between Lessees and Lessor;

“ Secondary Market Value ” has the meaning given to that term under the Device Repurchase Agreement;

“Senior Agent ” has the meaning given to that term under the Servicing Agreement;

“ Senior Loan Agreement ” has the meaning given to that term under the Servicing Agreement;

“ Senior Loan ” has the meaning given to that term under the Servicing Agreement;

“ Senior Subordinated Loan ” has the meaning given to that term under the Servicing Agreement;

“ Senior Subordinated Loan Creditors ” has the meaning given to that term under the Servicing Agreement;

“ Series ” has the meaning given to that term under the MLS LLC Agreement;

“ Series 2 ” means Series 2 of Mobile Leasing Solutions;

“ Series 2 Assets ” means the assets of Series 2, whether held by Series 2 directly or held in the name of Mobile Leasing Solutions on behalf of Series 2;

“ Series 2 Members ” means the Members, in their respective capacities as holders of Series 2 Units (as defined in the MLS LLC Agreement) of Mobile Leasing Solutions;
“ Series 2 Pledged Assets ” means the Series 2 Assets that are subject to the MLS Security Documents;
“ Servicer ” has the meaning given to that term under the Servicing Agreement;

“ Servicer Collection Accounts ” has the meaning given to that term under the Servicing Agreement;


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“ Servicer Replacement Event ” has the meaning given to it under Section 3.1 of the Servicing Agreement;

“ Servicing Agreement ” means the Amended and Restated Servicing Agreement (Tranche 2), dated as of the date hereof and effective as of the Amendment Closing Date, among Lessor, Servicer, Lessees and Collateral Agent;

“ Settlement Date ” has the meaning given to that term in the MLS Intercreditor Agreement;

“ SoftBank ” means SoftBank Corp.;

“ Sprint ” means Sprint Corporation, a Delaware corporation;

“ Sprint Guarantee ” means the Guaranty (Tranche 2), dated as of April 28, 2016 and effective as of the Lease Closing Date, by Sprint in favor of Lessor;

“ Sprint Party ” means Sprint, each Originator, Servicer, each Lessee, and each other Subsidiary of Sprint party to a Transaction Document;

“ Sprint Spectrum ” has the meaning given to that term in the preamble of this Agreement;

“ Sprint Transaction Documents ” has the meaning given to that term under the Servicing Agreement;

“ Sub-Servicer ” has the meaning given to that term under the Servicing Agreement;

“ Subsidiary ” means, with respect to any Person (the “ parent ”) at any date, any corporation, limited liability company, partnership, association or other entity (a) of which securities or other ownership interests representing more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, controlled or held, or (b) that is, as of such date, otherwise Controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent;

“ Tax Authority ” has the meaning given to that term under the Tax Services Agreement;

“ Taxes ” means all income, gross receipts, rental, franchise, excise, stamp, occupational, capital, value added, sales, use, ad valorem (real and personal), property (real and personal) and taxes, fees, levies, imposts, charges or withholdings of any nature whatsoever, together with any assessments, penalties, fines, additions to tax and interest thereon, howsoever imposed, by any Governmental Authority or other taxing authority in the United States or by any foreign government, foreign governmental subdivision or other foreign or international taxing authority;

“ Tax Services Agreement ” has the meaning given to that term under the Servicing Agreement;





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“ Term ” has the meaning given to that term under Section 2.7 ( Term ) of this Agreement;

“ Transaction ” means, collectively, the transactions contemplated by the Transaction Documents;

“ Transaction Documents ” has the meaning given to that term under the Servicing Agreement;

“ Transfer Agreements ” means the First Step Transfer Agreement and the Second Step Transfer Agreement;

“ Type ” means, with respect to a Device, the make, model, memory and color of such Device;

“ Uniform Commercial Code ” or “ UCC ” shall mean the Uniform Commercial Code (or any similar or equivalent legislation), as in effect from time to time in any applicable jurisdiction;

“ Unpaid Balance ” means, with respect to any Customer Lease at any time, all remaining Customer Receivables payable by a Customer under such Customer Lease at and after such time;

“ Upgrade Date ” means the date of a Customer Upgrade;

“ Upgrade Dilution ” means, in connection with each Upgrade Exchange, the sum of (a) if the Upgraded Customer Lease subject to such Upgrade Exchange provides for a lower Customer Receivable or fewer Customer Receivable payment dates than the related Exchanged Customer Lease, in each case, factoring in any down payment in respect of such Upgraded Customer Lease paid into the MLS Collection Account (Tranche 2), an amount equal to the difference between the amount payable by the Customer under the Exchanged Customer Lease and the amount payable by the Customer under the Upgraded Customer Lease for the period between the Upgrade Date and the Device Lease Expiration Date of the Device Lease for the Upgraded Device and (b) if the Fixed Price as of the Expected Sales Date of the Exchanged Device subject to such Upgrade Exchange exceeds the expected fair market value of the related Upgraded Device as of such Expected Sales Date as determined by Brightstar in accordance with its customary valuation procedures on or promptly following the Upgrade Date, an amount equal to such excess;
“ Upgrade Dilution Payment Date” has the meaning given to that term under Section 2.13(b)(i);

“ Upgrade Exchange ” means, with respect to a Device Lease, an exchange of the Device subject to such Device Lease with an Upgraded Device pursuant to Section 2.13(b);
“ Upgrade Exchange Option Transfer Date ” has the meaning given to that term in the Second Step Transfer Agreement;








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“ Upgrade Holding Period ” means, for any Exchanged Device, the period from the relevant Upgrade Date for such Exchanged Device to the Upgrade Exchange Option Transfer Date for such Exchanged Device;

“ Upgrade Policy ” has the meaning given to that term in the Servicing Agreement;

“ Upgrade Reserve Account (Tranche 2) ” means the account at Bank of America (4427295795) in the name of the Lessee Representative subject to an Account Control Agreement;

“ Upgrade Termination Option ” has the meaning given to that term under Section 2.13(b)(ii);
“ Upgrade Termination Option Payment ” means, in respect of an Upgrade Exchange, an amount equal to (a) the sum of (i) all previously accrued and unpaid Rental Payments with respect to the relevant Exchanged Device due and owing as of the relevant Upgrade Date, if any, plus (ii) the Rental Payments that would have accrued during the remainder of the Scheduled Customer Lease Term for such Exchanged Device, if any, plus (iii) if the relevant Customer returns such Exchanged Device not satisfying the Device Return Condition or does not return such Exchanged Device, the Device Residual Value as of the Expected Sales Date for such Exchanged Device, minus (b) any Customer Receivables (including any down payments) transferred to the MLS Collection Account (Tranche 2) on account of the relevant Upgraded Device attributable to any period after the relevant Upgrade Date;
“ Upgraded Customer Lease ” means a Customer Lease with respect to an Upgraded Device;

“ Upgraded Device ” means the Device leased by a Customer pursuant to a Customer Lease entered into in connection with a Customer Upgrade;

“ Voting Securities ” means, with respect to any Person, the stock or other ownership or equity interests, of whatever class or classes, the holders of which ordinarily have the power to vote for the election of the members of the board of directors, managers, trustees or other voting members of the governing body of such Person (other than stock or other ownership or equity interests having such power only by reason of the happening of a contingency); and

“ Waterfall ” has the meaning given to that term under the Servicing Agreement.
Schedule 1 Page 2












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Exhibit 31.1
CERTIFICATION
I, Marcelo Claure, certify that:
1.
I have reviewed this quarterly report on Form 10-Q of Sprint Corporation;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
 

 
 

Date: February 6, 2017
/s/ Marcelo Claure
Marcelo Claure
Chief Executive Officer






Exhibit 31.2
CERTIFICATION
I, Tarek Robbiati, certify that:
1.
I have reviewed this quarterly report on Form 10-Q of Sprint Corporation;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
 

 
 

Date: February 6, 2017
/s/ Tarek Robbiati
Tarek Robbiati
Chief Financial Officer






Exhibit 32.1
Certification Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
In connection with the quarterly report of Sprint Corporation (the “Company”) on Form 10-Q for the period ended December 31, 2016 , as filed with the Securities and Exchange Commission (the “Report”), I, Marcelo Claure, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:
(1)
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 

Date: February 6, 2017
 
/s/ Marcelo Claure
Marcelo Claure
Chief Executive Officer






Exhibit 32.2
Certification Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
In connection with the quarterly report of Sprint Corporation (the “Company”) on Form 10-Q for the period ended December 31, 2016 , as filed with the Securities and Exchange Commission (the “Report”), I, Tarek Robbiati, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:
(1)
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 

Date: February 6, 2017
 
/s/ Tarek Robbiati
Tarek Robbiati
Chief Financial Officer