SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
January 31, 1996
SPRINT CORPORATION
(Exact name of registrant as specified in its charter)
Kansas 1-4721 48-0457967
(State of (Commission (IRS Employer
Incorporation) File Number) Identification
Number)
2330 Shawnee Mission Parkway, Westwood, Kansas 66205
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(913) 624-3000
P. O. Box 11315, Kansas City, Missouri 64112
(Mailing address of principal executive offices)
Item 5. Other Events.
Investment in Sprint by France Telecom and Deutsche Telekom AG
On January 31, 1996, France Telecom and Deutsche Telekom AG each
acquired 31,762,837.48 shares of Class A Preference Stock of the
registrant for $1.5 billion, or a total investment in the registrant
of $3 billion. Based on the liquidation value and conversion price
of the shares of Class A Preference Stock, the shares held by each of
France Telecom and Deutsche Telekom AG currently carry 30,798,291.7
votes, or approximately 7.5% of the total voting power of the
registrant. The conversion price, and therefore the number of votes,
is subject to adjustment in the event the registrant spins off its
subsidiary, 360 Communications Company (formerly Sprint Cellular
Company), to the holders of its common stock.
France Telecom and Deutsche Telekom AG will make the remainder
of their investment in the registrant following the spin-off of 360
Communications Company, which is expected to occur in the first half
of 1996. Following full investment, France Telecom and Deutsche
Telekom AG will each own shares of Class A Common Stock of the
registrant with approximately 10% of the registrant's voting power.
Depending on the price of the stock of the spun-off entity at the
time of the spin-off, France Telecom and Deutsche Telekom AG are
expected to invest an additional $500 million to $700 million in the
registrant. If the spin-off does not occur, the additional
investment would be approximately $1.2 billion.
In connection with the investment, the Articles of Incorporation
and the Bylaws of the registrant were amended and France Telecom and
Deutsche Telekom AG named their respective chairmen, Michel Bon and
Ron Sommer, to the Board of Directors of the registrant.
Deutsche Telekom AG, France Telecom and the registrant also
announced the closing of their new global telecommunications joint
venture.
Sprint Telecommunications Venture
Effective as of January 31, 1996, the registrant, together with
Tele-Communications, Inc. ("TCI"), Comcast Corporation ("Comcast")
and Cox Communications, Inc. ("Cox"), have entered into a series of
agreements amending in certain respects their previously announced
joint venture to engage in the communications business (the "Sprint
Telecommunications Venture").
Under the amended agreements, the business of the Sprint
Telecommunications Venture will be the provision of wireless
services; it will no longer be authorized to engage in the business
of providing local wireline communications services to residences and
businesses. The obligations of TCI, Cox and Comcast with respect to
causing their cable television facilities to be made available to the
Sprint Telecommunications Venture for wireline communications
services have been terminated, along with any obligation of the
Sprint Telecommunications Venture to pay the previously agreed upon
compensation for the use of such facilities. In addition, TCI,
Comcast and Cox are no longer obligated to contribute to the Sprint
Telecommunications Venture their respective interests in Teleport
Communications Group Inc., TCG Partners and certain local joint
ventures managed by such entities ("TCG").
The registrant and each of TCI, Comcast and Cox agreed to
negotiate in good faith on a market-by-market basis for the provision
of local wireline telephony services over the cable television
facilities of the applicable cable company under the Sprint brand.
Accordingly, local telephony offerings in each market would be the
subject of individual agreements to be negotiated between the
registrant and each cable company, rather than being provided through
the Sprint Telecommunications Venture as previously contemplated.
The companies also reaffirmed their intention to continue to attempt
to integrate the business of TCG with that of the Sprint
Telecommunications Venture. The agreements also contain certain
restrictions on the ability of each company to offer or promote, or
package certain of its products or services with, certain products
and services of other persons, and require the applicable cable
company to make its facilities available to the registrant for
specified purposes to the extent that it has made such facilities
available to others for such purposes. The agreements described in
this paragraph have a five year term that reduces to three years in
specified circumstances.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
4A. Articles of Incorporation, as amended
4B. Bylaws, as amended
99A. Amendment No. 1 to Joint Venture Agreement, dated as of January
31, 1996, among Sprint Corporation, Sprint Global Venture, Inc.,
France Telecom, Deutsche Telekom AG and Atlas
Telecommunications, S.A.
99B. Joint Venture Agreement dated as of June 22, 1995, among Sprint
Corporation, Sprint Global Venture, Inc., France Telecom
and Deutsche Telekom AG (filed as Exhibit (10)(a) to Sprint
Corporation Quarterly Report on Form 10-Q for the Quarter ended
June 30, 1995 and incorporated herein by reference).
99C. Amended and Restated Agreement of Limited Partnership of
MajorCo., L.P., dated as of January 31, 1996, among Sprint
Spectrum, L.P., TCI Network Services, Comcast Telephony Services
and Cox Telephony Partnership.
99D. Parents Agreement dated as of January 31, 1996, between Sprint
Corporation and Tele-Communications, Inc.
99E. Parents Agreement dated as of January 31, 1996, between Sprint
Corporation and Comcast Corporation.
99F. Parents Agreement dated as of January 31, 1996, between Sprint
Corporation and Cox Communications, Inc.
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
By /s/ Michael T. Hyde
Michael T. Hyde
Assistant Secretary
Dated: February 12, 1996
EXHIBIT INDEX
Exhibit
Number Exhibit Page No.
4A. Articles of Incorporation, as amended
4B. Bylaws, as amended
99A. Amendment No. 1 to Joint Venture Agreement,
dated as of January 31, 1996, among Sprint
Corporation, Sprint Global Venture, Inc.,
France Telecom, Deutsche Telekom AG and
Atlas Telecommunications, S.A.
99B. Joint Venture Agreement dated as of June
22, 1995, among Sprint Corporation, Sprint
Global Venture, Inc., France Telecom and
Deutsche Telekom AG (filed as Exhibit
(10)(a) to Sprint Corporation Quarterly
Report on Form 10-Q for the Quarter ended
June 30, 1995 and incorporated herein by
reference).
99C. Amended and Restated Agreement of Limited
Partnership of MajorCo., L.P., dated as of
January 31, 1996, among Sprint Spectrum,
L.P., TCI Network Services, Comcast
Telephony Services and Cox Telephony
Partnership.
99D. Parents Agreement dated as of January 31,
1996, between Sprint Corporation and Tele-
Communications, Inc.
99E. Parents Agreement dated as of January 31,
1996, between Sprint Corporation and
Comcast Corporation.
99F. Parents Agreement dated as of January 31,
1996, between Sprint Corporation and Cox
Communications, Inc.
Exhibit 4A
ARTICLES OF INCORPORATION
OF
SPRINT CORPORATION
(As amended January 30, 1996)
FIRST
The name of the Corporation is SPRINT CORPORATION.
SECOND
That this Corporation is organized for profit, and that the purposes
for which it is formed are:
The construction and maintenance of a telephone line; the
construction and maintenance of a telegraph line; and the powers (but not
by way of limitation) to enter into joint ventures (whether incorporated
or unincorporated), partnerships and other forms of business
relationships with public operators, governmental agencies, governmental
instrumentalities, corporations, partnerships and other organizations,
entities or persons (whether domestic or foreign) for the construction,
leasing, ownership, operation and maintenance of telecommunications and
other information transmission networks and all businesses related
thereto, both domestically and abroad, and to provide voice, data and
other communications and information services to any person or entity; to
lend and borrow money that may be necessary and proper in connection with
the conduct of its business; to hold, purchase, mortgage or otherwise
convey such real and personal estate as the purposes of this Corporation
shall require; and also take, hold and convey such other property, real,
personal or mixed, as shall be requisite for this Corporation to acquire
in order to obtain or secure the payment of any indebtedness or liability
due to or belonging to this Corporation; to sell real, mixed or personal
property which may be proper for the conduct of its business; to carry on
its business outside of, as well as within, the state, and to purchase,
hold, sell, transfer, mortgage, pledge or otherwise dispose of the shares
of capital stock of, or any bonds, securities or evidences of
indebtedness created by any other corporation or corporations of any
state, or the United States, or any other country, nation or government,
which corporation shall be incorporated for the accomplishment of the
same or similar purposes as this Corporation or shall be incorporated for
purposes, the accomplishment of which would be incidental to or would aid
or facilitate the accomplishment of the purposes for which this
Corporation shall have been formed, and to exercise all rights, powers
and privileges of ownership of such stock or securities; to do any and
all other acts or things necessary, proper and incidental to the conduct
of its business and incidental to the accomplishment of the purposes for
which this Corporation may be formed; and to engage in any other lawful
act or activity for which corporations may be organized under the Kansas
General Corporation Code (the "General Corporation Code").
THIRD
The Corporation's registered office is located at 2330 Shawnee
Mission Parkway, Westwood, Johnson County, Kansas 66205; Mr. J. Richard
Devlin is the registered agent at said address.
FOURTH
The Corporation shall have perpetual existence.
FIFTH
1. Number of Directors; Increases in Number of Directors. (a) The
number of Directors shall not be less than ten nor more than 20 (unless
increased to more than 20 pursuant to subsection (b) of this Section 1 or
Section 6(e) of this ARTICLE FIFTH) as may be determined from time to
time by the affirmative vote of the majority of the Board of Directors or
as provided in subsection (b) of this Section 1 or in Section 6(e) of
this ARTICLE FIFTH.
(b) If at any time following the Initial Issuance Date, the Class A
Holders are entitled to elect a number of Directors pursuant to Section
2(a) of this ARTICLE FIFTH or Section 3(d) of the Class A Provisions that
exceeds the sum of the number of Directors elected by the Class A Holders
then serving on the Board of Directors and the number of vacancies on the
Board of Directors which the Directors elected by the Class A Holders or
the Class A Holders are entitled to fill, the total number of Directors
shall automatically and without further action be increased by the
smallest number necessary to enable the Class A Holders (and the
Directors elected by the Class A Holders in the case of vacancies) to
elect the number of Directors that the Class A Holders are entitled to
elect pursuant to such Section 2(a) or Section 3(d) of the Class A
Provisions.
2. Election of Directors. (a) Election of Directors by Class A
Holders. (i) Except as otherwise provided in Sec tions 7(b), 7(f) and
7(k) of the Class A Provisions, after the Initial Issuance Date, the
Class A Holders shall have the right, voting separately as a class, to
elect a number of Directors equal to the greater of (x) two and (y) the
product (rounded to the nearest whole number if such product is not a
whole number) of (I) the aggregate Percentage Ownership Interests of the
Class A Holders and (II) the total number of Directors, provided that so
long as Section 310 of the Com munications Act of 1934, as amended (or
any successor provision of law) ("Section 310"), remains in effect, under
no circumstances shall (A) the Class A Holders have the right to elect
Aliens as Directors such that the total number of Aliens so elected by
them would exceed the maximum percentage of the total number of Directors
of this Corporation permitted under Section 310 to be Aliens or (B) the
total number of Directors elected by the Class A Holders and serving on
the Board of Di rectors exceed the maximum percentage of the total
Directors of this Corporation permitted under Section 310 to be elected
by shareholders that are Aliens. Such Directors elected by the Class A
Holders shall not be divided into classes.
(ii) Upon the first to occur of (A) the conversion of all
outstanding shares of Class A Common Stock into Common Stock pursuant to
Section 7 of the Class A Provisions, (B) the redemption of all of the
outstanding shares of Class A Preference Stock, and (C) the termination
of the Fundamental Rights as to all outstanding shares of Class A
Preference Stock pursuant to Section 7 of the Class A Provisions, the
term of office of all Class A Directors then in office shall thereupon
terminate, the vacancy or vacancies resulting from such termination shall
be filled by the remaining Directors then in office, acting by majority
vote of such remaining Directors, and the Director or Directors so
elected to fill such vacancy or vacancies shall not be treated hereunder
or under the Bylaws of this Corporation as Class A Directors. If at any
time the number of Directors that the Class A Holders have the right to
elect pursuant to this Section 2(a) shall decrease other than as set
forth in the preceding sentence, and the Class A Holders shall not have
removed or caused to re sign, in either case effective not later than the
fifteenth day following the event that resulted in such decrease, a
number of Class A Directors so that the total number of Directors elected
by the Class A Holders then in office does not exceed the number provided
in the first sentence of Sec tion 2(a)(i), then the terms of office of
all Class A Directors shall terminate on such fifteenth date. The
vacancy or vacancies resulting from such termination of the terms of the
Class A Directors shall be filled as follows: (A) the vacancy or
vacancies equal to the number of Directors that the Class A Holders then
have the right to elect pursuant to this Section 2(a) (after giving
effect to the decrease referred to in the preceding sentence) shall be
filled as provided in Section 4(b) of this ARTICLE FIFTH, and (B) the
remaining vacancy or vacancies shall be filled by the remaining Directors
other than Class A Directors then in office, acting by majority vote of
such remaining Directors, and the Director or Directors so elected to
fill such vacancy or vacancies shall not be treated hereunder or under
the Bylaws as Class A Directors.
(iii) (1) Notwithstanding anything to the contrary in this Section
2, but subject to paragraphs (2), (3), (4) and (5) of this Section
2(a)(iii) and the proviso set forth at the end of the first sentence of
Section 2(a)(i) of this ARTICLE FIFTH (the "Section 2(a) Proviso"), if
the aggregate Per centage Ownership Interest of the Class A Holders is
20% or greater, the Class A Holders at all times shall have the right to
elect not less than 20% of the total number of Directors, provided that,
if the Section 2(a) Proviso prevents the Class A Holders from electing at
least 20% of the total number of Directors under such circumstances, this
Corporation shall increase the total number of Directors to a number not
greater than 20 if such increase would enable the Class A Holders to
elect at least 20% of the total number of Directors as increased.
(2) The provisions of Section 2(a)(iii)(1) of this ARTICLE FIFTH
(the "Section 2(a)(iii)(1) Provisions") shall terminate and be of no
force and effect (a "Nullification") unless reinstated in accordance with
Section 2(a)(iii)(5), if either:
(A) this Corporation delivers an opinion of nationally-recognized
U.S. tax counsel to the effect that the Section 2(a)(iii)(1)
Provisions are, with respect to both FT and DT, either not a
Necessary Condition or not a Sufficient Condition to secure any
Treaty Benefit and within 90 days of the delivery of such
opinion by this Corporation there is not delivered to this
Corporation by FT or DT an opinion of nationally-recognized
U.S. tax counsel concluding that such provisions are a
Necessary Condition and a Sufficient Condition for either FT or
DT to secure a Treaty Benefit, or
(B) this Corporation provides written notice to FT and DT in which
it agrees to accord FT and DT those Treaty Benefits to which FT
and DT would be entitled if the Section 2(a)(iii)(1) Provisions
were in effect (the "Continuing Treaty Benefits") and to
indemnify FT and DT on an after-tax basis against (a) any
liability arising out of according FT and DT Continuing Treaty
Benefits to the extent such liability would not arise if the
Section 2(a)(iii)(1) Provisions were in effect and (b) the loss
of those Continuing Treaty Benefits that this Corporation
cannot directly accord; provided that this Corporation by
written notice to FT and DT may revoke and withdraw such
agreement to accord such Treaty Benefits and to provide such
indemnification following the date of such notice and upon
delivery of such notice the Section 2(a)(iii)(1) Provisions
shall again become effective. Notwithstanding any revocation
or withdrawal pursuant to the proviso contained in the
immediately preceding sentence, this Corporation shall continue
to indemnify FT and DT on an after-tax basis against any loss
of Treaty Benefits to which FT or DT, as the case may be, would
have been entitled had the Nullification described in this
Section 2(a)(iii)(2)(B) not taken place.
If a Nullification occurs under the provisions of para graph (A) of
this Section 2(a)(iii)(2), then after the date of any such Nullification,
and until such time as a change in facts or Applicable Law requires a
different result, this Corporation shall accord FT and DT Treaty Benefits
under the relevant treaties between the United States and France and the
United States and Germany, but only to the extent FT or DT, as the case
may be, would have been entitled to claim such benefits had such
Nullification not occurred.
(3) In addition to its rights under Sec tion 2(a)(iii)(2), this
Corporation shall have the right, from time to time after the Investment
Completion Date, to deliver to each of FT and DT a written notice
requesting that the chief tax officer of each of FT and DT certify that
FT, in the case of the request furnished to FT, and DT, in the case of
the request furnished to DT, is eligible to claim at least one Treaty
Benefit, and that such chief tax officer provide this Corporation with
other facts and information reasonably requested by this Corporation that
are reasonably necessary for this Corporation to determine whether the
Sec tion 2(a)(iii)(1) Provisions are a Sufficient Condition or a
Necessary Condition to secure at least one Treaty Benefit. Unless within
60 days of delivery of any such request, either FT or DT delivers such
requested certificate to this Corporation, and provides such requested
facts or information, the Section 2(a)(iii)(1) Provisions shall terminate
and be of no force or effect, unless reinstated in accordance with Sec
tion 2(a)(iii)(5).
(4) If FT and DT determine, after the Investment Com pletion Date,
that the Section 2(a)(iii)(1) Provisions are, with respect to both FT and
DT, either not a Necessary Condition or not a Sufficient Condition to
secure at least one Treaty Benefit, FT and DT shall deliver to this
Corporation a certification to such effect, and the Section 2(a)(iii)(1)
Provisions shall terminate and be of no force or effect, unless
reinstated in accordance with Section 2(a)(iii)(5).
(5) Each of FT and DT shall have the right, at any time after the
date the Section 2(a)(iii)(1) Provisions are nullified pursuant to
paragraph (A) (but not paragraph (B)) of clause (2) or clause (3) or (4)
of this Section 2(a)(iii), to deliver to this Corporation a certificate
signed by the chief tax officer of either FT or DT to the effect that FT
or DT, as the case may be, is eligible to claim a Treaty Benefit and an
opinion of nationally-recognized U.S. tax counsel to the effect that the
Section 2(a)(iii)(1) Provisions are again a Necessary Condition and a
Sufficient Condition for any of FT or DT to secure a Treaty Benefit.
Upon the delivery of any such certificate and opinion, the Section
2(a)(iii)(1) Provisions shall again become effective unless and until
they become ineffective pursuant to the other provisions of this Section
2(a)(iii).
(6) For purposes of this Section 2(a)(iii), the term "FT" shall
include any Qualified Subsidiary of FT organized under the laws of France
and the term "DT" shall include any Qualified Subsidiary of DT organized
under the laws of Germany.
(7) The Section 2(a)(iii)(1) Provisions shall be a "Necessary
Condition" with respect to any Treaty Benefit if FT or DT would not be
entitled to claim such Treaty Benefit unless such Section 2(a)(iii)(1)
Provisions are in effect.
(8) The Section 2(a)(iii)(1) Provisions shall be a "Sufficient
Condition" with respect to any Treaty Benefit if FT and DT will otherwise
fulfill all other relevant conditions to claiming such Treaty Benefit if
the Section 2(a)(iii)(1) Provisions are in effect.
(b) Election of Directors by Other Holders. (i) Subject to clause
(ii) below, the holders of Common Stock shall have the right to elect
that number of Directors equal to the excess of (x) the total number of
Directors over (y) the sum of the number of Directors the Class A Holders
are entitled to elect and the number of Directors, if any, that the
holders of Preferred Stock, voting separately by class or series, are
entitled to elect in accordance with the provisions of ARTICLE SIXTH of
these Articles of Incor poration. The Class A Holders shall have no
right to vote for Directors under this Section 2(b)(i).
(ii) So long as Section 310 remains in effect, under no
circumstances shall an Alien Director elected by the holders of Common
Stock be qualified to serve as a Director if the number of Aliens who
would then be serving as members of the Board of Directors, including
such elected Alien, would con stitute more than the maximum number of
Aliens permitted by Section 310 on the Board of Directors.
(iii) The Directors (other than the Directors elected by the Class A
Holders and any Directors elected by the holders of any one or more
classes or series of Preferred Stock having the right, voting separately
by class or series, to elect Directors) shall be divided into three
classes, designated Class I, Class II and Class III, with the term of
office of one class expiring each year. The number of Class I, Class II
and Class III Directors shall consist, as nearly as prac ticable, of one
third of the total number of Directors (other than the Directors elected
by the Class A Holders and any Directors elected by the holders of any
one or more classes or series of Preferred Stock having the right, voting
separately by class or series, to elect Directors). At each annual
meeting of stockholders of this Corporation after the Initial Issuance
Date, successors to the class of Directors whose term expires at that
annual meeting shall be elected for a three-year term.
(iv) Whenever the holders of any one or more classes or series of
Preferred Stock shall have the right, voting separately by class or
series, to elect Directors at an annual or special meeting of
stockholders, the election, term of office, filling of vacancies and
other features of such direc torships shall be governed by the terms of
these Articles of Incorporation applicable thereto, and such Directors so
elected shall not be divided into classes pursuant to this ARTICLE FIFTH
unless expressly provided by such terms.
3. Change in Number of Directors. If the number of Directors
(other than Directors elected by Class A Holders and any Directors
elected by the holders of any one or more classes or series of Preferred
Stock having the right, voting separately by class or series, to elect
Directors) is changed, any increase or decrease shall be apportioned
among the classes so as to maintain the number of Directors in each class
as nearly equal as possible.
4. Term of Office. (a) Each Director shall be elected for a three
year term. A Director shall hold office until the annual meeting for the
year in which his term expires and until his successor shall be elected
and shall qualify to serve, subject to prior death, resignation,
retirement, disqualification or removal from office.
(b) Any vacancy on the Board of Directors (whether resulting from an
increase in the total number of Directors, the departure of one of the
Directors or otherwise) may be filled by the affirmative vote of a
majority of the Directors elected by the same class or classes of
stockholders which would be entitled to elect the Director who would fill
such vacancy if the annual meeting of stockholders of this Corporation
were held on the date on which such vacancy oc curred, provided that at
any time when there is only one such Director so elected and then
serving, such Director may fill such vacancy and, provided, further, that
at any time when there are no such Directors then serving, the
stockholders of the class or classes entitled to elect the Director who
will fill such vacancy shall have the right to fill such vacancy and,
provided, further, that, so long as any Class A Stock is outstanding, any
vacancy to be filled by the Director or Directors elected by the holders
of Common Stock may not be filled with a Person who, upon his election,
would not be an Independent Director or would be an Alien, as the case
may be, if the effect of such election would be that less than a majority
of the Board of Directors following such election would be Independent
Directors, or that the number of Aliens who would then be serving on the
Board of Directors would constitute more than the maximum number of
Aliens permitted on the Board of Directors under Section 310.
(c) Any additional Director of any class elected to fill a vacancy
resulting from an increase in the number of Directors of such class shall
hold office for a term that shall coincide with the remaining term of the
Directors of that class, but, except as provided in Section 2(a)(ii) of
this ARTICLE FIFTH, in no case will a decrease in the number of Directors
shorten the term of any incumbent Director. Any Director elected to fill
a vacancy not resulting from an increase in the number of Directors shall
have the same remaining term as that of his predecessor.
5. Rights, Powers, Duties, Rules and Procedures; Amendment of
Bylaws. (a) Except to the extent prohibited by law or as set forth in
these Articles of Incorporation or the Bylaws, the Board of Directors
shall have the right (which, to the extent exercised, shall be exclusive)
to establish the rights, powers, duties, rules and procedures that from
time to time shall govern the Board of Directors and each of its members,
including, without limitation, the vote required for any action by the
Board of Directors, and that from time to time shall affect the
Directors' power to manage the business and affairs of this Corporation.
No Bylaw shall be adopted by stockholders which shall impair or impede
the implementation of the foregoing.
(b) The Board of Directors is expressly authorized and empowered, in
the manner provided in the Bylaws of this Corporation, to adopt, amend
and repeal the Bylaws of this Corporation in any respect to the full
extent permitted by the General Corporation Code not inconsistent with
the laws of the General Corporation Code or with these Articles of
Incorporation, provided that the following provisions of the Bylaws may
not be amended, altered, repealed or made inopera tive or ineffective by
adoption of other provisions to the Bylaws without the affirmative vote
of the holders of record of a majority of the shares of Class A Stock
then outstanding, voting separately as a class, at any annual or special
meeting of stockholders, the notice of which shall have specified or
summarized the proposed amendment, alteration or repeal of the Bylaws:
ARTICLE III, SECTIONS 2, 4, 5, 8 AND 9; ARTICLE IV, SECTIONS 5, 6, 10, 11
AND 12; ARTICLE VI, SECTION 1; AND ARTICLE VII, SECTIONS 1 AND 2.
6. Removal; Changes in Status; Preferred Stock Directors. (a)
Except as provided in paragraphs (c) or (d) of this Section 6, a Director
(other than a Director elected by the Class A Holders or by the holders
of any class or series of Preferred Stock having the right, voting
separately by class or series, to elect Directors) may be removed only
for cause. No Director so removed may be reinstated for so long as the
cause for removal continues to exist. Such removal for cause may be
effected only by the affirmative vote of the holders of a majority of
shares of the class or classes of stockholders which were entitled to
elect such Director.
(b) A Director elected by the holders of the Class A Stock may be
removed with or without cause. If removed for cause, no Director so
removed may be reinstated for so long as the cause for removal continues
to exist. Removal may be effected with or without cause by the
affirmative vote of the holders of a majority of shares of Class A Stock
or with cause by the affirmative vote of the holders of two-thirds of the
shares of the Common Stock, the Class A Stock and other capital stock of
this Corporation entitled to general voting power, voting together as a
single class.
(c) If a Director elected by the holders of Common Stock who was
not, at the time of his election to the Board of Directors, an Alien,
subsequently becomes an Alien, the effect of which would be that the
number of Aliens who would then be serving as members of the Board of
Directors, including the Director who changed status, would constitute
more than the maximum number of Aliens permitted on the Board of
Directors under Section 310, such Director shall upon his change in
status automatically and without further action be removed from the Board
of Directors.
(d) So long as any Class A Stock is outstanding, if an Independent
Director elected by the holders of Common Stock subsequently ceases to be
an Independent Director, the effect of which would be that the
Independent Directors who would then be serving as members of the Board
of Directors would not constitute a majority of the Board of Directors,
such Director shall automatically and without further action upon his
change in status be removed from the Board of Directors.
(e) (i) So long as any Class A Stock is outstanding, if a Director
elected by the holders of any class or series of Preferred Stock having
the right, voting separately by class or series, to elect Directors (a
"Preferred Stock Director") is an Alien, or after election becomes an
Alien, the effect of which would be that the number of Aliens who would
then be serving as members of the Board of Directors (including such
Preferred Stock Director) would constitute more than the maximum number
of Aliens permitted on the Board of Directors under Section 310, the
total number of Directors shall automatically and without further action
be increased by the smallest number necessary to enable the Class A
Holders (and the Directors elected by the Class A Holders in the case of
vacancies) to elect Aliens as Directors to the fullest extent that the
Class A Holders are entitled to elect Directors pursuant to Section 2(a)
of this ARTICLE FIFTH without vio lating the requirements of Section 310.
(ii) So long as any Class A Stock is outstanding, if a Preferred
Stock Director is not an Independent Director, or after election ceases
to be an Independent Director, the effect of which would be that the
Independent Directors who would then be serving as members of the Board
of Directors would not constitute a majority of the Board of Directors,
the total number of Directors shall automatically and without further
action be increased by the smallest number necessary so that the number
of Directors then serving who are not Independent Directors (including
such Preferred Stock Director and any vacancies which the holders of
Class A Stock have a right to fill) constitute less than a majority of
the Board of Directors.
7. Definitions. Certain capitalized terms used in this ARTICLE
FIFTH without definition shall have the meanings set forth in Section 12
of the Class A Provisions.
SIXTH
The total number of shares of capital stock which may be issued by
this Corporation is 2,020,000,000, of which 500,000,000 shares shall be
Class A Common Stock with a par value of $2.50 per share (hereinafter,
the "Class A Common Stock"); 1,000,000,000 shares shall be Common Stock
with a par value of $2.50 per share (hereinafter, the "Common Stock");
500,000,000 shares shall be Class A Preference Stock with a par value of
$1.00 per share (hereinafter, the "Class A Preference Stock"); and
20,000,000 shares shall be Preferred Stock (herein referred to as the
"Preferred Stock," such term not to include the Class A Preference Stock)
without par value.
GENERAL PROVISIONS RELATING TO ALL STOCK
1. Preemptive Rights; Cumulative Voting. No holder of shares of
capital stock of any class of this Corporation or holder of any security
or obligation convertible into shares of capital stock of any class of
this Corporation shall have any preemptive right whatsoever to subscribe
for, purchase or otherwise acquire shares of capital stock of any class
of this Corporation, whether now or hereafter authorized; provided that
this provision shall not prohibit this Corporation from granting,
contractually or otherwise, to any such holder, the right to purchase
additional securities of this Corporation. Stockholders of this
Corporation shall not be entitled to cumulative voting of their shares in
elections of Directors.
2. Redemption of Shares Held by Aliens. Not withstanding any other
provision of these Articles of Incorporation to the contrary, outstanding
shares of Common Stock and Class A Stock Beneficially Owned by Aliens may
be redeemed by this Corporation, by action duly taken by the Board of
Directors (with the approval of a majority of the Continuing Directors
(as defined in ARTICLE SEVENTH) at a meeting at which at least seven
Continuing Directors are present, except that no such approval of the
Continuing Directors shall be required if (i) the Fair Price Provisions
have been deleted in their entirety, (ii) the Fair Price Pro visions have
been modified so as explicitly not to apply to any Class A Holder, or
they have been modified in a manner reasonably satisfactory to FT and DT
so as explicitly not to apply to any transactions with any Class A Holder
contemplated under these Articles of Incorporation, (iii) the transaction
in question is not a "Business Combination" within the meaning of the
Fair Price Provisions, or (iv) the Class A Holder that is a party to the
transaction, along with its Affiliates (as such term is defined in Rule
12b-2 under the Securities Exchange Act of 1934, as in effect on October
1, 1982) and Associates (as such term is defined in Rule 12b-2 under the
Securities Exchange Act of 1934, as in effect on October 1, 1982), is no
longer an "Interested Stockholder" or "Affiliate" of an "Interested
Stockholder" within the meaning of the Fair Price Provisions), to the
extent necessary or advisable, in the judgment of the Board of Directors,
for this Corporation or any of its Subsidiaries to comply with the
requirements of Section 310 (each of (i) through (iv), a "Fair Price
Condition"), provided that shares of Class A Stock only may be redeemed
if, and only to the extent that, the outstanding shares of Class A Stock
represent Votes constituting greater than 20% of the aggregate Voting
Power of this Corporation immediately prior to the time of such
redemption. The terms and conditions of such redemption shall be as
follows, subject in any case to any other rights of a particular Alien or
of this Corporation pursuant to any contract or agreement between such
Alien and this Corporation:
(a) except as provided in Section 2(f), the redemp tion price
of the shares to be redeemed pursuant to this Section 2 of these
GENERAL PROVISIONS RELATING TO ALL STOCK of ARTICLE SIXTH shall be
equal to the Market Price of such shares on the third Business Day
prior to the date notice of such redemption is given pursuant to
subsection (d) of this Section 2, provided that, except as provided
in clause (f), below, such redemption price as to any Alien who
purchased such shares of Common Stock after November 21, 1995 and
within one year prior to the Redemption Date shall not (unless
otherwise determined by the Board of Directors) exceed the purchase
price paid by such Alien for such shares; (b) the redemption price
of such shares may be paid in cash, Redemption Securities or any
combination thereof; (c) if less than all of the shares Beneficially
Owned by Aliens are to be redeemed, the shares to be redeemed shall
be selected in such manner as shall be determined by the Board of
Directors, which may include selection first of the most recently
purchased shares thereof, selection by lot or selection in any other
manner determined by the Board of Directors to be equi table,
provided that this Corporation shall in all cases be entitled to
redeem shares of Common Stock Beneficially Owned by Aliens prior to
redeeming any shares of Class A Common Stock Beneficially Owned by
Aliens; (d) this Corporation shall give notice of the Redemption
Date at least 30 days prior to the Redemption Date to the record
holders of the shares selected to be redeemed (unless waived in
writing by any such holder) by delivering a written notice by first
class mail, postage pre-paid, to the holders of record of the shares
selected to be redeemed, addressed to such holders at their last
address as shown upon the stock transfer books of this Corporation
(each such notice of redemption specifying the date fixed for
redemption, the redemption price, the place or places of payment and
that payment will be made upon presentation and surrender of the
certificates repre senting such shares), provided that the
Redemption Date may be the date on which written notice shall be
given to record holders if the cash or Redemption Securities
necessary to effect the redemption shall have been deposited in
trust for the benefit of such record holders and subject to
immediate withdrawal by them upon surrender of the stock
certificates for their shares to be redeemed; (e) on the Redemption
Date, unless this Corporation shall have defaulted in paying or
setting aside for payment the cash or Redemption Securities payable
upon such redemption, any and all rights of Aliens in respect of
shares so redeemed (including without limitation any rights to vote
or participate in dividends), shall cease and terminate, and from
and after such Redemption Date such Aliens shall be entitled only to
receive the cash or Redemption Securities payable upon redemption of
the shares to be redeemed; and (f) such other terms and conditions
as the Board of Directors shall determine to be equitable, provided
that, if any shares of Class A Stock are redeemed pursuant to this
Section 2 of these GENERAL PROVISIONS RELATING TO ALL STOCK of
ARTICLE SIXTH, the redemption price of any such shares redeemed
shall be a per share price equal to (i) in the case of Class A
Common Stock the greater of (A) the Market Price of a share of
Common Stock on the Redemption Date and (B) the Weighted Average
Price paid by the Class A Holders for the Class A Common Stock
together with a stock appreciation factor thereon (calcu lated on
the basis of a 365-day year) at the rate of 3.88% through and
including the Redemption Date, such stock appreciation factor to be
calculated, on an annual compounding basis, from the date of
purchase of such Class A Common Stock until the Redemption Date (the
"Alternative Price"), and (ii) in the case of Class A Preference
Stock, its Liquidation Preference, provided, that if this
Corporation redeems any shares of Class A Common Stock after the
third anniversary of the Invest ment Completion Date, the redemption
price of any such shares redeemed shall be the Market Price of a
share of Common Stock on the Redemption Date. The redemption price
to be paid to the Class A Holders shall be modified in accordance
with Article IX of the Stockholders' Agreement if either (i) such
redemption is effected on or prior to the third anniversary of the
Investment Com pletion Date, or (ii) such redemption is effected
within the 120-day period described in the last sentence of Section
2.11 of the Stockholders' Agreement (as such period may be extended
pursuant thereto) following an election by this Corporation to
redeem shares in accor dance with such Section.
Any notice that is mailed as herein provided shall be conclusively
presumed to have been duly given, whether or not the holder of shares to
be redeemed received such notice, provided that all notices to be given
to the Class A Holders shall be made and deemed delivered in accordance
with Section 13 of the Class A Provisions; and failure to give such
notice by mail, or any defect in such notice, to holders of shares
designated for redemption shall not affect the validity of the
proceedings for the redemption of any other shares.
3. Beneficial Ownership Inquiry. (a) This Corporation may by
written notice require a Person that is a holder of record of Common
Stock or Class A Stock or that this Corpo ration knows to have, or has
reasonable cause to believe has, Beneficial Ownership of Common Stock or
Class A Stock to certify that, to the knowledge of such Person: (i) no
Common Stock or Class A Stock as to which such Person has record
ownership or Beneficial Ownership is Beneficially Owned by Aliens; or
(ii) the number and class or series of shares of Common Stock or Class A
Stock owned of record or Beneficially Owned by such Person that are owned
of record or Beneficially Owned by Persons that are Aliens are as set
forth in such certificate.
(b) With respect to any Common Stock or Class A Stock identified by
such Person in response to Section 3(a)(ii) above, this Corporation may
require such Person to provide such further information as this
Corporation may reasonably require in order to implement the provisions
of Section 2 of these GENERAL PROVISIONS RELATING TO ALL STOCK of ARTICLE
SIXTH.
(c) For purposes of applying Section 2 of these GENERAL PROVISIONS
RELATING TO ALL STOCK of ARTICLE SIXTH with respect to any Common Stock
or Class A Stock, in the event of the failure of any Person to provide
the certificate or other information to which this Corporation is
entitled pursuant to this Section, this Corporation in its sole
discretion may presume that the Common Stock or Class A Stock in question
is, or is not, Beneficially Owned by Aliens. 4. Factual Determinations.
The Board of Directors shall have the power and duty to construe and
apply the provisions of Sections 2 and 3 of these GENERAL PROVISIONS
RELATING TO ALL STOCK of ARTICLE SIXTH and, with respect to shares of
Common Stock, to make all determinations necessary or desirable to
implement such provisions, including but not limited to: (a) the number
of shares of Common Stock that are Beneficially Owned by any Person; (b)
whether a Person is an Alien; (c) the application of any other definition
of these Articles of Incorporation to the given facts; and (d) any other
matter relating to the applicability or effect of Section 2 of these
GENERAL PROVISIONS RELATING TO ALL STOCK of ARTICLE SIXTH.
5. Loss of Voting Rights. If (a) there is a breach by FT, DT, any
Qualified Subsidiary, any Strategic Investor or any Qualified Stock
Purchaser of any of the provisions of Sections 3.1(a) or 3.2(b) (as it
relates to matters described in Section 3.1(a)) of the Standstill
Agreement or any corresponding provision of any Qualified Subsidiary
Standstill Agreement, Strategic Investor Standstill Agreement or
Qualified Stock Purchaser Standstill Agreement, (b) there is a willful
breach in any material respect by FT, DT, any Qualified Subsidiary, any
Strategic Investor or any Qualified Stock Purchaser of any provision of
Section 3.1 (other than Section 3.1(a)) of the Standstill Agreement or
any correspond ing provision of any Qualified Subsidiary Standstill
Agreement, Strategic Investor Standstill Agreement or Qualified Stock
Purchaser Standstill Agreement, or (c) a Government Affiliate or Related
Company (each as defined in the Standstill Agreement) takes an action
which if taken by FT or DT would violate Sections 3.1 or 3.2(b) (as it
relates to matters other than those described in Section 3.1(a)) of the
Standstill Agreement, then FT and its Qualified Subsidiaries (except in
the case of a breach arising from the action of a Government Affiliate of
Germany, a Related Company of DT or a Strategic Investor in a Qualified
Subsidiary of DT in which FT is not an investor), DT and its Qualified
Subsidiaries (except in the case of a breach arising from the action of a
Government Affiliate of France, a Related Company of FT or a Strategic
Investor in a Qualified Subsidiary of FT in which DT is not an investor)
and each Qualified Stock Purchaser shall not be entitled to vote any of
their shares of capital stock of this Corporation with respect to any
matter or proposal arising from, relating to or involving, such breach or
action, and no such purported vote by such Class A Holders on such matter
shall be effective or shall be counted.
6. Definitions. Certain capitalized terms used in these GENERAL
PROVISIONS RELATING TO ALL STOCK without definition shall have the
meanings set forth in Section 12 of the provisions of ARTICLE SIXTH
entitled GENERAL PROVISIONS RELATING TO CLASS A STOCK.
GENERAL PROVISIONS RELATING TO COMMON STOCK AND CLASS A STOCK
1. Except as expressly set forth in ARTICLE FIFTH of these Articles
of Incorporation or in the provisions of ARTICLE SIXTH entitled GENERAL
PROVISIONS RELATING TO ALL STOCK and GENERAL PROVISIONS RELATING TO CLASS
A STOCK, each share of Common Stock and each share of Class A Common
Stock shall be entitled to one Vote, and the shares of Class A Preference
Stock shall be entitled to the number of Votes equal to the number of
Class A Conversion Shares or, if the Conversion Price has not yet been
Fixed, the number of Class A Conversion Shares determined as if the
Conversion Price had been Fixed on the Initial Issuance Date at the
Minimum Price, on all matters in respect of which the holders of Common
Stock are entitled to vote, and the Class A Holders and the holders of
Common Stock shall vote together with the holders of all other classes or
series of capital stock which have general voting power on all such
matters as a single class.
2. Dividends shall be declared and paid only out of net income or
earned surplus of this Corporation.
3. (a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of this Corporation, after payment or provision
for payment of the debts and other liabilities of this Corporation,
including the liquidation preferences of any series of Preferred Stock
and of the Class A Preference Stock, the holders of Class A Common Stock
and the holders of Common Stock shall be entitled to share ratably in the
remaining net assets of this Corporation. (b) The Class A Preference
Stock shall rank junior to any series of Preferred Stock in the payment
of dividends and the distribution of assets upon the liquidation,
dissolution or winding-up of this Corporation, unless any such series of
Preferred Stock is specifically made junior to or to rank on a parity
with the Class A Preference Stock in the payment of dividends or the
distribution of assets upon liquidation, dissolution or winding-up of
this Corporation. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of this Corporation, no holder of
shares of Class A Preference Stock shall receive any distributions or
payments with respect to such shares unless prior thereto holders of all
series of Preferred Stock, which have not been specifically made junior
to or to rank on a parity with the Class A Preference Stock in the
distribution of assets upon liquidation, dissolution or winding-up of
this Corporation, shall have received with respect to each share of such
Preferred Stock the amounts to be paid with respect to such share upon
the liquidation, dissolution or winding-up of this Corporation as
provided in ARTICLE SIXTH of these Articles of Incorporation.
(c) In the event of any voluntary or involuntary liquidation,
dissolution or winding-up of this Corporation, (i) no distribution shall
be made to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding-up) to the Class A
Preference Stock, unless prior thereto the holders of shares of Class A
Preference Stock shall have received with respect to all outstanding
shares of Class A Preference Stock (other than Section 7(i) Preference
Shares), the Adjusted Aggregate Liquidation Preference, and (ii) the
Section 7(i) Preference Shares shall, immediately prior to such
liquidation, dissolution or winding-up, automatically convert (without
the payment of any consideration) into that number of duly issued, fully
paid and nonassessable shares of Common Stock equal to the number of
shares of Common Stock purchased by the Class A Holders and converted
into shares of Class A Preference Stock pursuant to Section 7(i) of the
Class A Provisions, for an aggregate conversion price equal to the
Section 7(i) Aggregate Purchase Price.
(d) Neither the merger nor consolidation of this Corporation,
nor the Transfer of all or part of its assets, shall be deemed to be a
voluntary or involuntary liquidation, dissolution or winding up of this
Corporation within the meaning of this clause 3.
GENERAL PROVISIONS RELATING TO COMMON STOCK
1. Dividends. The holders of the Common Stock shall be entitled to
receive, when and if declared by the Board of Directors out of funds
legally available therefor, dividends in respect of the Common Stock
equivalent on a per share basis to those payable on the Class A Common
Stock. Dividends on the Common Stock shall be payable on the same date
fixed for the payment of the corresponding dividend on shares of Class A
Common Stock and shall be in an amount per share equal to the full per
share amount of any cash dividend paid on shares of Class A Common Stock,
plus the full per share amount (payable in kind) of any non-cash dividend
paid on shares of Class A Common Stock, provided that if this Corporation
shall declare and pay any dividends on shares of Class A Common Stock
payable in shares of Class A Common Stock, or in options, warrants or
rights to acquire shares of Class A Common Stock, or in securities
convertible into or exchangeable for shares of Class A Common Stock, then
in each case, this Corporation shall declare and pay, at the same time
that it declares and pays any such dividend, an equivalent dividend per
share on the Common Stock payable in shares of Common Stock, or options,
warrants or rights to acquire shares of Common Stock, or securities
convertible into or exchangeable for shares of Common Stock.
2. No Dilution or Impairment. No reclassification, subdivision or
combination of the outstanding shares of Class A Stock shall be effected
directly or indirectly (including, without limitation, any
reclassification, subdivision or combination effected pursuant to a
consolidation, merger or liquidation) unless at the same time the Common
Stock is reclassified, subdivided or combined so that the holders of the
Common Stock are entitled, in the aggregate, to Voting Power representing
the same percentage of the Voting Power of this Corporation relative to
the Class A Stock as was represented by the shares of Common Stock
outstanding immediately prior to such reclassification, subdivision or
combination, subject to the limitations, restrictions and conditions on
such rights contained herein.
GENERAL PROVISIONS RELATING TO CLASS A STOCK
1. Rights and Privileges. (a) Except as otherwise set forth in
ARTICLE FIFTH of these Articles of Incorporation, that portion of ARTICLE
SIXTH entitled GENERAL PROVISIONS RELATING TO ALL STOCK, or the Class A
Provisions, the holders of Class A Common Stock shall be entitled to all
of the rights and privileges pertaining to the ownership of Common Stock
without any limitations, prohibitions, restrictions or qualifications
whatsoever, and shall be entitled to such other rights and privileges as
are expressly set forth in ARTICLE FIFTH of these Articles of
Incorporation, that portion of ARTICLE SIXTH entitled GENERAL PROVISIONS
RELATING TO ALL STOCK or in the Class A Provisions.
(b) Except as otherwise set forth in ARTICLE FIFTH of these Articles
of Incorporation, that portion of ARTICLE SIXTH entitled GENERAL
PROVISIONS RELATING TO ALL STOCK, or in the Class A Provisions, the
holders of Class A Preference Stock shall be entitled to all of the
rights and privileges to which Kansas law accords a separate class of
preferred stock, without any limitations, prohibitions, restrictions or
qualifications whatsoever, and shall be entitled to such other rights and
privileges as are expressly set forth in ARTICLE FIFTH of these Articles
of Incorporation, that portion of ARTICLE SIXTH entitled GENERAL
PROVISIONS RELATING TO ALL STOCK or in the Class A Provisions.
2. Dividends. (a) (i) The holders of shares of Class A Common
Stock shall be entitled to receive, when and if declared by the Board of
Directors out of funds legally available therefor, dividends in respect
of the Class A Common Stock equivalent on a per share basis to those
payable on the Common Stock. Dividends on the Class A Common Stock shall
be payable on the same date fixed for the payment of the corresponding
dividend on shares of Common Stock and shall be in an amount per share
equal to the full per share amount of any cash dividend paid on shares of
Common Stock, plus the full per share amount (payable in kind) of any
non-cash dividend paid on shares of Common Stock.
(ii) The holders of shares of Class A Preference Stock, in
preference to the holders of Common Stock and of any other outstanding
junior capital stock (including any series of Preferred Stock which is
specifically made junior to the Class A Preference Stock in the payment
of dividends), but after payment of dividends to holders of shares of all
series of Preferred Stock that are not specifically made junior to or
made to rank on a parity with the Class A Preference Stock in the payment
of dividends, shall be entitled to receive, when and if declared by the
Board of Directors out of funds legally available therefor, quarterly
dividends payable in cash on the first day of January, April, July and
October in each year (each such date being referred to herein as a
"Quarterly Dividend Payment Date" and each such quarter a "Dividend
Payment Period"), commencing on the first Quarterly Dividend Payment Date
after the Initial Issuance Date, in an amount per share (rounded to the
nearest cent) equal to (x) if the Conversion Price has not yet been
Fixed, (1) during the first two years following the Initial Issuance
Date, the greater of (A) the Minimum Dividend Amount per share of Class A
Preference Stock multiplied by 43,118,018 and divided by the number of
shares of Class A Preference Stock then outstanding, and (B) the Per
Share Common Dividend (as defined below) multiplied by the Dividend
Factor divided by the number of shares of Class A Preference Stock then
outstanding, and (2) following the second anniversary of the Initial
Issuance Date, an identical amount per Dividend Payment Period resulting
in an annual dividend rate equal to 12.5 basis points over the Applicable
LIBOR Rate, (y) if the Conversion Price has been Fixed but the Investment
Completion Date has not occurred, the aggregate per share amount of all
dividends and distributions (other than Extraordinary Dividends and other
dividends or distributions that result in an adjustment pursuant to the
Class A Provisions and other than a dividend payable in shares of
Cellular Common Stock in connection with the Cellular Spin-off if it
occurs prior to the delivery of a Notice of Abandon ment)(the "Per Share
Common Dividend"), declared on the Common Stock since the immediately
preceding Quarterly Dividend Payment Date, or, with respect to the first
Quarterly Dividend Payment Date, since the Initial Issuance Date, in each
case multiplied by a fraction, the numerator of which shall be $47.225
and the denominator of which shall be the Conversion Price at the time in
effect, or (z) if the Investment Completion Date has occurred, the
aggregate per share amount of all dividends (including, without
limitation, all non-cash dividends except for dividends described in
clause (iii), below) declared on the Common Stock since the immediately
preceding Quarterly Dividend Payment Date, or, with respect to the first
Quarterly Dividend Payment Date, since the Investment Completion Date, in
each case multiplied by a fraction, the numerator of which shall be the
Liquidation Preference of a share of Class A Preference Stock and the
denominator of which shall be the Conversion Price at the time in effect.
With respect to shares of Class A Preference Stock outstanding for less
than a full Dividend Payment Period, the dividend paid with respect to
such shares shall be equal to the dividend paid with respect to such
entire Dividend Payment Period times a fraction the numerator of which
shall be the number of days during such Dividend Payment Period that such
shares were outstanding and the denominator shall be the number of days
during such Dividend Payment Period.
(iii) If this Corporation shall declare and pay any dividend on
shares of Common Stock payable in shares of Common Stock, or in options,
warrants or rights to acquire shares of Common Stock, or in securities
convertible into or exchange able for shares of Common Stock, then in
each case, this Corporation shall declare and pay, at the same time that
it de clares and pays any such dividend, an equivalent dividend per share
on the Class A Common Stock.
(b) Dividends under Section 2(a)(ii) of the Class A Provisions shall
begin to accrue and be cumulative on outstanding shares of Class A
Preference Stock from the Initial Issuance Date. Accrued but unpaid
dividends shall accumulate but shall not bear interest. Dividends paid
on the shares of Class A Preference Stock in an amount less than the
total amount of such dividends at the time accrued and payable on such
shares shall be allocated pro rata on a share-by-share basis among all
such shares at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of shares of Class A
Preference Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be not more than
30 days prior to the date fixed for the payment thereof.
(c) Notwithstanding any other provision of this Section 2, the
holders of shares of Class A Preference Stock shall not be entitled to
receive shares, other equity interests of any direct or indirect
Subsidiary of this Corporation or cash or other property distributed to
the holders of Common Stock in connection with the Cellular Spin-off.
3. Other Class A Preference Stock Terms. (a) (i) Except as
otherwise provided in clause (iii) below, all of the outstanding shares
of Class A Preference Stock shall automatically convert, without the
requirement of any payment by the Class A Holders, upon the date (the
"Conversion Date") that is the later of (A) the earliest of (I) 35
Trading Days after the Cellular Spin-off Date, (II) 30 days after the
date on which this Corporation has delivered a notice to each Class A
Holder that the Cellular Spin-off has been abandoned (a "Notice of
Abandonment"), and (III) the 60th day after the fifth anniversary of the
Initial Issuance Date, and (B) five Business Days after the date on which
the Conversion Price becomes Fixed, into that number of validly issued,
fully paid and nonassessable shares of Class A Common Stock or, if the
Fundamental Rights shall have terminated as to all outstanding shares of
Class A Preference Stock, Common Stock, equal to the quotient of the
aggregate of the Liquidation Preference of the outstanding shares of
Class A Preference Stock divided by the applicable Conversion Price
specified in Section 3(b); provided that, if the Conversion Price has not
been Fixed by the fifth anniversary of the Initial Issuance Date, the
Class A Preference Stock shall only be convertible pursuant to Section
3(b)(v) of the Class A Provisions. In addition, shares of Class A
Preference Stock shall convert, without the requirement of any payment by
the Class A Holders, as otherwise provided in these Class A Provisions.
To the extent any such conversion would result in the Class A Holders
that are Aliens owning securities with Votes constituting in the
aggregate more than 20% of the Voting Power of this Corporation
outstanding at that time, such number of shares of Class A Preference
Stock as may be required so that the 20% level is not exceeded shall, at
the election of this Corporation, effected by delivery of a notice to
each Class A Holder at least five Business Days prior to the Conversion
Date, be either (a) redeemed by this Corporation within ten Business Days
of the delivery of such notice in cash and/or Redemption Securities in an
amount equal to the Liquidation Preference of such shares as modified to
comply with the requirements of Article IX of the Stockholders'
Agreement, or (b) sold by such Class A Holders in third party or open
market sales (a "Requested Sale"), provided that this Corporation shall
not be permitted to so redeem shares of Class A Preference Stock unless a
majority of the Continuing Directors shall have first approved, at a
meeting at which at least seven Continuing Directors are present, such
redemption, unless a Fair Price Condition has been satisfied. In the
case of any Requested Sale, the Class A Holders shall sell such Shares,
as promptly as practicable following receipt of the notice referred to in
the immediately preceding sentence, but in no event later than 120 days
following the receipt thereof, as extended day-for-day for each day that
such sales are actually delayed during such time period because (A) the
Requested Sale cannot be effected due to the anti-fraud rules of the
U.S. securities laws, or (B) this Corporation has delayed a proposed
registration of such shares in accordance with Section 1.4 of the
Registration Rights Agreement. Each Class A Holder shall, promptly upon
the conclusion of such Requested Sale, deliver to this Corporation a
notice stating that such Requested Sale has been concluded and indicating
the total amount of consideration received therefrom (the "Total
Requested Sale Proceeds"). Following receipt of such notice, this
Corporation shall promptly pay (a "Requested Sale Supplementary Payment")
to each Class A Holder the excess, if any, of the aggregate Liquidation
Preference of such shares sold by such Class A Holder over the Total
Requested Sale Proceeds (in each case as modified to comply with the
requirements of Section 9.2 of the Stockholders' Agreement).
(ii) At any time on or after the Conversion Date, any holder of a
certificate or certificates representing shares of Class A Preference
Stock may surrender such certificates at the principal office of this
Corporation (or at any other location designated by both this Corporation
and the Class A Holders), which certificate or certificates, if this
Corporation shall so require, shall be duly endorsed to this Corporation
or in blank, or accompanied by proper instruments of transfer to this
Corporation. This Corporation shall, as soon as practicable after such
deposit of a certificate or certificates evidencing shares of Class A
Preference Stock and compliance with any other conditions herein
contained, deliver at such office (or such other location) to the person
for whose account such certificate or certificates were so surrendered,
or to the nominee or nominees of such person, a certificate or
certificates evidencing the number of shares of Class A Common Stock or
Common Stock, as the case may be, to which such person shall be entitled
as aforesaid. The conversion of the shares of Class A Preference Stock
shall be deemed to have been made, for all purposes, as of the Conversion
Date without regard to the date of the surrender of the certificates for
shares of Class A Preference Stock, and the person or persons entitled to
receive the Class A Common Stock or Common Stock, as the case may be,
deliverable upon conversion of such Class A Preference Stock shall be
treated for all purposes as the record holder or holders of such Class A
Common Stock or Common Stock, as the case may be, on the Conversion Date.
(iii) Notwithstanding anything to the contrary in this Section 3(a),
if after the Cellular Spin-off Date shares of Class A Preference Stock
that previously were not convertible because the Cellular Spin-off Date
had not occurred otherwise would be converted pursuant to this Section
3(a) into Class A Common Stock or Common Stock at a Conversion Price
greater than 135% of the Average Sprint Price for the 20 Trading Days
ended on the tenth Business Day prior to the Conversion Date, the Class A
Holders may elect, by delivery of a notice to this Corporation executed
by or on behalf of all Class A Holders, at least two Business Days prior
to the Conversion Date, to defer such conversion until the first Business
Day following the thirtieth day after the occurrence of a period of 20
Trading Days in which the Conversion Price is less than or equal to 135%
of the Average Sprint Price over such period or until the Class A Holders
shall otherwise elect, by delivery of a notice to this Corporation
executed by or on behalf of each Class A Holder, to convert ten Business
Days after delivery of such notice the shares of Class A Preference Stock
at the Conversion Price set forth in Section 3(b) without regard to this
clause (iii). If the Class A Holders elect to defer conversion in
accordance with this Section 3(a)(iii), the shares of Class A Preference
Stock shall not be subject to conversion pursuant to Section 3(b)(v) or
redemption pursuant to Section 3(c).
(b) The Conversion Price of the Class A Preference Stock shall
initially be established at the time and at the price set forth below in
this Section 3(b) (such Conversion Price to be subject in each case to
adjustment as provided in the Class A Provisions):
(i) If the Average Sprint Price determined at the Initial
Issuance Date is within the Sprint Price Range, the Conversion Price
shall be Fixed on the Initial Issuance Date at the Target Price.
(ii) If the Average Sprint Price determined at the Initial
Issuance Date is above the Upper Threshold Sprint Price, the
Conversion Price shall be Fixed on the Initial Issuance Date at the
Maximum Price (determined by reference to such Average Sprint
Price).
(iii) If the Average Sprint Price determined at the Initial
Issuance Date is below the Lower Threshold Sprint Price,
(x) the Conversion Price shall be Fixed on the Initial
Issuance Date at the Minimum Price if this Corporation has
elected, by delivery of a notice to each of FT and DT at least
five Business Days before the Initial Issuance Date, to
establish the Conversion Price at the Minimum Price (determined
by reference to such Average Sprint Price), and the Conversion
Price shall be Fixed on the Initial Issuance Date at the Target
Price if FT and DT have elected, by delivery at least five
Business Days before the Initial Issuance Date, of a notice to
this Corporation executed by each of FT and DT, to establish
the Conversion Price at the Target Price, the first such notice
delivered to be effective, provided that this Corporation may
only deliver such a notice if a majority of the Continuing
Directors shall have first approved, at a meeting at which at
least seven Continuing Directors are present, Fixing the
Conversion Price on the Initial Issuance Date at the Minimum
Price, unless a Fair Price Condition has been satisfied;
(y) if no timely election has been made by this
Corporation or by FT and DT as contemplated by clause (x)
above, and
(1) if, prior to the second anniversary of the
Initial Issuance Date, the Cellular Spin-off Date has
occurred and the Average Sprint Price for any period of 20
consecutive Trading Days following the Cellular Spin-off
Date has been at or above the New Lower Threshold Sprint
Price, the Conversion Price shall, effective on the first
day following the end of such 20-day period, be Fixed at
the New Target Price, provided that if the Cellular
Spin-off Date shall have occurred prior to the second
anniversary of the Initial Issuance Date and the Average
Sprint Price during any Spin-off Trading Period is at or
above the Modified Lower Threshold, the Conversion Price
shall be Fixed, effective on the first day following such
Spin-off Trading Period, at the New Target Price;
(2) if, prior to the second anniversary of the
Initial Issuance Date, the Cellular Spin-off Date has not
occurred and the Average Sprint Price for any period of 20
consecutive Trading Days has been at or above the Lower
Threshold Sprint Price, the Conversion Price shall be
Fixed on the day following the end of such 20-day period
at the Target Price;
(3) at any time prior to the second anniversary of
the Initial Issuance Date, (i) if the Cellular Spin-off
Date has occurred, this Corporation or the Class A
Holders, by notice delivered, in the case of this
Corporation to each Class A Holder, and in the case of the
Class A Holders, to this Corporation by or on behalf of
each Class A Holder, the first such notice delivered to be
effective, may elect to Fix the Conversion Price,
effective on the date of such notice, at (A) if the Class
A Holders make such election, the New Target Price or (B)
if this Corporation makes such election, the Minimum Price
(determined by reference to such Average Sprint Price for
the 20 consecutive Trading Day period ended five days
before the date of such election, provided that, if the
Cellular Spin-off Date has occurred fewer than 25 Trading
Days prior to the delivery of such notice, the Conversion
Price shall be determined by reference to such Average
Sprint Price for the 20 consecutive Trading Day period
beginning on the Trading Day following the Cellular
Spin-off Date and the Conversion Date shall be Fixed five
days after the end of such 20-day period), provided that
this Corporation may only deliver such a notice if a
majority of the Continuing Directors shall have first
approved, at a meeting at which at least seven Continuing
Directors are present, Fixing the Conversion Price on the
date of such notice at the Minimum Price, unless a Fair
Price Condition has been satisfied; and (ii) if the
Cellular Spin-off Date has not occurred, either this
Corporation or the Class A Holders, by notice delivered,
in the case of this Corporation, to each Class A Holder,
and in the case of the Class A Holders, to this
Corporation by or on behalf of each Class A Holder, the
first such notice delivered to be effective, may elect to
Fix the Conversion Price, effective on the date of such
notice, at (A) if the Class A Holders make such election,
the Target Price, or (B) if this Corporation makes such
election, the Minimum Price (determined by reference to
the Average Sprint Price for the 20 consecutive Trading
Day period ended five days before the date of such
election), provided that this Corporation may only deliver
such a notice if a majority of the Continuing Directors
shall have first approved, at a meeting at which at least
seven Continuing Directors are present, Fixing the
Conversion Price on the date of such notice at the Minimum
Price, unless a Fair Price Condition has been satisfied;
(4) (A) if neither the Cellular Spin-off Date nor the
conversion of all of the outstanding Class A Preference
Stock into Class A Common Stock or Common Stock has
occurred prior to the second anniversary of the Initial
Issuance Date and the Conversion Price has not previously
been Fixed, the Conversion Price will, automatically on
such second anniversary, become Fixed at the Minimum
Price, determined by reference to the Average Sprint Price
for the 20 consecutive Trading Days ended five Business
Days before such second anniversary; provided that, if
such Average Sprint Price is then below the Second
Anniversary Lower Threshold Sprint Price, this Corporation
may elect to defer the Fixing of the Conversion Price, by
notice delivered to each Class A Holder within such five
Business Day period, so that if, at any time during the
following three years, the Average Sprint Price shall be
at least the Second Anniversary Lower Threshold Sprint
Price (if the Cellular Spin-off Date shall not have
occurred) or 93.308% of the New Lower Threshold Sprint
Price (if the Cellular Spin-off Date shall have so
occurred), the Conversion Price shall be Fixed at 93.308%
of the Target Price (if the Cellular Spin-off Date shall
not have so occurred) and 93.308% of the New Target Price
(if the Cellular Spin-off Date shall have so occurred),
provided that if the Cellular Spin-off Date shall have
occurred prior to the fifth anniversary of the Initial
Issuance Date and the Average Sprint Price during any
Spin-off Trading Period is at or above the Modified New
Lower Threshold, the Conversion Price shall be Fixed,
effective on the day following such Spin-off Trading
Period, at 93.308% of the New Target Price. At any time
during such three year period, this Corporation may elect,
by notice delivered to each Class A Holder, to cause the
Conversion Price to be Fixed, effective on the date of
such notice, at the Minimum Price (determined by reference
to the Average Sprint Price for the 20 Trading Days ended
five Business Days before the date of such election,
provided that, if the Cellular Spin-off Date shall occur
during the last 20 Trading Day period before the second
anniversary of the Initial Issuance Date, all calculations
to have been based upon such period under this clause (A)
shall be deferred until the first 20 consecutive Trading
Day Period after the Cellular Spin-off Date, on which such
calculations shall be then based), provided that this
Corporation may only deliver such a notice if a majority
of the Continuing Directors shall have first approved, at
a meeting at which at least seven Continuing Directors are
present, Fixing the Conversion Price on the date of such
notice at the Minimum Price, unless a Fair Price Condition
has been satisfied, and FT and DT may elect by notice
delivered to this Corporation by or on behalf of each
Class A Holder to cause the Conversion Price to be Fixed,
effective on the date of such notice, at a price equal to
93.308% of the Target Price (if the Cellular Spin-Off Date
shall have not occurred) and 93.308% of the New Target
Price (if the Cellular Spin-Off Date shall have occurred),
the first such notice to be effective;
(B) if, prior to such second anniversary, the
Cellular Spin-off Date has occurred, but the conversion of
all of the outstanding shares of Class A Preference Stock
has not taken place and the Conversion Price has not
previously been Fixed, the Conversion Price will,
automatically on such second anniversary, become Fixed at
the Minimum Price, determined by reference to the Average
Sprint Price for the 20 consecutive Trading Days ended
five Business Days before the second anniversary of the
Initial Issuance Date, provided that if such Average
Sprint Price is then below 93.308% of the New Lower
Threshold Sprint Price, this Corporation may elect to
defer the Fixing of the Conversion Price by notice
delivered to each Class A Holder within such five Business
Day period so that if, at any time during the following
three years, the Average Sprint Price shall be at least
equal to 93.308% of the New Lower Threshold Sprint Price,
the Conversion Price will be Fixed at 93.308% of the New
Target Price. At any time during such three year period,
this Corporation may elect by notice delivered to each
Class A Holder at any time after the fifth Business Day
following the end of the 20 Trading Day period starting on
the first Trading Day following the Cellular Spin-off
Date, to cause the Conversion Price to be Fixed, effective
on the date of such notice, at the Minimum Price
(determined by reference to the Average Sprint Price for
the 20 Trading Days ended five Business Days before the
date of such election), provided that this Corporation may
only deliver such a notice if a majority of the Continuing
Directors shall have first approved, at a meeting at which
at least seven Continuing Directors are present, Fixing
the Conversion Price on the date of such notice at the
Minimum Price, unless a Fair Price Condition has been
satisfied, and the Class A Holders may elect, by notice to
that effect delivered to this Corporation by or on behalf
of each Class A Holder, at any time to cause the
Conversion Price to be Fixed effective on the date of such
notice, at a price equal to 93.308% of the New Target
Price, the first such notice delivered to be effective.
(iv) If the Conversion Price has been Fixed before the Cellular
Spin-off Date, effective at the Cellular Spin-off Date, the
Conversion Price fixed with reference to the Maximum Price, Minimum
Price or Target Price, as the case may be, automatically and without
notice, will be re-fixed with reference to the New Maximum Price,
New Minimum Price or New Target Price, respectively, the calculation
of such New Minimum Price or such New Maximum Price to be based on
the Average Sprint Price used to calculate the related Maximum Price
or Minimum Price, as the case may be.
(v) If the Conversion Price has not been Fixed by a date which
is five years after the Initial Issuance Date and this Corporation
shall not have redeemed all of the outstanding shares of Class A
Preference Stock as required under Section 3(c), the Class A
Preference Stock shall be convertible only at the election of the
Class A Holders made at any time after the end of ten Business Days
after the 60th day after such fifth anniversary, by notice to that
effect delivered to this Corporation by or on behalf of each Class A
Holder, such conversion to occur five Business Days after delivery
of such notice, at a Conversion Price equal to 135% of the Average
Sprint Price for the 20 Trading Days ended on the Trading Day five
Trading Days prior to such conversion.
(vi) Upon the issuance of shares of Class A Preference Stock at
the Optional Shares Closing (as defined in the Investment Agreement)
or as provided in Section 7(i) of the Class A Provisions or Article
V or VI of the Stockholders' Agreement, the Conversion Price shall
be adjusted further to be the quotient of (x) the sum of (I) the
number of outstanding shares of Class A Preference Stock prior to
such issuance times the Conversion Price of such shares prior to
this adjustment and (II) the number of such shares received upon
such issuance times the purchase price thereof, divided by (y) the
total number of shares of Class A Preference Stock outstanding after
such issuance.
(vii) In addition to any other adjustments provided for in the
Class A Provisions, (x) the Conversion Price and, as appropriate,
the per share dollar amounts reflected in or used in calculating the
Adjusted Cellular Price, the Net Cellular Acquisition Amount, the
Net Cellular Indebtedness, the Average Sprint Price, the Average
Cellular Price, the Lower Threshold Sprint Price, the New Lower
Threshold Sprint Price, the Upper Threshold Sprint Price, the New
Upper Threshold Sprint Price, the Second Anniversary Lower Threshold
Sprint Price, the Target Price, the New Target Price, the Minimum
Price, the New Minimum Price, the Maximum Price, the New Maximum
Price, the Modified Lower Threshold, the Modified New Lower
Threshold, and the Cellular Spin-off Reduction Factor shall be
adjusted to reflect any stock split, subdivision, stock dividend
payable in shares of Common Stock or other reclassification,
consolidation or combination of this Corporation's Voting Securities
or similar action or transaction undertaken after June 14, 1994,
provided that no such adjustment shall be made to the Average Sprint
Price, the Average Cellular Price, the Minimum Price or the New
Minimum Price with respect to events described in this clause (x)
which occur prior to the beginning of the measurement period with
respect to such price, and provided, further, that no adjustment
shall be made under this subsection (vii)(x) in respect of the
Cellular Spin-off or any Spin-off. (y) the Conversion Price and, as
appropriate, the per share dollar amounts reflected in or used in
calculating the Lower Threshold Sprint Price, the New Lower
Threshold Sprint Price, the Upper Threshold Sprint Price, the New
Upper Threshold Sprint Price, the Second Anniversary Lower Threshold
Sprint Price, the Target Price, the New Target Price, the Minimum
Price, the New Minimum Price, the Modified Lower Threshold, the
Modified New Lower Threshold, the Maximum Price and the New Maximum
Price shall be adjusted to reflect any Extraordinary Dividend or
Dividends and any non-cash dividend or distribution (except as
described in clause (x) and except for dividends or distributions of
equity securities of any Subsidiary of this Corporation pur suant to
a Spin-off or the Cellular Spin-off) paid on or with respect to
shares of Common Stock, or any reorganization or reclassification
pursuant to which holders of Common Stock receive cash, property or
(except as described in clause (x), above) securities of this
Corporation, in each case occurring after June 22, 1995, as follows,
provided that no such adjustment shall be made to the Minimum Price
or the New Minimum Price with respect to events described in this
clause (y) which occur prior to the determination of such price: (A)
if such dividend, distribution or event occurs on or prior to the
date the Conversion Price is Fixed, (1) the Target Price, the
Maximum Price, the New Target Price, the Minimum Price, the New
Minimum Price and the New Maximum Price shall be decreased dollar
for dollar by the amount of cash and the Fair Market Value of all
non-cash property or securities distributed with respect to a share
of Common Stock (the "Per Share Distributed Value"); (2) the Lower
Threshold Sprint Price and the New Lower Threshold Sprint Price
shall be decreased by the Per Share Distributed Value divided by
1.35; and (3) the Upper Threshold Sprint Price and the New Upper
Threshold Sprint Price shall be decreased by the Per Share
Distributed Value divided by 1.25; and (B) if such dividend,
distribution or event occurs after the date the Conversion Price is
Fixed, the Conversion Price shall be decreased by subtracting an
amount equal to the Per Share Distributed Value. (c) Unless the
Class A Holders have exercised their option to defer conversion of
the Class A Preference Stock pursuant to Section 3(a)(iii), each
outstanding share of Class A Preference Stock shall be redeemed by
this Corporation within five Business Days after the 60th day
following the fifth anniversary of the Initial Issuance Date for
cash at a redemption price per share equal to its Liquidation
Preference (such price, the "Class A Preference Redemption Price"),
such payment to be delivered to each Class A Holder no later than
five Business Days after such redemption, provided that the failure
to so redeem at such time shall not preclude this Corporation from
so redeeming at any time thereafter.
(d) If any time after the termination of Fundamental Rights as to
all outstanding Shares of Class A Preference Stock, this Corporation
shall not have declared and paid all accrued and unpaid dividends on the
Class A Preference Stock as provided in Section 2 of the Class A
Provisions for four consecutive Quarterly Dividend Payment Dates, then,
in addition to any other voting rights provided in these Articles of
Incorporation, the holders of the Class A Preference Stock shall have the
exclusive right, voting separately as a class, to elect two Directors.
The right of the holders of the Class A Preference Stock to elect the
Class A Directors pursuant to this Section 3(d) shall continue until all
such accrued and unpaid dividends shall have been paid. At such time,
the terms of the Class A Directors shall terminate. At any time when the
holders of the Class A Preference Stock shall have thus become entitled
to elect Class A Directors, a special meeting of the Class A Holders
shall be called for the purpose of electing such Class A Directors, to be
held within 30 days after the right of the holders of the Class A
Preference Stock to elect such Class A Directors shall arise, upon notice
given in the manner provided by law or the Bylaws of this Corporation for
giving notice of a special meeting of the Class A Holders (provided,
however, that such a special meeting shall not be called if the annual
meeting of stock holders is to convene within said 30 days). At any such
special meeting or at any annual meeting at which the Class A Holders
shall be entitled to elect Class A Directors, the holders of a majority
of the then outstanding Class A Preference Stock present in person or by
proxy shall be sufficient to constitute a quorum for the election of such
directors. The persons elected by the holders of the Class A Preference
Stock at any meeting in accordance with the terms of the preceding
sentence shall become Class A Directors on the date of such election.
(e) Whenever quarterly dividends or other dividends or distributions
payable on the Class A Preference Stock as provided in Section 2 of the
Class A Provisions are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on shares of
Class A Preference Stock outstanding shall have been paid in full, this
Corporation shall not: (i) declare or pay dividends or make any other
distributions on any shares or stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding-up) to the Class A
Preference Stock; (ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding-up) with the Class
A Preference Stock except dividends paid ratably on the Class A
Preference Stock and all such parity stock on which dividends are payable
or in arrears in proportion to the total amounts to which the holders of
all such shares are then entitled; or (iii) redeem or purchase or
otherwise acquire for consideration shares of any stock junior (either as
to dividends or upon liquidation, dissolution or winding-up) to the Class
A Preference Stock, provided that, notwithstanding the foregoing, this
Corporation may at any time redeem, purchase or otherwise acquire shares
of stock of any such class junior as to either or both dividends or upon
liquidation, dissolution or winding-up, in exchange for, or out of the
net cash proceeds from the substantially simultaneous sale of, other
shares of stock of any class which is also junior as to either or both
dividends or upon liquidation, dissolution or winding-up, as the case may
be.
(f) This Corporation shall not permit any Subsidiary of this
Corporation to purchase or otherwise acquire for consideration any shares
of stock of this Corporation unless this Corporation could, under Section
3(e), above, purchase or otherwise acquire such shares at such time and
in such manner. 4. Special Rights to Disapprove Certain Actions. At
least 40 days prior to the occurrence of a Subject Event (as defined
below), this Corporation shall deliver to each Class A Holder a notice (a
"Notice") of such proposed Subject Event, setting forth in reasonable
detail the nature of such proposed Subject Event. This Corporation shall
thereafter be entitled to effect such proposed Subject Event unless
within 30 days of delivery of such Notice there shall have been a Class A
Action exercising the special rights of the Class A Holders to disapprove
such Subject Event, provided that the Class A Holders shall have no
special right to disapprove any action (x) which this Corporation is
required to take to comply with its obligations or exercise its rights
under the Investment Agreement, the Stockholders' Agreement, the
Standstill Agreement, the Registration Rights Agreement or the Joint
Venture Agreement or any document executed pursuant to any such agreement
or the Class A Provisions, or (y) taken to comply with Applicable Law or
the rules of any exchange or market system on which securities of this
Corporation may be traded, and provided, further, that any action to be
taken by this Corporation in reliance on clause (y) of the foregoing
proviso is the only action commercially reasonably available to this
Corporation to effect such compliance, as certified to the Class A
Holders by resolution of the Independent Directors. For purposes of
these Articles, the term "Subject Event" means only the following
transactions and only if such transactions are consummated within the
respective time periods indicated below:
(a) Until the second anniversary of the Initial Issuance Date
or, in the case of clause (iv) below, the later of (x) the second
anniversary of the Initial Issuance Date and (y) the Investment
Completion Date: (i) any transaction or series of related
transactions (other than Exempt Asset Divestitures or Exempt Long
Distance Asset Divestitures) that results, directly or indirectly,
in Transfers of assets of this Corporation or its Subsidiaries with
an aggregate Fair Market Value (calculated in the case of each
Transfer as at the date this Corporation or any such Subsidiary
enters into a definitive agreement to effect such Transfer) of more
than 20 percent of Market Capitalization (calculated (x) in the case
of a single transaction as at the date this Corporation or any such
Subsid iary enters into a definitive agreement to effect such
Transfer and (y) in the case of a series of related transactions, as
at the date this Corporation or any such Subsidiary enters into a
definitive agreement to effect the last of such Transfers); (ii) any
transaction or series of related transactions (including, without
limitation, mergers, purchases of stock or assets, joint ventures or
other acquisitions), but excluding any transaction constituting an
Exempt Asset Divestiture or Exempt Long Distance Asset Divestiture,
resulting, directly or indirectly, in the acquisition by this
Corporation or its Subsidiaries for cash or debt securities maturing
in less than one year from the date of issuance of (x) assets
constituting or predominantly used in Core Businesses ("Core
Business Assets") for a purchase price or, in the case of a series
of related transactions, an aggregate purchase price that exceeds 20
percent of Market Capitalization (calculated as at the date this
Corporation or any such Subsidiary enters into a definitive
agreement to effect such transaction or, in the case of a series of
related transactions, as at the date this Corporation or any such
Subsidiary enters into a definitive agreement to effect the last of
such related transactions) or (y) other assets for a purchase price
or, in the case of a series of related transactions, for an
aggregate purchase price that exceeds five percent of Market
Capitalization (calculated as at the date this Corporation or any
such Subsidiary enters into a definitive agreement to effect such
transaction or, in the case of a series of related transactions, as
at the date this Corporation or any such Subsidiary enters into a
definitive agreement to effect the last of such related
transactions), provided that, if any such other assets are proposed
to be obtained in the course of a proposed transaction in which both
Core Business Assets and other assets are to be acquired and the
ratio of the fair market value of the Core Business Assets to be
acquired to the fair market value of the other assets to be acquired
exceeds 1.75 to 1, then the holders of the Class A Stock shall not
be entitled to disapproval rights with respect to such transaction
except as provided in clause (x) of this Section 4(a)(ii); (iii)
issuance by this Corporation of any capital stock or debt
(including, without limitation, direct or indirect issuances such as
pursuant to mergers and other business combinations) with both (x) a
class vote to elect one or more Directors and (y) rights with
respect to dispositions of Long Distance Assets or other assets, or
share issuances, which rights are in scope and duration as extensive
as or more extensive than the comparable related rights granted to
the Class A Holders in these Articles of Incorporation or in the
Stockholders' Agreement, provided that this Section 4(a)(iii) shall
not apply to the extent that (a) such rights are required by
Applicable Law, (b) the holders of any series of Preferred Stock
have the right, voting separately as a class, to elect a number of
Directors of this Corporation upon the occurrence of a default in
payment of dividends or redemption price, or (c) such rights
described in clause (y) are granted in connection with borrowings
and are reflected in a loan agreement, credit agree ment, trust
indenture or similar agreement or instrument; (iv) declaration of
any Extraordinary Dividends during any one year that, individually
or in the aggregate, exceed five percent of Market Capitalization as
at the Business Day immediately preceding the declaration of the
last such dividend or distribution (other than in connection with
transactions within the meaning of clause (e) of the definition of
Exempt Asset Divestitures or clause (g) of the definition of Exempt
Long Distance Asset Divestitures); or (v) any merger or other
business combination in which this Corporation is not the surviving
parent corporation.
(b) Until the earliest of (i) the fifth anniversary of the
Initial Issuance Date, (ii) such time as (A) legislation has been
enacted repealing Section 310, (B) an FCC Order shall have been
issued, or (C) outside counsel to this Corporation with a nationally
recognized expertise in telecommunications regulatory matters
delivers to each of FT and DT a legal opinion, addressed to each of
them, in form and substance reasonably satisfactory to FT and DT, to
the effect that Section 310 does not prohibit FT and DT from owning
the Long Distance Assets proposed to be Transferred by this
Corporation, (iii) the delivery by FT, DT, Atlas or any of their
Affiliates (or a Permitted Designee (as such term is defined in the
Joint Venture Agreement)) of a notice pursuant to Section 17.2(b) of
the Joint Venture Agreement indicating the agreement to purchase all
of the Sprint Venture Interests (as such term is defined in the
Joint Venture Agreement) following an offer by this Corporation or
Sprint Sub pursuant to Section 17.2(a) of the Joint Venture
Agreement, and (iv) the delivery by this Corporation and/or Sprint
Sub of a notice pursuant to Section 17.3(a) of the Joint Venture
Agreement exer cising the put right to sell all of their Sprint
Venture Interests (as such term is defined in the Joint Venture
Agreement) to FT, DT and Atlas (or a Permitted Designee (as such
term is defined in the Joint Venture Agreement)), a direct or
indirect Transfer (other than in connection with an Exempt Long
Distance Asset Divesti ture) after the Initial Issuance Date by this
Corporation or its Subsidiaries of Long Distance Assets with a Fair
Market Value (calculated as at the date this Corporation or any such
Subsidiary enters into a definitive agreement to effect such
Transfer) that, when aggregated with the Fair Market Value of all
other Long Distance Assets Transferred by this Corporation or its
Subsidiaries since the Initial Issuance Date (other than in Exempt
Long Distance Asset Divestitures) (calculated in each case as at the
date this Corporation or any such Subsidiary enters into a
definitive agreement to effect each such respective Transfer)
exceeds five percent of the Fair Market Value of the Long Distance
Assets of this Corpo ration and its Subsidiaries, on a consolidated
basis (calculated as at the date this Corporation or any such
Subsidiary enters into a definitive agreement to effect the last
such Transfer).
(c) Except as otherwise provided in Section 7 of the Class A
Provisions, for so long as any shares of Class A Stock are
outstanding: (i) any amendment to these Articles of Incorporation,
the Bylaws or the Rights Agreement that would adversely affect the
rights of the Class A Holders under these Articles of Incorporation
or the Bylaws; (ii) issuance by this Corporation (including, without
limitation, pursuant to mergers or other business combinations) of
any series or class of capital stock or debt security with
Supervoting Powers; (iii) any merger or other business combination
involving this Corporation that results directly or indirectly in a
Change of Control, unless the surviving corporation expressly (x)
assumes all of this Corporation's obligations in respect of the
rights of the Class A Holders under Section 4(b) of the Class A
Provisions and the provisions of Article III of the Stockholders'
Agreement (except, in each case, as they may be otherwise terminated
pursuant to the Class A Provisions or the Stockholders' Agreement)
and all of the provisions of the Registration Rights Agreement and
(y) agrees to be bound by any applicable Tie-Breaking Vote in accor
dance with Articles 17 and 18 of the Joint Venture Agreement; (iv)
any merger or other business combination involving this Corporation
that does not result directly or indirectly in a Change of Control
unless: (x) this Corporation survives as the parent entity; or (y)
the surviving corporation expressly assumes all of this
Corporation's obligations in respect of the rights of the Class A
Holders granted pursuant to these Articles of Incorpo ration and the
Class A Provisions and under the Bylaws, the Stockholders' Agreement
and the Registration Rights Agreement; or (v) if any shares of Class
A Preference Stock are outstanding, issuance by this Corporation of
shares of Preferred Stock which have rights to the payment of
dividends or the distribution of assets upon the liquidation,
dissolution or winding up of this Corporation senior to such rights
of the Class A Preference Stock. 5. Special Rights Regarding Major
Issuances. At least 90 days before the consummation, directly or
indirectly, by this Corporation of any Major Issuance prior to the
second anniversary of the Initial Issuance Date, this Corporation
shall deliver to each Class A Holder a notice of such proposed Major
Issuance. This Corporation shall be entitled to effect such
proposed Major Issuance (upon receipt of the requisite approval of
the Board of Directors described below) unless within 75 days of the
delivery of such notice there shall have been a Class A Action
exercising the special rights of the Class A Holders to disapprove
such Major Issuance. In addition, so long as any Class A Stock is
outstanding, prior to effecting any Major Issuance:
(a) occurring on or prior to the fifth anniversary of the
Initial Issuance Date, this Corporation shall obtain the prior
approval of two-thirds of the Independent Directors by resolution,
certified to the Class A Holders; and
(b) occurring after the fifth anniversary of the Initial
Issuance Date, this Corporation shall obtain the prior approval of a
majority of the Independent Directors. 6. Special Rights Regarding
Holdings by Major Competitors of FT or DT. (a) Until the tenth
anniversary of the Initial Issuance Date, at least 90 days prior to
consummating any transaction or taking any other action that,
directly or indirectly, would result in, or is taken for the purpose
of encouraging or facilitating, a Major Competitor of FT or DT or of
the Joint Venture having, or being granted by this Corporation any
right, permission or approval to acquire (other than pursuant to a
Strategic Merger), a Percentage Ownership Interest of ten percent or
more (a "Major Competitor Transaction"), this Corporation shall
provide each Class A Holder with notice of such Major Competitor
Transaction in the manner set forth in Subsection (c) below and, if
there is a Class A Action exercising the special rights of the Class
A Holders to disapprove such Major Competitor Transaction within 75
days of the delivery of such notice, this Corporation shall not
consummate such Major Competitor Transaction.
(b) Until the tenth anniversary of the Initial Issuance Date, if a
Major Competitor of FT or DT or of the Joint Venture obtains a Percentage
Ownership Interest of 20 percent or more as a result, directly or
indirectly, of a Strategic Merger: (i) if the Class A Holders have not
made the commitment described in Article VI of the Stockholders'
Agreement, this Corporation (or its successor in such Strategic Merger)
shall, subject to the provisos of Sections 2.1(a)(iii) and 2.2(a) of the
Standstill Agreement, nonetheless take all action necessary or advisable
to lift all restrictions, contractual or otherwise, imposed by this
Corporation or such successor on the ability of the Class A Holders, at
any time after the Class A Common Issuance Date, to purchase shares of
Common Stock or other Voting Securities from third parties sufficient to
permit the Class A Holders to have a Percentage Ownership Interest equal
to that of the Major Competitor of FT or DT or of the Joint Venture; and
(ii) this Corporation shall ensure that the Class A Holders have rights
with regard to (w) a class vote to elect Directors, (x) class approval
and disapproval rights, (y) any other special rights in respect of the
business or operations of this Corporation and (z) any rights to receive
special dividends, distributions or other rights from this Corporation,
which are in scope and duration at least as extensive as any rights
granted by this Corporation to such Major Competitor of FT or DT or of
the Joint Venture (other than rights deriving solely from the number of
Voting Securities owned), regardless of whether or not the Class A
Holders purchase any additional Voting Securities.
(c) Until the tenth anniversary of the Initial Issuance Date, this
Corporation shall deliver to each Class A Holder notice of its intent to
issue Voting Securities in a Major Competitor Transaction to any Major
Competitor of FT or DT or of the Joint Venture at least 30 days prior to
such issuance, such notice to contain a complete and correct description
in reasonable detail of the transaction in question, including, without
limitation, the purchase price for such securities, the nature of such
securities, the identity of the Major Competitor of FT or DT or of the
Joint Venture and the rights (contractual and other) this Corporation
would grant such Major Competitor. This Corporation shall also deliver
to each Class A Holder notice of any such issuance within five days after
it occurs, such notice to contain a description of the transaction in
question and be accompanied by complete and correct copies of all
agreements, instruments and written understandings of this Corporation,
its Subsidiaries and Affiliates and such Major Competitor of FT or DT or
of the Joint Venture and the Subsidiaries and Affiliates of such Major
Competitor executed in respect of such transaction. 7. Conversion of
Shares; Termination of Fundamental Rights. (a) Failure to Maintain
Ownership. If, after the Investment Completion Date, the aggregate
Committed Percentage of the Class A Holders shall be below ten percent
(i) for more than 180 consecutive days or (ii) immediately following a
Transfer of Class A Stock by a Class A Holder, each outstanding share of
Class A Common Stock shall automatically convert (without the payment of
any consideration) into one duly issued, fully paid and nonassessable
share of Common Stock, or if any shares of Class A Preference Stock are
out standing, the Fundamental Rights shall terminate as to all
outstanding shares of Class A Preference Stock, such conversion or
termination to take place on the next Business Day following the end of
such 180-day period in the case of clause (i) or on the date of such
Transfer in the case of clause (ii), provided that, if the aggregate
Committed Percentage of the Class A Holders shall fall below ten percent
for more than 180 consecutive days following the later of the Fixed
Closing Date and the date of a Major Issuance as a result of the
consummation of such Major Issuance, then unless all of the outstanding
shares of Class A Common Stock shall have been converted earlier, or the
Fundamental Rights shall have previously terminated as to all outstanding
shares of Class A Preference Stock, in each case pursuant to this Section
7 of the Class A Provisions, (x) the Class A Common Stock shall not
convert into Common Stock, or the Fundamental Rights shall not terminate,
as the case may be, until the last to occur of (i) the third anniversary
of the date of such Major Issuance, (ii) the third anniversary of the
Fixed Closing Date and (iii) the Investment Completion Date, and (y) the
Class A Holders shall continue to be entitled to elect Directors pursuant
to ARTICLE FIFTH of these Articles of Incor poration until the last to
occur of (i) the third anniversary of the date of such Major Issuance,
(ii) the third anniversary of the Fixed Closing Date, and (iii) the
Investment Completion Date, but (z) after the last to occur of the
expiration of 180 days following the Fixed Closing Date, 180 days
following the date of such Major Issuance, and the Investment Completion
Date, the Class A Holders shall no longer have their rights under
Sections 4, 5, 6, 7 and 8 of the Class A Provisions, and provided,
further, that such conversion shall not be considered to be an
acquisition of Common Stock for purposes of Section 7(i) of the Class A
Provisions.
(b) FT/DT Joint Venture Termination; Material Breach of Investment
Documents. (i) Each outstanding share of Class A Common Stock shall
automatically convert (without the payment of any consideration) into one
duly issued, fully paid and non assessable share of Common Stock and, if
any shares of Class A Preference Stock are outstanding, the Fundamental
Rights shall terminate as to all outstanding shares of Class A Preference
Stock, if: (t) the Sprint Parties receive the Tie-Breaking Vote pursuant
to Section 17.5 of the Joint Venture Agreement; (u) there is an FT/DT
Joint Venture Termination; (v) FT or DT or any Qualified Subsidiary
breaches in any material respect its obligations under Section 2.4 of the
Stockholders' Agreement; (w) FT or DT or any Qualified Subsidiary
breaches in any material respect its obligations under Article II (other
than Section 2.4) of the Stockholders' Agreement; (x) FT, DT or any
Qualified Subsidiary breaches any of the provisions of Article 2 (other
than Section 2.1(b)) of the Standstill Agreement or any corresponding
provision of any Qualified Subsidiary Standstill Agreement; (y) FT, DT or
any Qualified Subsidiary breaches any of the provisions of Sections 3.1
or 3.2 of the Stand still Agreement or any corresponding provisions of
any Qualified Subsidiary Standstill Agreement, in each case in a Control
Context, or otherwise breaches Sections 3.1(a)(ii), (iii) or (iv) or
Section 3.1(g) of the Standstill Agreement or any corresponding provision
of any Qualified Subsidiary Standstill Agreement; or (z) FT, DT or any
Qualified Subsidiary breaches any of the provisions of Sections 3.1
(except Section 3.1(a)(ii), (iii) or (iv), or Section 3.1(g)) or 3.2 of
the Standstill Agreement or any corresponding provisions of any Qualified
Subsidiary Standstill Agreement, in each case other than in a Control
Context; provided that, with respect to an alleged breach of the type
described in clauses (v), (w), (x), (y) or (z) above, the Class A Holders
alleged to have committed such breach (the "Breaching Holders") shall
deliver a notice (I) except with respect to a breach of the type
described in clause (y) above, in accordance with clauses (ii)(x) or
(iii)(x) below, in which case no conversion of the Class A Common Stock
or termination of the Fundamental Rights as to all outstanding shares of
Class A Preference Stock, as the case may be, shall take place unless
such breach fails to be cured within the time provided for cure in such
clause (ii) or (iii), as the case may be; (II) in accordance with clauses
(ii)(y), (iii)(y) or (iv) below, in which case no conversion of the Class
A Common Stock or termination of the Fundamental Rights, as the case may
be, shall take place until there is issued a final nonappealable decision
or order of a court of competent jurisdiction finding that such breach
has occurred and, if applicable, was not cured within the time provided
for cure in clauses (ii) or (iii) below, as the case may be; or (III)
admitting that such a breach has occurred, and (if applicable) cannot be
cured within the time periods provided for cure in clauses (ii) or (iii)
below, in which case each outstanding share of Class A Common Stock shall
automatically convert (without the payment of any consideration) into one
duly issued, fully paid and nonassessable share of Common Stock or the
Fundamental Rights shall terminate as to all outstanding shares of Class
A Preference Stock, as the case may be, in each case upon delivery of
such notice; and
provided, further, that if the Breaching Holders fail to perform the
actions described in clauses (I) or (II) above within the time periods
provided for performing such actions in clauses (ii), (iii) or (iv)
below, they shall be deemed to have taken the action described in clause
(III) above.
(ii) For any alleged breach of the type described in clauses (w),
(x) or (z) of clause (i) above, the Breaching Holders shall have the
right, within five Business Days after the date (for purposes of this
clause (ii), the "Breach Notice Date") that notice of such breach is
delivered to each Breaching Holder by this Corporation, to deliver to
this Corpo ration a notice either: (x) committing to effect a cure as
soon as practical, in which case the Breaching Holders shall effect such
cure as soon as practical, but in no event later than the 20th Business
Day from the Breach Notice Date (or, with respect to an alleged breach of
clauses (w) or (x), if such cure cannot be effected within such time
period due to the anti-fraud rules of the U.S. securities laws, such
longer period as is reasonably necessary to cure such breach in a manner
consistent with such rules), provided that (I) the Breaching Holders
shall have no right to cure unless such breach is susceptible to cure;
(II) such cure period shall continue only for so long as each Breaching
Holder shall be undertaking to effect such a cure in a diligent manner;
(III) with respect to an alleged breach of clause (i)(x) above, this
Corporation shall have the right at any time after the end of such 20-day
period to purchase such number of shares of Common Stock or Class A
Stock, as the case may be, as is necessary to return the Class A Holders
to the ownership level permitted by the Standstill Agreement or a
Qualified Subsidiary Standstill Agree ment, as the case may be, at a
price equal to the lower of (A) the Market Price for such shares at the
time of such redemption and (B) the price paid by the Breaching Holders
for such shares, provided that this Corporation may only exercise such
right if a majority of the Continuing Directors shall have first
approved, at a meeting at which at least seven Continuing Directors are
present, such a purchase of Shares, unless a Fair Price Condition has
been satisfied; and (IV) withdrawal of the action alleged to have caused
such breach shall not, in and of itself, give rise to a presumption that
such breach has been cured; or (y) disputing that such a breach has
occurred, provided that during such time as the most recent decision or
order of a court of competent jurisdiction is to the effect that such
breach has occurred and was not cured within the time provided for cure
in clause (x) of this clause (ii), the rights provided to the Class A
Holders under Sections 4 (except 4(a)(iii) and 4(c)), 5, 6, 7 and 8 of
the Class A Provisions and the right to elect members of the Board of
Directors of the holders of the Class A Stock under ARTICLE FIFTH of
these Articles of Incorporation shall be suspended and may not be exer
cised by the Class A Holders.
(iii) For any alleged breach of the type described in clause (i)(v)
above, the Breaching Holders shall have the right, within five Business
Days after the date (for purposes of this clause (iii), the "Breach
Notice Date") that notice of such breach is delivered to each Breaching
Holder by this Corporation, to deliver to this Corporation a notice
either: (x) committing to effect a cure as soon as practical, in which
case the Breaching Holders shall effect such cure as soon as practical,
but in no event later than the 20th Business Day from the Breach Notice
Date (or, if such cure cannot be effected within such time period due to
the anti-fraud rules of the U.S. securities laws, such longer period as
is reasonably necessary to cure such breach in a manner consistent with
such rules), provided that (I) the Breaching Holders shall have no right
to cure unless such breach is susceptible to cure; (II) such cure period
shall continue only for so long as each Breaching Holder shall be
undertaking to effect such a cure in a diligent manner; and (III)
withdrawal of the action alleged to have caused such breach shall not, in
and of itself, give rise to a presumption that such breach has been
cured; or
(y) disputing that such a breach has occurred;
provided that, in each case, from the Breach Notice Date until the
earlier to occur of the cure of such breach and the issuance of a
decision or order of a court of compe tent jurisdiction finding that
such breach has not oc curred or was cured within the time provided
for cure in clause (x) of this clause (iii), the rights provided to
the Class A Holders under Sections 4 (except 4(a)(iii) and 4(c)), 5,
6, 7 and 8 of the Class A Provisions and the right to elect members
of the Board of Directors of the holders of the Class A Stock under
ARTICLE FIFTH of these Articles of Incorporation shall be suspended
and may not be exercised by the Class A Holders; and provided,
further, that following such decision or order, such rights shall be
suspended during such time as the most recent decision or order of a
court of competent jurisdiction is to the effect that such breach
has oc curred and was not cured within the time provided for cure in
clause (x) of this clause (iii).
(iv) For any alleged breach of the type described in clause (i)(y)
above, the Breaching Holders shall have the right, within five Business
Days after the date (for purposes of this clause (iv), the "Breach Notice
Date") that notice of such breach is delivered to each Breaching Holder
by this Corporation, to deliver to this Corporation a notice disputing
that such a breach has occurred, provided that from the Breach Notice
Date until the issuance of a decision or order of a court of competent
jurisdiction finding that such breach has not occurred, the rights
provided to the Class A Holders under Sections 4 (except 4(a)(iii) and
4(c)), 5, 6, 7 and 8 of the Class A Provisions and the right to elect
members of the Board of Directors of the holders of the Class A Stock
under ARTICLE FIFTH of these Articles of Incorporation shall be suspended
and may not be exercised by the Class A Holders; and provided, further,
that following such decision or order, such rights shall be suspended
during such time as the most recent decision or order of a court of
competent jurisdiction is to the effect that such breach has occurred.
(v) For purposes of this Section 7(b), an alleged breach shall be
deemed to have occurred in a Control Context if the action or actions
alleged to have given rise to such breach were taken in the context of
efforts by any Class A Holder or any other Person having the purpose or
effect of changing or influencing the control of this Corporation. (vi)
No conversion pursuant to this Section 7(b) shall be considered an
acquisition for purposes of Section 7(i) of the Class A Provisions.
(c) Failure to Purchase at Closings; Class A Preference Stock
Ownership. The Fundamental Rights shall terminate as to all outstanding
shares of Class A Preference Stock if (i) FT or DT or any Qualified
Subsidiary which is a party to the Investment Agreement breaches its
obligation to purchase shares of Common Stock or Class A Stock, as the
case may be, under the Investment Agreement at an Additional Preference
Stock Closing, a Supplemental Preference Stock Closing or a Deferred
Common Stock Closing, as such terms are defined in the Investment
Agreement, or (ii) if, prior to the Investment Completion Date, the
outstanding shares of Class A Preference Stock have an aggregate
liquidation value of less than $1.5 billion as a result of a Transfer of
shares of Class A Preference Stock by a Class A Holder (other than a
Transfer contemplated by Section 7.4(b)(i)(y) of the Stockholders'
Agreement);
(d) Corporation Joint Venture Termination. Unless the Class A
Common Stock shall have been converted earlier or the Fundamental Rights
shall have been terminated earlier as to all outstanding shares of Class
A Preference Stock, in each case pursuant to this Section 7 of the Class
A Provisions, if there is a Corporation Joint Venture Termination, each
outstanding share of Class A Common Stock shall automatically convert
(without the payment of any consideration) into one duly issued, fully
paid and nonassessable share of Common Stock or the Fundamental Rights
shall terminate as to all outstanding shares of Class A Preference Stock,
as the case may be, in each case on the third anniversary of the date of
such Corporation Joint Venture Termination, provided that any such
conversion shall not be considered to be an acquisition of Common Stock
for purposes of Section 7(i) of the Class A Provisions.
(e) Other Joint Venture Termination. If (i) there is a sale of all
the Venture Interests of the Sprint Parties or the FT/DT Parties pursuant
to Section 17.2, 17.3, 17.4, 19.3, 20.6 or 20.11 of the Joint Venture
Agreement or (ii) the Joint Venture is otherwise terminated, in each case
other than due to (i) an FT/DT Joint Venture Termination or (ii) a
Corporation Joint Venture Termination: (x) on the date of such
termination, the rights provided to the Class A Holders in Sections 4
(except Sections 4(c)(i) and 4(c)(iii)), 5 and 6 of the Class A
Provisions shall terminate; and (y) unless the Class A Common Stock shall
have been converted, or the Fundamental Rights shall have been terminated
earlier as to all outstanding shares of Class A Preference Stock, as the
case may be, in each case pursuant to this Section 7 of the Class A
Provisions, each outstanding share of Class A Common Stock shall
automatically convert (without the payment of any consideration) into one
duly issued, fully paid and nonassessable share of Common Stock or those
Fundamental Rights which have not been terminated earlier as to all
outstanding shares of Class A Preference Stock pursuant to clause (x)
shall terminate, as the case may be, in each case on the third
anniversary of the date of such termination, provided that any such
conversion shall not be considered to be an acquisition of Common Stock
for purposes of Section 7(i) of the Class A Provisions.
(f) Change of Control. If there is a Change of Control within the
meaning of clause (a) of the definition of Change of Control, (i) the
rights provided to the Class A Holders in ARTICLE FIFTH of these Articles
of Incorporation, and Sections 4 (except Sections 4(b), 4(c)(iii) (as to
rights provided under Section 4(b)) and 4(c)(iv) (as to rights provided
under Section 4(b)), 5 and 6 of the Class A Provisions shall terminate
upon the consummation of the transactions contemplated thereby, provided
that, prior to such consummation, this Corporation shall engage in good
faith negotiations with any potential acquiror of Control to provide the
Class A Holders with rights equivalent to those provided in ARTICLE FIFTH
of these Articles of Incorporation and (ii) all, but not less than all,
of the Class A Holders shall have the right (but not the obligation) to
deliver to this Corpora tion a written notice upon which delivery (x) if
Class A Common Stock is then outstanding, each outstanding share of Class
A Common Stock shall automatically convert (without the payment of any
consideration) into one duly issued, fully paid and nonassessable share
of Common Stock or (y) if Class A Preference Stock is then outstanding,
(A) if at the time of delivery of such notice the Conversion Price has
been Fixed, the Transfer Restrictions shall cease to be of further force
and effect, and each share of Class A Preference Stock Transferred
thereafter (other than to a Qualified Subsidiary or Class A Holder) shall
convert at the applicable Conversion Price (without the payment of any
consideration) into that number of duly issued, fully paid and
nonassessable shares of Common Stock equal to the number of related Class
A Conversion Shares, or (B) if at the time of delivery of such notice the
Conversion Price has not been Fixed, the Class A Holders may deliver a
notice to this Corporation electing either that (x) upon delivery of such
notice, the Transfer Restrictions shall cease to be of further force and
effect, and each share of Class A Preference Stock Transferred thereafter
(other than to a Qualified Subsidiary or Class A Holder) shall convert
upon such Transfer at the Target Price (without the payment of
consideration) into that number of duly issued, fully paid and
nonassessable shares of Common Stock equal to the number of related Class
A Conversion Shares, or (y) on the 31st day following delivery of such
notice, the Transfer Restrictions cease to be of further force and
effect, and each share of Class A Preference Stock Transferred thereafter
(other than to a Qualified Subsidiary or Class A Holder) shall convert
upon such Transfer at the Minimum Price at the date of such Transfer
(without the payment of consideration) into that number of duly issued,
fully paid and nonassessable shares of Common Stock equal to the number
of related Class A Conversion Shares, provided that this Corporation may
elect within 30 days after the delivery of notice by the Class A Holders
hereunder to the effect specified in this clause (y), in lieu of
releasing the Transfer Restrictions and having such Shares convert at the
Minimum Price, to have this Corporation redeem each share of Class A
Preference Stock for cash at a per share price equal to its Liquidation
Preference on the 90th day following the delivery of such notice,
provided, further, that (i) if this Corporation's notes at the date of
delivery of such notice fulfill the requirements set forth in the proviso
to the definition of "Corporation Eligible Notes," this Corporation may,
upon delivery of a notice to each Class A Holder no fewer than ten
Business Days prior to such 90th day, in lieu of redeeming the Class A
Preference Stock for cash, issue to each Class A Holder a Corporation
Eligible Note in an amount equal to the aggregate Liquidation Preference
attributable to the shares of Class A Preference Stock held by such Class
A Holder maturing at the earlier of (A) three years from the date of
issuance, and (B) five years from the Initial Issuance Date, and (ii)
this Corporation shall not be permitted to elect the option to redeem set
forth in the first proviso unless a majority of the Continuing Directors
shall have first approved, at a meeting at which at least seven
Continuing Directors are present, such redemption, unless a Fair Price
Condition has been satisfied. Any such conversion of Class A Stock
pursuant to this clause (f) shall not be considered to be an acquisition
of Common Stock for purposes of Section 7(i) of the Class A Provisions.
(g) Unequal Ownership. (i) If the ratio (the "Ownership Ratio") of
the Percentage Ownership Interest of either FT or DT to the Percentage
Ownership Interest of the other exceeds the Applicable Ratio for 60
consecutive days following a notice of such event delivered by this
Corporation to each of FT and DT, each share of Class A Common Stock, if
any, shall automatically convert (without the payment of any
consideration) into one duly issued, fully paid and nonassessable share
of Common Stock or the Fundamental Rights shall terminate as to all
outstanding shares of Class A Preference Stock, as the case may be,
provided that any such conversion shall not be considered to be an
acquisition of Common Stock for purposes of Section 7(i) of the Class A
Provisions.
(ii) For purposes of calculating the Ownership Ratio, FT and DT
shall be deemed to own shares of Class A Stock owned by a Qualified
Subsidiary as follows: (x) if only one of FT or DT owns, directly or
indirectly, Votes in such Qualified Subsidiary, FT or DT, as the case may
be, shall be deemed to own all of the shares of Class A Stock owned by
such Qualified Subsid iary; and (y) if both FT and DT own, directly or
indirectly, Votes in such Qualified Subsidiary, each of FT and DT shall
be deemed to own its respective Applicable Percentage of the shares of
Class A Stock owned by such Qualified Subsidiary. As used herein, the
"Applicable Percentage" shall mean the percentage of the equity interests
of such Qualified Subsidiary owned, directly or indirectly, by FT or DT,
as the case may be.
(h) Unauthorized Transfers. Unless approved by this Corporation,
upon any Transfer of shares of Class A Stock (other than a Transfer to a
Qualified Subsidiary, a Qualified Stock Purchaser or to FT or DT, in each
case which Transfer is effected in accordance with the provisions of
Article II of the Stockholders' Agreement), (i) in the case of a Transfer
of Class A Common Stock, each share of Class A Common Stock so
Transferred shall automatically convert (without the payment of any
consideration) into one duly issued, fully paid and nonassessable share
of Common Stock as of the date of such Transfer and (ii) in the case of a
Transfer of Class A Preference Stock, (x) if at the date of Transfer the
Conversion Price has been Fixed, each share of Class A Preference Stock
so Transferred shall automatically convert (without the payment of any
consideration) into that number of duly issued, fully paid and
nonassessable shares of Common Stock equal to the number of related Class
A Conversion Shares, or (y) if at the date of Transfer the Conversion
Price has not been Fixed, each share of Class A Preference Stock so
Transferred shall automatically convert at the Target Price (without the
payment of any consideration) into that number of duly issued, fully paid
and nonassessable shares of Common Stock equal to the number of related
Class A Conversion Shares, provided that no conversion of Class A Stock
pursuant to this Section 7(h) shall be considered to be an acquisition of
Common Stock for purposes of Section 7(i) of the Class A Provisions. (i)
Conversion of Common Stock into Class A Stock. Unless the Fundamental
Rights shall have been previously terminated as to all outstanding shares
of Class A Preference Stock, (i) following the Class A Common Issuance
Date and until the conversion of all of the shares of Class A Common
Stock pursuant to this Section 7, each share of Common Stock acquired by
a Class A Holder shall automatically convert (without the payment of any
consideration) into one duly issued, fully paid and nonassessable share
of Class A Common Stock at the date of such acquisition; and (ii)
following the date of the Supplemental Preference Stock Closing and prior
to the Class A Common Issuance Date, each share of Common Stock acquired
by a Class A Holder shall automatically convert (without payment of any
consideration) into that number of duly issued, fully paid and
nonassessable shares of Class A Preference Stock at the date of such
purchase equal to the quotient of (A) the number of shares of Class A
Preference Stock outstanding immediately prior to such acquisition,
divided by (B) the number of Class A Conversion Shares associated with
such outstanding shares of Class A Preference Stock.
(j) Notice of Conversion; Exchange of Stock Certificates; Effect of
Conversion of all Class A Stock, etc. (i) Immediately upon the
conversion of shares of Class A Stock into shares of Common Stock, or
shares of Common Stock into shares of Class A Stock, as the case may be
and in each case pursuant to this Section 7 (the shares of Class A Stock
or shares of Common Stock so converted hereinafter referred to as the
"Converted Shares"), the rights of the holders of such Converted Shares,
as such, shall cease and the holders thereof shall be treated for all
purposes as having become the record owners of the shares of Class A
Stock or Common Stock, as the case may be, issuable upon such conversion
(the "New Shares"), provided that such Persons shall be entitled to
receive when paid any dividends declared on the Converted Shares as of a
record date preceding the time the Converted Shares were converted (the
"Conversion Time") and unpaid as of the Conversion Time. If the stock
transfer books of this Corporation shall be closed at the Conversion
Time, such Person or Persons shall be deemed to have become such holder
or holders of record of the New Shares at the opening of business on the
next succeeding day on which such stock transfer books are open.
(ii) As promptly as practicable after the Conversion Time, upon the
delivery to this Corporation of the certificates formerly representing
Converted Shares, this Corporation shall deliver or cause to be
deliv-ered, to or upon the written order of the record holder of such
certificates, a certificate or certificates representing the number of
duly issued, fully paid and nonassessable New Shares into which the
Converted Shares formerly represented by such certificates have been
converted in accordance with the provisions of this Section 7.
(iii) This Corporation shall pay all United States federal, state or
local documentary, stamp or similar issue or transfer taxes payable in
respect of the issue or delivery of New Shares upon the conversion of
Converted Shares pursuant to this Section 7, provided that this
Corporation shall not be required to pay any tax which may be payable in
respect of any registration of Transfer involved in the issue or delivery
of New Shares in a name other than that of the registered holder of
shares converted or to be converted, and no such issue or delivery shall
be made unless and until the person requesting such issue has paid to
this Corporation the amount of any such tax or has established, to the
satisfaction of this Corporation, that such tax has been paid.
(iv) This Corporation shall at all times reserve and keep available,
out of the aggregate of its authorized but unissued Class A Common Stock,
Class A Preference Stock and Common Stock and its issued Common Stock
held in its treasury, for the purpose of effecting the conversion of the
Common Stock, Class A Preference Stock and Class A Common Stock
contemplated hereby, the full number of shares of Common Stock then
deliverable upon the conversion of all outstanding shares of Class A
Stock, and the full number of shares of Class A Stock that would be
deliverable upon conversion of all of the shares of Common Stock and
Class A Preference Stock the Class A Holders are permitted to acquire
hereunder and under the Investment Agreement, the Stockholders' Agreement
and the Standstill Agreement.
(v) Following conversion of all outstanding shares of Class A Common
Stock into shares of Common Stock pursuant to this Section 7 of the Class
A Provisions, this Corporation shall not, directly or indirectly, issue,
or sell from the treasury, any shares of Class A Common Stock. Following
conversion of all outstanding shares of Class A Preference Stock into
shares of Class A Common Stock (or Common Stock, as the case may be) this
Corporation shall not, directly or indirectly, issue, or sell from the
treasury, any shares of Class A Preference Stock.
(k) Class A Stock Held by Qualified Stock Purchasers. (i) If any
Qualified Stock Purchaser shall become a Major Competitor of this
Corporation or of the Joint Venture, on the date the writing referred to
in the definition of Major Competitor in Section 12 of these Class A
Provisions is delivered to each Class A Holder, each share of Class A
Common Stock owned by such Qualified Stock Purchaser shall automatically
convert (without the payment of any consideration) into one duly issued,
fully paid and nonassessable share of Common Stock, or if shares of Class
A Preference Stock are outstanding, the Fundamental Rights shall
terminate as to the particular shares of Class A Preference Stock owned
by such Qualified Stock Purchaser.
(ii) Each outstanding share of Class A Common Stock owned by a
Qualified Stock Purchaser shall automatically convert (without the
payment of any consideration) into one duly issued, fully paid and
nonassessable share of Common Stock, or if shares of Class A Preference
Stock are outstanding, the Fundamental Rights shall terminate as to the
particular shares of Class A Preference Stock owned by such Qualified
Stock Purchaser, in each case if:
(v) such Qualified Stock Purchaser breaches in any material
respect its obligations under Section 2.4 of the Stockholders'
Agreement; (w) such Qualified Stock Purchaser breaches in any
material respect its obligations under Article II (other than
Section 2.4) of the Stockholders' Agreement; (x) such Qualified
Stock Purchaser breaches any of the provisions of Article 2 of the
Qualified Stock Purchaser Standstill Agreement; (y) such Qualified
Stock Purchaser breaches any of the provisions of Section 3.1 or 3.2
of the Qualified Stock Purchaser Standstill Agreement in a Control
Context, or such Qualified Stock Purchaser otherwise breaches
Sections 3.1(a)(ii), (iii) or (iv) or Section 3.1(g) of the
Qualified Stock Purchaser Standstill Agreement; or (z) such
Qualified Stock Purchaser breaches any of the provisions of Sections
3.1 (except Section 3.1(a)(ii), (iii) or (iv), or Section 3.1(g)) or
3.2 of the Qualified Stock Purchaser Standstill Agreement, in each
case other than in a Control Context;
provided, that such Qualified Stock Purchaser shall deliver a notice (I)
except with respect to a breach of the type described in clause (y)
above, in accordance with clauses (iii)(x) or (iv)(x) below, in which
case no conversion of the Class A Common Stock owned by such Qualified
Stock Purchaser shall take place and the Fundamental Rights shall not
terminate as to the particular shares of Class A Preference Stock owned
by such Qualified Stock Purchaser unless such breach fails to be cured
within the time provided for cure in such clause (iii) or (iv), as the
case may be; (II) in accordance with clauses (iii)(y), (iv)(y) or (v)
below, in which case no conversion of the Class A Common Stock owned by
such Qualified Stock Purchaser shall take place and the Fundamental
Rights shall not terminate as to the particular shares of Class A
Preference Stock owned by such Qualified Stock Purchaser until there is
issued a final nonappealable decision or order of a court of competent
jurisdiction finding that such breach has occurred and, if applicable,
was not cured within the time provided for cure in clauses (iii) or (iv)
below, as the case may be; or (III) admitting that such a breach has
occurred, and (if applicable) cannot be cured within the time periods
provided for cure in clauses (iii) or (iv) below, in which case each
outstanding share of Class A Common Stock owned by such Qualified Stock
Purchaser shall auto matically convert (without the payment of any consid
eration) into one duly issued, fully paid and nonassessable share of
Common Stock upon delivery of such notice, or if shares of Class A
Preference Stock are outstanding, the Fundamental Rights shall terminate
as to the particular shares of Class A Preference Stock owned by such
Qualified Stock Purchaser; and
provided, further, that if such Qualified Stock Purchaser fails to
perform the actions described in clauses (I) or (II) above within the
time periods provided for performing such actions in clauses (iii), (iv)
or (v) below, it shall be deemed to have taken the action described in
clause (III) above.
(iii) For any alleged breach of the type described in clauses (w),
(x) or (z) of clause (ii) above, such Qualified Stock Purchaser shall
have the right, within five Business Days after the date (for purposes of
this clause (iii), the "Breach Notice Date") that notice of such breach
is delivered to such Qualified Stock Purchaser by this Corporation, to
deliver to this Corporation a notice either: (x) committing to effect a
cure as soon as practical, in which case such Qualified Stock Purchaser
shall effect such cure as soon as practical, but in no event later than
the 20th Business Day from the Breach Notice Date (or, with respect to an
alleged breach of clauses (w) or (x), if such cure cannot be effected
within such time period due to the anti-fraud rules of the
U.S. securities laws, such longer period as is reasonably necessary to
cure such breach in a manner consistent with such rules), provided that
(I) such Qualified Stock Purchaser shall have no right to cure unless
such breach is susceptible to cure; (II) such cure period shall continue
only for so long as such Qualified Stock Purchaser shall be undertaking
to effect such a cure in a diligent manner; (III) with respect to an
alleged breach of clause (ii)(x) above, this Corporation shall have the
right at any time after the end of such 20-day period to purchase such
number of shares of Class A Stock as is necessary to return such
Qualified Stock Purchaser to the ownership level permitted by the
Qualified Stock Purchaser Standstill Agreement, at a price equal to the
lower of (A) the Market Price for such Shares at the time of such
redemption and (B) the price paid by such Qualified Stock Purchaser for
such Shares, provided that this Corporation may only exercise such right
if a majority of the Continuing Directors shall have first approved, at a
meeting at which at least seven Continuing Directors are present, such a
purchase of Shares, unless a Fair Price Condition has been satisfied; and
(IV) withdrawal of the action alleged to have caused such breach shall
not, in and of itself, give rise to a presumption that such breach has
been cured; or (y) disputing that such a breach has occurred, provided
that during such time as the most recent decision or order of a court of
competent jurisdiction is to the effect that such breach has occurred and
was not cured within the time provided for cure in clause (x) of this
clause (iii), the rights provided to such Qualified Stock Purchaser under
Sections 4 (except 4(a)(iii) and 4(c)), 5, 6, 7 and 8 of the Class A
Provisions and the right of such Qualified Stock Purchaser to elect
members of the Board of Directors as a holder of the Class A Common Stock
under ARTICLE FIFTH of these Articles of Incorporation shall be suspended
and may not be exercised by such Qualified Stock Purchaser.
(iv) For any alleged breach of the type described in clause (ii)(v)
above, such Qualified Stock Purchaser shall have the right, within five
Business Days after the date (for purposes of this clause (iv), the
"Breach Notice Date") that notice of such breach is delivered to such
Qualified Stock Purchaser by this Corporation, to deliver to this
Corporation a notice either: (x) committing to effect a cure as soon as
practical, in which case such Qualified Stock Purchaser shall effect such
cure as soon as practical, but in no event later than the 20th Business
Day from the Breach Notice Date (or, if such cure cannot be effected
within such time period due to the anti-fraud rules of the U.S.
securities laws, such longer period as is reasonably neces-sary to cure
such breach in a manner consistent with such rules), provided that (I)
such Qualified Stock Purchaser shall have no right to cure unless such
breach is susceptible to cure; (II) such cure period shall continue only
for so long as such Qualified Stock Purchaser shall be undertaking to
effect such a cure in a diligent manner; and (III) withdrawal of the
action alleged to have caused such breach shall not, in and of itself,
give rise to a presumption that such breach has been cured; or (y)
disputing that such a breach has occurred;
provided that, in each case, from the Breach Notice Date until the
earlier to occur of the cure of such breach and the issuance of a
decision or order of a court of competent jurisdiction finding that such
breach has not occurred or was cured within the time provided for cure in
clause (x) of this clause (iv), the rights provided to such Qualified
Stock Purchaser under Sections 4 (except 4(a)(iii) and 4(c)), 5, 6, 7 and
8 of the Class A Provisions and the right of such Qualified Stock
Purchaser to elect members of the Board of Directors as a holder of the
Class A Common Stock under ARTICLE FIFTH of these Articles of
Incorporation shall be suspended and may not be exercised by such
Qualified Stock Purchaser; and provided, further, that following such
decision or order, such rights shall be suspended during such time as the
most recent decision or order of a court of competent jurisdiction is to
the effect that such breach has occurred and was not cured within the
time provided for cure in clause (x) of this clause (iv).
(v) For any alleged breach of the type described in clause (ii)(y)
above, such Qualified Stock Purchaser shall have the right, within five
Business Days after the date (for purposes of this clause (v), the
"Breach Notice Date") that notice of such breach is delivered to such
Qualified Stock Purchaser by this Corporation, to deliver to this
Corporation a notice disputing that such a breach has occurred, provided
that from the Breach Notice Date until the issuance of a decision or
order of a court of competent jurisdiction finding that such breach has
not occurred, the rights provided to such Qualified Stock Purchaser under
Sections 4 (except 4(a)(iii) and 4(c)), 5, 6, 7 and 8 of the Class A
Provisions and the right of such Qualified Stock Purchaser to elect
members of the Board of Directors as a holder of the Class A Common Stock
under ARTICLE FIFTH of these Articles of Incorporation shall be suspended
and may not be exercised by such Qualified Stock Purchaser and provided,
further, that following such decision or order, such rights shall be
suspended during such time as the most recent decision or order of a
court of competent jurisdiction is to the effect that such breach has
occurred.
(vi) For purposes of this Section 7(k), an alleged breach shall be
deemed to have occurred in a Control Context if the action or actions
alleged to have given rise to such breach were taken in the context of
efforts by such Qualified Stock Purchaser or any other Person having the
purpose or effect of changing or influencing the control of this Corpora
tion.
(vii) No conversion pursuant to this Section 7(k) shall be
considered an acquisition for purposes of Section 7(i) of the Class A
Provisions.
(l) Effect of Conversion or Termination of Fundamental Rights.
Following the earlier of (i) conversion of all of the shares of Class A
Common Stock pursuant to this Section 7 and (ii) a termination of the
Fundamental Rights as to all outstanding shares of Class A Preference
Stock, each share of Class A Common Stock issued by this Corporation
pursuant to the Investment Agreement, the Stockholders' Agreement or
these Articles of Incorporation shall automatically convert (without the
payment of any consideration) into one duly issued, fully paid and
nonassessable share of Common Stock and each share of Class A Preference
Stock to be so issued shall automatically convert (without the payment of
any consideration) into duly issued, fully paid and nonassessable shares
of Common Stock based on the number of related Class A Conversion Shares,
provided that such conversion shall not be considered an acquisition of
Common Stock for purposes of Section 7(i) of the Class A Provisions.
(m) Exclusionary Tender Offer. If the Board of Directors shall
determine not to oppose a tender offer by a Person other than FT, DT or
any of their respective Affiliates for Voting Securities of this
Corporation representing not less than 35 percent of the Voting Power of
this Corporation, and the terms of such tender offer do not permit the
Class A Holders to sell an equal or greater percentage of their Shares as
the other holders of Voting Securities of this Corporation are permitted
to sell taking into account any proration, all, but not less than all, of
the Class A Holders shall have the right (but not the obligation) to
deliver to this Corporation a written notice requesting (x) if Class A
Common Stock is then outstanding, conversion of certain shares of Class A
Common Stock designated by the Class A Holders into Common Stock, upon
which delivery each share of Class A Common Stock so designated in such
notice shall automatically convert (without the payment of any
consideration) into one duly issued, fully paid and nonassessable share
of Common Stock, and (y) if Class A Preference Stock is then outstanding,
(A) if at the time of delivery of the notice the Conversion Price has
been Fixed, conversion of certain shares of Class A Preference Stock
designated by the Class A Holders into Common Stock, upon which delivery
each share of Class A Preference Stock so designated shall convert
(without the payment of any consideration) into that number of duly
issued, fully paid and nonassessable shares of Common Stock equal to the
number of related Class A Conversion Shares, or (B) if at the time of
delivery of the notice the Conversion Price has not been Fixed,
conversion at the Target Price of certain shares of Class A Preference
Stock designated by the Class A Holders into Common Stock, upon which
delivery each share of Class A Preference Stock so designated shall
convert (without the payment of any consideration) at the Target Price
into that number of duly issued, fully paid and nonassessable shares of
Common Stock equal to the number of related Class A Conversion Shares,
provided that (i) conversion pursuant to this clause (m) shall not be
considered to be an acquisition of Common Stock for purposes of Section
7(i) of the Class A Provisions, (ii) unless the Class A Common Stock
shall have otherwise been converted into Common Stock, or the Fundamental
Rights shall have been terminated as to all outstanding shares of Class A
Preference Stock, in each case pursuant to Section 7 of these Class A
Provisions upon or prior to the consummation or abandonment of the
transaction contemplated by such tender offer, immediately following the
consummation of such transaction or the delivery by this Corporation to
each Class A Holder of a notice that such transaction has been abandoned,
each share of Common Stock, if any, held by a Class A Holder shall
automatically reconvert (without the payment of any consideration) into
one duly issued, fully paid and nonassessable share of Class A Common
Stock (if Class A Common Stock was outstanding immediately prior to
delivery of the notice) or that number of duly issued, fully paid and
nonassessable shares of Class A Preference Stock on the same basis as
shares of Class A Preference initially converted into Common Stock (if
Class A Preference Stock was outstanding immediately prior to delivery of
the notice); and (iii) only those shares of Class A Common Stock or Class
A Preference Stock, as the case may be, related to shares of Common Stock
that were not so reconverted shall be deemed for any purpose under these
Articles, the Stockholders' Agreement, the Investment Agreement, the
Standstill Agreement, the Registration Rights Agreement, or any agreement
or document related thereto to have been converted into Common Stock
pursuant to this Section 7(m) of the Class A Provisions, and the Class A
Common Stock or Class A Preference Stock so reconverted, as the case may
be, shall be deemed to have been at all times outstanding shares of Class
A Common Stock or Class A Preference Stock, as the case may be.
(n) Events under the Stockholders' Agreement. While shares of Class
A Preference Stock are outstanding, but prior to the time the Conversion
Price shall have been Fixed, (i) if the event described in Section
2.6(a)(iii) of the Stockholders' Agreement shall occur and not have been
cured within the time period specified therein, the holders of a majority
of the Class A Preference Stock may deliver a notice of election to this
Corporation within 20 Business Days following the date that such cure
period has lapsed (or such earlier date that this Corporation provides
notice to each of FT and DT that it will not effect such cure) electing
either that (x) upon delivery of such notice, the Transfer Restrictions
cease to be of further force and effect, and each share of Class A
Preference Stock Transferred thereafter (other than to a Qualified
Subsidiary or Class A Holder) convert upon such Transfer at the Target
Price (without the payment of consideration) into that number of duly
issued, fully paid and nonassessable shares of Common Stock equal to the
number of related Class A Conversion Shares, or (y) this Corporation
redeem each share of Class A Preference Stock for cash at a per share
price equal to its Liquidation Preference on the 90th day following the
delivery of such notice, provided that this Corporation, if it disputes
that such a breach has occurred, shall not be obligated to so redeem the
Class A Stock until the earlier of the date the parties agree that a
breach described in Section 2.6(a)(iii) of the Stockholders' Agreement
has occurred and the date of a final, nonappealable judgment of a court
of competent juris diction to the effect that such a breach has occurred
(in which case the amount to be paid shall include interest at a rate
equal to 12.5 basis points over the Applicable LIBOR Rate, less any
dividends paid or payable on the Class A Preference Stock with respect to
such period, from the 90th day following the initial court judgment until
the date of payment), provided, further, that if the Class A Holders
elect the redemption option provided in the preceding clause (y), this
Corporation may in lieu of such redemption, by notice delivered to the
Class A Holders prior to (A) if this Corporation is contesting that such
a breach has occurred, the expiration of the 90th day following the
initial court judgment, or (B) if this Corporation is not so contesting,
the 30th day following delivery of a notice of election by the Class A
Holders hereunder, elect to cause the Transfer Restric tions to cease to
be of further force and effect, and each share of Class A Preference
Stock Transferred thereafter (other than to a Qualified Subsidiary or
Class A Holder) to convert upon such Transfer at the Minimum Price at the
date of such Transfer (without payment of any consideration) into that
number of duly issued, fully paid and nonassessable shares of Common
Stock equal to the number of related Class A Conversion Shares, provided
that this Corporation shall be deemed to have made this election unless,
prior to the expiration of the time periods set forth in the preceding
clauses (A) and (B), as the case may be, a majority of the Continuing
Directors shall have approved, at a meeting at which at least seven
Continuing Directors are present, the redemption option set forth in
clause (y) above, unless a Fair Price Condition has been satisfied. (ii)
if any of the events described in Section 2.6(a) of the Stockholders'
Agreement (other than clause (iii) or (iv) thereof) shall occur, the
holders of a majority of the Class A Preference Stock may deliver a
notice of election to this Corporation electing that, upon delivery of
such notice, the Transfer Restrictions cease to be of further force and
effect, and each share of Class A Preference Stock Transferred thereafter
(other than to a Qualified Subsidiary or Class A Holder) convert upon
such Transfer at the Target Price (without the payment of consideration)
into that number of duly issued, fully paid and nonassessable shares of
Common Stock equal to the number of related Class A Conversion Shares.
(o) Transfers if Not Redeemed. Each Share of Class A Preference
Stock Transferred pursuant to Section 2.6(c) of the Stockholders'
Agreement shall automatically convert (without the payment of any
consideration) at the Minimum Price on the date of such Transfer into
that number of duly issued, fully paid and nonassessable Shares of Common
Stock equal to the number of related Class A Conversion Shares, provided
that such conversion shall not be considered an acquisition of Common
Stock for purposes of Section 7(i) of the Class A Provisions.
(p) Events under Rights Agreement. If there shall occur a Stock
Acquisition Date (as defined in the Rights Agreement) or an event
described in clause (ii) of Section 3(a) of the Rights Agreement (without
regard to the ten business day period (or such longer period as the Board
shall determine) described therein), in each case other than due to an
action on the part of any Class A Holder, the holders of a majority of
the outstanding shares of Class A Preference Stock may deliver a notice
of election to this Corporation electing that, immediately prior to the
Distribution Date (as defined in the Rights Agreement), each share of
Class A Preference Stock shall convert at the Target Price (without the
payment of any consideration) into that number of duly issued, fully paid
and nonassessable shares of Class A Common Stock equal to the number of
related Class A Conversion Shares.
8. Change of Control Procedures. As long as shares of Class A
Stock are outstanding, but subject to Sections 7(a), (b), (f) and (k) of
the Class A Provisions, if this Corpo ration, directly or indirectly, (a)
determines to sell all or substantially all of the assets of this
Corporation, (b) determines not to oppose a third-party tender, exchange
or other purchase offer for Voting Securities with a number of Votes in
excess of 35 percent of the Voting Power of this Cor poration, (c)
determines to effect a merger or other business combination involving
this Corporation that would result in a Person (other than any Class A
Holder) holding Voting Securities of the resulting entity representing 35
percent or more of the Voting Power of such entity or (d) otherwise
determines to sell Control of this Corporation, this Corporation shall
conduct such transaction in accordance with reasonable procedures to be
determined by the Board of Directors, and permit FT and DT to participate
in that process on a basis no less favorable than that granted any other
participant. 9. No Dilution or Impairment. (a) After the Class A
Common Issuance Date, no reclassification, subdivision or combination of
the outstanding shares of Common Stock shall be effected directly or
indirectly (including without limitation any reclassification,
subdivision or combination effected pursuant to a consolidation, merger
or liquidation) unless at the same time the Class A Common Stock is
reclassified, subdivided, combined or consolidated so that the holders of
the Class A Common Stock (i) are entitled, in the aggregate, to a number
of Votes representing the same percentage of the Voting Power of this
Corporation relative to the Common Stock as were represented by the
shares of Class A Common Stock outstanding immediately prior to such
reclassification, subdivision or combination and (ii) maintain all of the
rights associated with the Class A Common Stock set forth in these
Articles of Incorporation, including without limitation the right to
receive dividends and other distributions (including liquidating and
other distributions) that are equivalent to those payable per share in
respect of shares of Common Stock, subject to the limitations,
restrictions and conditions on such rights contained herein.
(b) Without limiting the generality of the foregoing, in the case of
any consolidation or merger of this Corporation with or into any other
entity (other than a merger which does not result in any
reclassification, conversion, exchange or cancellation of the Common
Stock) or any reclassification of the Common Stock into any other form of
capital stock of this Corporation, whether in whole or in part, each
Class A Holder shall, after such consolidation, merger or
reclassification, have the right (but not the obligation), by notice
delivered to this Corporation or any successor thereto within 90 days
after the consummation of such consolidation, merger or reclas
sification, to (i) in the case of Class A Common Stock, convert each
share of Class A Common Stock held by it into the kind and amount of
shares of stock and other securities and property which such Class A
Holder would have been entitled to receive upon such consolidation,
merger, or reclassification if such Class A Holder had converted its
shares of Class A Common Stock into Common Stock immediately prior to
such merger, consolidation or reclassification or (ii) in the case of
Class A Preference Stock, receive preferred or preference stock of this
Corporation or the ultimate parent entity of any successor thereto with
rights no less favorable to the Class A Holders than those applicable to
the Class A Preference Stock (including, without limitation, the right to
receive dividends and liquidating and other distributions) set forth in
these Articles of Incorporation, the Bylaws, the Investment Agreement,
the Stockholders' Agreement and the Registration Rights Agreement. This
Corporation shall not effect, directly or indirectly, any such
reclassification, subdivision or combination of outstanding shares of
Common Stock unless it delivers to the Class A Holders written notice of
its intent to take such action at least ten Business Days before taking
such action.
(c) The conversion ratio expressed in Section 3(c)(ii) of the
portion of ARTICLE SIXTH entitled GENERAL PROVISIONS RELATING TO COMMON
STOCK AND CLASS A STOCK and the Dividend Factor shall be adjusted to
reflect any stock split, subdivision, stock dividend, or other
reclassification, consolidation or a combination of this Corporation's
Voting Securities or similar action or transaction undertaken after June
22, 1995, provided that no adjustment shall be made under this Section
9(c) in respect of the Cellular Spin-off or any Spin-off. 10. Class
Voting. Except as otherwise provided in Section 2(a) of ARTICLE FIFTH or
in the Class A Provisions, the Class A Holders shall not have, nor be
entitled to, a class vote with respect to any matter to be voted on by
the stockholders of this Corporation.
11. Amendment of Class A Provisions and ARTICLE FIFTH. The Class A
Provisions and Section 2(a)(iii) of ARTICLE FIFTH of these Articles of
Incorporation may be amended in any manner which would not materially
alter or change the powers, preferences or rights of the holders of
shares of the Common Stock or Preferred Stock so as to affect such
powers, preferences or rights adversely, by the Board of Directors of
this Corporation with the affirmative vote of only the holders of at
least two-thirds of the outstanding shares of Class A Stock, voting
together as a single class, and without the affirmative vote of the
holders of shares of the Common Stock or the Preferred Stock. Upon the
retirement of shares of Class A Stock, (i) such shares shall not resume
the status of authorized and unissued shares of that class, (ii) such
shares shall not be reissued, and (iii) upon the execution,
acknowledgment and filing of a certificate in accordance with
Kan. Stat. Ann. 17-6003 and 17-6603 (or any successor provisions)
stating that the reissuance of such shares is pro hibited, identifying
the shares and reciting their retirement, then the filing of such
certificate shall have the effect of amending these Articles of
Incorporation so as to reduce accordingly the number of authorized shares
of Class A Common Stock or Class A Preference Stock, as the case may be,
or if such retired shares constitute all of the authorized shares of such
class, then the filing of such certificate shall have the effect of
amending these Articles of Incorporation automatically so as to eliminate
all references to such class of stock therefrom. 12. Definitions. For
purposes of ARTICLE FIFTH of these Articles of Incorporation, the
provisions of ARTICLE SIXTH of these Articles of Incorporation entitled
GENERAL PROVISIONS RELATING TO ALL STOCK, GENERAL PROVISIONS RELATING TO
COMMON STOCK AND CLASS A STOCK, GENERAL PROVISIONS RELATING TO COMMON
STOCK, and the Class A Provisions:
"Acquisition" shall mean the acquisition by Cellular of assets
(which may include the acquisition of the common equity interests in a
Person) that constitute a business that, prior to such acquisition, has
been operated as a company or a division or has otherwise been operated
as a separate business.
"Adjusted Aggregate Liquidation Preference" shall mean the
difference between (a) the aggregate of the Liquidation Preference of the
outstanding shares of Class A Preference Stock (including Section 7(i)
Preference Shares whether or not converted pursuant to Section 3(c)(ii)
of the Class A Provisions), minus (b) the Section 7(i) Aggregate Purchase
Price.
"Adjusted Cellular Price" shall mean, subject to adjustment as
provided in the Class A Provisions, the Average Cellular Price multiplied
by the Capitalization Ratio.
"Affiliate" shall mean, with respect to any Person, any other Person
that directly, or indirectly through one or more intermediaries, Controls
or is Controlled by, or is under common Control with, such Person,
provided that (a) no JV Entity shall be deemed an Affiliate of any Class
A Holder or this Corporation unless (i) FT, DT and Atlas own a majority
of the Voting Power of such JV Entity and this Corporation does not have
the Tie-Breaking Vote (as defined in Section 18.1 of the Joint Venture
Agreement), or (ii) FT, DT or Atlas has the Tie-Breaking Vote; (b) FT, DT
and this Corporation shall not be deemed Affiliates of each other; (c)
Atlas shall be deemed an Affiliate of FT and DT; and (d) the term
"Affiliate" shall not include any Governmental Authority of France or
Germany or any other Person Controlled, directly or indirectly, by any
such Governmental Authority except in each case for FT, DT, Atlas and any
other Person directly, or indirectly through one or more intermediaries,
Controlled by FT, DT or Atlas.
"Alien" shall mean "aliens", "their representatives", "a foreign
government or representatives thereof" or "any corporation organized
under the laws of a foreign country" as such terms are used in Section
310(b)(4) of the Communications Act of 1934, as amended, or as hereafter
may be amended, or any successor provision of law.
"Applicable LIBOR Rate" shall mean the one-month London Interbank
Offered Rate (the "Quoted Rate") listed in the "Money Rates Box" of The
Wall Street Journal (New York Edition) (or any successor publication) on
the day on which such interest is to begin to accrue, provided that if
such day is a day on which the Quoted Rate is not listed in The Wall
Street Journal (New York Edition) (or such successor publication) or The
Wall Street Journal (New York Edition) (or such successor publication) is
not published, the Applicable LIBOR Rate shall be the Quoted Rate on the
most recent day prior to such date on which a Quoted Rate is listed in
The Wall Street Journal (New York Edition) (or such successor
publication).
"Applicable Ratio" shall have the meaning set forth in Section
7.5(a) of the Stockholders' Agreement.
"Associate" shall have the meaning ascribed to such term in Rule
12b-2 under the Exchange Act, provided that when used to indicate a
relationship with FT or DT or their respective Subsidiaries or
Affiliates, the term "Associate" shall mean (a) in the case of FT, any
Person occupying any of the posi tions listed on Schedule A to the
Stockholders' Agreement and (b) in the case of DT, any Person occupying
any of the positions listed on Schedule B to the Stockholders' Agreement,
provided, further, that, in each case, no Person occupying any such
position described in clause (a) or (b) hereof shall be deemed an
"Associate" of FT or DT, as the case may be, unless the Persons occupying
all such positions described in clauses (a) and (b) hereof Beneficially
Own, in the aggregate, more than 0.2% of the Voting Power of the Company.
"Atlas" shall mean the company formed as a societe anonyme
under the laws of Belgium pursuant to the Joint Venture Agreement, dated
as of December 15, 1994, between FT and DT, as amended.
"Average Cellular Price" shall mean, subject to adjustment as
provided in the Class A Provisions, the average of the Closing Prices of
a share of Cellular Common Stock for the 20 consecutive Trading Days on
which such shares are traded "regular way" starting on the first such
Trading Day after the Cellular Spin-off Date.
"Average Price" shall mean, as to a security, the average of the
Closing Prices of a security for the 20 consecutive Trading Days ending
on the fifteenth Trading Day prior to the date of determination or ending
on such other date specified herein.
"Average Sprint Price" shall mean, subject to adjustment as provided
in the Class A Provisions, the Average Price of a share of Common Stock
at the date of determination specified herein. For purposes of this
definition, if any portion of the relevant determination period occurs
prior to the Cellular Spin-off and the Closing Price of Common Stock on
any Trading Day during the determination period is quoted "ex" the
distribution of Cellular Common Stock, the Closing Price of the Common
Stock for such Trading Day will be adjusted by adding the product of the
Closing Price of the Cellular Common Stock for such Trading Day
multiplied by the Capitalization Ratio.
"Beneficial Owner" (including, with its correlative meanings,
"Beneficially Own" and "Beneficial Ownership"), with respect to any
securities, shall mean any Person which:
(a) has, or any of whose Affiliates or Associates has, directly
or indirectly, the right to acquire (whether such right is
exercisable immediately or only after the passage of time) such
securities pursuant to any agreement, arrangement or understanding
(whether or not in writing), including, without limitation, pursuant
to the Investment Agreement and the Stockholders' Agree ment, or
upon the exercise of conversion rights, exchange rights, warrants or
options, or otherwise; (b) has, or any of whose Affiliates or
Associates has, directly or indirectly, the right to vote or dispose
of (whether such right is exercisable immediately or only after the
passage of time) or has "beneficial ownership" of (as determined
pursuant to Rule 13d-3 under the Exchange Act but including all such
securities which a Person has the right to acquire beneficial
ownership of whether or not such right is exercisable within the 60-
day period specified therein) such securities, including pursuant to
any agreement, arrangement or understanding (whether or not in
writing); or (c) has, or any of whose Affiliates or Associates has,
any agreement, arrangement or understanding (whether or not in
writing) for the purpose of acquiring, holding, voting or disposing
of any securities which are Beneficially Owned, directly or
indirectly, by any other Person (or any Affiliate thereof),
provided that Class A Stock and Common Stock held by one of FT or DT or
its Affiliates shall not also be deemed to be Beneficially Owned by the
other of FT or DT or its Affiliates.
"Board of Directors" shall mean the board of directors of this
Corporation.
"Business Day" shall mean any day other than a day on which
commercial banks in The City of New York, Paris, France, or Frankfurt am
Main, Germany, are required or authorized by law to be closed.
"Buyers" shall have the meaning set forth in the Investment
Agreement.
"Bylaws" shall mean the Bylaws of this Corporation as amended or
supplemented from time to time.
"Capitalization Ratio" shall mean the quotient of the number of
shares of Cellular Common Stock outstanding immediately following the
Cellular Spin-off, divided by the number of shares of Common Stock
immediately following the Cellular Spin-off.
"Cellular" shall mean (a) until immediately prior to the Cellular
Spin-off Date, the Cellular and Wireless Division, (b) immediately prior
to the Cellular Spin-off Date, the direct or indirect wholly owned
subsidiary of this Corporation owning the assets of the Cellular and
Wireless Division, the shares of which subsidiary are to be distributed
to this Corporation's stockholders in connection with the Cellular
Spin-off, and (c) on and after the Cellular Spin-off Date, such company,
provided that the term "Cellular" shall not include any assets retained
by this Corporation after the Cellular Spin-off Date.
"Cellular and Wireless Division" shall mean the Cellular and
Wireless Communications Services Division of this Corporation.
"Cellular Common Stock" shall mean the shares of common stock of
Cellular.
"Cellular Spin-off" shall mean the distribution by this Corporation
on a pro rata basis to the holders of the Common Stock of shares of
Cellular Common Stock representing all of the common equity of Cellular.
"Cellular Spin-off Date" shall mean the date on which shares of
Cellular Common Stock are distributed to the holders of Common Stock.
"Cellular Spin-off Reduction Factor" shall mean, subject to
adjustment as provided in the Class A Provisions, (a) $5.25, if the
Adjusted Cellular Price is not less than $3.25 or more than $7.25, or (b)
if the Adjusted Cellular Price is more than $7.25 but not more than
$8.25, $5.25 plus 50% of the difference between the Adjusted Cellular
Price and $7.25, or (c) if the Adjusted Cellular Price is more than
$8.25, $5.75 plus the difference between the Adjusted Cellular Price and
$8.25, or (d) if the Adjusted Cellular Price is less than $3.25 but not
less than $2.25, $5.25 minus 50% of the difference between $3.25 and the
Adjusted Cellular Price or (e) if the Adjusted Cellular Price is below
$2.25, $4.75 minus the difference between $2.25 and the Adjusted Cellular
Price. Notwithstanding the foregoing, (i) if the Net Cellular
Indebtedness immediately after the Cellular Spin-off exceeds $2.955, each
dollar amount set forth in the first sentence of this definition (other
than the Adjusted Cellular Price) shall be reduced dollar-for-dollar by
such excess; (ii) if $2.955 exceeds the Net Cellular Indebtedness, each
such dollar amount shall be increased dollar-for-dollar by such excess;
and (iii) if Cellular has effected any Acquisition and/or Disposition
after June 22, 1995 and prior to the Cellular Spin-off Date, such dollar
amounts shall be increased by the Net Cellular Acquisition Amount, if
positive, and decreased by the absolute value of the Net Cellular
Acquisition Amount, if negative.
"Change of Control" shall mean a: (a) decision by the Board of Directors
to sell Control of this Corporation or not to oppose a third party
tender offer for Voting Securities of this Corporation representing
more than 35% of the Voting Power of this Corporation; or (b) change
in the identity of a majority of the Directors due to (i) a proxy
contest (or the threat to engage in a proxy contest) or the election
of Directors by the holders of Preferred Stock; or (ii) any
unsolicited tender, exchange or other purchase offer which has not
been approved by a majority of the Independent Directors,
provided that a Strategic Merger shall not be deemed to be a Change of
Control and provided, further, that any transaction between this
Corporation and FT and DT or otherwise involving FT and DT and any of
their direct or indirect Subsidiaries which are party to a Contract
therefor shall not be deemed to be a Change of Control.
"Class A Action" shall mean action by the holders of a majority of
the shares of Class A Stock taken by a vote at either a regular or
special meeting of the stockholders of this Corporation or of the holders
of the Class A Stock or by written consent delivered to the Secretary of
this Corpora tion.
"Class A Common Issuance Date" shall mean the date this Corporation
first issues shares of Class A Common Stock.
"Class A Common Stock" shall have the meaning set forth in ARTICLE
SIXTH of these Articles of Incorporation.
"Class A Conversion Shares" shall mean, the shares of Class A Common
Stock or Common Stock into which the then outstanding shares of Class A
Preference Stock (or, as the case may be, a specified number of shares of
Class A Preference Stock) would, at the time of determination, be con
vertible at the then applicable Conversion Price if the conditions to
establishment of the Conversion Date had been met.
"Class A Director" shall mean any Director elected by the Class A
Holders pursuant to Section 2(a) of ARTICLE FIFTH of these Articles of
Incorporation, appointed by Class A Directors pursuant to Section 4(b) of
ARTICLE FIFTH of these Articles of Incorporation, or elected by the Class
A Holders pursuant to Section 3(d) of the Class A Provisions.
"Class A Holders" shall mean (a) the holders of the Class A Stock or
the Class A Preference Stock, as the case may be, and (b) any Qualified
Stock Purchaser who has executed with this Corporation a Qualified Stock
Purchaser Assumption Agreement (as such term is defined in the
Stockholders' Agreement), for so long as such Person holds Class A
Preference Stock or Class A Common Stock.
"Class A Preference Stock" shall have the meaning set forth in
ARTICLE SIXTH of these Articles of Incorporation.
"Class A Provisions" shall mean the portion of ARTICLE SIXTH of
these Articles of Incorporation entitled GENERAL PROVISIONS RELATING TO
CLASS A STOCK.
"Class A Stock" shall mean the Class A Common Stock or, if shares of
Class A Preference Stock are outstanding, the Class A Preference Stock.
"Closing Price" shall mean, with respect to a security on any day,
the last sale price, regular way, or in case no such sale takes place on
such day, the average of the closing bid and asked prices, regular way,
in either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to trading
on The New York Stock Exchange, Inc. or, if such security is not listed
or admitted to trading on such exchange, as reported in the principal
consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the
security is listed or admitted to trading or, if the security is not
listed or admitted to trading on any national securities exchange, the
last quoted sale price or, if not so quoted, the average of the high bid
and low asked prices in the over-the-counter market, as reported by
NASDAQ or such other system then in use, or, if on any such date such
security is not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker
making a market in the security selected in good faith by the Board of
Directors. If the security is not publicly held or so listed or publicly
traded, "Closing Price" shall mean the Fair Market Value of such
security.
"Committed Percentage" shall mean, as to any Class A Holder, the
percentage obtained by dividing the aggregate number of Votes represented
or to be represented by the Voting Securities of this Corporation (a)
owned of record by such Class A Holder or by its nominees; and (b) which
such Class A Holder has committed to this Corporation to purchase
pursuant to Articles V and VI and Sections 7.3 and 7.8 of the
Stockholders Agreement and Article II of the Investment Agreement, by the
sum of (i) the Voting Power of this Corporation, plus (ii) the Votes to
be represented by any Voting Securities of this Corporation such Class A
Holder has committed to this Corporation to purchase from this
Corporation pursuant to Articles V and VI and Section 7.3 of the
Stockholders' Agreement and Article II of the Investment Agreement.
"Continuing Director" shall have the meaning set forth in the Fair
Price Provisions.
"Contract" shall mean any loan or credit agreement, note, bond,
indenture, mortgage, deed of trust, lease, franchise, contract, or other
agreement, obligation, instrument or binding commitment of any nature.
"Control" shall mean, with respect to a Person or Group, any of the
following:
(a) ownership by such Person or Group of Votes entitling it to
exercise in the aggregate more than 35 percent of the Voting Power
of the entity in question; or (b) possession by such Person or Group
of the power, directly or indirectly, (i) to elect a majority of the
board of directors (or equivalent governing body) of the entity in
question; or (ii) to direct or cause the direction of the management
and policies of or with respect to the entity in question, whether
through ownership of securities, by contract or otherwise.
"Conversion Date" shall have the meaning set forth in Section
3(a)(i) of the Class A Provisions.
"Conversion Price" shall have the meaning set forth in Section 3(b)
of the Class A Provisions.
"Core Businesses" shall mean all businesses in the fields of
telecommunications and information technology and applications, and
equipment, software applications and consumer and business services
related thereto or making use of the technology thereof, including
value-added consumer and business services generated through or as a
result of underlying telecommunications services using all technology
(voice, data and image) and physical transport, network intel ligence,
and software applications, and cable television (but not including any
programming or content-related activities with respect thereto).
"Corporation Eligible Notes" shall mean notes of this Corporation,
substantially in the form of "Company Eligible Notes" as provided in the
Stockholders' Agreement, made payable to a Class A Holder as provided in
Sections 7(f) and 7(n) of the Class A Provisions, which, in the written
opinion of an investment banking firm of recognized international
standing addressed to the Class A Holder and reasonably satisfactory to
such Class A Holder, would sell, at the date of their issuance, at a
price equal to their principal amount (taking into account the likely
manner and timing of resale by such Class A Holder), provided that no
note of this Corporation shall be deemed to be a Corporation Eligible
Note (a) if it is to be issued at a time when this Corporation's debt
instruments comparable to the notes proposed to be a Corporation Eligible
Note (or such note itself) do not possess at least two of the three
following ratings: Baa3 or better (or a comparable rating if the rating
system is changed) by Moody's Investors Service, Inc.; BBB-or better (or
a compar able rating if the rating system is changed) by Standard and
Poor's Corporation; and BBB-or better (or a comparable rating if the
rating system is changed) by Duff & Phelps Credit Rating Co., and (b)
unless nationally-recognized counsel shall have delivered an opinion in
form and substance reasonably satisfactory to each payee that such notes
are enforceable obligations of this Corporation in accordance with the
terms thereof.
"Corporation Joint Venture Termination" shall mean any of the
following:
(a) the sale of Venture Interests by a Sprint Party pursuant to
Section 20.5(a) of the Joint Venture Agreement; or (b) the receipt
by the FT/DT Parties of the Tie-Breaking Vote due to a Funding
Default, Material Non-Funding Default or Bankruptcy (as such terms
are defined in the Joint Venture Agreement) on the part of any of
the Sprint Parties.
"Director" shall mean a member of the Board of Directors.
"Disposition" means the disposition by Cellular of assets (which may
include the disposition of common equity interests in a Person) that
constitute a business that, prior to such disposition, has been operated
as a company or a division or has otherwise been operated as a separate
business.
"Dividend Factor" shall mean 43,118,018, as adjusted as provided in
Section 9(c) of the Class A Provisions.
"DT" shall mean Deutsche Telekom AG, an Aktiengesellschaft formed
under the laws of Germany.
"ESMR" shall mean any commercial mobile radio service, and the
resale of such service, of the type authorized under the rules for
Specialized Mobile Radio Services designated under Subpart S of Part 90
of the FCC's rules or similar Applicable Laws of any other country in
effect on the date hereof, including the networking, marketing,
distribution, sales, customer interface and operations functions relating
thereto.
"Europe" shall mean the current geographic area covered by the
following countries and territories located on the European continent,
plus, in the case of France, its territories and possessions located
outside the European continent: Albania, Andorra, Austria, Belgium,
Bosnia-Hercegovina, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark,
Estonia, Finland, France, Germany, Gibraltar, Greece, Hungary, Iceland,
Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Macedonia,
Malta, Monaco, Montenegro, Netherlands, Norway, Poland, Portugal,
Romania, San Marino, Serbia, Slovakia, Slovenia, Spain, Sweden,
Switzerland, Turkey, Ukraine, United Kingdom, and Vatican City.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the United States Securities
and Exchange Commission promulgated thereunder.
"Exempt Asset Divestitures" shall mean, with respect to this
Corporation and its Subsidiaries:
(a) Transfers of assets, shares or other equity interests
(other than Long Distance Assets) to joint ventures approved by FT
and DT prior to the Initial Issuance Date; (b) Transfers of assets,
shares or other equity interests (other than Long Distance Assets)
to (i) any entity in exchange for equity interests in such entity
if, after such transaction, this Corporation owns at least 51
percent of both the Voting Power and equity interests in such entity
or (ii) any joint venture that is an operating joint venture not
controlled by any of its principals and in which (x) this
Corporation has the right, acting alone, to disapprove (and thereby
prohibit) decisions relating to acquisitions and divestitures
involving more than 20 percent of the Fair Market Value of such
entity's assets, mergers, consolidations and dissolution or
liquidation of such entity and the adoption of such entity's
business plan, and (y) Major Competitors of the Joint Venture do not
in the aggregate own more than 20% of the equity interests or Voting
Power; or (c) transactions in which this Corporation exchanges one
or more (i) local exchange telephone businesses for one or more such
businesses or (ii) public cellular or wireless radio
telecommunications service systems for one or more such systems,
provided that this Corporation shall not, directly or indirectly,
receive cash in any such transaction in an amount greater than 20
percent of the Fair Market Value of the property or properties
Transferred by it; (d) Transfers of assets, shares or other equity
interests (other than Long Distance Assets) by this Corporation to
any of its Subsidiaries, or by any of its Subsidiaries to this
Corporation or any other Subsidiary of this Corporation; (e) (i) any
Spin-off of equity interests of a wholly-owned Subsidiary that is
not a Subsidiary which, directly or indirectly, owns Long Distance
Assets (for purposes of this definition, the "Spun-off Entity"),
provided that, in the case of a Spin-off which is consummated
following the Initial Issuance Date, the Class A Holders receive
securities in the Spun-off Entity of a separate class with rights no
less favorable to the Class A Holders than those applicable to the
Class A Stock set forth in these Articles of Incorporation and the
Bylaws, or (ii) the Cellular Spin-off, unless a Notice of
Abandonment has been delivered; (f) Transfers of assets (other than
Long Distance Assets) of this Corporation or any of its Subsidiaries
that are primarily or exclusively used in connection with providing
information technology or data processing functions or services
(collectively, for purposes of this definition, the "IT Assets") to
any Person that regularly provides information technology or data
processing functions or services on a commercial basis, in
connection with a contractual arrangement (for purposes of this
definition, an "IT Service Contract") pursuant to which such Person
undertakes to provide information tech nology or data processing
functions or services to this Corporation or any of its Subsidiaries
of substantially the same nature as the services associated with the
use of such assets prior to such Transfer and upon commercially
reasonable terms to this Corporation as determined in good faith by
this Corporation, provided that (i) the term of such IT Service
Contract shall be for a period at least as long as the weighted
average useful life of such assets, or this Corporation or such
Subsidiary shall have the right to cause such IT Service Contract to
be renewed or extended for a period at least as long as such
weighted average useful life upon commercially reasonable terms to
this Corporation as determined in good faith by this Corporation,
and (ii) the Transfer of such assets will not materially and
adversely affect the operation of this Corporation; or (g) Transfers
of assets (other than Long Distance Assets or IT Assets) of this
Corporation or any of its Subsidiaries to any Person in connection
with any contractual arrangement (for purposes of this definition, a
"Non-IT Service Contract") pursuant to which such Person undertakes
to provide services to this Corporation or any of its Subsidiaries
of substantially the same nature as the services associated with the
use of such assets prior to such Transfer and upon commercially
reasonable terms to this Corporation as determined in good faith by
this Corporation, provided, that (i) the Fair Market Value of such
assets, together with the Fair Market Value of assets of this
Corporation Transferred to such Person or other Persons in related
transactions, do not represent more than five percent of the Fair
Market Value of the assets of this Corporation, (ii) the Transfer of
such assets will not materially and adversely affect the operation
of this Corporation, and (iii) the term of such Non-IT Service
Contract shall be for a period at least as long as the weighted
average useful life of the assets so Transferred or this Corporation
or such Subsidiary has the right to cause such Non-IT Ser vice
Contract to be renewed or extended for a period at least as long as
such weighted average useful life upon commercially reasonable terms
to this Corporation as determined in good faith by this Corporation.
"Exempt Long Distance Asset Divestitures" shall mean, with respect
to this Corporation and its Subsidiaries:
(a) Transfers of Long Distance Assets to a Qualified Joint
Venture; (b) Transfers of Long Distance Assets to any entity if this
Corporation and its Subsidiaries after such transaction own at least
70 percent of both the Voting Power and equity interests of such
entity, provided that if a Major Competitor of FT or DT or of the
Joint Venture holds equity interests in such entity, such Major
Compet itor's equity interests and Votes in such entity as a
percentage of the Voting Power of such entity shall not, directly or
indirectly, exceed 20 percent; (c) Transfers of Long Distance Assets
pursuant to an underwritten, widely-distributed public offering at
the conclusion of which this Corporation and its Subsidiaries shall
own at least 51 percent of both the Voting Power and equity
interests in the entity that owns such Long Distance Assets; (d)
Transfers in the ordinary course of business of Long Distance Assets
determined by this Corporation to be unnecessary for the orderly
operation of this Corporation's business, and sale-leasebacks of
Long Distance Assets and similar financing transactions after which
this Corporation and its Subsidiaries continue in possession and
control of the Long Distance Assets involved in such transaction;
(e) Transfers of Long Distance Assets by this Corporation to any of
its Subsidiaries, or by any of its Subsidiaries to this Corporation
or any other Subsidiary of this Corporation; (f) Transfers of Long
Distance Assets to FT or DT or any assignee thereof pursuant to the
Stockholders' Agreement; (g) any Spin-off of equity interests of a
wholly-owned Subsidiary which, directly or indirectly, owns Long
Distance Assets (for purposes of this definition, the "Spun-off
Entity"), provided that the Class A Holders receive securities in
the Spun-off Entity of a separate class with rights no less
favorable to the Class A Holders than those applicable to the Class
A Stock set forth in these Articles of Incorporation and the Bylaws;
(h) Transfers of Long Distance Assets of this Corporation or any of
its Subsidiaries that are primarily or exclusively used in
connection with providing information technology or data processing
functions or services (collectively, for purposes of this
definition, the "IT Assets") to any Person that regularly provides
information technology or data processing functions or services on a
commercial basis, in connection with a contractual arrangement (for
purposes of this definition, an "IT Service Contract") pursuant to
which such Person undertakes to provide information technology or
data processing functions or services to this Corporation or any of
its Subsidiaries of substantially the same nature as the services
associated with the use of such Long Distance Assets prior to such
Transfer and upon commer cially reasonable terms to this Corporation
as determined in good faith by this Corporation, provided that (i)
the term of such IT Service Contract shall be for a period at least
as long as the weighted average useful life of such Long Distance
Assets, or this Corporation or such Subsid iary shall have the right
to cause such IT Service Contract to be renewed or extended for a
period at least as long as such weighted average useful life upon
commercially reasonable terms to this Corporation as determined in
good faith by this Corporation, and (ii) the Transfer of such Long
Distance Assets will not materially and adversely affect the
operation of the Long Distance Business. Any such IT Service
Contract involving Transfers of Long Distance Assets, including any
renewal or extension thereof, shall be deemed to be a Long Distance
Asset; or (i) Transfers of Long Distance Assets (other than IT
Assets) of this Corporation or any of its Subsidiaries to any Person
in connection with any contractual arrangement (for purposes of this
definition, a "Non-IT Service Contract") pursuant to which such
Person undertakes to provide services to this Corporation or any of
its Subsidiaries of substantially the same nature as the services
associated with the use of such Long Distance Assets prior to such
Transfer and upon commercially reasonable terms to this Corporation
as determined in good faith by this Corporation, provided, that (i)
the Fair Market Value of such Long Distance Assets, together with
the Fair Market Value of Long Distance Assets Transferred to such
Person or other Persons in related transactions, do not represent
more than three percent of the Fair Market Value of the Long
Distance Assets of this Corporation, (ii) the Transfer of such Long
Distance Assets will not materially and adversely affect the
operation of the Long Distance Business, and (iii) the term of such
Non-IT Service Contract shall be for a period at least as long as
the weighted average useful life of the Long Distance Assets so
Transferred or this Corporation or such Subsidiary has the right to
cause such Service Contract to be renewed or extended for a period
at least as long as such weighted average useful life upon
commercially reasonable terms to this Corporation as determined in
good faith by this Corporation. Any such Non-IT Service Contract
involving Transfers of Long Distance Assets, including any renewal
or extension thereof, shall be deemed to be a Long Dis tance Asset.
"Extraordinary Dividend" shall mean, with respect to capital stock
of this Corporation, a cash dividend or other cash distribution, other
than (a) a regular periodic dividend payable in cash; or (b) a dividend
payable in accordance with the terms of the Preferred Stock or the Class
A Preference Stock.
"Fair Market Value" shall mean, with respect to any asset, shares or
other property, the cash price at which a willing seller would sell and a
willing buyer would buy such asset, shares or other property in an
arm's-length negotiated transaction without undue time restraints, as
determined in good faith by a majority of the Independent Directors as
certified in a resolution delivered to all of the Class A Holders.
"Fair Price Condition" shall have the meaning set forth in that
section of ARTICLE SIXTH of these Articles of Incorporation entitled
GENERAL PROVISIONS RELATING TO ALL STOCK.
"Fair Price Provisions" shall mean ARTICLE SEVENTH of these Articles
of Incorporation, and any successor provision thereto.
"FCC" shall mean the Federal Communications Commission.
"FCC Order" shall mean, with respect to any proposed Transfer of
Long Distance Assets by this Corporation, either:
(a) an effective written order or other final action from the
FCC (either in the first instance or upon review or reconsideration)
either declaring that FT and DT are not prohibited by Section 310
from owning such Long Distance Assets or stating that no such
declaration is required, and as to which no Proceeding shall be
pending or threatened that presents a substantial possibility of
resulting in a reversal thereof; or (b) an effective written order
from, or other final action taken by, the FCC pursuant to delegated
authority (either in the first instance or upon review or
reconsideration) either declaring that FT and DT are not prohibited
by Section 310 from owning such Long Distance Assets, or stating
that no such declaration is required, which order or final action
shall no longer be subject to further administrative review, and as
to which no Proceeding shall be pending or threatened that presents
a substantial possibility of resulting in a reversal thereof;
For purposes of clause (b) of this definition, an order from, or other
final action taken by, the FCC pursuant to delegated authority shall be
deemed no longer subject to further administrative review: (x) if no
petition for reconsideration or appli cation for review by the FCC of
such order or final action has been filed within thirty days after the
date of public notice of such order or final action, as such 30-day
period is computed and as such date is defined in Sections 1.104 and 1.4
(or any successor provi sions), as applicable, of the FCC's rules, and
the FCC has not initiated review of such order or final action on its own
motion within forty days after the date of public notice of the order or
final action, as such 40-day period is computed and such date is defined
in Sections 1.117 and 1.4 (or any successor provisions) of the FCC's
rules; or (y) if any such petition for reconsideration or application for
review has been filed, or, if the FCC has initiated review of such order
or final action on its own motion, the FCC has issued an effective
written order or taken final action to the effect set forth in clause (a)
above.
"Fix" or "Fixed" shall mean, in relation to the Conversion Price,
the initial establishment of the Conversion Price in accordance with
Section 3(b) of the Class A Provisions.
"Fixed Closing Date" means the date of the first closing to occur
under the Investment Agreement after the date on which the Conversion
Price is Fixed.
"France" shall mean the Republic of France, including French Guiana,
Guadeloupe, Martinique and Reunion, and its territories and
possessions.
"FT" shall mean France Telecom, an exploitant public formed
under the laws of France.
"FT/DT Joint Venture Termination" shall mean any of the following:
(a) the sale of Venture Interests by an FT/DT Party pursuant to Section
20.5(b), 20.5(c) or 20.5(d) of the Joint Venture Agreement; or (b) the
receipt by the Sprint Parties of the Tie-Breaking Vote due to a Funding
Default, Material Non-Funding Default or Bankruptcy (as such terms are
defined in the Joint Venture Agreement) on the part of any of the FT/DT
Parties.
"FT/DT Party" shall have the meaning set forth in the Joint Venture
Agreement.
"Fundamental Rights" means the rights of holders of Class A
Preference Stock to elect Directors and the rights of the holders of
Class A Preference Stock provided in Sections 4, 5, 6 and 8 of the Class
A Provisions.
"Germany" shall mean the Federal Republic of Germany.
"Governmental Authority" shall mean any federation, nation, state,
sovereign, or government, any federal, supranational, regional, state or
local political subdivision, any governmental or administrative body,
instrumentality, department or agency or any court, tribunal,
administrative hearing body, arbitration panel, commission or other
similar dispute resolving panel or body, and any other entity exercis ing
executive, legislative, judicial, regulatory or administrative functions
of a government, provided that the term "Governmental Authority" shall
not include FT, DT, Atlas or any of their respective Subsidiaries.
"Group" shall mean any group within the meaning of Section 13(d)(3)
of the Exchange Act.
"Independent Director" shall mean any member of the Board of
Directors who (a) is not an officer or employee of this Corporation, or
any Class A Holder, or any of their respective Subsidiaries, (b) is not a
former officer of this Corporation, or any Class A Holder, or any of
their respective Subsidiaries, (c) does not, in addition to such person's
role as a Director, act on a regular basis, either individually or as a
member or representative of an organization, serving as a professional
adviser, legal counsel or consultant to this Corporation, or any Class A
Holder, or their respective Subsidiaries, if, in the opinion of the
Nominating Committee of the Board of Directors of this Corporation (the
"Nominating Committee") or the Board of Directors if a Nominating
Committee is not in existence, such relationship is material to this
Corporation, any Class A Holder, or the organization so represented or
such person, and (d) does not represent, and is not a member of the
immediate family of, a person who would not satisfy the requirements of
the preceding clauses (a), (b) and (c) of this sentence. A person who
has been or is a partner, officer or director of an organization that has
customary commercial, industrial, banking or underwriting rela tionships
with this Corporation, any Class A Holder, or any of their respective
Subsidiaries, that are carried on in the ordinary course of business on
an arms-length basis and who otherwise satisfies the requirements set
forth in clauses (a), (b), (c) and (d) of the first sentence of this
definition, may qualify as an Independent Director, unless, in the
opinion of the Nominating Committee or the Board of Directors if a
Nominating Committee is not in existence, such person is not independent
of the management of this Corporation, or any Class A Holder, or any of
their respective Subsidiaries, or the relationship would interfere with
the exercise of independent judgment as a member of the Board of
Directors. A person who otherwise satisfies the requirements set forth
in clauses (a), (b), (c) and (d) of the first sentence of this definition
and who, in addition to fulfilling the customary director's role, also
provides additional services directly for the Board of Directors and is
separately compensated therefor, would nonetheless qualify as an
Independent Director. Notwithstanding anything to the contrary contained
in this definition, each Director as of the date of the execution of the
Investment Agreement who is not an executive officer of this Corporation
shall be deemed to be an Inde pendent Director hereunder.
"Initial Issuance Date" shall mean the first date that any shares of
Class A Stock are issued.
"Investment Agreement" shall mean the Investment Agreement, dated as
of July 31, 1995, among FT, DT and this Corporation (and all exhibits and
schedules thereto), as it may be amended or supplemented from time to
time.
"Investment Completion Date" shall mean the date of the Supplemental
Preference Stock Closing (as such term is defined in the Investment
Agreement) or the Class A Common Issuance Date, whichever shall first
occur.
"Investment Documents" means the Investment Agreement and the
Stockholders' Agreement.
"Joint Venture" shall mean the joint venture formed by FT, DT, this
Corporation and Sprint Sub, as provided in the Joint Venture Agreement.
"Joint Venture Agreement" shall mean the Joint Venture Agreement,
dated as of June 22, 1995 among FT, DT, Sprint Sub, and this Corporation.
"JV Entity" shall have the meaning set forth in the Joint Venture
Agreement.
"Lien" shall mean any mortgage, pledge, security interest, adverse
claim, encumbrance, lien (statutory or otherwise) or charge of any kind
(including any agreement to give any of the foregoing, any conditional
sale or other title retention agreement, any lease in the nature thereof,
and the filing of or agreement to give any financing statement under the
Uniform Commercial Code or similar Applicable Law of any jurisdiction) or
any other type of preferential arrangement for the purpose, or having the
effect, of protecting a creditor against loss or securing the payment or
performance of an obligation.
"Lien Transfer" shall mean the granting of any Lien on any Long
Distance Asset, other than: (a) a lien securing purchase money
indebtedness that does not have a term longer than the estimated useful
life of such Long Distance Asset; (b) Liens or other comparable
arrangements relating to the financing of accounts receivable; and (c)
Liens securing any other indebtedness for borrowed money, provided that
(i) the amount of such indebtedness, when added to the aggregate amount
of purchase money indebtedness referred to in clause (a) above, does not
exceed 30% of the total book value of the Long Distance Assets as at the
date of the most recently published balance sheet of this Corporation,
(ii) the indebtedness secured by such Liens is secured only by Liens on
Long Distance Assets, (iii) the face amount of such indebtedness does not
exceed the book value of the Long Distance Assets subject to such Liens,
and (iv) such indebtedness is for a term no longer than the estimated
useful life of the Long Distance Assets subject to such Liens.
"Liquidation Preference" shall mean, at a date of determination, the
quotient of (a) the sum of (i) the products of (x) each share of Class A
Preference Stock (other than Section 7(i) Preference Shares or shares of
Class A Preference Stock purchased from this Corporation at the Optional
Shares Closing (as such term is defined in the Investment Agreement) or
pursuant to Article V or VI of the Stockholders' Agreement), times (y)
the liquidation value thereof for each such share, (ii) the aggregate
purchase price of shares of Class A Preference Stock purchased from this
Corporation at the Optional Shares Closing or pursuant to Article V or VI
of the Stockholders' Agreement, and (iii) the Section 7(i) Aggregate
Purchase Price, divided by (b) the number of shares of Class A Preference
Stock outstanding, in each case immediately prior to the date of
determination, plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, on such date of
determination.
"Local Exchange Division" shall mean the Local Communications
Services Division of this Corporation.
"Long Distance Assets" shall mean: (a) the assets reflected in this
Corporation's balance sheet for the year ended December 31, 1994 as
included in the Long Distance Division; (b) any assets acquired by
this Corporation or any of its Subsidiaries following December 31,
1994 that are reflected in this Corporation's balance sheet as
included in the Long Distance Division; (c) any assets of this
Corporation or any of its Subsidiaries that are not reflected in
this Corporation's balance sheet for the year ended December 31,
1994 as in cluded in the Long Distance Division, which after
December 31, 1994 are transferred by this Corporation or any of its
Subsidiaries to, or reclassified by this Corporation or any of its
Subsidiaries as part of, the Long Distance Division; (d) any assets
acquired by this Corporation after December 31, 1994 that are used
or held for use primarily for the benefit of the Long Distance
Business; and (e) any assets referred to in clauses (a) through (c)
above that are used or held for use primarily for the benefit of the
Long Distance Business which are trans ferred or reclassified by
this Corporation or any of its Subsidiaries outside of the Long
Distance Division, but which continue to be owned by this
Corporation or any of its Subsidiaries; provided that the term "Long
Distance Assets" shall not include (i) any assets that are used or
held for use primarily for the benefit of any Non-Long Distance
Business, or (ii) any other assets reflected in this Corporation's
balance sheet for the year ended December 31, 1994 as included in
the Cellular and Wireless Division or the Local Exchange Division
(other than as such assets in the Cellular and Wireless Division or
the Local Exchange Division may be transferred or reclassified in
accordance with paragraph (c) of this definition).
"Long Distance Business" shall mean all long distance
telecommunications activities and services of this Corporation and its
Subsidiaries at the relevant time, including (but not limited to) all
long distance transport services, switching and value-added services for
voice, data, video and multimedia transmission, migration paths and
intelligent overlapping architectures, provided that the term "Long
Distance Business" shall not include any activities or services primarily
related to any Non-Long Distance Business.
"Long Distance Division" shall mean the Long Distance Communications
Services Division of this Corporation.
"Lower Threshold Sprint Price" shall mean $34.982 (subject to
adjustment as provided in the Class A Provisions).
"Major Competitor" shall mean (a) with respect to FT or DT, a Person
that materially competes with a major portion of the telecommunications
services business of FT or DT in Europe or a Person that has taken
substantial steps to become such a Major Competitor and which FT or DT
has reasonably concluded, in its good faith judgment, will be such a
competitor in the near future in France or Germany, provided that FT
and/or DT furnish in writing to this Corporation reasonable evidence of
the occurrence of such steps; (b) with respect to this Corpo ration, a
Person that materially competes with a major portion of the
telecommunications services business of this Corporation in North
America, or a Person that has taken substantial steps to become such a
Major Competitor and which this Corporation has reasonably concluded, in
its good faith judgment, will be such a competitor in the near future in
the United States of America provided that this Corporation furnish in
writing to each Class A Holder reasonable evidence of the occurrence of
such steps; and (c) with respect to the Joint Venture, a Person that
materially competes with a major portion of the telecommunications
services business of the Joint Venture, or a Person that has taken
substantial steps to become such a Major Competitor and which FT, DT or
this Corporation has reasonably concluded, in its good faith judgment,
will be such a competitor in the near future, provided that FT, DT or
this Corporation furnish in writing to the other two of them reasonable
evidence of the occurrence of such steps.
"Major Competitor Transaction" shall have the meaning set forth in
Section 6(a) of the Class A Provisions.
"Major Issuance" shall mean any transaction, including, but not
limited to, a merger or business combination, resulting, directly or
indirectly, in the issuance (or sale from treasury) in connection with
such transaction of Voting Securities of this Corporation with a number
of Votes equal to or greater than 30 percent of the Voting Power of this
Corporation immediately prior to such issuance.
"Market Capitalization" shall mean, with respect to this Corporation
at any date, the sum of the average Market Price over the immediately
preceding 20 Business Days of each share of outstanding capital stock of
this Corporation, securities convertible into such capital stock and
options, warrants or other rights to acquire such capital stock.
"Market Price" shall mean with respect to a security on any date,
the Closing Price of such security on the Trading Day immediately prior
to such date. The Market Price shall be deemed to be equal to (a) in the
case of a share of Class A Common Stock, the Market Price of a share of
Common Stock; and (b) in the case of a share of Class A Preference Stock,
the Liquidation Preference. The Market Price of any options, warrants,
rights or other securities convertible into or exercisable for Class A
Common Stock (except for the Class A Preference Stock) shall be equal to
the Market Price of options, warrants, rights or other securities
convertible into or exercisable for Common Stock upon the same terms and
otherwise containing the same terms as such options, warrants, rights or
other securities convertible into or exercisable for Class A Common
Stock.
"Maximum Price" shall mean, subject to adjustment as provided in the
Class A Provisions, the lesser of (a) 125% of the Average Sprint Price
for the relevant trading period provided for herein and (b) $48.704.
"Minimum Dividend Amount" shall mean $0.25 per share per quarter.
"Minimum Price" shall mean, subject to adjustment as provided in the
Class A Provisions, 135% of the Average Sprint Price for the relevant
period as provided for herein.
"Modified Lower Threshold" shall mean, subject to adjustment as
provided in the Class A Provisions, the quotient of (A) the sum of (i)
the product of the Lower Threshold Sprint Price multiplied by that number
of days prior to the Cellular Spin-off Date in any Spin-off Trading
Period and (ii) the product of the New Lower Threshold Sprint Price
multiplied by that number of days beginning on and including the Cellular
Spin-off Date in such Spin-off Trading Period, divided by (B) 20.
"Modified New Lower Threshold" shall mean, subject to adjustment as
provided in the Class A Provisions, the quotient of (A) the sum of (i)
the product of the Second Anniversary Lower Threshold Sprint Price
multiplied by that number of days prior to the Cellular Spin-off Date in
any Spin-off Trading Period and (ii) the product of 93.308% of the New
Lower Threshold Sprint Price multiplied by that number of days beginning
on and including the Cellular Spin-off Date in such Spin-off Trading
Period, divided by (B) 20.
"NASDAQ" means the National Association of Securities Dealers,
Inc. Automated Quotations System.
"Net Cellular Acquisition Amount" shall mean, subject to adjustment
as provided in the Class A Provisions, the difference, which may be a
negative number, of the aggregate Purchase Prices paid by Cellular for
Acquisitions after June 22, 1995, minus the aggregate value of the Sales
Prices received by Cellular in connection with Dispositions after June
22, 1995, such difference to be calculated on a per share basis using the
number of outstanding shares of Common Stock immediately after the
Cellular Spin-off Date.
"Net Cellular Indebtedness" shall mean, subject to adjustment as
provided in the Class A Provisions, the amount of indebtedness for
borrowed money of Cellular outstanding immediately after the Cellular
Spin-off Date, minus the amount of Cellular's cash at such time, such
amount to be calculated on a per share basis using the number of
outstanding shares of Common Stock immediately after the Cellular
Spin-off Date.
"New Lower Threshold Sprint Price" shall mean, subject to adjustment
as provided in the Class A Provisions, the Lower Threshold Sprint Price
minus .9630 times the Cellular Spin-off Reduction Factor.
"New Maximum Price" shall mean, subject to adjustment as provided in
the Class A Provisions, (a) if the Cellular Spin-off Date occurs prior
to the First Closing for the relevant period specified herein, the lesser
of (i) 125% of the Average Sprint Price for the relevant period specified
herein and (ii) $48.704 minus 125% of the Cellular Spin-off Reduction
Factor and (b) if the Cellular Spin-off Date occurs after the First
Closing, the Maximum Price minus the product of (i) the lesser of (x)
1.25 and (y) the quotient of $48.704 divided by the Average Sprint Price
used in calculating such Maximum Price, multiplied by (ii) the Cellular
Spin-off Reduction Factor.
"New Minimum Price" shall mean, subject to adjustment as provided in
the Class A Provisions, the Minimum Price minus 135% of the Cellular
Spin-off Reduction Factor.
"New Target Price" shall mean, subject to adjustment as provided in
the Class A Provisions, the Target Price minus 130% of the Cellular
Spin-off Reduction Factor, provided that, if the Cellular Spin-off Date
does not occur prior to the Initial Issuance Date and the Average Sprint
Price determined at the Initial Issuance Date is within the Sprint Price
Range, the New Target Price shall be the Target Price minus the product
of (a) the quotient of $47.225 divided by such Average Sprint Price,
multiplied by (b) the Cellular Spin-off Reduction Factor.
"New Upper Threshold Sprint Price" shall mean, subject to adjustment
as provided in the Class A Provisions, the Upper Threshold Sprint Price
minus 1.04 times the Cellular Spin-off Reduction Factor.
"Non-Long Distance Business" shall mean (a) the ownership of any
equity or other interests in the Joint Venture or any of the JV Entities;
the enforcement or performance of any of the rights or obligations of
this Corporation or any Subsid iary of this Corporation pursuant to the
Joint Venture Agreement; or any activities or services of the Joint
Venture or any of the JV Entities; (b) the Triple Play Activities; (c)
any activities or services primarily related to the provi sion of
subscriber connections to a local exchange or switch providing access to
the public switched telephone network; (d) any activities or services
primarily related to the provision of exchange access services for the
purpose of originating or terminating long distance telecommunications
services; (e) any activities or services primarily related to the resale
by the Local Exchange Division of long distance telecommunications
services of this Corporation or other carriers; (f) any activities or
services primarily related to the provision of inter-LATA long distance
telecommunications services that are incidental to the local exchange
services business of the Local Exchange Division; (g) any activities or
services primarily related to the provision of intra-LATA long distance
telecommunications services; (h) any activities or services (whether
local, intra-LATA or inter-LATA) primarily related to the provision of
cellular, PCS, ESMR or paging services, mobile telecommunications
services or any other voice, data or voice/data wireless services,
whether fixed or mobile, or related to telecommunications services
provided through communications satellite systems (whether low, medium or
high orbit systems); and (i) the use of the "Sprint" brand name or any
other brand names, trade names or trademarks owned or licensed by this
Corporation or any of its Subsidiaries.
"North America" shall mean the current geographic area covered by
the following countries: Canada, the United States of Mexico and the
United States of America.
"Notice of Abandonment" shall have the meaning set forth in Section
3(a)(i) of the Class A Provisions, provided that if the Cellular Spin-off
Date does not occur on or prior to the fifth anniversary of the Initial
Issuance Date, the Company shall be conclusively deemed to have delivered
a Notice of Abandonment on such fifth anniversary.
"PCS" shall mean a radio communications system of the type
authorized under the rules for broadband personal communications services
designated as Subpart E of Part 24 of the FCC's rules or similar
Applicable Laws of any other country, including the network, marketing,
distribution, sales, customer interface and operations functions relating
thereto.
"Percentage Ownership Interest" shall mean, with respect to any
Person, that percentage of the Voting Power of this Corporation
represented by Votes associated with the Voting Securities of this
Corporation owned of record by such Person or by its nominees.
"Per Share Common Dividend" shall have the meaning set forth in
Section 2(a)(ii) of the Class A Provisions.
"Per Share Distributed Value" shall have the meaning set forth in
Section 3(b)(vii) of the Class A Provisions.
"Person" shall mean an individual, a partnership, an association, a
joint venture, a corporation, a business, a trust, any entity organized
or existing under Applicable Law, an unincorporated organization or any
Governmental Authority.
"Preferred Stock" shall have the meaning set forth in ARTICLE SIXTH
of these Articles of Incorporation.
"Preferred Stock Director" shall have the meaning set forth in
ARTICLE FIFTH of these Articles of Incorporation.
"Proceeding" shall mean any action, litigation, suit, proceeding or
formal investigation or review of any nature, civil, criminal, regulatory
or otherwise, before any Govern mental Authority.
"Purchase Price" shall mean, as to Acquisitions by Cellular, the
amount paid in cash plus the Fair Market Value of non-cash consideration
paid to effect such Acquisition, provided that indebtedness assumed by
Cellular shall not be included in the Purchase Price paid in respect of
any Acquisition to the extent that it is included in Net Cellular
Indebtedness.
"Qualified Joint Venture" shall have the meaning set forth in
Article I of the Investment Agreement.
"Qualified Stock Purchaser" shall mean a Person that (a) FT and DT
reasonably believe has the legal and financial ability to purchase shares
of Class A Stock from this Corporation in accordance with Article VI of
the Stockholders' Agreement and (b) would not be a Major Competitor of
this Corporation or of the Joint Venture immediately following such
purchase.
"Qualified Stock Purchaser Standstill Agreement" shall have the
meaning set forth in the Standstill Agreement.
"Qualified Subsidiary" shall have the meaning set forth in the
Investment Agreement.
"Qualified Subsidiary Standstill Agreement" shall have the meaning
set forth in the Investment Agreement.
"Redemption Date" shall mean the date fixed by the Board of
Directors for the redemption of any shares of capital stock of this
Corporation pursuant to Section 2 of the provisions of ARTICLE SIXTH of
these Articles of Incorporation entitled GENERAL PROVISIONS RELATING TO
ALL STOCK.
"Redemption Securities" shall mean any debt or equity securities of
this Corporation, any of its Subsidiaries, or any combination thereof
having such terms and conditions as shall be approved by the Board of
Directors and which, together with any cash to be paid as part of the
redemption price pursuant to subsection (b) of Section 2 of the
provisions of ARTICLE SIXTH of these Articles of Incorporation entitled
GENERAL PROVISIONS RELATING TO ALL STOCK or Section 3(a)(i) of the Class
A Provisions, in the opinion of an investment banking firm of recognized
national standing selected by the Board of Directors (which may be a firm
which provides other investment banking, brokerage or other services to
this Corporation), have a Market Price, at the time notice of redemption
is given pursuant to subsection (d) of Section 2 of the provisions of
ARTICLE SIXTH of these Articles of Incorporation entitled GENERAL
PROVISIONS RELATING TO ALL STOCK of Section 3(a)(i) of the Class A
Provisions, at least equal to the redemption price required to be paid by
subsection (a) of such Section 2 or Section 3(a)(i) of the Class A
Provisions.
"Registration Rights Agreement" shall mean the Registration Rights
Agreement, dated the Initial Issuance Date, among FT, DT and this
Corporation, as it may be amended or supplemented from time to time.
"Requested Sale" shall have the meaning set forth in Section 3(a)(i)
of the Class A Provisions.
"Rights Agreement" shall mean the Rights Agreement, dated as of
August 8, 1989, between this Corporation and UMB Bank, n.a., as amended
on June 4, 1992 and as of July 31, 1995, and as it may be amended or
supplemented from time to time.
"Sales Price" shall mean, as to any Disposition by Cellular, the
amount received in cash plus the Fair Market Value of non-cash
consideration received to effect such Disposition, provided that any
indebtedness assumed or retained by Cellular shall not be deducted from
the Sales Price to the extent that it is included in Net Cellular
Indebtedness.
"Second Anniversary Lower Threshold Sprint Price" shall mean,
subject to adjustment as provided in the Class A Provisions, $32.641.
"Section 310" shall have the meaning set forth in Section 2(a) of
ARTICLE FIFTH of these Articles of Incorporation.
"Section 7(i) Aggregate Purchase Price" means the aggregate purchase
price paid for shares of Common Stock purchased by the Class A Holders
which are converted into Class A Preference Stock pursuant to Section
7(i) of the Class A Provisions.
"Section 7(i) Preference Shares" shall mean shares of Class A
Preference Stock acquired by the Class A Holders upon conversion of
shares of Common Stock pursuant to Section 7(i) of the Class A
Provisions.
"Shares" shall mean (a) shares of Class A Stock, Common Stock or any
other Voting Securities of this Corporation, (b) securities of this
Corporation convertible into Voting Securities of this Corporation and
(c) options, warrants or other rights to acquire such Voting Securities,
but in the case of clause (c) excluding any rights of the Class A Holders
or FT and DT to acquire Voting Securities of this Corporation pursuant to
the Investment Agreement and the Stockholders' Agreement (but not
excluding any Voting Securities received upon the exercise of such
rights).
"Spin-off" shall mean any spin-off or other pro rata distribution of
equity interests of a wholly-owned direct or indirect Subsidiary of this
Corporation to the stockholders of this Corporation, provided that the
term "Spin-off" shall not include the Cellular Spin-off unless a Notice
of Abandonment has been delivered.
"Spin-off Trading Period" shall mean any 20 consecutive Trading Day
period which begins on or after the 19th Trading Day before the Cellular
Spin-off Date or which ends on or before the 18th Trading Day after the
Cellular Spin-off Date.
"Sprint Party" shall have the meaning set forth in the Joint Venture
Agreement.
"Sprint Price Range" shall mean from and including the Lower
Threshold Sprint Price to and including the Upper Threshold Sprint Price.
"Sprint Sub" shall mean Sprint Global Venture, Inc.
"Standstill Agreement" shall mean the Standstill Agreement, dated as
of July 31, 1995, among FT, DT and this Corporation, as it may be amended
or supplemented from time to time.
"Stockholders' Agreement" shall mean the Stockholders' Agreement,
dated as of the Initial Issuance Date, among FT, DT and this Corporation
(and all exhibits thereto), as it may be amended or supplemented from
time to time.
"Strategic Investor" shall have the meaning set forth in the
Investment Agreement.
"Strategic Merger" shall mean a merger or other business combination
involving this Corporation (a) in which the Class A Holders are entitled
to retain or receive, as the case may be, voting equity securities of the
surviving parent entity in exchange for or in respect of (by conversion
or otherwise) such Class A Stock, with an aggregate Fair Market Value
equal to at least 75% of the sum of (i) the Fair Market Value of all
consideration which such Class A Holders have a right to receive with
respect to such merger or other business combination, and (ii) if this
Corporation is the surviving parent entity, the Fair Market Value of the
equity securities of the surviving parent entity which the Class A
Holders are entitled to retain, (b) immediately after which the surviving
parent entity is an entity whose voting equity securities are registered
pursuant to Section 12(b) or Section 12(g) of the Exchange Act or which
otherwise has any class or series of its voting equity securities held by
at least 500 holders and (c) immediately after which no Person or Group
(other than the Class A Holders) owns Voting Securities of such surviving
parent entity with Votes equal to more than 35 percent of the Voting
Power of such surviving parent entity.
"Subsidiary" shall mean, with respect to any Person (the "Parent"),
any other Person in which the Parent, one or more direct or indirect
Subsidiaries of the Parent, or the Parent and one or more of its direct
or indirect Subsidiaries (a) have the ability, through ownership of
securities individu ally or as a group, ordinarily, in the absence of
contingencies, to elect a majority of the directors (or individuals
performing similar functions) of such other Person, and (b) own more than
50% of the equity interests, provided that Atlas shall be deemed to be a
Subsidiary of each of FT and DT.
"Supervoting Powers" shall mean, as to the capital stock and debt
securities of this Corporation:
(a) Common Stock entitled to more than one Vote per share
(other than pursuant to the Rights Agreement); or (b) Voting
Securities of this Corporation other than Common Stock entitled to a
number of Votes per share or unit, as the case may be, greater than
the quotient of (i) the price per share or unit, as the case may be,
at which such security will be issued by this Corporation di vided
by (ii) the Market Price per share of Common Stock on the date of
issuance. "Target Price" shall mean $47.225 (subject to adjustment
as provided in the Class A Provisions).
"Tie-Breaking Vote" shall have the meaning set forth in Section
18.1(a) of the Joint Venture Agreement, and shall include any successor
provision thereto.
"Total Requested Sale Proceeds" shall have the meaning set forth in
Section 3(a)(i) of the Class A Provisions.
"Trading Day" shall mean, with respect to any security, any day on
which the principal national securities exchange on which such security
is listed or admitted to trading or NASDAQ, if such security is listed or
admitted to trading thereon, is open for the transaction of business
(unless such trading shall have been suspended for the entire day) or, if
such security is not listed or admitted to trading on any national
securities exchange or NASDAQ, any day other than a Saturday, Sunday, or
a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
"Transfer" shall mean any act pursuant to which, directly or
indirectly, the ownership of the assets or securities in question is
sold, transferred, conveyed, delivered or otherwise disposed, but shall
not include (a) any grant of Liens, (b) any conversion or exchange of any
security of this Corporation pursuant to a merger or other business
combination involving this Corporation, (c) any transfer of ownership of
assets to the surviving entity in a Strategic Merger or pursuant to any
other merger or other business combination not prohibited by the Class A
Provisions, or (d) any foreclosure or other execution upon any of the
assets of this Corporation or any of its Subsidiaries other than
foreclosures resulting from Lien Transfers.
"Treaty Benefit" shall mean: (a) the 5% rate of dividend withholding
(or any successor rate applicable to non-portfolio
investments); (b) the exemption from income tax with respect to
dividends paid or profits distributed by this Corporation; (c)
the exemption from income tax with respect to gains or profits
derived from the sale, exchange, or disposal of stock in this
Corporation; or (d) the exemption from taxes on capital with
respect to stock in this Corporation; under, in the case of
(a), (b), (c) and (d) above, either (i) the relevant income tax
treaty between the United States and France, in the case of FT,
and the United States and Germany, in the case of DT, or (ii)
any provisions of French statutory law, in the case of FT, or
German statutory law, in the case of DT, which refers to, or is
based on or derived from, any provision of such treaty, or (e)
any other favorable treaty benefit or statutory benefit, that
specifically requires the ownership of a certain amount of
voting power or voting interest in this Corporation, under a
provision of the relevant income tax treaty between the United
States and France or the statutory laws of France, in the case
of FT, or the relevant income tax treaty between the United
States and Germany or the statutory laws of Germany, in the
case DT, provided that the chief tax officer of FT or DT
certifies that such benefit is reasonably expected to provide
to FT or DT, as the case may be, combined tax savings in the
year such certification is made and in future years of at least
U.S. $15 million.
"Triple Play Activities" shall mean (a) the ownership of any equity
or other interests in MajorCo, L.P. or any of its successors or
Affiliates; the enforcement or performance of any of the rights or
obligations of this Corporation or any Subsidiary of this Corporation
pursuant to the Agreement of Limited Partnership of MajorCo, L.P. or any
other agreement or arrangement contemplated thereby, except to the extent
relating to the provision of services by this Corporation as the long
distance telecommunications provider to MajorCo, L.P.; or any activities
or services of MajorCo, L.P. or any of its successors or Affiliates; (b)
the ownership of any equity or other interests in any Teleport Entity (as
that term is defined in the Contribution Agreement (the "Contribution
Agreement"), dated as of March 28, 1995, by and among TCI Network
Services, Comcast Telephony Services, Cox Telephony Partnership, MajorCo,
L.P. and NewTelco, L.P.); or any activities or services of any Teleport
Entity or any of their respective successors or Affiliates; and (c) the
ownership of any equity or other interests in PhillieCo, L.P., or any of
its successors or Affiliates; the enforcement or performance of any of
the rights or obligations of this Corporation or any Subsidiary of this
Corporation pursuant to the Amended and Restated Agreement of Limited
Partnership of PhillieCo, L.P., dated as of February 17, 1995, or any
other agreement or arrangement contemplated thereby, except to the extent
relat ing to the provision of services by this Corporation as the long
distance telecommunications provider to PhillieCo, L.P.; or any
activities or services of PhillieCo, L.P. or any of its successors or
Affiliates.
"Upper Threshold Sprint Price" shall mean, subject to adjustment as
provided in the Class A Provisions, $37.780.
"Venture Interests" shall have the meaning set forth in the Joint
Venture Agreement.
"Vote" shall mean, with respect to any entity, the ability to cast a
vote at a stockholders', members' or comparable meeting of such entity
with respect to the election of directors, managers or other members of
such entity's governing body, or the ability to cast a general
partnership or comparable vote, provided that with respect to this
Corporation only, the term "Vote" shall mean the ability to exercise
general voting power (as opposed to the exercise of special voting or
disapproval rights such as those set forth in the Class A Provisions)
with respect to matters other than the election of directors at a meeting
of the stockholders of this Corporation.
"Voting Power" shall mean, with respect to any entity as at any
date, the aggregate number of Votes outstanding as at such date in
respect of such entity.
"Voting Securities" shall mean, with respect to an entity, any
capital stock or debt securities of such entity if the holders thereof
are ordinarily, in the absence of contingencies, entitled to a Vote, even
though the right to such Vote has been suspended by the happening of such
a contingency, and in the case of this Corporation, shall include,
without limitation, the Common Stock and the Class A Stock, but shall not
include any shares issued pursuant to the Rights Agreement to the extent
such issuance is caused by action of a Class A Holder.
"Weighted Average Price" shall mean the weighted average per unit
price paid by the purchasers of any capital stock, debt instrument or
security of this Corporation. In determining the price of shares of
Common Stock or Class A Common Stock issued upon the conversion or
exchange of securities or issued upon the exercise of options, warrants
or other rights, the consideration for such shares shall be deemed to
include the price paid to purchase the convertible security or the
warrant, option or other right, plus any additional consideration paid
upon conversion or exercise. If any portion of the price paid is not
cash, the Independent Directors (acting by majority vote) shall determine
in good faith the Fair Market Value of such non-cash consideration. If
any new shares of Common Stock are issued together with other shares or
securities or other assets of this Corporation for consideration which
covers both the new shares and such other shares, securities or other
assets, the portion of such consideration allocable to such new shares
shall be determined in good faith by the Independent Directors (acting by
majority vote), in each case as certified in a resolution sent to all
Class A Holders.
13. Notices. All notices made by this Corporation pursuant to the
Class A Provisions shall be made in writing and any such notice shall be
deemed delivered when the same has been delivered in person to, or
transmitted by telex or telecopier to, or seven days after it has been
sent by air mail to the addresses of, all of the Class A Holders as
indicated on the stock transfer books of this Corporation.
Communications by telex or telecopier also shall be sent concurrently by
air mail, but shall in any event be effective as stated above.
14. No Other Beneficiaries. The Class A Provisions are intended
for the benefit of the Class A Holders only, and nothing in the Class A
Provisions is intended or will be construed to confer upon or to give any
third party or other stockholder of this Corporation any rights or
remedies by virtue hereof. Any term of the Class A Provisions may be
waived by the holders of at least two-thirds of the outstanding shares of
Class A Stock, voting together as a single class.
GENERAL PROVISIONS RELATING TO
PREFERRED STOCK
1. The Preferred Stock may be issued from time to time in one or
more series, each of such series to have such voting powers (full or
limited or without voting powers) designation, preferences and relative,
participating, optional or other special rights and qualifications,
limitations or restrictions thereof as are stated and expressed herein,
or in a resolution or resolutions providing for the issue of such series
adopted by the Board of Directors as hereinafter provided.
2. Authority is hereby granted to the Board of Directors, subject
to the provisions of this ARTICLE SIXTH, to create one or more series of
Preferred Stock and, with respect to each series, to fix or alter as
permitted by law, by resolution or resolutions providing for the issue of
such series:
(a) the number of shares to constitute such series and the
distinctive designation thereof;
(b) the dividend rate on the shares of such series, the dividend
payment dates, the periods in respect of which dividends are
payable ("dividend periods") whether such dividends shall be
cumulative, and if cumulative, the date or dates from which
dividends shall accumulate;
(c) whether or not the shares of such series shall be redeemable,
and, if redeemable, on what terms, including the redemption
prices which the shares of such series shall be entitled to
receive upon the redemption thereof; (d) whether or not the
shares of such series shall be subject to the operation of
retirement or sinking funds to be applied to the purchase or
redemption of such shares for retirement and, if such
retirement or sinking fund or funds be established, the annual
amount thereof and the terms and provisions relative to the
operation thereof;
(e) whether or not the shares of such series shall be convertible
into, or exchangeable for, shares of any other class or classes
or of any other series of the same or any other class or
classes of stock of the Corporation and the conversion price or
prices or rate or rates, or the rate or rates at which such
exchange may be made, with such adjustments, if any, as shall
be stated and expressed or provided in such resolution or
resolutions;
(f) the voting power, if any, of the shares of such series; and
(g) such other terms, conditions, special rights and protective
provisions as the Board of Directors may deem advisable.
3. No dividend shall be declared and set apart for payment on any
series of Preferred Stock in respect of any dividend period unless there
shall likewise be or have been paid, or declared and set apart for
payment, on all shares of Preferred Stock of each other series entitled
to cumulative dividends at the time outstanding which rank equally as to
dividends with the series in question, dividends ratably in accordance
with the sums which would be payable on the said shares through the end
of the last preceding dividend period if all dividends were declared and
paid in full.
4. If upon any dissolution of the Corporation, the
assets of the Corporation distributable among the holders
of any one or more series of Preferred Stock which are (i)
entitled to a preference over the holders of the Common
Stock upon such dissolution, and (ii) rank equally in
connection with any such distribution, shall be insufficient
to pay in full the preferential amount to which the holders
of such shares shall be entitled, then such assets, or the
proceeds thereof, shall be distributed among the holders of
each such series of the Preferred Stock ratably in accordance
with the sums which would be payable on such distribution
if all sums payable were discharged in full.
5. In the event that the Preferred Stock of any series
shall be redeemable, then, at the option of the Board of
Directors, the Corporation may at such time or times as
may be specified by the Board of Directors as provided in
paragraph (c) of Section 2 of this ARTICLE SIXTH redeem
all, or any number less than all, of the outstanding shares
of such series at the redemption price thereof and on the
other terms fixed herein or by the Board of Directors as
provided in said paragraph (c) (the sum so payable upon
any redemption of preferred Stock being herein referred to
as the "redemption price").
PREFERRED STOCK-FIRST SERIES, CONVERTIBLE
Amount
The number of shares to constitute the initial series of
Preferred Stock shall be 1,742,853 and the designation thereof
shall be Preferred Stock-First Series (hereafter "First
Series").
Dividends
Holders of shares of the First Series will be entitled to
receive cumulative cash dividends at the quarterly rate of
$.22-1/2 per share for six consecutive quarters commencing in
September, 1967 (the specific date to coincide with the date
the Corporation pays its third quarter Common Stock dividend);
thereafter the cumulative quarterly dividend rate will be $.37-
1/2 per share. All such payments will be made out of funds
legally available for the payment of such dividends, when and
as declared, before any distribution shall be made on the
Corporation's Common Stock.
Conversion Rights
The holders of shares of the First Series may convert any
or all of said shares into Common Stock at any time after
December 7, 1989, on the basis of three (3) shares of the
Common Stock of the Corporation for each share of the First
Series. Such ratio is herein referred to as the "conversion
rate."
The conversion rate shall be subject to the following
adjustments:
A. In case the Corporation shall (i) pay a dividend in
Common Stock or (ii)subdivide the outstanding shares
of Common Stock into a greater number of shares of
Common Stock or combine the outstanding shares of
Common Stock into a smaller number of shares of
Common Stock, the conversion rate in effect
immediately prior to such stock dividend,
subdivision or combination shall be proportionately
increased or decreased as the case may be.
B. No such adjustment shall be required, however, if
the aggregate number of shares of Common Stock
issued as dividends on the Common Stock since the
most recent previous adjustment does not exceed 5%
of the total number of shares of Common Stock
outstanding; provided, however, that when the
aggregate number of shares of Common Stock issued
as dividends since the most recent previous adjustment
shall exceed the foregoing 5%, the conversion rate
shall be increased in proportion to the same
percentage or ratio that the aggregate of all such
dividends in shares of Common Stock since the most
recent previous adjustment bears to the total number
of shares of Common Stock outstanding.
C. In the event the Corporation shall fix a record date
for the purpose of determining the holders of shares
of Common Stock entitled to receive any dividend in
Common Stock, the conversion rate or any subsequent
conversion rate in effect immediately prior to the
record date fixed for the determination of
shareholders entitled to such dividend shall be
proportionately increased (subject to the limitation
of subparagraph (B) above) and such adjustment will
become effective immediately after the opening of
business on the day following such record date.
D. The conversion rate shall not be adjusted by reason
of: (i) the issuance of shares pursuant to options
and stock purchase agreements granted or entered
into with officers or employees of the Corporation;
and (ii) the issuance of shares for cash or in
exchange for assets or stock of another company.
E. Any adjustment in the conversion rate as herein
provided shall be to the nearest, or if there shall
be no nearest, then to the next lower, one-hundredth
of a share of Common Stock, and shall remain in
effect until further adjustment as required
hereunder.
F. In case the Corporation shall be recapitalized, or
shall be consolidated with or merged into, or shall
sell or transfer its property and assets as, or
substantially as, an entirety to any other
corporation, proper provisions shall be made as a
part of the terms of such recapitalization,
consolidation, merger, sale or transfer whereby the
holder of any shares of the First Series at the time
outstanding immediately prior to such event shall
thereafter be entitled to such conversion rights,
with respect to securities of the Corporation
resulting from such recapitalization, consolidation
or merger, or to which such sale or transfer shall
be made, as shall be substantially equivalent to the
conversion rights herein provided for.
G. No fraction of a share of Common Stock shall be
issued upon any conversion. In lieu of the fraction
of a share to which the holder of shares of the
First Series surrendered for conversion would
otherwise be entitled, such holder shall receive, as
soon as practicable after the date of conversion, an
amount in cash equal to the same fraction of the
market value of a full share of Common Stock. For
the purposes of this subparagraph, the market value
of a share of Common Stock shall be the last
recorded sale price of such a share on the New York
Stock Exchange on the day immediately preceding the
date upon which such shares of such series are
surrendered for conversion, or if there be no such
recorded sale price on such date, the last quoted
bid price per share of Common Stock on such
Exchange at the close of business on such date.
Liquidation Rights
In the event of any liquidation, dissolution or winding
up of the Corporation the holders of the First Series will be
entitled to receive out of the assets of the Corporation
available for distribution to stockholders, before any
distribution of the assets shall be made to the holders of
Common Stock, the sum of $42.50 per share if such
liquidation is voluntary and the sum of $40.00 per share if
such liquidation is involuntary, plus in each case any
accumulated unpaid dividends. If upon any liquidation,
dissolution or winding up of the Corporation the amounts
payable with respect to the Preferred Stock are not paid
in full, the holders of the Preferred Stock will share ratably
in any distribution of assets in proportion to the full preferential
amounts to which they are entitled.
Redemption
The First Series may be redeemed by the Corporation after
July 1, 1972, at any time or from time to time, upon at least
thirty days' prior notice, at the redemption price of $42.50
per share, plus any accumulated unpaid dividends. If less
than all the outstanding First Series is to be redeemed, the
shares to be redeemed shall be determined in such manner as
may be prescribed by the Board of Directors. Shares so
redeemed shall be retired and not reissued.
Voting Rights
Each holder of the First Series will be entitled to one
(1) vote for each share held.
If six quarterly dividends on any series of the Preferred
Stock are in arrears, the number of directors of the
Corporation shall be increased by two (2) and the holders of
all the Preferred Stock voting as a class will be entitled to
elect two (2) directors until all arrears in dividends have
been paid.
Consent of the holders of at least two-thirds of the then
outstanding Preferred Stock of all classes will be necessary
to: (a) authorize any stock ranking either as to payment of
dividend or distribution of assets prior to the First Series
or any other Preferred Stock then outstanding or (b) amend,
alter, or change in any material respect prejudicial to the
holders thereof the preferences of any then outstanding
Preferred Stock.
Consent of the holders of a majority of the then
outstanding Preferred Stock of all classes will be necessary
to: (a) increase the authorized amount of the Preferred Stock
or (b) create any other class of stock ranking on a parity
with the Preferred Stock.
Preemptive Rights
No holder of Preferred Stock will have any preemptive
rights.
Listing
The Corporation intends to apply for listing on the New
York Stock Exchange, subject to the approval of that Exchange,
of its First Series.
PREFERRED STOCK-SECOND SERIES, CONVERTIBLE
Amount, Rank and Designation
The amount of shares to constitute the Second Series of
Preferred Stock shall be 8,758,472 shares plus such an
additional amount, if any, as shall be required under the
Agreement and Plan of Merger between the Company
and Carolina Telephone and Telegraph Company dated as
of July 18, 1968. The designation thereof shall be "Preferred
Stock-Second Series, Convertible" (hereinafter "Second
Series"). Shares of the Second Series shall rank on a parity
with shares of the First Series of the Preferred Stock as to
dividends and upon liquidation and shall have a preference
over the shares of the Common Stock and any other class
or series of stock ranking junior to the Second Series as to
dividends or upon liquidation.
Dividends
Holders of shares of the Second Series will be entitled
to receive cumulative cash dividends each calendar quarter
payable in March, June, September and December of each
year, at the following rates: $.31-1/4 per share for the eight
(8) consecutive quarters beginning with the quarter ending
March 31, 1969 through the quarter ending December 31,
1970; $.34-3/8 per share for eight (8) quarters beginning with
the quarter ending March 31, 1971 through the quarter ending
December 31, 1972; and $.37-1/2 per share in each quarter
thereafter.
All such payments will be made out of funds legally
available for the payment of such dividends, when and as
declared by the Board of Directors of the Corporation. Before
any dividends on the Common Stock or any other class or
series of stock of the Corporation ranking junior to the Second
Series as to dividends shall be paid or declared and set apart
for payment, the holders of shares of the Second Series shall
be entitled to receive the full accumulated cash dividends for
all quarterly dividend periods ending on or before the date on
which any dividend on any such class or series of stock
ranking junior to the Second Series as to dividends or upon
liquidation is declared or is to be paid.
Conversion Rights
The holders of shares of the Second Series may convert
any or all of said shares into Common Stock at any time after
December 7, 1989, on the basis of two and one-half (2-1/2)
shares of the Common Stock of the Corporation for each one
share of the Second Series. Such ratio is herein referred to
as the "conversion rate." In case of the redemption of any
shares of the Second Series, such right of conversion shall
cease and terminate as to the shares duly called for
redemption, at the close of business on the date fixed for
redemption, unless default shall be made in the payment of the
redemption price. Upon conversion the Corporation shall make
no payment or adjustment on account of dividends accrued or in
arrears on the Second Series surrendered for conversion.
The conversion rate in effect at any time shall be
subject to adjustment as follows:
A. In case the Corporation shall (i) declare a dividend
on its Common Stock in shares of its capital stock,
(ii) subdivide its outstanding shares of Common
Stock, (iii) combine its outstanding shares of
Common Stock into a smaller number of shares, or
(iv) issue any shares by reclassification of its
shares of Common Stock (including any
reclassification in connection with a consolidation
or merger in which the Corporation is the continuing
corporation), at the conversion rate in effect at
the time of the record date for such dividend or of
the effective date of such subdivision, combination
or reclassification shall be proportionately
adjusted so that the holder of any shares of the
Second Series surrendered for conversion after such
time shall be entitled to receive the number of
shares which he would have owned or have been
entitled to receive had such shares of the Second
Series been converted immediately prior to such
time. Such adjustment shall be made successively
whenever any event listed above shall occur.
B. In case the Corporation shall fix a record date for
the issuance of rights or warrants to all holders of
its Common Stock entitling them (for a period
expiring within 45 days after such record date) to
subscribe for or purchase shares of Common Stock at
a price per share less than the current market price
per share of Common Stock (as defined in Paragraph
D below) on such record date, the conversion rate
after such record date shall be determined by
multiplying the conversion rate in effect
immediately prior to such record date by a fraction,
of which the numerator shall be the number of shares
of Common Stock outstanding on such record date plus
the number of additional shares of Common Stock to
be offered for subscription or purchase, and of
which the denominator shall be the number of shares
of Common Stock outstanding on such record date plus
the number of shares of Common Stock which the
aggregate offering price (without deduction for
expenses or commissions of any kind) of the total
number of shares so to be offered would purchase at
such current market price. Such adjustment shall be
made successively whenever such a record date is
fixed; and in the event that such rights or warrants
are not so issued, the conversion rate shall again
be adjusted to be the conversion rate which would
then be in effect if such record date had not been
fixed.
C. In case the Corporation shall fix a record date for
the making of a distribution to all holders of its
Common Stock (including any such distribution made
in connection with a consolidation or merger in
which the Corporation is the continuing corporation)
of evidences of its indebtedness or assets
(excluding dividends paid in, or distributions of,
cash) or subscription rights or warrants (excluding
those referred to in Paragraph B above), the
conversion rate after such record date shall be
determined by multiplying the conversion rate in
effect immediately prior to such record date by a
fraction, of which the numerator shall be the
current market price per share of Common Stock (as
defined in Paragraph D below) on such record date,
and of which the denominator shall be such current
market price per share of Common Capital Stock, less
the fair market value (as determined by the Board of
Directors whose determination shall be conclusive,
and described in a statement filed with the transfer
agent or agents for the Second Series and with the
principal office of the Corporation) of the portion
of the assets or evidences of indebtedness so to be
distributed or of such subscription rights or
warrants applicable to one share of Common Stock.
Such adjustment shall be made successively whenever
such a record date is fixed; and in the event that
such distribution is not so made, the conversion
rate shall again be adjusted to the conversion rate
which would then be in effect if such record date
had not been fixed.
D. For the purpose of any computation under Paragraphs
B and C above, the current market price per share of
Common Stock on any record date shall be deemed to
be the average of the daily closing prices for the
30 consecutive business days commencing 45 business
days before such date. The closing price for each
day shall be the last sale price regular way or, in
case no such sale takes place on such day, the mean
between the closing bid and asked prices regular
way, in either case on the New York Stock Exchange.
E. The conversion rate shall not be adjusted by reason
of: (i) the issuance of shares pursuant to options
and stock purchase agreements granted or entered
into with officers or employees of the Corporation;
and (ii) the issuance of shares for cash (except as
provided in Paragraph B above) or in exchange for
assets or stock of another company.
F. Any adjustment in the conversion rate as herein
provided shall be to the nearest, or if there shall
be no nearest, then to the next lower, one-hundredth
of a share of Common Stock, and shall remain in
effect until further adjustment as required
hereunder.
G. In case the Corporation shall be recapitalized, or
shall be consolidated with or merged into, or shall
sell or transfer its property and assets as, or
substantially as, an entirety to any other
corporation, proper provisions shall be made as a
part of the terms of such recapitalization,
consolidation, merger, sale or transfer whereby the
holder of any shares of the Second Series at the
time outstanding immediately prior to such event
shall thereafter be entitled to such conversion
rights, with respect to securities of the
Corporation resulting from such recapitalization,
consolidation or merger or to which such sale or
transfer shall be made, as shall be substantially
equivalent to the conversion rights herein provided
for.
H. No fraction of a share of Common Stock shall be
issued upon any conversion. In lieu of the fraction
of a share to which the holder of shares of the
Second Series surrendered for conversion would
otherwise be entitled, such holder shall receive, as
soon as practicable after the date of conversion, an
amount in cash equal to the same fraction of the
market value of a full share of Common Stock. For
the purposes of this subparagraph, the market value
of a share of Common Stock shall be the last
recorded sale price of such a share on the New York
Stock Exchange on the day immediately preceding the
date upon which such shares of such series are
surrendered for conversion, or if there be no such
recorded sale price on such day, the last quoted bid
price per share of Common Stock on such Exchange
at the close of business on such date.
I. Whenever there shall be an adjustment in the
conversion rate as provided by the foregoing, the
Corporation will file with each transfer agent for
shares of the Second Series a certificate signed by
the President or the chief financial or accounting
officer of the Corporation, setting forth in
reasonable detail the calculation of the adjustment,
and shall mail to each holder of record thereof, a
notice describing the adjustment and stating the
applicable record or effective date therefor, at
least 20 days prior thereto.
Liquidation Rights
In the event of any liquidation, dissolution or winding
up of the Corporation the holders of the Second Series
will be entitled to receive out of the assets of the Corporation
available for distribution to stockholders, before any
distribution of the assets shall be made to the holders of the
Common Stock or any other class or series of stock ranking
junior to the Second Series either as to dividends or upon
liquidation, the sum of $35.42 per share if such liquidation
is voluntary and the sum of $33.33 per share if such
liquidation is involuntary, plus in each case any accumulated
unpaid dividends (whether or not declared), to the end of the
current quarterly dividend period in which the payment is
made. If upon any liquidation, dissolution or winding up of
the Corporation the amounts payable with respect to the
Second Series and any other series of Preferred Stock
which ranks on a parity with the Second Series are not
paid in full, the holders of the Second Series and such
parity Preferred Stock will share ratably in any distribution
of assets in proportion to the full preferential amounts to
which they are entitled.
Redemption
Subject to the provisions herein and in the charter
contained, the Second Series may be redeemed by the
Corporation after December 31, 1975, at any time or from time
to time, upon at least thirty days' prior notice, at the
redemption price of $50.00 per share, plus any accumulated
unpaid dividends (whether or not declared), to the end of the
current quarterly dividend period in which the payment is
made. If less than all the outstanding Second Series is to be
redeemed, the shares to be redeemed shall be selected by lot,
in such equitable manner as may be prescribed by the Board
of Directors. Shares so redeemed shall be retired and not
reissued.
Reservation of Shares
The Corporation shall at all times keep available and
reserved the number of shares of its Common Stock required
for conversion of the outstanding and any reserved shares of
the Second Series.
Certain Protective Provisions
If at any time the full cumulative dividends on shares of
the Second Series have not been paid or declared and set
aside for payment for the current and all past quarterly dividend
periods, the Corporation (a) will not declare, or pay, or set
apart for payment any dividends or make any distribution, on
any other class or series of stock of the Corporation ranking
junior to the Second Series whether as to dividends or upon
liquidation; (b) will not redeem, purchase or otherwise
acquire, or permit any subsidiary to purchase or otherwise
acquire, any shares of any junior class or series if the
Corporation shall be in default with respect to any dividend
payable on shares of the Second Series, provided that
notwithstanding the foregoing, the Corporation may at any time
redeem, purchase or otherwise acquire shares of stock of any
such junior class in exchange for, or out of the net cash
proceeds from the substantially simultaneous sale of, other
shares of stock of any junior class; and (c) will not redeem
pursuant to redemption rights in the terms of such stock any
stock ranking on a parity with the Second Series unless at the
same time it redeems all the shares of the Second Series.
Unless the consent of all or a greater number of such
shares is required by law, the consent of the holders of at
least two-thirds (2/3) of the then outstanding shares of the
Second Series shall be necessary in order to liquidate or
dissolve the Corporation voluntarily or by any other means
involving the vote or consent of any stockholders of the
Corporation.
Unless the consent of all or a greater number of such
shares is required by law, consent of the holders of at least
two-thirds (2/3) of the then outstanding aggregate number of
shares of the Second Series and each other series of the
Preferred Stock whose terms provide for such consent, taken
together, will be necessary to: (a) authorize (by whatever
means) any stock ranking either as to payment of dividends or
distribution of assets prior to the Second Series or any other
Preferred Stock then outstanding; or (b) authorize any merger
or consolidation (or transfer of all or substantially all of
the assets of the Corporation in a transaction contemplating
in substance and effect the exchange of shares of the
Preferred Stock for stock of another corporation) unless the
surviving, resulting or other corporation in such transaction
shall have authorized no stock ranking prior to the Preferred
Stock as to dividends or upon liquidation (unless such stock
is a stock substantially the same as, and to be exchanged for,
stock of the Corporation previously authorized pursuant to the
preceding clause (a)); or (c) amend, alter, or change in any
material respect adverse to the holders thereof the
preferences of any then outstanding Preferred Stock; provided
that in case of any such action described in the preceding
clauses (a), (b) and (c) which, in any material respect, is
adverse to the Second Series as a series and is not a term
generally applicable to and with the same relative effect upon
all series, the consent of the holders of two-thirds (2/3) of
the then outstanding shares of the Second Series will be
required.
Unless the consent of all or a greater number of such
shares is required by law, consent of the holders of a
majority of the then outstanding aggregate number of shares
of the Second Series and each other series of the Preferred
Stock whose terms provide for such consent, taken together,
will be necessary to: (a) increase the authorized amount of the
Preferred Stock; (b) authorize any merger or consolidation (or
transfer of all or substantially all the assets of the
Corporation to another corporation contemplating in substance
and effect the exchange of shares of the Preferred Stock for
stock of another corporation) unless the surviving, resulting
or other corporation in such transaction shall have no greater
authorized amount of stock ranking on a parity with the
Preferred Stock as to payment of dividends or upon liquidation
than was authorized by the Corporation immediately prior to
such transaction; or (c) create any other class of stock
ranking on a parity with the Preferred Stock as to dividends
or upon liquidation.
Voting Rights
Each holder of the Second Series will be entitled to one
(1) vote for each share held, and, in addition to the other
class and series voting rights of the shares of the Second
Series, shall have general voting power, share for share, with
the Common Stock of the Corporation and any other shares
having general voting power.
If six quarterly dividends on any series of the Preferred
Stock are in arrears, the number of directors of the
Corporation shall be increased by two (2) and the holders of
all the Preferred Stock voting as a class will be entitled to
elect two (2) directors until all arrears in dividends have
been paid. The Corporation will promptly take all such action
as shall be necessary to permit such election to occur
promptly after such arrearage occurs.
PREFERRED STOCK-THIRD SERIES
(1) Designation; Number of Shares. The series shall be
designated as Preferred Stock-Third Series, 7-3/4%,
Cumulative, and shall consist of 400,000 shares. The shares
of said series are hereinafter sometimes called the "Third
Series Shares."
(2) Dividends. The holders of the Third Series Shares
shall be entitled to receive, as and when declared by the
Board of Directors, out of funds legally available for the
payment of dividends, cumulative dividends at the rate of
$7.75 per share per annum. Such dividends shall be
cumulative from the date on which the Third Series Shares
are originally issued and shall be payable on June 1, 1973,
for the period commencing on such date of original issuance
and ending on said June 1, and thereafter quarterly on
September 1, 1973, December 1, 1973, and on the first day
of each March, June, September, and December thereafter.
(3) Optional Redemption. The Third Series Shares shall
be redeemable at the option of the Corporation, upon at least
thirty (30) days prior written notice addressed to each
registered holder of Third Series Shares at his address
appearing in the stock records of the Corporation, at any time
after March 1, 1974 as a whole, or from time to time in part,
at the following redemption prices per share if redeemed
during the twelve-month period ending on the first day of
March,
<TABLE>
<CAPTION>
Redemption Redemption
Year Price Year Price
<C> <C> <C> <C>
1975---------- $107.49 1990---------- $103.59
1976---------- 107.23 1991---------- 103.33
1977---------- 106.97 1992---------- 103.07
1978---------- 106.71 1993---------- 102.81
1979---------- 106.45 1994---------- 102.55
1980---------- 106.19 1995---------- 102.29
1981---------- 105.93 1996---------- 102.03
1982---------- 105.67 1997---------- 101.77
1983---------- 105.41 1998---------- 101.51
1984---------- 105.15 1999---------- 101.25
1985---------- 104.89 2000---------- 101.00
1986---------- 104.63 2001---------- 100.75
1987---------- 104.37 2002---------- 100.50
1988---------- 104.11 2003---------- 100.25
1989---------- 103.85
</TABLE>
and at $100.00 per share if redeemed at any time after
March 1, 2003, plus, in each case, an amount equal to
dividends accrued thereon to the redemption date;
provided, however, that prior to March 1, 1983, no Third
Series Shares shall be redeemed pursuant to this
paragraph (3) if (a) such redemption is part of a refunding
or anticipated refunding operation involving the application,
directly or indirectly, of borrowed funds having an interest
cost to the Company, computed in accordance with generally
accepted accounting principles, of less than 7-3/4% per
annum, or of preferred stock having an annual dividend cost
of less than 7-3/4% per annum of the greater of (i) the price
paid to the Corporation therefor or (ii) the amount payable
thereon in the event of involuntary liquidation, or (b) such
redemption is part of a refunding or anticipated refunding
operation involving the application, directly or indirectly, of
the proceeds of the issuance of any shares of common
stock of the Corporation within two years prior to or following
the date of such redemption.
(4) Sinking Fund. As a sinking fund for the retirement
of the Third Series Shares, when, as, and if directed by
resolution of the Board of Directors and subject to any
applicable restrictions of law, on March 1, 1978, and on each
March 1 thereafter (so long as any of the Third Series Shares
are outstanding) to and including March 1, 2007, the
Corporation shall redeem 12,000 of the Third Series Shares (or
the number of the Third Series Shares then outstanding if less
than 12,000), and on March 1, 2008 (if any of the Third Series
Shares remain outstanding) the Corporation shall redeem all of
the Third Series Shares then outstanding, at a price of $100
per share, plus, in each case, an amount equal to dividends
accrued thereon to the redemption date. The obligation of the
Corporation to make such redemption shall be cumulative so
that if the full number of shares required to be redeemed on
any March 1 are not so redeemed, the redemption shall be made
thereafter as soon as funds become available therefor. In no
event, however, shall any Third Series Shares be called for
redemption for the sinking fund unless and until full
cumulative dividends on all outstanding shares of all series
of Preferred Stock of the Corporation (except any series of
such Preferred Stock ranking as to dividends or assets junior
to the Third Series Shares), other than the shares previously
or then to be called for redemption, shall have been paid or
declared and set apart for payment for all past quarterly
dividend periods and for all current quarterly dividend
periods ending on or before the redemption date. The
Corporation may at its option, upon notice as provided in
paragraph (3) above, on March 1, 1978 and on each March 1
thereafter to and including March 1, 2007, redeem 12,000 of
the Third Series Shares, or any lesser number of said shares
which is an integral multiple of 1,000, in addition to shares
then to be redeemed for the sinking fund pursuant to this
paragraph (4), at a price of $100 per share, plus, in each
case, an amount equal to dividends accrued thereon to the
redemption date, which privilege shall be noncumulative. No
redemption of the Third Series Shares, pursuant to paragraph
(3) above or the next preceding sentence of this paragraph
(4), nor any purchase or other acquisition of any Third Series
Shares by the Corporation, shall constitute a retirement of
such shares in lieu of or as a credit against any sinking fund
retirement required by this paragraph (4).
(5) Liquidation. In the event of any liquidation,
dissolution or winding-up of the Corporation, the holders of
the Third Series Shares shall be entitled to receive out of
the assets of the Corporation available for distribution to
stockholders, before any distribution of the assets shall be
made to the holders of the Common Stock or any other class
or series of stock ranking as to dividends or assets junior to
the Third Series Shares, an amount, in the case of voluntary
liquidation, dissolution or winding-up, equal to the
redemption price specified in paragraph (3) above applicable
on the date of such voluntary liquidation, dissolution or
winding-up, and, in the case of involuntary liquidation,
dissolution, or winding-up, $100 per share, plus, in the case
of each share (whether on voluntary or involuntary
liquidation, dissolution or winding-up), an amount equal to
the dividends accrued or unpaid thereon, whether or not
declared, to the date fixed for payment. If upon any
liquidation, dissolution or winding-up of the Corporation, the
amounts payable with respect to the Third Series Shares and
any other series of Preferred Stock of the Corporation which
ranks on a parity with the Third Series Shares are not paid in
full, the holders of the Third Series Shares and such parity
Preferred Stock shall share ratably in any distribution of
assets in proportion to the full preferential amounts to which
they are entitled.
(6) Ranking. The Third Series Shares shall rank equally
with the Preferred Stock-First Series, Convertible, and the
Preferred Stock-Second Series, Convertible, of the Corporation
with respect to priority in the payment of dividends and in
the distribution of assets upon any liquidation, whether
voluntary or involuntary. If at any time the full cumulative
dividends on the Third Series Shares have not been paid or
declared and set aside for payment for the current and all
past quarterly dividend periods, or the Corporation shall not
have redeemed all Third Series Shares theretofore required to
be redeemed, the Corporation will not (a) declare or pay, or
set aside for payment, any dividends, or make any
distribution, on its Common Stock or any other stock ranking
as to dividends or assets junior to the Third Series Shares,
or (b) redeem, purchase or otherwise acquire, or permit any
Subsidiary to purchase or otherwise acquire, any shares of
Common Stock or any such other junior stock. In no event
shall any dividend be paid on any shares of any series of
Preferred Stock (other than the Preferred Stock-First Series
and Preferred Stock-Second Series) ranking equally with the
Third Series Shares until all Third Series Shares required to
be redeemed on or before the applicable dividend payment date
have been redeemed.
(7) No Conversion or General Voting Rights. The Third
Series Shares shall not be convertible into or exchangeable
for other securities of the Corporation. The Third Series
Shares shall not be entitled to voting rights of any kind
whatsoever, except only as and when and to the extent
required by law, and except for the special voting rights
specified in paragraphs (8) and (9) below.
(8) Voting Rights if Dividend or Sinking Fund Arrearage.
If six (6) quarterly dividends on any series of the Preferred
Stock of the Corporation are in arrears, or if any sinking
fund payment on any series of the Preferred Stock of the
Corporation has been in arrears for more than one year, the
number of Directors of the Corporation shall be increased by
two (2) and the holders of all series of the Preferred Stock
of the Corporation outstanding, voting as a class, shall be
entitled to elect two (2) Directors until all arrears in
dividends and sinking fund payments have been paid. At any
time after the right to elect two Directors of the Corporation
shall arise, the Secretary of the Corporation shall call a
special meeting of the holders of the Preferred Stock for the
purpose of electing such Directors, to be held within 40 days
after such right arises. Such meeting shall be held at such
place as shall be specified in the notice and upon the notice
provided in the by-laws of the Corporation for the holding of
special meetings of stockholders. If such meeting shall not
be so called within 30 days after such right arises, then the
holders of record of at least 5% of any series of Preferred
Stock then outstanding may designate in writing one of their
number to call such meeting, and the person so designated
shall call such meeting at the place and upon the notice above
provided, and for that purpose shall have access to the stock
books of the Corporation. At any meeting at which the holders
of the Preferred Stock shall have the right to vote for the
election of such two Directors, the holders of 33-1/3% of the
then outstanding Preferred Stock present in person or
represented by proxy shall be sufficient to constitute a
quorum of said class for the election of such two Directors
and the vote of the holders of a plurality of the Preferred
Stock so present shall be sufficient to elect such two
Directors.
(9) Protective Provisions. So long as any of the Third
Series Shares is outstanding, the Corporation shall not:
(A) Without the affirmative vote or written consent
of the holders of at least two-thirds (2/3) of the Third
Series Shares then outstanding, issue any additional
shares of Preferred Stock of any series unless
Consolidated Net Income for any twelve (12) consecutive
calendar months within the fifteen (15) calendar months
immediately preceding such issue was at least four (4)
times the annual dividend requirement on all shares of
Preferred Stock of the Corporation to be outstanding
immediately after such issuance;
(B) Without the affirmative vote or written consent
of the holders of at least two-thirds (2/3) of the Third
Series Shares then outstanding (a) authorize any stock
ranking prior to the Third Series Shares in the payment
of dividends or in the distribution of assets upon
liquidation, (b) authorize any merger or consolidation
(or transfer of all or substantially all of the assets of
the Corporation in a transaction contemplating in
substance and effect the exchange of shares of the
Preferred Stock for stock of another corporation) unless
the surviving, resulting or other corporation in such
transaction shall have authorized no stock ranking prior
to the Third Series Shares in the payment of dividends or
in the distribution of assets upon liquidation (unless
such stock is a stock substantially the same as, and to
be exchanged for, stock of the Corporation previously
authorized pursuant to the clause (a) above); or (c)
amend, alter or change in any material respect adverse to
the holders thereof the rights or preferences of the
Third Series Shares; provided, however, that without the
affirmative vote or written consent of the holders of at
least 76% of the Third Series Shares then outstanding the
Corporation shall not reduce the dividend rate on the
Third Series Shares or change the provisions of the first
two sentences of paragraph (4) above in any material
respect adverse to the holders of the Third Series
Shares; and
(C) Without the affirmative vote or written consent
of the holders of at least a majority of the then
outstanding aggregate number of Third Series Shares and
each other series of the Preferred Stock whose terms
provide for such vote or consent, taken together, (a)
increase the authorized amount of the Preferred Stock of
the Corporation, (b) create any other class of stock
ranking on a parity with the Preferred Stock of the
Corporation in the payment of dividends or in the
distribution of assets upon liquidation, or (c) authorize
any merger or consolidation (or transfer of all or
substantially all the assets of the Corporation to
another corporation contemplating in substance and effect
the exchange of shares of the Preferred Stock for stock
of another corporation) unless the surviving, resulting
or other corporation in such transaction shall have no
greater authorized amount of stock ranking on a parity
with the Preferred Stock in the payment of dividends or
in the distribution of assets upon liquidation than was
authorized by the Corporation immediately prior to such
transaction.
(10) Status of Redeemed or Reacquired Shares. All
Third Series Shares redeemed and otherwise reacquired by
the Corporation shall be cancelled. Such shares shall be
restored to the status of authorized but unissued shares
of the Corporation's Preferred Stock, but shall not be
reissued as Third Series Shares.
(11) Definitions. As used in paragraph (9)(A)above,
the following terms shall have the following meanings:
(A) "Consolidated Net Income" shall mean
consolidated gross revenues of the Corporation and
its Subsidiaries less all operating and non-
operating expenses of the Corporation and its
Subsidiaries including all charges of a proper
character (including current and deferred taxes on
income, provision for taxes on unremitted foreign
earnings which are included in gross revenues, and
current additions to reserves), but not including in
gross revenues any gains (net of expenses and taxes
applicable thereto) in excess of losses resulting
from the sale, conversion or other disposition of
capital assets (i.e., assets other than current
assets), any gains resulting from the write-up of
assets, any earnings of any corporation acquired by
the Corporation or any Subsidiary through purchase,
merger or consolidation or otherwise for any year
prior to the year of acquisition, or any equity in
any Subsidiary at the date of acquisition over the
cost of the investment in such Subsidiary; all
determined in accordance with generally accepted
accounting principles, including the making of
appropriate deductions for minority interests, if
any, in Subsidiaries.
(B) "Subsidiary" shall mean any corporation at
least a majority of the stock of which having
general voting rights is, at the time as of which
any election is being made, owned by the Corporation
either directly or through Subsidiaries.
PREFERRED STOCK-FOURTH SERIES
(1) Designation and Amount. The shares of such Series
shall be designated as "Preferred Stock - Fourth Series,
Junior Participating" (hereafter "Fourth Series") and the
number of shares constituting such series shall be six million
two hundred fifty thousand (6,250,000).
(2) Dividends. The dividend rate on the shares of the
Fourth Series shall be for each quarterly dividend (here
inafter referred to as a "quarterly dividend period"), which
quarterly dividend periods shall commence on January 1,
April 1, July 1 and October 1 in each year (or in the case of
original issuance, from the date of original issuance) and
shall end on and include the day next preceding the first date
of the next quarterly dividend period, at a rate per quarterly
dividend period (rounded to the nearest cent) equal to the
greater of (a) $10.00 or (b) subject to the provision for
adjustment hereinafter set forth, 100 times the aggregate per
share amount of all cash dividends, and 100 times the
aggregate per share amount (payable in cash, based upon the
fair market value at the time the non-cash dividend or other
distribution is declared as determined in good faith by the
Board of Directors) of all non-cash dividends or other
distributions other than a dividend payable in shares of
Common Stock or Class A Common Stock, as the case may
be, or a subdivision of the outstanding shares of Common
Stock or Class A Common Stock, as the case may be (by
reclassification or otherwise), declared (but not withdrawn)
on the Common Stock of the Corporation or the Class A
Common Stock of the Corporation, as the case may be,
during the immediately preceding quarterly dividend period,
or, with respect to the first quarterly dividend period, since
the first issuance of any share or fraction of a share of the
Fourth Series. In the event this Company shall at any time
after August 12, 1986 (the "Rights Declaration Date") (i) declare
any dividend on Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number
of shares, then in each such case the amount to which holders
of shares of the Fourth Series were entitled immediately prior
to such event under clause (b) of the preceding sentence shall
be adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
(3) Voting Rights. Except as prescribed by law and in
addition to the rights provided for in ARTICLE SIXTH of the
Articles of Incorporation of the Corporation, as amended, and
subject to the provision for adjustment hereinafter set forth,
the holders of the Fourth Series shall be entitled to 100
votes for each share held and shall be entitled to exercise
such voting rights with the holders of Common Stock, without
distinction as to class, at any annual or special meeting of
stockholders for the election of directors and on any other
matter coming before such meeting. In the event the
Corporation shall at any time after the Rights Declaration
Date (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common
Stock, or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the number of
votes per share to which holders of shares of the Fourth
Series were entitled immediately prior to such event shall be
adjusted by multiplying such number by a fraction the
numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(4) Certain Restrictions.
(A) Whenever quarterly dividends or other dividends
or distributions payable on the shares of the Fourth
Series as provided in Section (2) are in arrears,
thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of the
Fourth Series outstanding shall have been paid in full,
the Corporation shall not:
(i) declare or pay dividends (except a dividend
payable in Common Stock and/or any other class of
stock ranking junior to the shares of the Fourth
Series) on, make any other distributions on, or
redeem or purchase or otherwise acquire for
consideration any shares of stock ranking junior
(either as to dividends or upon liquidation,
dissolution or winding up) to the shares of the
Fourth Series;
(ii) redeem or purchase or otherwise acquire
for consideration shares of any stock ranking on a
parity (either as to dividends or upon liquidation,
dissolution or winding up) with the shares of the
Fourth Series, provided that the Corporation may at
any time redeem, purchase or otherwise acquire
shares of any such parity stock in exchange for
shares of any stock of the Corporation ranking
junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Shares of the
Fourth Series; or
(iii) purchase or otherwise acquire for
consideration any shares of the Fourth Series, or
any shares of stock ranking on a parity with the
shares of the Fourth Series, except in accordance
with a purchase offer made in writing or by
publication (as determined by the Board of
Directors) to all holders of such shares upon such
terms as the Board of Directors, after consideration
of the respective annual dividend rates and other
relative rights and preferences of the respective
series and classes, shall determine in good faith
will result in fair and equitable treatment among
the respective series or classes.
(B) The Corporation shall not permit any subsidiary
of the Corporation to purchase or otherwise acquire for
consideration any shares of stock of the Corporation
unless the Corporation could, under paragraph (A) of this
Section (4), purchase or otherwise acquire such shares at
such time and in such manner.
(5) Reacquired Shares. Any shares of the Fourth Series
purchased or otherwise acquired by the Corporation in any
manner whatsoever shall be retired and cancelled promptly
after the acquisition thereof. All such shares shall upon
their cancellation become authorized but unissued shares of
Serial Preferred Stock and may be reissued as part of a new
series of Serial Preferred Stock to be created by resolution
or resolutions of the Board of Directors, subject to the
conditions and restrictions on issuance set forth herein.
(6) Liquidation, Dissolution or Winding Up. In the
event of any voluntary or involuntary liquidation, dissolution
or winding up of the Corporation, the holders of the shares of
the Fourth Series shall be entitled to receive the greater of
(a) $100.00 per share, plus accrued dividends to the date of
distribution, whether or not earned or declared, or (b) an
amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount
to be distributed per share to holders of Common Stock. In
the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock
payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding
Common Stock into a smaller number of shares, then in each
such case the amount to which holders of shares of the Fourth
Series were entitled immediately prior to such event pursuant
to clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction the numerator of which
is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding
immediately prior to such event.
(7) Consolidation, Merger, etc. In case the Corporation
shall enter into any consolidation, merger, combination or
other transaction in which the shares of Common Stock are
exchanged for or changed into other stock or securities, cash
and/or any other property, then in any such case the shares of
the Fourth Series shall at the same time be similarly
exchanged or changed in an amount per share (subject to the
provision for adjustment hereinafter set forth) equal to 100
times the aggregate amount of stock, securities, cash and/or
any other property (payable in kind), as the case may be, into
which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time
after the Rights Declaration Date (i) declare any dividend on
Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine
the outstanding Common Stock into a smaller number of
shares, then in each such case the amount set forth in the
preceding sentence with respect to the exchange or change
of shares of the Fourth Series shall be adjusted by multiplying
such amount by a fraction the numerator of which is the number
of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of
Common Stock that were outstanding immediately prior to such
event.
(8) Ranking. The shares of the Fourth Series shall rank
junior to all other series of the Corporation's Serial
Preferred Stock as to the payment of dividends and the
distribution of assets, unless the terms of any such series
shall provide otherwise.
(9) Fractional Shares. Shares of the Fourth Series may
be issued in fractions of a share which shall entitle the
holder, in proportion to such holder's fractional shares, to
exercise voting rights, receive dividends, participate in
distributions and to have the benefit of all other rights of
holders of Shares of the Fourth Series.
PREFERRED STOCK-FIFTH SERIES
(1) Designation; Number of Shares; Stated Value. The
Series shall be designated as Preferred Stock-Fifth Series
(the "Fifth Series") and shall consist of ninety-five (95)
shares. The shares of such series are hereinafter sometimes
called the "Fifth Series Shares." The stated value of the
Fifth Series Shares shall be One Hundred Thousand Dollars
($100,000) per share.
(2) Dividends. The rate of dividends upon the Fifth
Series Shares (which shall be cumulative from the date of
issue) and the time of payment thereof shall be 6.00% of the
stated value per share per annum, payable quarterly on the
last days of January, April, July and October in each year.
(3) Rank. The Fifth Series Shares shall rank on a
parity with shares of the First Series, Second Series and
Third Series of the Preferred Stock as to dividends and upon
liquidation.
(4) Voting Rights. Holders of Fifth Series Shares will
be entitled to one vote for each share held and will be
entitled to exercise such voting rights together with the
holders of Common Stock of the Corporation, without
distinction as to class. If no dividends or less than full
cumulative dividends on the Fifth Series Shares shall have
been paid for each of four consecutive dividend periods, or if
arrearages in the payment of dividends on the Fifth Series
Shares shall have cumulated to an amount equal to full
cumulative dividends on the Fifth Series Shares for six
quarterly dividend periods, the holders of the Fifth Series
Shares shall, at all meetings held for the election of
Directors until full cumulative dividends for all past
quarterly dividend periods and the current quarterly dividend
period on the Fifth Series Shares shall have been paid or
declared and set apart for payment, possess voting power,
acting alone, to elect the smallest number constituting a
majority of the Directors then to be elected. The Corporation
will promptly take all such action as shall be necessary to
permit such election to occur promptly after such arrearage
occurs.
(5) Non-Convertible. The Fifth Series Shares shall not
be convertible into or exchangeable for stock of any other
class or classes of the Corporation.
(6) Repurchase by the Corporation. Upon six months'
prior written notice, the holders of the Fifth Series Shares
may tender all and not less than all of the Fifth Series
Shares to the Corporation for purchase at a price per share
equal to the stated value of One Hundred Thousand Dollars
($100,000) per share plus accrued dividends to the date of
repurchase by the Company (the Purchase Price). Upon such
proper tender of all shares of the Fifth Series Shares by the
holders, the Corporation shall purchase the Fifth Series
Shares at the Purchase Price.
(7) Tender Procedures. The Fifth Series Shares will not
be deemed tendered unless and until the certificate or
certificates therefor have been received by the Corporation or
the bank or trust company designated for the purpose and, if
payment upon acceptance of tender thereof is to be made other
than to the record holders, such certificate or certificates
have been duly endorsed and are in proper form for transfer,
with all transfer taxes due in respect thereof paid or
provided for.
(8) Redemption. If the holders have not theretofore
tendered the Fifth Series Shares to the Corporation for
purchase pursuant to paragraphs 6 and 7 hereof by March 14,
2003, then the Corporation shall redeem all of the outstanding
Fifth Series Shares at the Purchase Price on a date set forth
in written notice to the holders as the redemption date (the
Redemption Date). The Corporation shall give notice of such
redemption not less than thirty (30) days prior to the
Redemption Date, by mail to the holders of record of the
outstanding shares at their respective addresses then
appearing on the books of the Corporation. At any time before
the Redemption Date, the Corporation may deposit in trust the
funds necessary for such redemption with a bank or trust
company to be designated in the notice of redemption, doing
business in the City of Chicago and State of Illinois or in
the City and State of New York, and having capital, surplus
and undivided profits aggregating $25,000,000. In the event
such deposit is made so that the deposited funds shall be
forthwith available to the holders of the shares to be
redeemed upon surrender of the certificates evidencing such
shares, then, upon the giving of the notice of such
redemption, as hereinabove provided, or upon the earlier
delivery to such bank or trust company of irrevocable
authorization and direction so to give such notice, all shares
with respect to the redemption of which such deposit shall
have been made and the giving of such notice effected shall,
whether or not the certificates for such shares shall be
surrendered for cancellation, be deemed to be no longer
outstanding for any purpose and all rights with respect to
such shares shall thereupon cease and terminate, except
only the right of the holders of the certificates for such shares
to receive, out of the funds so deposited in trust, from and
after the time of such deposit, the amount payable upon the
redemption thereof, without interest.
(9) Cancelled Shares. The Fifth Series Shares,
purchased upon tender or redeemed as herein provided, shall
be cancelled and upon such cancellation shall be deemed to be
authorized and unissued shares of Preferred Stock, without par
value, of the Corporation but shall not be reissued as shares
of the same or any theretofore outstanding series.
(10) Default. Default by the Corporation in complying
with the provisions of paragraph 6 or 8 hereof shall preclude
the declaration or the payment of dividends or the making of
any other distribution whatsoever upon the Common Stock of
the Corporation (other than a distribution in shares of its Common
Stock) until the Corporation shall have cured such default by
depositing the funds necessary therefor in the manner and upon
the terms herein provided. The holders of the Fifth Series
Shares shall not be entitled to apply to any court of law or
equity for a money judgment or remedy on account of any such
default other than to restrain the Corporation from the
actions specified above upon the Common Stock of the
Corporation until such default shall have been cured; and
(11) Liquidation Rights. In the event of any
liquidation, dissolution or winding up of the Corporation the
holders of the Fifth Series will be entitled to receive out of
the assets of the Corporation available for distribution to
stockholders, before any distribution of the assets shall be
made to the holders of Common Stock, the sum of $100,000 per
share, plus an amount equal to cumulative dividends accrued
and unpaid thereon to the date of distribution to holders of
the Fifth Series. If upon any liquidation, dissolution or
winding up of the Corporation the amounts payable with respect
to the Fifth Series and any other series of Preferred Stock
which ranks on a parity with the Fifth Series are not paid in
full, the holders of the Fifth Series and such parity
Preferred Stock will share ratably in any distribution of
assets in proportion to the full preferential amounts to which
they are entitled.
SEVENTH
1. In addition to any affirmative vote required by law
or these Articles of Incorporation, and except as expressly
provided in section 2 of this ARTICLE SEVENTH, the affirmative
vote of the holders of eighty (80) percent of the outstanding
shares of the Corporation entitled to vote in an election of
Directors shall be required for the approval or authorization
of any Business Combination (as hereinafter defined).
2. The provisions of section 1 of this ARTICLE SEVENTH
shall not be applicable if:
A. The Business Combination shall have been
approved by a majority of the Continuing Directors (as
hereinafter defined); provided, however, that such
approval shall only be effective if obtained at a meeting
of Directors at which at least seven Continuing Directors
are present; or
B. The Business Combination is a merger or
consolidation and the cash or Fair Market Value (as
hereinafter defined) of the property, securities or other
consideration to be received per share by the stock-
holders of each class of stock of the Corporation in the
Business Combination, if applicable, is not less than the
highest per share price paid by the Interested
Stockholder (as hereinafter defined), with appropriate
adjustments for stock splits, stock dividends and like
distributions, in the acquisition by the Interested
Stockholder of any of its holdings of each class of the
Corporation's capital stock.
3. For purposes of this ARTICLE SEVENTH:
A. The term "Business Combination" shall mean:
(i) any merger or consolidation of the
Corporation or any subsidiary of the Corporation
with (a) any Interested Stockholder or (b) any other
corporation (whether or not itself an Interested
Stockholder) which is, or after such merger or
consolidation would be, an Affiliate (as defined on
October 1, 1982 in Rule 12b-2 under the Securities
Exchange Act of 1934, as amended (the "Exchange
Act")) of an Interested Stockholder;
(ii) any sale, lease, exchange, mortgage,
pledge, transfer or other disposition (in one
transaction or a series of transactions) to or with
any Interested Stockholder or any Affiliate of any
Interested Stockholder of any assets of the
Corporation or any subsidiary of the Corporation
that have an aggregate Fair Market Value of
$1,000,000 or more;
(iii) the issuance or transfer by the
Corporation or any subsidiary of the Corporation (in
one transaction or a series of transactions) of any
securities of the Corporation or any subsidiary of
the Corporation to any Interested Stockholder or any
Affiliate of any Interested Stockholder in exchange
for cash, securities or other property (or a
combination thereof) having an aggregate Fair Market
Value of $1,000,000 or more;
(iv) the adoption of any plan or proposal for
the liquidation or dissolution of the Corporation
proposed by or on behalf of an Interested
Stockholder or any Affiliate of any Interested
Stockholder; or
(v) any reclassification of securities
(including any reverse stock split), or
recapitalization of the Corporation, or any merger
or consolidation of the Corporation with any of its
subsidiaries or any other transaction (whether or
not with or into or otherwise involving an
Interested Stockholder) which has the effect,
directly or indirectly, of increasing the
proportionate share of the outstanding shares of any
class of equity or convertible securities of the
Corporation or any subsidiary which is directly or
indirectly owned by any Interested Stockholder or
any Affiliate of any Interested Stockholder.
B. The term "Continuing Director" shall mean any
member of the Board of Directors of the Corporation who
is unaffiliated with the Interested Stockholder and was a
member of the Board of Directors prior to the time that
the Interested Stockholder became an Interested
Stockholder, and any successor of a Continuing Director
if the successor is unaffiliated with the Interested
Stockholder and is recommended or elected to succeed a
Continuing Director by a majority of Continuing
Directors, provided that such recommendation or election
shall only be effective if made at a meeting of Directors
at which at least seven Continuing Directors are present.
C. The term "Fair Market Value" shall mean:
(i) in the case of stock, the highest closing
sale price during the 30-day period immediately
preceding the date in question of a share of such
stock on the Composite Tape for New York Stock
Exchange-listed stocks, or, if such stock is not
quoted on the Composite Tape, on the New York
Stock Exchange, or, if such stock is not listed on such
Exchange, on the principal United States securities
exchange registered under the Exchange Act on which
such stock is listed, or, if such stock is not
listed on any such exchange, the highest closing bid
quotation with respect to a share of such stock
during the 30-day period preceding the date in
question on the National Association of Securities
Dealers, Inc. Automated Quotations System or any
system then in use, or if no such quotations are
available, the fair market value on the date in
question of a share of such stock as determined in
good faith by a majority of Continuing Directors,
provided that such determination shall only be
effective if made at a meeting of Directors at which
at least seven Continuing Directors are present; or
(ii) in the case of property or securities
other than cash or stock, the fair market value of
such property or securities on the date in question
as determined in good faith by a majority of
Continuing Directors, provided that such
determination shall only be effective if made at a
meeting of Directors at which at least seven
Continuing Directors are present.
D. The term "Interested Stockholder" shall mean
and include any individual, corporation, partnership or
other person or entity which, together with its
Affiliates and "Associates" (as defined on October 1,
1982 in Rule 12b-2 under the Exchange Act), "Beneficially
Owns" (as defined on October 1, 1982 in Rule 13d-3 under
the Exchange Act) in the aggregate ten percent or more of
the outstanding shares of the Corporation entitled to
vote in an election of Directors, and any Affiliate or
Associate of any such individual, corporation,
partnership or other person or entity.
EIGHTH
1. Prevention of "Greenmail." Any direct or indirect
purchase or other acquisition by this Corporation of any
Equity Security (as hereinafter defined) of any class at a
price above Market Price (as hereinafter defined) from any
Interested Securityholder (as hereinafter defined) who has
beneficially owned any Equity Security of the class to be
purchased for less than two years prior to the date of such
purchase or any agreement in respect thereof shall, except
as hereinafter expressly provided, require the affirmative vote
of the holders of at least a majority of the voting power of
the then outstanding shares of capital stock of this
Corporation entitled to vote generally in the election of
directors (the "Voting Stock"), excluding Voting Stock bene
ficially owned by such Interested Securityholder, voting
together as a single class (it being understood that for the
purposes of this ARTICLE EIGHTH, each share of the Voting
Stock shall have the number of votes granted to it pursuant to
ARTICLE SIXTH of this Certificate of Incorporation). Such
affirmative vote shall be required notwithstanding the fact
that no vote may be required, or that a lesser percentage may
be specified, by law or any agreement with any national
securities exchange, or otherwise, but (i) no such affirmative
vote shall be required with respect to any purchase,
redemption or other acquisition by this Corporation of capital
stock from FT, DT, any Qualified Subsidiary or any Qualified
Stock Purchaser pursuant to the provisions of the Investment
Documents (as such term is defined in Section 12 of the
provisions of ARTICLE SIXTH of these Articles of Incorporation
entitled GENERAL PROVISIONS RELATING TO CLASS A
STOCK) or these Articles of Incorporation, and (ii) no such
affirmative vote shall be required with respect to any purchase
or other acquisition of securities made as part of a tender or
exchange offer by this Corporation to purchase securities of
the same class made on the same terms to all holders of such
securities and complying with the applicable requirements of the
Securities Exchange Act of 1934 and the rules and regulations
thereunder (or any subsequent provisions replacing such Act,
rules or regulations).
2. Certain Definitions. For the purposes of this ARTICLE
EIGHTH:
A. A "person" shall mean any individual, firm,
corporation or other entity.
B. "Interested Securityholder" shall mean any
person (other than the Corporation or any corporation of
which a majority of any class of Equity Security is
owned, directly or indirectly, by the Corporation) who or
which:
(i) is the beneficial owner, directly or
indirectly, of 5% or more of the class of securities
to be acquired; or
(ii) is an Affiliate of the Corporation and at
any time within the two-year period immediately
prior to the date in question was the beneficial
owner, directly or indirectly, of 5% or more of the
class of securities to be acquired; or
(iii) is an assignee or has otherwise succeeded
to any shares of the class of securities to be
acquired which were at any time within the two-year
period immediately prior to the date in question
beneficially owned by an Interested Securityholder,
if such assignment or succession shall have occurred
in the course of a transaction or transactions not
involving a public offering within the meaning of
the Securities Act of 1933, as amended.
C. A person shall be a "beneficial owner" of any
security of any class of the Corporation:
(i) which such person or any of its
Affiliates or Associates (as hereinafter defined)
beneficially owns, directly or indirectly; or
(ii) which such person or any of its Affiliates
or Associates has (a) the right to acquire (whether
such right is exercisable immediately or only after
the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or
options, or otherwise, or (b) any right to vote
pursuant to any agreement, arrangement or
understanding; or
(iii) which are beneficially owned, directly
or indirectly, by any other person with which such
person or any of its Affiliates or Associates has
any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing
of any security of any class of the Corporation.
D. For the purposes of determining whether a
person is an Interested Securityholder pursuant to
paragraph B of this Section 2, the relevant class of
securities outstanding shall be deemed to comprise all
such securities deemed owned through application of
paragraph C of this Section 2, but shall not include
other securities of such class which may be issuable
pursuant to any agreement, arrangement or understanding,
or upon exercise of conversion rights, warrants or
options, or otherwise.
E. "Affiliate" or "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2
of the General Rules and Regulations under the Securities
Exchange Act of 1934, as in effect on October 1, 1982.
F. "Equity Security" shall have the meaning
ascribed to such term in Section 3(a)(11) of the
Securities Exchange Act of 1934, as in effect on January
1, 1985.
G. "Market Price" shall mean the highest closing
sale price during the thirty-day period immediately
preceding the date in question, of a share of any Equity
Security on the Composite Tape for New York Stock
Exchange issues or, if such Equity Security is not quoted
on the Composite Tape or is not listed on such Exchange,
on the principal United States security exchange
registered under the Securities Exchange Act of 1934, as
amended, on which such Equity Security is listed, or, if
such Equity Security is not listed on any such exchange,
the highest closing bid quotation with respect to a share
of such Equity Security during the thirty-day period
preceding the date in question on the National
Association of Securities Dealers, Inc. Automated
Quotations System or any system then in use, or, if no
such quotations are available, the fair market value on
the date in question of a share of such Equity Security.
3. Compliance. The Board of Directors of the
Corporation shall have the power to determine the application
of, or compliance with, this ARTICLE EIGHTH, including,
without limitation: (i) whether a person is an Interested
Securityholder; (ii) whether a person is a beneficial owner of
any Equity Security; and (iii) the Market Price of any Equity
Security. Any decision or action taken by the Board of
Directors arising out of or in connection with the
construction, interpretation and effect of this ARTICLE
EIGHTH shall lie within its absolute discretion and shall be
conclusive and binding, except in circumstances involving
bad faith.
NINTH
No Director of the Corporation shall be personally liable
to the Corporation or its stockholders for monetary damages
for breach of fiduciary duty by such Director as a Director;
provided, however, that this ARTICLE NINTH shall not
eliminate or limit the liability of a Director to the extent
provided by applicable law (i) for any breach of the Director's
duty of loyalty to the Corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section
51 of the General Corporation Code of the State of Kansas, or
(iv) for any transaction from which the Director derived an
improper personal benefit. No amendment to or repeal of this
ARTICLE NINTH shall apply to or have any effect on the
liability or alleged liability of any Director of the
Corporation for or with respect to any acts or omissions of
such Director occurring prior to such amendment or repeal.
Exhibit 4B
SPRINT CORPORATION
BYLAWS
ARTICLE I
Name and Location
SECTION 1. The name of the Corporation shall be the
name set forth in the Articles of Incorporation.
SECTION 2. The principal office of the Corporation is
located at 2330 Shawnee Mission Parkway, Westwood,
Kansas.
SECTION 3. Other offices for the transaction of business
of the Corporation may be located at such place in Kansas or
elsewhere as the Board of Directors may from time to time
determine.
ARTICLE II
Capital Stock
SECTION 1. All certificates of stock shall be signed by
the Chairman of the Board of Directors, the President or a Vice
President and the Secretary or an Assistant Secretary, and
sealed with the corporate seal.
SECTION 2. Transfers of stock shall be made on the
books of the Corporation upon the surrender of the old certificate
properly endorsed, and said old certificate shall be cancelled
before a new certificate is issued.
SECTION 3. A new certificate of stock may be issued in
the place of any certificate theretofore issued, alleged to have
been lost or destroyed, and the Corporation may, in its
discretion, require the owner of the lost or destroyed
certificate, or its legal representative, to give a bond
sufficient to indemnify the Corporation against any claim that
may be made against it on account of the alleged loss of any
certificate.
SECTION 4. No holder of shares of any class of this
Corporation, or holder of any securities or obligations
convertible into shares of any class of this Corporation, shall
have any preemptive right whatsoever to subscribe for, purchase
or otherwise acquire shares of this Corporation of any class,
whether now or hereafter authorized; provided, however, that
nothing in SECTION 4 shall prohibit the Corporation from
granting, contractually or otherwise, to any such holder, the
right to purchase additional securities of the Corporation.
ARTICLE III
Stockholders' Meetings
SECTION 1. The annual meeting of the stockholders of the
Corporation shall be held on the third Tuesday of April in each
year, either within or without the State of Kansas, as may from
time to time be determined by the Board of Directors. At such
meeting the stockholders shall elect directors in the manner
provided in the Articles of Incorporation of the Corporation.
The stockholders may transact such other business at such
annual meetings as may properly come before the meeting.
SECTION 2. A special meeting of the holders of any one
or more classes of the capital stock of the Corporation entitled
to vote as a class or classes with respect to any matter, as
required by law or as provided in the Articles of Incorporation,
may be called at any time and place by the Chairman, the
President or the Board of Directors, and shall be called by the
Chairman, the President or the Secretary on the written request
of the holders of record of a majority of the shares of stock of
such class or classes issued and outstanding and entitled to
vote.
SECTION 3. Notice of the time and place of all annual
meetings and of the time, place and purpose of all special
meetings (other than meetings of the holders of the Class A
Stock separately as a class) shall be mailed by the Secretary
to each stockholder at his last known post office address as
it appears on the records of the Corporation at least twenty (20)
days before the date set for such meeting.
SECTION 4. Nominations of persons for election to the
Board of the Corporation at a meeting of the stockholders may
be made by or at the direction of the Board of Directors or may
be made (a) in the case of persons to be elected by stockholders
other than the holders of Class A Stock, at a meeting of
stockholders by any stockholder of the Corporation who is not a
holder of shares of Class A Stock and who is entitled to vote for
the election of Directors at the meeting, and (b) in the case of
persons to be elected by the holders of shares of Class A Stock
as provided for in the Articles of Incorporation of the
Corporation (the "Class A Directors"), at a meeting of
stockholders by any holder of shares of Class A Stock, in each
case in compliance with the notice procedures set forth in this
SECTION 4 of ARTICLE III. Such nominations, other than those
made by or at the direction of the Board, shall be made pursuant
to timely notice in writing to the Secretary of the Corporation.
To be timely, a stockholder's notice shall be delivered to or
mailed and received at the principal executive offices of the
Corporation not less than fifty (50) days nor more than seventy-
five (75) days prior to the meeting; provided, however, that in
the event that less than sixty-five (65) days' notice or prior
public disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder to be timely must be so
received no later than the close of business on the fifteenth
(15th) day following the day on which such notice of the date of
the meeting was mailed or such public disclosure was made,
whichever first occurs. Such stockholder's notice to the
Secretary shall set forth (a) as to each person whom the
stockholder proposes to nominate for election or re-election as
a Director, (i) the name, age, business address and residence
address of the person, (ii) the principal occupation or
employment of the person, (iii) the class and number of shares
of capital stock of the Corporation which are beneficially owned
by the person and (iv) any other information relating to the
person that is required to be disclosed in solicitations for
proxies for election of Directors pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended; and
(b) as to the stockholder giving the notice (i) the name and
record address of the stockholder and (ii) the class and number
of shares of capital stock of the Corporation which are beneficially
owned by the stockholder. The Corporation may require any
proposed nominee to furnish such other information as may
reasonably be required by the Corporation to determine the
eligibility of such proposed nominee to serve as Director of the
Corporation. No person shall be eligible for election as a Director
of the Corporation at a meeting of the stockholders (a) unless such
person has been nominated in accordance with the procedures set
forth herein; and (b) unless nominated by holders of the Class A
Stock or the Preferred Stock, such person is an Independent
Nominee, as hereinafter defined, provided that nominees need not
be Independent Nominees if election of such nominees would not
result in less than a majority of the Board of Directors
following such election being Independent Directors (as such term
is defined in the Articles of Incorporation of the Corporation).
If the facts warrant, the Chairman of the meeting shall determine
and declare to the meeting that a nomination does not satisfy one
or both of the requirements set forth in clauses (a) and (b) of
the preceding sentence and the defective nomination shall be
disregarded. As used herein, "Independent Nominee" means a
person who, if elected, would be an Independent Director as such
term is defined in the Articles of Incorporation of the
Corporation. Nothing in this SECTION 4 shall be construed to
affect the requirements for proxy statements of the Corporation
under Regulation 14A of the Exchange Act.
SECTION 5. At any meeting of the stockholders (other
than a separate meeting of the holders of the Class A Stock),
only such business shall be conducted as shall have been
properly brought before the meeting. To be properly brought
before a meeting (other than a separate meeting of the holders
of the Class A Stock), business must be (a) specified in the
notice of meeting (or any supplement thereto) given by or at
the direction of the Board of Directors, (b) otherwise properly
brought before the meeting by or at the direction of the Board
of Directors, or (c) otherwise properly brought before
the meeting by a stockholder. For business to be properly
brought before a meeting by a stockholder, the stockholder
must have given timely notice thereof in writing to the Secretary
of the Corporation. To be timely, a stockholder's notice shall be
delivered to or mailed and received at the principal executive
offices of the Corporation not less than fifty (50) days nor more
than seventy-five (75) days prior to the meeting; provided,
however, that in the event that less than sixty-five (65) days'
notice or prior public disclosure of the date of the meeting is
given or made to stockholders, notice by the stockholder to
be timely must be so received no later than the close of
business on the fifteenth (15th) day following the day on which
such notice of the date of the meeting was mailed or
such public disclosure was made, whichever first occurs.
Such stockholder's notice to the Secretary shall set forth
(a) as to each matter the stockholder proposes to bring
before the meeting, a brief description of the business desired
to be brought before the meeting and the reasons for conducting
such business at the meeting, and (b) as to the stockholder
giving the notice (i) the name and record address of the
stockholder, (ii) the class and number of shares of capital stock
of the Corporation which are beneficially owned by the stockholder
and (iii) any material interest of the stockholder in such business.
No business shall be conducted at a meeting of the stockholders
(other than a separate meeting of the holders of the Class A Stock)
unless proposed in accordance with the procedures set forth herein.
The Chairman of the meeting shall, if the facts warrant, determine
and declare to the meeting that business was not properly brought
before the meeting in accordance with the foregoing procedure
and such business shall not be transacted. To the extent this
SECTION 5 shall be deemed by the Board of Directors or the
Securities and Exchange Commission, or finally adjudged by a
court of competent jurisdiction, to be inconsistent with the right
of stockholders to request inclusion of a proposal in the Corporation's
proxy statement pursuant to Rule 14a-8 promulgated under the
Securities Exchange Act of 1934, as amended, such rule shall
prevail.
SECTION 6. The Chairman of the Board of Directors, or in
his absence the President, or in his absence or inability to act,
a Vice President shall preside at all stockholders' meetings
(other than meetings of the holders of the Class A Stock
separately as a class).
SECTION 7. Except as otherwise provided in the Articles
of Incorporation of the Corporation, at each meeting of the
stockholders, each stockholder shall be entitled to cast one vote
for each share of voting stock standing of record on the books of
the Corporation, in his name, and may cast such vote either in
person or by proxy. All proxies shall be in writing and filed
with the Secretary of the meeting.
SECTION 8. Except as otherwise provided in the Articles
of Incorporation of the Corporation, each stockholder other than
a holder of shares of Class A Stock shall have the right to vote,
in person or by proxy, a number of votes equal to the number of
shares of stock owned by the stockholder for each Director to be
elected (other than those to be elected by the holders of shares
of Class A Stock as provided for in the Articles of Incorporation
of the Corporation). Each holder of shares of Class A Stock
shall have the right to vote, in person or by proxy, a number of
votes equal to the number of shares of Class A Stock owned by
such holder (or such other number of votes as may be provided in
the Articles of Incorporation of the Corporation) for each
director to be elected by the holders of Class A Stock as
provided for in the Articles of Incorporation of the Corporation.
Stockholders shall not be entitled to cumulative voting of their
shares in elections of Directors.
SECTION 9. At any meeting held for the purpose of
electing directors, (i) the presence in person or by proxy of the
holders of at least a majority of the then outstanding shares of
Class A Stock shall be required and be sufficient to constitute a
quorum of such class for the election by such class of Class A
Directors and (ii) the presence in person or by proxy of the
holders of at least a majority of the then outstanding voting
shares of the Corporation other than the Class A Stock shall be
required and be sufficient to constitute a quorum for the
election of directors other than Class A Directors. At any such
meeting or adjournment thereof the absence of a quorum of the
holders of Class A Stock shall not prevent the election of
directors other than Class A Directors, and the absence of a
quorum of the holders of voting shares other than Class A Stock
shall not prevent the election of Class A Directors. At a
meeting held for any purpose other than the election of
directors, shares representing a majority of the votes entitled
to be cast on such matter, present in person or represented by
proxy, shall constitute a quorum. In the absence of the required
quorum at any meeting of stockholders, a majority of such holders
present in person or by proxy shall have the power to adjourn the
meeting, from time to time, without notice (except as required by
law) other than an announcement at the meeting, until a quorum
shall be present.
SECTION 10. At each of the annual stockholders' meetings,
one of the executive officers of the Corporation shall submit a
statement of the business done during the preceding year,
together with a report of the general financial condition of the
Corporation.
ARTICLE IV
Directors
SECTION 1. The business and property of the Corporation
shall be managed by a Board consisting of such number of
Directors as is determined from time to time in accordance with
the provisions of the Articles of Incorporation of the
Corporation. The Board of Directors may elect one of their
number to act as Chairman of the Board.
SECTION 2. Each Director upon his election shall qualify
by filing his written acceptance with the Secretary or an
Assistant Secretary and by fulfilling any prerequisite to
qualification that may be set forth in the Articles of
Incorporation of the Corporation.
SECTION 3. The annual meeting of the directors shall be
held immediately after the adjournment of each annual meeting of
the stockholders and in the event a quorum is not present, said
meeting shall be held within ten days after adjournment upon
proper notice by the Chairman of the Board of Directors, the
President or a Vice President.
SECTION 4. Special meetings of the Board of Directors
may be called at any time or place by the Chairman of the Board
or by the President, and in the absence or inability of either of
them to act, by a Vice President, and may also be called by any
two members of the Board. By unanimous consent of the directors,
special meetings of the Board may be held without notice, at any
time and place.
SECTION 5. Notice of all regular and special meetings of
the Board of Directors or the Executive Committee or any
committee established pursuant to SECTION 12 of ARTICLE IV
(an "Other Committee") shall be sent to each Director or member
of such committee, as the case may be, by the Secretary, by
a means reasonably calculated to be received at least seven (7)
days prior to the time fixed for such meeting, or notice of special
meetings of the Board of Directors or the Executive Committee or
any Other Committee may be given by telephone, telegraph, telefax
or telex to each Director or member of such committee, as the
case may be, at least twenty-four (24) hours prior to the time
fixed for such meeting, or on such shorter notice as the person
or persons calling the meeting may reasonably deem necessary or
appropriate in the circumstances. To the extent provided in the
notice of the meeting or as otherwise determined by the Chairman
of the Board or the Board of Directors, Directors may participate
in any regular or special meeting by means of conference
telephone or similar communications equipment which allows all
persons participating in such meeting to hear each other, and
participation in such meeting by means of such a device shall
constitute presence in person at such meeting. In addition,
Class A Directors who have not received notice of any special
meeting of the Board of Directors or the Executive Committee or
any Other Committee, as the case may be, at least six (6) days
prior to the time fixed for such meeting may participate in such
meeting by means of conference telephone or similar
communications equipment which allows all persons participating
in such meeting to hear each other, and participation in such
meeting by means of such a device shall constitute presence in
person at such meeting.
SECTION 6. Except as otherwise provided in the Articles
of Incorporation of the Corporation, a quorum for the transaction
of business at any meeting of the directors shall consist of a
majority of the members of the Board, but the directors present,
although less than a quorum, shall have the power to adjourn the
meeting from time to time or to some future date.
SECTION 7. The directors shall elect the officers of the
Corporation and fix their salaries. Such election shall be made
at the Directors' meeting following each annual stockholders'
meeting.
SECTION 8. The Board of Directors from time to time, as
they may deem proper, shall have authority to appoint a general
manager, counsel or attorneys and other employees for such
length of time and upon such terms and conditions and at such
salaries as they may deem necessary and/or advisable.
SECTION 9. The members of the Board of Directors shall
receive compensation for their services in such amount as may
be reasonable and proper and consistent with the time and service
rendered. The members of the Board of Directors shall receive
the reasonable expenses necessarily incurred in the attendance
of meetings and in the transaction of business for the Corporation.
SECTION 10.
(a) Indemnification.
(1) Actions Other Than Those by or in the Right of the
Corporation. The Corporation shall indemnify any
person who was or is a party or is threatened to
be made a party to any threatened, pending or
completed action, suit or proceeding, whether
civil, criminal, administrative or investigative
(other than an action by or in the right of the
Corporation) by reason of the fact that such
person is or was a director, officer, employee or
agent of the Corporation, or is or was serving at
the request of the Corporation as a director,
officer, employee or agent of another corporation,
partnership, joint venture, trust or other
enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by
such person in connection with such action, suit
or proceeding if such person acted in good faith
and in a manner such person reasonably believed to
be in or not opposed to the best interests of the
Corporation (or such other corporation or
organization), and, with respect to any criminal
action or proceeding, had no reasonable cause to
believe such person's conduct was unlawful. The
termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall
not, of itself, create a presumption that the
person did not act in good faith and in a manner
which such person reasonably believed to be in or
not opposed to the best interests of the
Corporation, and, with respect to any criminal
action or proceeding, had reasonable cause to
believe that such person's conduct was unlawful.
(2) Action by or in the Right of the Corporation. The
Corporation shall indemnify any person who was or
is a party or is threatened to be made a party to
any threatened, pending or completed action or
suit by or in the right of the Corporation to
procure a judgment in its favor by reason of the
fact that such person is or was a director,
officer, employee or agent of the Corporation, or
is or was serving at the request of the
Corporation as a director, officer, employee or
agent of another corporation, partnership, joint
venture, trust or other enterprise, against
expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection
with the defense or settlement of such action or
suit if such person acted in good faith and in a
manner such person reasonably believed to be in or
not opposed to the best interests of the
Corporation (or such other corporation or
organization) and except that no indemnification
shall be made in respect of any claim, issue or
matter as to which such person shall have been
adjudged to be liable to the Corporation (or such
other corporation or organization) unless and only
to the extent that the court in which such action
or suit was brought shall determine upon
application that, despite the adjudication of
liability but in view of all the circumstances of
the case, such person is fairly and reasonably
entitled to indemnity for such expenses which
such court shall deem proper.
(3) Successful Defense of Action. Notwithstanding,
and without limitation of, any other provision of
this SECTION 10, to the extent that a director,
officer, employee or agent of the Corporation has
been successful on the merits or otherwise in
defense of any action, suit or proceeding referred
to in paragraph (1) or (2) of this sub-Section
(a), or in defense of any claim, issue or matter
therein, such director, officer, employee or agent
shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred
by such person in connection therewith.
(4) Determination Required. Any indemnification under
paragraph (1) or (2) of this sub-Section (a)
(unless ordered by a court) shall be made by the
Corporation only as authorized in the specific
case upon a determination that indemnification of
the director, officer, employee or agent is proper
in the circumstances because such director,
officer, employee or agent has met the applicable
standard of conduct set forth in said paragraph.
Such determination shall be made (i) by the Board
of Directors by a majority vote of a quorum
consisting of directors who were not parties to
the particular action, suit or proceeding, or (ii)
if such a quorum is not obtainable, or, even if
obtainable, a quorum of disinterested directors so
directs, by independent legal counsel in a written
opinion, or (iii) by the stockholders.
(5) Advance of Expenses. Expenses incurred in
defending a civil or criminal action, suit or
proceeding may be paid by the Corporation in
advance of the final disposition of such action,
suit or proceeding upon receipt of a satisfactory
undertaking by or on behalf of the director,
officer, employee or agent to repay such amount if
it shall ultimately be determined that such person
is not entitled to be indemnified by the
Corporation as authorized in this sub-Section (a).
(b) Insurance. The Corporation may, when authorized
by the Board of Directors, purchase and maintain
insurance on behalf of any person who is or was a
director, officer, employee or agent of the Corporation,
or is or was serving at the request of the Corporation as
a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against such
person and incurred by such person in any such
capacity, or arising out of such person's status as
such, whether or not the Corporation would have the
power to indemnify him against such liability under the
provisions of sub-Section (a). The risks insured under
any insurance policies purchased and maintained on
behalf of any person as aforesaid or on behalf of the
Corporation shall not be limited in any way by the
terms of this SECTION 10 and to the extent compatible
with the provisions of such policies, the risks insured
shall extend to the fullest extent permitted by law,
common or statutory.
(c) Nonexclusivity; Duration. The indemnifications and
rights provided by, or granted pursuant to, this
SECTION 10 shall not be deemed exclusive of any other
indemnifications, rights or limitations of liability to
which any person may be entitled under any Bylaw,
agreement, vote of stockholders or disinterested
directors, or otherwise, either as to action in such
person's official capacity or as to action in another
capacity while holding office, and they shall continue
although such person has ceased to be a director,
officer, employee or agent and shall inure to the
benefit of such person's heirs, executors and
administrators. The authorization to purchase and
maintain insurance set forth in sub-Section (b) shall
likewise not be deemed exclusive.
SECTION 11. The Chief Executive Officer of the
Corporation, together with no more than five additional Directors
elected by stockholders other than holders of shares of Class
A Stock, and at least one Class A Director selected by the
holders of a majority of the shares of Class A Stock, shall
constitute an Executive Committee of the Board of Directors.
The Executive Committee between regular meetings of the
Board of Directors shall manage the business and property
of the Corporation and shall have the same power and authority
as the Board of Directors; provided, however, the Executive
Committee shall not act (other than to make recommendations)
in those cases where it is provided by law or by the Articles of
Incorporation of the Corporation that any vote or action in order
to bind the Corporation shall be taken by the Directors. Members
of the Executive Committee may participate in any meeting of the
Executive Committee by means of conference telephone or similar
communications equipment which allows all persons participating
in the meeting to hear each other, and participation in a meeting
by means of such a device shall constitute presence in person at
such meeting.
The Executive Committee shall keep a record of its
proceedings and may hold meetings upon one (1) day's written
notice or upon waiver of notice signed by the members either
before or after said Executive Committee meeting.
A majority of the Executive Committee shall constitute a
quorum for the transaction of business at any meeting for which
notice has been given to all members in accordance with ARTICLE
IV, SECTION 5 hereof or for which notice has been waived by all
members.
SECTION 12. If the Board of Directors shall form any
committee other than the Executive Committee, such committee
shall have at least one member who is a Class A Director;
provided, however, that no Class A Director shall be a member of
(i) any committee established pursuant to the provisions of any
law relating to the national security of the United States, (ii)
any committee the membership on which by such a director
would be prohibited by any law or by the rules of the New York
Stock Exchange or (iii) the compensation committee, if the Board
of Directors determines that such a director would not be considered
a "disinterested person" within the meaning of Rule 16b-
3(c)(2)(i) promulgated under the Securities Exchange Act of 1934,
as amended. Any committee so formed, to the extent provided in
the resolution of the Board of Directors pursuant to which it was
formed or in the Bylaws or pursuant to the statutes of Kansas,
shall have and may exercise all the powers and authority of the
Board of Directors.
ARTICLE V
Officers
SECTION 1. The officers of this Corporation shall be a
Chairman of the Board of Directors, a President, as many Vice
Presidents as the Board of Directors may from time to time deem
advisable and one or more of which may be designated Executive
Vice President or Senior Vice President, a Secretary, a
Treasurer, and such Assistant Secretaries and Assistant
Treasurers as the Board of Directors may from time to time deem
advisable, and such other officers as the Board of Directors may
from time to time deem advisable and designate. The Chairman of
the Board of Directors shall be a member of and be elected by the
Board of Directors. All other officers shall be elected by the
Board of Directors. All officers shall hold office until their
respective successors are elected and shall have qualified. Any
two of said offices may be held by one person except the office
of President and Vice President.
SECTION 2. The Chairman of the Board of Directors shall
preside at all meetings of the Directors and stockholders at
which he is present and shall have such other duties, power and
authority as may be prescribed by the Board of Directors from
time to time. The Board of Directors may designate the Chairman
of the Board as the Chief Executive Officer of the Corporation
with all of the powers otherwise conferred upon the President of
the Corporation under these Bylaws, or it may, from time to time,
divide the responsibilities, duties and authority for the general
control and management of the Corporation's business and affairs
between the Chairman of the Board and the President.
SECTION 3. Unless the Board of Directors otherwise
provides, the President shall be the Chief Executive Officer of
the Corporation with such general executive powers and duties of
supervision and management as are usually vested in such office
and shall perform such other duties as are authorized by the
Board of Directors. The Chairman of the Board or the President
shall sign contracts, certificates and other instruments of the
Corporation as authorized by the Board of Directors. If the
Chairman of the Board is designated as the Chief Executive
Officer of the Corporation, the President shall perform such
duties as may be delegated to him by the Board of Directors and
as are conferred by law exclusively upon such office.
SECTION 4. A Vice President shall have right and power
to perform all duties and exercise all authority of the
President, in case of absence of the President or upon vacancy in
the office of President, and shall have all power and authority
usually enjoyed by a person holding the office of Vice President.
SECTION 5. The Secretary shall issue notices of all
directors' and stockholders' meetings, and shall attend and keep
the minutes of the same; shall have charge of all corporate
books, records and papers; shall be custodian of the corporate
seal; shall attest with his signature, which may be a facsimile
signature if authorized by the Board of Directors, and impress
with the corporate seal, all stock certificates and written
contracts of the Corporation; and shall perform all other duties
as are incident to his office. Any Assistant Secretary, in the
absence or inability of the Secretary, shall perform all duties
of the Secretary and such other duties as may be required.
SECTION 6. The Treasurer shall have custody of all money
and securities of the Corporation and shall give bond in such sum
and with such sureties as the directors may specify, conditioned
upon the faithful performance of the duties of his office. He
shall keep regular books of account and shall submit them,
together with all his records and other papers, to the directors
for their examination and approval annually; and semi-annually,
or when directed by the Board of Directors, he shall submit to
each director a statement of the condition of the business and
accounts of the Corporation; and shall perform all such other
duties as are incident to his office. An Assistant Treasurer, in
the absence or inability of the Treasurer, shall perform all the
duties of the Treasurer and such other duties as may be required.
SECTION 7. Any officer or employee of the Corporation
shall give such bond for the faithful performance of his duties
in such sum, as and when the Board of Directors may direct.
ARTICLE VI
Dividends
SECTION 1. Dividends shall be paid out of the net income
or earned surplus of the Corporation, determined after making
proper provision for required sinking fund deposits for debt
obligations and proper provisions for working capital and such
reserves as may be required by good and generally accepted
accounting practice, when declared from time to time by
resolution of the Board of Directors. No such dividends shall be
declared or paid which will impair the capital of the
Corporation.
ARTICLE VII
Amendments
SECTION 1. Except as otherwise provided in the Articles
of Incorporation of the Corporation and SECTION 2 of this ARTICLE
VII, the Bylaws may be amended, altered or repealed by the Board
of Directors, subject to the power of stockholders to amend,
alter or repeal the Bylaws; or the Bylaws shall be amended in
such other manner as may from time to time be authorized by the
laws of the State of Kansas.
SECTION 2. The following provisions of the Bylaws may
not be amended, altered, repealed or made inoperative or
ineffective by adoption of other provisions to the Bylaws without
the affirmative vote of the holders of record of a majority of
the shares of Class A Stock then outstanding, voting separately
as a class, at any annual or special meeting of stockholders, the
notice of which shall have specified or summarized the proposed
amendment, alteration or repeal of the Bylaws: ARTICLE III,
SECTIONS 2, 4, 5, 8 and 9; ARTICLE IV, SECTIONS 5, 6, 10,
11 and 12; ARTICLE VI, SECTION 1; and ARTICLE VII,
SECTIONS 1 and 2.
ARTICLE VIII
Corporate Seal
SECTION 1. The corporate seal of this Corporation shall
have inscribed thereon the name of the Corporation and its state
of incorporation and the words, "Seal - Incorporated 1938".
Exhibit 99A
AMENDMENT NO. 1 TO
JOINT VENTURE AGREEMENT
THIS AMENDMENT NO. 1 TO JOINT VENTURE AGREEMENT
(this "Amendment"), dated as of January 31, 1996, by and among
SPRINT CORPORATION, a Kansas corporation ("Sprint"), SPRINT
GLOBAL VENTURE, INC., a Kansas corporation ("Sprint Sub"),
FRANCE TELECOM, an exploitant public formed under the laws of
France ("FT"), DEUTSCHE TELEKOM AG, an Aktiengesellschaft
formed under the laws of Germany ("DT"), and ATLAS
TELECOMMUNICATIONS S.A., a societe anonyme formed under
the laws of Belgium ("Atlas");
W I T N E S S E T H:
WHEREAS, Sprint, Sprint Sub, FT and DT have entered into
that certain Joint Venture Agreement, dated as of June 22, 1995
(the "June 22 JVA"), pursuant to which Sprint, Sprint Sub, FT and
DT agreed to form the Joint Venture to provide telecommunications
services and to pursue various telecommunications opportunities
around the globe;
WHEREAS, Sprint, Sprint Sub, FT and DT wish to amend the
June 22 JVA to reflect certain agreements reached by Sprint,
Sprint Sub, FT and DT subsequent to their entering into the June
22 JVA;
WHEREAS, Atlas wishes to become a Party to the June 22
JVA as amended by this Amendment; and
WHEREAS, in furtherance of the objectives set forth above,
the Parties desire to enter into this Amendment.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained
herein, in the June 22 JVA and in the other Operative Agreements,
and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties,
intending to be legally bound, hereby agree as follows:
ARTICLE 1.
DEFINITIONS AND CONSTRUCTION
Section 1.1. Certain Definitions; Interpretation. Capitalized
terms used and not otherwise defined herein shall have the
meaning ascribed thereto in the Joint Venture Agreement.
Section 1.3 of the June 22 JVA shall apply to this Amendment.
ARTICLE 2.
AMENDMENTS; ETC.
Section 2.1. Amendments to Article 1 of the June 22 JVA.
(a) The definition of "Atlas Joint Venture Agreement"
contained in Section 1.1 of the June 22 JVA is amended to read in
its entirety as follows:
"`Atlas Joint Venture Agreement' shall mean
the Amended and Restated Joint Venture Agreement
between FT and DT dated as of January 22, 1996
relating to the Atlas joint venture between FT and DT."
(b) The definition of "Atlas Joint Venture Documents "
contained in Section 1.1 of the June 22 JVA is amended to read in
its entirety as follows:
"`Atlas Joint Venture Documents' shall mean
the Atlas Joint Venture Agreement, the Statuts,
the Shareholders Agreement, the DT Collateral
Agreements and the FT Collateral Agreements, as
such terms are defined in the Atlas Joint Venture
Agreement, except for the Intellectual Property
Agreement between Transpac S.A. and FT to be
entered into prior to February 29, 1996 pursuant to
Article 4.01(d)(2) of the Atlas Joint Venture Agreement
which shall become an FT Collateral Agreement on
the date such agreement is executed."
(c) "Atlas/ROE Services Agreement" shall mean the Atlas/ROE
Services Agreement as defined in Section 3.2.
(d) The definition of "Atlas Transactions" contained in
Section 1.1 of the June 22 JVA is amended to read in its entirety
as follows:
"`Atlas Transactions' shall mean the transactions
contemplated by the Atlas Joint Venture Documents
to be consummated on or prior to the `First Closing'
(as defined in the Atlas Joint Venture Documents)."
(e) The definition of "GBN Entities" contained in Section
1.1 of the June 22 JVA is amended to read in its entirety as
follows:
"`GBN Entities' shall mean the GBN Parent
Entity and all other JV Entities formed or acquired
for the purpose of conducting the GBN Business."
(f) The definition of "Intellectual Property Agreements"
contained in Section 1.1 of the June 22 JVA is amended to read in
its entirety as follows:
"`Intellectual Property Agreements' shall
mean theSprint Technical Information Contribution
Agreement, the Atlas Technical Information
Contribution Agreement, the Trademark Contribution
Agreement between Sprint Sub and ROW Services,
L.L.C., the Trademark Contribution Agreement between
DT and ROE Holdco B.V., the Trademark Contribution
Agreement between DT and ROW Holdco B.V., the
Trademark Sale and Assignment Agreement between
Sprint International Communications Corporation and ROE
Holdco B.V., the Trademark Sale and Assignment Agreement
between Sprint International Communications Corporation
and ROW Holdco B.V., the Technical Information License
and Access Master Agreement, the JV Trademark License
and Master Agreement and the Trademark License and
Master Agreement, in each case to be mutually agreed to
by the Parties and entered into pursuant to Section 15.19."
(g) The definition of "JV Entities" contained in Section
1.1 of the June 22 JVA is amended to read in its entirety as
follows:
"`JV Entity' shall mean the GBN Parent
Entity, the ROW Parent Entity and the ROE Parent
Entity, and each other Person formed or acquired
pursuant to the terms hereof to conduct the Venture
Business, it being understood that to the extent holding
company structures are utilized, the holding company
and each other Person it Controls shall each be deemed
a JV Entity. Sprint, FT, DT and Atlas and their respective
Subsidiaries shall not be deemed to be JV Entities. No
GBN Special Matter Subsidiary, Sprint Plan Action
Subsidiary or Atlas Plan Action Subsidiary shall be
deemed to be a JV Entity, unless the outstanding equity
interests in such GBN Special Matter Subsidiary, Sprint
Plan Action Subsidiary or Atlas Plan Action Subsidiary
are purchased pursuant to Section 8.1(b), 8.2(d) or
8.3(d), as the case may be."
(h) The definition of "Restricted Services" contained in
Section 1.1 of the June 22 JVA is amended to read in its entirety
as follows:
"`Restricted Services' shall mean those services listed
on Schedule 1.1(f)."
(i) The definitions of "ROE Entities" and "ROW Entities"
contained in Section 1.1 of the June 22 JVA are amended to read
in their entirety as follows:
"`ROE Entities' shall mean the ROE Parent Entity
and all other JV Entities formed or acquired for the
purpose of conducting the Venture Business in the ROE
Territory, any of which may be formed as, among other
things, a partnership or a limited liability company."
"`ROW Entities' shall mean the ROW Parent
Entity and all other JV Entities formed or acquired for
the purpose of conducting the Venture Business in the
ROW Territory, any of which may be formed as, among
other things, a partnership or a limited liability company."
(j) The following definition of "Atlas Full Implementation
Date" is inserted in Section 1.1 immediately following the
definition of "Assumed Liabilities:"
"`Atlas Full Implementation Date' shall mean
the date on which each of FT and DT shall have
contributed to Atlas substantially all of the businesses
and assets which it committed to contribute to Atlas
at the Second Closing (as defined in the Atlas Joint
Venture Documents), provided that the fair market
value of Atlas immediately following such contribution
is at least equal to ECU 1 billion."
(k) The definitions of "DT Intellectual Property
Agreements," "FT Intellectual Property Agreements" and "Sprint
Intellectual Property Agreements" contained in Section 1.1 of
the June 22 JVA are deleted in their entirety.
(l) The last sentence of Section 1.3 of the June 22 JVA is
deleted in its entirety.
Section 2.2. Amendments to Article 2 of the
Joint Venture Agreement.
(a) Section 2.1(c) of the June 22 JVA is amended to read in
its entirety as follows:
"(c) To the extent provided in the Services
Agreements, the Joint Venture will also be a
nonexclusive sales representative or reseller with
respect to the products and services of FT, DT and
Sprint set forth on Schedule 2.1(c)."
(b) Section 2.2(b) of the June 22 JVA is amended to read in
its entirety as follows:
"(b) The Parties also agree that, except as
prohibited by Applicable Law or as otherwise provided
in the Operative Agreements: (1) each of FT and DT
and their respective Subsidiaries (other than Atlas
and its Subsidiaries) will be the exclusive distributors
of the JV Services in their respective Home Countries;
(2) Sprint and its Subsidiaries will be the exclusive
distributors of the JV Services in their Home Country;
and (3) each Party will supply certain products and
services to the Joint Venture pursuant to and in
accordance with the other Operative Agreements to
which it is a party. Each of FT and DT
further agrees that if (i) Atlas or its Subsidiaries
shall provide any product or service to the Joint
Venture under a Services Agreement and (ii) such
Services Agreement further expressly contemplates
that such product or service shall be made available
by it to Atlas or its Subsidiaries in order to permit
Atlas or its Subsidiaries to perform such obligation,
it shall cause such product or service to be so
made available to Atlas or its Subsidiaries. Sprint
further agrees that if (x) Sprint Sub or its Subsidiaries
shall provide any product or service to the Joint
Venture under a Services Agreement and (y) such
Services Agreement further expressly contemplates
that such product or service shall be made available
by it to Sprint Sub or its Subsidiaries in order to
permit Sprint Sub or its Subsidiaries to perform such
obligation, it shall cause such product or service
to be so made available to Sprint Sub or its Subsidiaries."
Section 2.3. Amendments to Article 3 of the Joint Venture
Agreement. Section 3.2 of the June 22 JVA is amended to read in
its entirety as follows:
"Section 3.2. Responsibility for Global
and Regional Functions. The Parties have allocated
to the ROW Group and the ROE Group certain global
functions as listed in Schedule 3.2 hereto. For each
global function, a corresponding regional function (i)
in the ROE Territory will be allocated to the ROE
Parent Entity and (ii) in the ROW Territory will be
allocated to the ROW Parent Entity. Atlas shall
perform certain global and regional functions
allocated to the ROE Group pursuant to a services
contract to be negotiated by Atlas and the ROE
Group and approved by the Parties (the "Atlas/ROE
Services Agreement"). The Parties agree that in
negotiating any such services contract, the Parties
will use the terms set forth in Exhibit 3.2 as the
starting point for such negotiations, to the extent
that such terms are relevant to the structure of the
Joint Venture at the time of such negotiations.
Subject to Sections 18.1(a)(v) and (vi), the Global
Venture Board may from time to time create new
global functions, delete existing global functions
or change the allocation of any global functions."
Section 2.4. Governance Provisions. In accordance with
Sections 15.27, 15.28 and 15.29 of the June 22 JVA, certain of
the Parties or their Affiliates are entering into the Shareholders
Agreements concurrently with this Amendment. In accordance
with Section 15.30 of the Joint Venture Agreement, the Parties
have approved the form of the Constituent Documents. The Parties
acknowledge that certain of the provisions contained in the Shareholders
Agreements or the Constituent Documents which implement
Articles 4, 5, 6 and 7 and Section 18.1 of the Joint Venture
Agreement are inconsistent with such provisions of the June 22
JVA and agree that the provisions of the Shareholders Agreement
and the Constituent Documents shall, to the extent inconsistent
with the provisions of the June 22 JVA, supersede such provisions
of the June 22 JVA.
Section 2.5. Funding Principles. In accordance with
Sections 15.27, 15.28 and 15.29 of the Joint Venture Agreement,
certain of the Parties or their Affiliates are entering into the
Shareholders Agreements concurrently with this Amendment. The
Parties acknowledge that certain of the provisions contained in
the Shareholders Agreements which implement Sections 8.1, 8.2 and
8.3 and Article 11 of the Joint Venture Agreement are
inconsistent with such provisions of the June 22 JVA and agree
that the provisions of the Shareholders Agreement shall, to the
extent inconsistent with such provisions of the June 22 JVA,
supersede such provisions of the June 22 JVA.
Section 2.6. Tax Matters Agreement. In accordance with
Section 15.33 of the Joint Venture Agreement, the Parties are
entering into the Tax Matters Agreement concurrently with this
Amendment. The Parties acknowledge that certain of the
provisions contained in the Tax Matters Agreement are
inconsistent with certain provisions of the June 22 JVA and agree
that the provisions of the Tax Matters Agreement shall, to the
extent inconsistent with the provisions of the June 22 JVA,
supersede such provisions of the June 22 JVA.
Section 2.7. Master Transfer Agreement; Employee
Matters Agreement; Intellectual Property Agreements. In
accordance with Sections 15.18 and 15.17, respectively,
of the Joint Venture Agreement, the Parties are entering into
the Master Transfer Agreement and the Employee Matters
Agreement concurrently with this Amendment. The Parties
acknowledge that certain of the provisions contained in the Master
Transfer Agreement and the Employee Matters Agreement are
inconsistent with Schedule 11.1(a) of the June 22 JVA (e.g.
such provisions do not provide for the transfer of certain assets
listed on Schedule 11.1(a)) and that certain provisions of certain
Intellectual Property Agreements may be inconsistent with such
Schedule, and agree that the provisions of the Master Transfer
Agreement, the Employee Matters Agreement and such
Intellectual Property Agreements, to the extent inconsistent with
Schedule 11.1(a) of the June 22 JVA, shall supersede Schedule
11.1(a) of the June 22 JVA.
Section 2.8. Amendments to Article 10 of the June 22 JVA.
(a) Section 10.3(a)(i) of the June 22 JVA is amended to
read in its entirety as follows:
"(i) Offer any national long distance services in
competition with an Affiliated National Operation or an
Affiliated Public Telephone Operator ("Competing LD
Services"), provided that, subject to Sections 10.3(c)
and (d), any Party or any of its Affiliates shall remain
free to Offer such national long distance services in
any country or territory within the ROE Territory to the
extent permitted by Applicable Law until and unless
the Joint Venture is able to control (as such term is used
within the meaning of Regulation 4064/89 (OJ L395
of 30.12.1989) on the control of concentrations between
undertakings as of the date hereof) such Affiliated National
Operation or Affiliated Public Telephone Operator located
within such country or territory, and provided further that,
subject to Section 10.3(c), a Party or its Affiliates may
Invest or Participate in a Public Telephone Operator Offering
Competing LD Services;"
(b) Section 10.4(d) of the June 22 JVA is amended to read
in its entirety as follows:
"(d) Excluded Businesses. Subject to Section 10.5,
the ownership by a Party (directly or indirectly through an
Affiliate) of any ownership interest in any Excluded Business
and the conduct by such Party or its Affiliate of such Excluded
Business with any Person."
(c) Section 10.4(o) of the June 22 JVA is amended by
deleting the words "on Schedule 10.4(o) hereto" and inserting in
their place the words "on a schedule to the Master Transfer Agreement."
(d) Section 10.4(p) of the June 22 JVA is amended
to read in its entirety as follows:
"(p) Sprint's Businesses in France and Germany.
Sprint is currently negotiating with each of DT and FT
regarding a possible sale of the voice, data, card, and
messaging businesses of Sprint and its Affiliates in
France and Germany. The Parties agree that nothing
in Article 10 of this Agreement shall be construed to
prohibit for a period of twelve (12) months following
the Closing Date (i) the continued ownership by Sprint
and its Affiliates of such businesses, (ii) any activities of
Sprint and its Affiliates in connection with the performance
of the contracts of such businesses existing on the
Closing Date, or (iii) any activities of Sprint and its
Affiliates in connection with the orderly sale, divestiture
or wind down of such businesses. In addition, nothing in
Article 10 of this Agreement shall be construed to prohibit
Sprint and its Affiliates from entering into new customer
contracts in connection with such businesses for four (4)
months after Closing in the case of the voice businesses
and six (6) months after Closing in the case of the data
and messaging, and card businesses, provided, however,
that such contracts are within the current scope of business
of such businesses. Sprint agrees that it will sell, divest
or wind down such businesses within twelve (12) months
after Closing (subject, in the event that any such sale or
divestiture is made to FT, DT, Atlas or any of their respective
Affiliates, to approval of such sale or divestiture in accordance
with Section 15.38)."
(e) Section 10.5(a) of the June 22 JVA is amended to read
in its entirety as follows:
"The Parties have agreed upon the scope of each
Excluded Business (the "Approved Scope"), which Approved
Scope is set forth on Schedule 10.5(a) hereto. After the
Closing Date, the Global Venture Board shall review each
year the Excluded Businesses to determine whether any
further action should be taken with respect thereto."
(f) Section 10.5 of the June 22 JVA is amended by adding
a new Section 10.5(c) as follows:
"(c) Except as otherwise set forth in this Section
10.5(c), it shall be deemed within the Approved Scope
of a Party's Excluded Business for such Party (directly
or indirectly through an Affiliate) to increase its Investment
or Participation in such Excluded Business. Each Party
shall give prior written notice to the Global Venture Board
of any increase in its Investment or Participation in any
of its Excluded Businesses. If as a result of such increase
in its Investment or Participation, the Party (directly or
indirectly through an Affiliate) obtains Control of such
Excluded Business (such Excluded Business after such
increase, the "Controlled Excluded Business") and such
business Offers Competing Services or Competing LD
Services, such Party shall use commercially reasonable
efforts to cause such Controlled Excluded Business to
enter into an Affiliation Agreement with the appropriate JV
Entity, and the Joint Venture shall negotiate in good faith to
enter into an Affiliation Agreement with such Controlled
Excluded Business, all in accordance with Section 16.8(c),
unless the representatives of the Parties on the Global
Venture Board other than the representative of the Party
that controls the Controlled Excluded Business, in their sole
and absolute discretion shall have not approved the entering
into of an Affiliation Agreement with such Controlled
Excluded Business. No Party shall be obligated to cause
any Controlled Excluded Business to enter into an Affiliation
Agreement pursuant to this Agreement if any material element
of such Affiliation Agreement, as contemplated by Section
16.8(c), would violate either Applicable Law or any material
contractual obligations of the Party with respect to such
Controlled Excluded Business. If any Party fails to perform
its obligation to use commercially reasonable efforts to cause
its Controlled Excluded Business to enter into an Affiliation
Agreement with the appropriate JV Entity, such Controlled
Excluded Business shall be deemed to exceed its Approved
Scope."
(g) Section 10.6(b) of the June 22 JVA is amended by
inserting the following language at the end thereof:
"The Parties further confirm that, notwithstanding
the foregoing, this Section 10.6(b) shall not apply to `FT
or DT Products and Services' as defined in Section V.L.
of the Final Judgment filed in U.S. v. Sprint Corporation,
Civ. No. 95-1304 (D.D.C. July 17, 1995), provided that,
for purposes hereof, such FT or DT Products or Services
are agreed to include not only `leased lines or international
half circuits between the United States and France or
between the United States and Germany' as defined in
Subpart V.L(iii) of such Final Judgment, but also
international leased lines or international half circuits
between France or Germany and any other country
or territory."
Section 2.9. GBN Assets. Notwithstanding anything to the
contrary contained in Article 11 of the Joint Venture Agreement,
the Master Transfer Agreement shall not be required to identify
the Sprint GBN Assets, FT GBN Assets or the DT GBN Assets, and
the Parties shall not be required to transfer the Sprint GBN
Assets, the FT GBN Assets or the DT GBN Assets to the JV Entities
within the GBN Group or any Regional Operating Group.
Section 2.10. Amendments to Article 12 of the June 22 JVA.
(a) Section 12.1(a) of the June 22 JVA is amended by
replacing the words "Debevoise & Plimpton, 875 Third Avenue" with
the words "Mayer, Brown & Platt, 1675 Broadway."
(b) Section 12.1(b) of the June 22 JVA is amended by
deleting clause (i) thereof.
(c) Section 12.2(g) of the June 22 JVA is deleted in its
entirety.
Section 2.11. Governmental Approvals. Each of the Parties
hereby waives those conditions contained in Sections 13.1(a)(i),
13.1(a)(ii), 13.1(a)(iv) and 13.1(a)(vi) to the obligations of
such Party and its Affiliates to make their respective capital
contributions described in Section 11.1 and the obligations of
such Party and its Affiliates to enter into the other Operative
Agreements to which they are parties and otherwise to consummate
the Transactions to be consummated by them at Closing. Each of
the Parties further agrees to take those actions described in
Section 15.2 with respect to the Governmental Approvals referred
to in the previous sentence until such time as such Governmental
Approvals have been obtained.
Section 2.12. Business Plans. Each of the Parties hereby
irrevocably waives the condition to the obligations of such Party
and its Affiliates to make their respective capital contributions
described in Section 11.1 and the obligations of such Party and
its Affiliates to enter into the other Operative Agreements to
which they are parties and otherwise to consummate the
Transactions to be consummated by them at Closing contained in
Section 13.1(e) that the Closing Business Plans for the Regional
Operating Groups be in form and substance satisfactory to each
Party.
Section 2.13. Amendments to Article 13 of the June 22 JVA.
(a) Section 13.1 of the June 22 JVA is amended by
adding a new Section 13.1 (f) as follows:
"(f) National Antitrust Approvals. Notwithstanding
anything to the contrary in this Agreement or in any
other Operative Agreement: (a) the Parties agree that
the receipt of any Governmental Approval under national
Applicable Laws relating to antitrust or merger control
(a "National Antitrust Approval") shall not be a condition
to the obligation of any Party and its Affiliates to make
their respective capital contributions described in
Section 11.1 and the obligation of such Party and its
Affiliates to enter into the other Operative Agreements
to which they are parties and otherwise to consummate
the Transactions to be consummated by them at Closing;
and (b) no representation or warranty to be made on or
prior to the Closing Date by any party to any Operative
Agreement in such agreement or any document to be
delivered pursuant thereto shall be deemed to be made
with respect to any National Antitrust Approval."
(b) Section 13.2(h) of the June 22 JVA is deleted
in its entirety.
(c) Each of the Parties hereby irrevocably waives its
right to assert a Burdensome Condition resulting from (i)
except as set forth in clause (iii) below, the absence of any
Governmental Approvals of the Transactions as of the Closing Date
pursuant to Article 85, or the laws of any member EU country
(including France and Germany) that would otherwise be preempted
by the receipt of a final exemption under Article 85(3) of the
Treaty of Rome, (ii) the terms of FCC Declaratory Ruling and
Order No. 95-498 released January 11, 1996 or the terms of the
Final Judgment filed in U.S. v. Sprint Corporation, Civ. No. 95-
1304 (D.D.C. July 17, 1995) or, in each case, any modified terms
if such modified terms do not materially deviate from the
original terms thereof, or (iii) the imposition of any conditions
to the receipt of a final exemption under Article 85(3) of the
Treaty of Rome to the extent that such conditions do not
materially deviate from those set forth in the public notice
pursuant to Article 19(3) of EC Regulation 17, published in the
Official Journal of the European Communities, OJ No. C 377, 15
December 1995, p. 337/13 (including any conditions agreed to as
of the date of this Amendment by FT, DT or the French or German
governments with the EU authorities in connection with the
Transactions or the Atlas Transactions).
Section 2.14. Amendments to Article 15 of the June 22 JVA.
(a) Sections 15.12(c), 15.12(d), 15.12(e), 15.12(f)
and 15.12(g) of the June 22 JVA are deleted in their entirety.
(b) Section 15.13 of the June 22 JVA is amended
by deleting the words "in a manner anticipated by the Tax Matters
Agreement" in each place in which such words appear.
(c) Sections 15.14(b) and 15.14(c) of the June
22 JVA are amended to read in their entirety as follows:
"(b) Subject to Section 15.14(e), FT agrees
with Sprint that it will (i) ensure that Atlas and its
personnel are as fully committed to the success of
the Joint Venture as is FT, (ii) devote sufficient resources
to Atlas and each other Qualified Venture Subsidiary
of FT so that they can comply fully with their respective
obligations under this Agreement and under any other
Operative Agreement, and (iii) cause Atlas and each
such Qualified Venture Subsidiary to fulfill their respective
obligations under this Agreement and under any other
Operative Agreement.
(c) Subject to Section 15.14(e), DT agrees with
Sprint that it will (i) ensure that Atlas and its personnel
are as fully committed to the success of the Joint Venture
as is DT, (ii) devote sufficient resources to Atlas and each
other Qualified Venture Subsidiary of DT so that they can
comply fully with their respective obligations under this
Agreement and under any other Operative Agreement,
and (iii) cause Atlas and each such Qualified Venture
Subsidiary to fulfill their respective obligations under this
Agreement and under any other Operative Agreement."
(d) New Sections 15.14(d), (e) and (f) which shall read in
their entirety as follows are added to the June 22 JVA:
"(d) Atlas agrees with Sprint that it will (i) ensure
that Atlas France, Atlas Germany and each other
Subsidiary of Atlas and their respective personnel are as
fully committed to the success of the Joint Venture as
Atlas, (ii) devote sufficient resources to Atlas France,
Atlas Germany and each such other Subsidiary of Atlas
so that they can comply fully with their respective obligations
under this Agreement and under any other Operative
Agreement, and (iii) cause Atlas France, Atlas Germany
and each such other Subsidiary of Atlas to fulfill their
respective obligations under this Agreement and under
any other Operative Agreement.
(e) From and after the Atlas Full Implementation
Date, the respective commitments of FT and DT under
Sections 15.14(b)(ii) and (iii) and 15.14(c)(ii) and (iii) shall
not apply to: (A) the Atlas obligations contained in Section
15.14(d)(ii) and (iii) unless the obligations of Atlas France,
Atlas Germany or other Subsidiary of Atlas are Shareholders
Obligations; or (B) the obligations of Atlas or a Qualified
Venture Subsidiary under any other Operative Agreement
unless such obligations are Shareholder Obligations;
provided, however, that: (i) each of FT and DT shall within
one (1) year following such date (and, in any event, prior
to the fifth anniversary of the Closing) give written notice
to the Sprint Parties of its election to proceed under this
Section 15.14(e); (ii) from the Closing Date and until
the date of such election, each of FT and DT shall not
have withdrawn, removed or distributed, or permitted
Atlas to withdraw, remove or distribute, whether through
dividends, distributions, loans or otherwise, any of the
businesses or assets that DT or FT were committed to
contribute to Atlas in accordance with the Atlas Joint
Venture Documents through the Atlas Full Implementation
Date (other than cash dividends paid out of current or
retained earnings) unless, after giving effect to such
withdrawal, the fair market value of Atlas as of the date
of such withdrawal is at least equal to ECU 1 billion; and
(iii) after such election and until the fifth anniversary of the
Closing Date, each of FT and DT shall not withdraw,
remove or distribute, or permit Atlas to withdraw, remove
or distribute, whether through dividends, distributions,
loans or otherwise, any of the businesses or assets that
DT or FT were committed to contribute to Atlas in
accordance with the Atlas Joint Venture Documents
through the Atlas Full Implementation Date (other than
cash dividends paid out of current or retained earnings)
unless, after giving effect to such withdrawal, the fair
market value of Atlas is at least equal to ECU 1 billion.
(f) Notwithstanding anything to the contrary in any
Operative Agreement, if a Subsidiary of a Party (a
"Transferring Subsidiary") is a party to any other
Operative Agreement and such Subsidiary is permitted
thereunder to assign its rights thereunder to another
Subsidiary of such Party (a "Transferee Subsidiary")
without the consent of the other parties (the "Non-
Assigning Parties"), such Party shall not permit such
assignment unless, if requested by any Non-Assigning
Party, such Party enters into a "keepwell" of the
Transferee Subsidiary's obligations under such
Operative Agreement in form and substance reasonably
acceptable to such Non-Assigning Party. Upon
agreement on such "keepwell" arrangement, the Non-
Assigning Parties shall release the Transferring
Subsidiary of its obligations under such Operative
Agreement. Notwithstanding the foregoing, such Party
shall not be required to enter into such a "keepwell"
arrangement and the Transferring Subsidiary shall have
the right to assign its rights under such Operative
Agreement if the Transferee Subsidiary is otherwise
covered by a "keepwell" arrangement pursuant to an
Operative Agreement."
(e) Sections 15.23 and 15.26 of the June 22 JVA are
deleted in their entirety and all references in the Joint Venture
Agreement to the Global Backbone Network Services Agreement and
the X.75 Interconnect Management Agreement are deleted.
(f) Section 15.32 of the June 22 JVA is deleted in its
entirety.
(g) Section 15.34 of the June 22 JVA is deleted in its
entirety and all references in the Joint Venture Agreement to the
Plan Action/Special Matter Accounting Principles are deleted.
(h) A new Section 15.35 shall be added to read in its entirety
as follows:
"Section 15.35. Department of Justice Consent
Decree. The Parties hereby agree to take all reasonable
actions necessary to cause the JV Entities (other than
ROW Services, L.L.C.) to be bound by that certain Final
Judgment attached as an exhibit to the stipulation entered
into by Sprint, ROW Services, L.L.C. and the United States."
Section 2.15. Amendments to Article 16 of the June 22 JVA.
(a) The first sentence of Section 16.8(c) of the June 22 JVA
is amended to read in its entirety as follows:
"(c) Each Affiliation Agreement entered into
pursuant to this Section 16.8 shall, to the extent
applicable and permitted by Applicable Law, be
consistent with the principles contained in the
Services Agreements, and shall, as applicable,
provide (i) that the Affiliating Subsidiary, Affiliating
Entity, or Controlled Excluded Business will become
a distributor of the services of the Joint Venture,
(ii) that the Affiliating Subsidiary, Affiliating Entity or
Controlled Excluded Business will employ network
and information technology systems compatible with
those employed by the Global Backbone Network
and the Regional Operating Groups and (iii) that such
Affiliating Subsidiary, Affiliating Entity, or Controlled
Excluded Business will route its international traffic
over the Global Backbone Network and the networks
of the Regional Operating Groups."
(b) Section 16.8(d) of the June 22 JVA is amended by
adding at the end of the last sentence thereof the words "or
Section 10.5(c)."
Section 2.16. Amendments to Article 19 of the June 22 JVA.
(a) Section 19.1 of the June 22 JVA is amended by
adding, after the words "Venture Interest" in the third line, the
words "held by it, other than those held by it indirectly through
a JV Entity,".
(b) The words "held by a Party, other than those
held by such Party indirectly through a JV Entity," are inserted
after the words "Section 19.1" in the fourth line of Section 19.3
of the June 22 JVA.
(c) The last sentence of Section 19.3(e) is amended
to read in its entirety as follows:
"Upon satisfaction of such conditions,
subject to the terms of the other Operative
Agreements, the Transferee Party shall succeed
to all of the rights of the Selling Party under this
Agreement and the other Operative Agreements."
Section 2.17. Amendments to Article 20 of the June 22 JVA.
(a) The first sentence of Section 20.5(b) is amended to
read in its entirety as follows:
"Except as provided in Section 20.5(c), in the
case of a Termination Condition under Section 20.3(a)
resulting from a Funding Default by Atlas or any other
Qualified Venture Subsidiary of the FT/DT Parties (or
Wholly Owned Subsidiary of Atlas or of any such
Qualified Venture Subsidiary), under Section 20.3(b)
resulting from a Material Non-Funding Default by Atlas
or any other Qualified Venture Subsidiary of the FT/DT
Parties (or Wholly Owned Subsidiary of Atlas or of
any such Qualified Venture Subsidiary), or under
Section 20.3(c) resulting from the Bankruptcy of
Atlas or any other Qualified Venture Subsidiary of the
FT/DT Parties (or Wholly Owned Subsidiary of Atlas
or of any such Qualified Venture Subsidiary) holding
Venture Interests as permitted by this Agreement, the
Sprint Parties shall have the option (subject to approval
in accordance with Section 15.38) to purchase all, but
not less than all, of the Venture Interests of the
FT/DT Parties."
(b) Section 20.5(c) of the June 22 JVA is amended
to read in its entirety as follows:
"(c) Upon the occurrence of a Termination
Condition under Section 20.3(a) resulting from a
Funding Default by either FT (or Wholly Owned
Subsidiary of FT holding Venture Interests as
permitted by this Agreement) or DT (or Wholly
Owned Subsidiary of DT holding Venture Interests
as permitted by this Agreement), under Section
20.3(b) resulting from a Material Non-Funding
Default by either FT (or Wholly Owned Subsidiary
of FT holding Venture Interests as permitted by
this Agreement) or DT (or Wholly Owned Subsidiary
of DT holding Venture Interests as permitted by this
Agreement) or under Section 20.3(c) resulting from
the Bankruptcy of either FT (or Wholly Owned
Subsidiary of FT holding Venture Interests as permitted
by this Agreement) or DT (or Wholly Owned Subsidiary
of DT holding Venture Interests as permitted by this
Agreement), or of a failure by the maker of a True Up
Note (as defined in the Master Transfer Agreement) (a
"True Up Default") to pay any amount under such note
when due, then the Non-Defaulting European Party
shall have the option, which it may exercise whether
or not the Sprint Parties deliver a Termination Notice,
to purchase all, but not less than all, of the Venture
Interests of the Defaulting European Party. In order
to determine the option price, the Parties shall cause
the Appraised Value of the Venture Interests of each
of the Defaulting European Party and the Non-Defaulting
European Party to be determined pursuant to Section
17.8. If the Non-Defaulting European Party elects to
exercise its option to purchase the Venture Interests
of the Defaulting European Party, the Non-Defaulting
European Party shall deliver written notice of such
exercise to the Defaulting European Party and the
Sprint Parties within forty-five (45) days following receipt
of the Value Opinion. Such written notice shall
constitute an offer by the Non-Defaulting European
Party to purchase the Venture Interests of the
Defaulting European Party at the price set forth in this
Section 20.5(c), and the Defaulting European Party
hereby accepts any such offer by the Non-Defaulting
European Party. If the Non-Defaulting European Party
fails to deliver such written notice of such exercise
within said 45-day period, it will be deemed to have
elected not to purchase the Venture Interests of the
Defaulting European Party. In the event that the
Non-Defaulting European Party purchases the Venture
Interests of the Defaulting European Party pursuant
to this Section 20.5(c), the purchase price for the
Venture Interests shall be an amount payable in cash
in U.S. Dollars equal to (i) 75% of the Appraised Value
of such Venture Interests in case of a Termination
Condition described in Section 20.3(a) or (b) or in the
case of a True up Default and (ii) 100% of the
Appraised Value of such Venture Interests in case
of a Termination Condition described in Section
20.3(c). Following such a purchase and, as
applicable, the cure of such Funding Default or
Material Non-Funding Default, the Sprint Parties
shall cease to have the Tie-Breaking Vote; provided,
however, that upon the occurrence of a Material Non-
Funding Default by either FT (or Wholly Owned
Subsidiary of FT holding Venture Interests as
permitted by this Agreement) or DT (or Wholly
Owned Subsidiary of DT holding Venture Interests
as permitted by this Agreement) under Section 9.1,
9.2, 15.11, 15.12(b), 17.2, 17.3 or 18.1(b) or Article
10 of this Agreement or under any Article 21.1
Agreement (other than a Material Non-Funding
Default by any such Person under a provision of an
Article 21.1 Agreement which is similar to Section
15.12(e), 15.13, 15.14(c) or 20.2(c) or Article 19 of
this Agreement), the consummation by the
Non-Defaulting Party of the purchase of the
Venture Interests of the Defaulting European
Party as provided in this Section 20.5(c) shall
be treated, without any further action by such
Non-Defaulting European Party, as a cure of such
Material Non-Funding Default. For purposes of
this Agreement, the Venture Interests of a Defaulting
European Party shall include the Venture Interests
of all FT/DT Parties other than the Non-Defaulting
European Party (including the Venture Interests held
by such Non-Defaulting European Party through
Atlas or any other Qualified Venture Subsidiary of
the FT/DT Parties)."
Section 2.18. Amendments to Article 21 of the June 22 JVA.
Section 21.1 is amended by adding the following new Section
21.1(g):
"(g) Each of the Parties agrees that the
arbitration provisions of this Article 21 preclude
the Parties from commencing proceedings under
Section 592 et seq. of the German, Civil Procedures
with respect to any Dispute and agrees not to
initiate any proceedings under such Section with
respect to any Dispute."
Section 2.19. Amendments to Article 22 of the June 22 JVA.
Section 22.2 is amended to read in its entirety as follows:
"Section 22.2. Transition Plan. The Parties
agree that, following the occurrence of an event
described in Section 22.1, they will negotiate in
good faith to develop a plan (the "Transition Plan")
which will govern the rights and obligations of the
parties under the Operative Agreements. The
Transition Plan will be based on the principles
described in Schedule 22.2. Each of the Parties
agrees to cause its Affiliates and, insofar as within
its control, the JV Entities, to comply with the
provisions of the Transition Plan."
Section 2.20. Amendments to Article 23 of the June 22 JVA.
(a) The address for DT contained in Section 23.1 is
amended to read in its entirety as follows:
"DT: Deutsche Telekom AG
Friedrich-Ebert-Allee 140
D-53113 Bonn
Germany
Attn: Chief Executive Officer
Tel: 011-49-228-181-4000
Fax: 011-49-228-181-8602
(b) The following is added to the end of Section
23.1:
"Atlas
Tele-
communications
S.A.: Park Atrium
Rue des Colonies 11
B-1000 Bruxelles
Belgium
Attn: Vice President,
Legal & Regulatory Affairs
Tel: 011-32-2-545-2000
Fax: 011-32-2-545-2005
with a copy to:
Debevoise & Plimpton
21 Avenue George V
75008 Paris
France
Attn: James A.
Kiernan III, Esq.
Tel: 011-331-40-73-12-12
Fax: 011-331-47-20-50-82
with a copy to:
Cleary, Gottlieb, Steen &
Hamilton
Ulmenstrasse 37-39
60325 Frankfurt am Main
Germany
Attn: Russell Pollack, Esq.
Tel: 011-49-69-971-030
Fax: 011-49-69-971-03199"
(c) Section 23.7 is amended to read in its
entirety as follows:
"Section 23.7. Entire Agreement. The
provisions of this Agreement set forth the entire
agreement and understanding among the Parties
as to the subject matter hereof and supersede
the MOU and all prior agreements, oral or written,
and all prior communications between the Parties
relating to the subject matter hereof, other than
(i) the side letter dated June 22, 1995, among
Sprint, FT and DT regarding the right of Sprint to
elect a member to the Atlas board of directors
and (ii) those written agreements executed and
delivered contemporaneously with the first
amendment to this Agreement."
(d) Section 23.14 is amended to read in its
entirety as follows:
"Section 23.14. Waiver of Immunity. Each
of FT, DT and Atlas agrees that, to the extent that
it or any of its Subsidiaries or any of its property
or the property of any of its Subsidiaries is or
becomes entitled at any time to any immunity on
the grounds of sovereignty or otherwise based
upon its status as an agency or instrumentality
of the government from any legal action, suit or
proceeding or from set-off or counterclaim
relating to this Agreement from the jurisdiction
of any competent court, from service of process,
from attachment prior to judgment, from attachment
in aid of execution, from execution pursuant to a
judgment or an arbitral award or from any other
legal process in any jurisdiction, it, for itself and its
property, and for each of its Subsidiaries and its
property, expressly, irrevocably and unconditionally
waives, and agrees not to plead or claim any such
immunity with respect to matters arising with
respect to this Agreement or the subject matter
hereof (including any obligation for the payment
of money). Each of FT, DT and Atlas agrees that
the foregoing waiver is irrevocable and is not
subject to withdrawal in any jurisdiction or under
any statute, including the Foreign Sovereign Immunities
Act, 28 U.S.C. 1602 et seq. The foregoing waiver
shall constitute a present waiver of immunity at any
time any action is initiated against FT, DT, Atlas or
any of their Subsidiaries with respect to this
Agreement."
(e) The first sentence of Section 23.16 is
amended to read in its entirety as follows:
"Section 23.16 Effect of Force Majeure Event.
If any Party or any Affiliate of any Party shall be
prevented, hindered or delayed in the performance
of any obligation under this Agreement or any
other Operative Agreement (other than an
obligation to make money payments, except
for an obligation to make money payments
prohibited by action of a Governmental Authority
until the Parties obtain all Governmental Approvals
contemplated by Section 13.1(a)) by an Event of
Force Majeure beyond its reasonable control and
such prevention, hindrance or delay could not have
been prevented by reasonable precautions and
cannot reasonably be circumvented by the Party
or its Affiliate through the use of alternate sources,
work-around plans or other means, such Party will
give to each other Party prompt written notice of
such Event of Force Majeure specifying the nature,
date of inception and expected duration of such
Event of Force Majeure and, insofar as known, the
extent to which it or its Affiliate will be unable to
perform or be delayed in performing such obligation,
whereupon such obligation will be suspended to the
extent it or its Affiliate is affected by such Event of
Force Majeure during, but no longer than, the
continuance thereof."
Section 2.21. Amendments to Schedules to the June 22 JVA.
(a) Schedules 13.1(a)(viii), 14.1(c), 14.2(a)(iii) and
14.3(a)(iii) are amended to read in their entirety as set forth in the
corresponding schedules to this Amendment.
(b) Schedules 14.2(b)(ii), 14.3(b)(ii), 14.4(c) and 14.4(e)
referred to in Sections 14.2(b)(ii), 14.3(b)(ii), 14.4(c) and 14.4(e) of
the June 22 JVA are attached to this Amendment. The delivery of
the foregoing schedules constitutes satisfaction of the obligations
of the FT/DT Parties pursuant to Section 15.36 of the June 22 JVA,
and as of the execution of this Amendment, the Review Period
shall be terminated.
Section 2.22. Amendments to Exhibits to the June 22 JVA.
As required by the EU and agreed by the Parties, paragraph (b) of
Section 5 of Exhibit 15.24 is amended by inserting the following
language at the end thereof:
"Notwithstanding the foregoing or anything
in Product Supplement No. 15, the Parties agree
that the Phoenix Entities shall not serve as such
non-exclusive sales representatives with respect to
International Private Lines (`IPLs') from FT or DT,
but will act, where appropriate, as a reseller of such
IPLs."
ARTICLE 3.
ATLAS SIGNING DATE
Section 3.1. Atlas Signing Date. Atlas hereby acknowledges
its agreement (i) to be bound by the terms of the Joint Venture
Agreement as amended by this Amendment as a "Party" and as an
"FT/DT Party" and (ii) to comply with the obligations imposed by the
Joint Venture Agreement as amended by this Amendment on Atlas
and Atlas has caused its respective duly authorized officers to
execute this Amendment as of the date hereof, which date shall
be the "Atlas Signing Date" for purposes of the Joint Venture
Agreement. The obligations of FT and DT pursuant to Section
15.12(b) of the June 22 JVA shall be deemed to be satisfied in
full upon the due execution by Atlas of this Amendment and the
Review Period shall be deemed to have expired.
ARTICLE 4.
MISCELLANEOUS
Section 4.1. Miscellaneous. For the avoidance of doubt,
the Parties hereby confirm that (a) Article 23 as amended by
this Amendment and (b) Article 21 apply to this Amendment.
Section 4.2. Section Numbering. Sections of the June
22 JVA shall be renumbered as necessary as a result of this
Amendment and references to such renumbered sections shall
be deemed to refer to such sections as renumbered.
IN WITNESS WHEREOF, Sprint, Sprint Sub, FT, DT and Atlas
have caused their respective duly authorized officers to execute this
Amendment as of the day and year first above written.
SPRINT CORPORATION
By: /s/ Don A. Jensen
Name: Don Jensen
Title: Secretary
SPRINT GLOBAL
VENTURE, INC.
By: /s/ Don A. Jensen
Name: Don Jensen
Title: Vice-President
FRANCE TELECOM
By: /s/ Michel Hirsch
Name: Michel Hirsch
Title: Executive Vice-President
DEUTSCHE TELEKOM AG
By: /s/ B. Lammers
Name: Brigitte Lammers
Title: Attorney in Fact
ATLAS TELE-
COMMUNICATIONS S.A.
By: /s/ W. von Noorden
Name: Wolf von Noorden
Title: Vice President
<PAGE>
SCHEDULE 1.1(f)
to Amendment No. 1
to the Joint Venture Agreement
Restricted Services
None
<PAGE>
SCHEDULE 10.5(a)
to Amendment No. 1
to the Joint Venture Agreement
Excluded Businesses
A. Deutsche Telekom
1. FNA
FNA's mission is to improve and extend the range
and quality of global telecommunications services
available to the business community, with a primary
emphasis on the financial industry. By pooling the
resources of its members, FNA offers seamless
services irrespective of the customer's location.
Pursuant to this purpose, FNA also cooperates
with third parties via strategic commercial relationships.
FNA's principal product is "TeleConnect" which is
based on the provision of high-quality international
digital fixed connections with end-to-end character for
the transmission of data, voice, text and images.
DT's interest: 8.3%.
2. MATAV
MATAV is the Hungarian telecommunications operator
in which DT and Ameritech hold an equity interest of
67% through a company called MagyarCom in which DT
holds an equity interest of 50% and a deciding vote.
MATAV is responsible for the construction and operation
of the entire long-distance and international
telecommunications network in Hungary as well as the
majority of the country's local networks. On the basis
of this infrastructure, MATAV provides a full range of
international and domestic telecommunications services
(voice, data, video, satellite, ISDN, SDH, ATM, CATV,
etc.). MATAV's objective is to expand, modernize and
improve the Hungarian public telecommunications sector
and to support the development of Hungary as an
international telecommunications hub. With regard to
the latter, MATAV is required to install equipment and
facilities enabling the operation of a center for the
origination, termination and transit of international
telecommunications traffic and services. Through its
subsidiaries, MATAV is also active in the field of
analog and digital mobile communications, PABX
services in addition to some non-voice services
such as telegram and telex services. MATAV also
supplies modern international and value-added
telecommunications services to the Hungarian business
community and participates in international projects
(i.e., METRAN, TEL, TET, various satellite projects)
which benefit Hungary.
DT's interest: 33.5% (through MagyarCom).
3. Utel
Utel's purpose is to improve and operate both
international and domestic long-distance
telecommunications services of general use (voice,
data, video) in Ukraine and to provide and improve
international transit services to and from Ukraine. In
particular, Utel's mission is: to construct,
implement, own and operate international
telecommunications switches, long-distance
telephone exchanges, as well as transmission
and related facilities in Ukraine; to modernize
existing (and construct and operate new) earth
stations for use in conjunction with various satellite
systems; to work to develop local networks in Ukraine;
and to carry out foreign economic activity in connection
with these and other areas.
DT's interest: 19.5%.
4. UMC
UMC (Ukrainian Mobile Communications) is an
operator and provider of public cellular and related
communication services in Ukraine. It currently
operates a nationwide analog mobile communications
network in addition to selling related terminal
equipment. Preparations are underway for the
construction of a digital GSM network focusing
initially on the Kiev region. UMC owns and operates
the radio and cable transmission equipment necessary
for the operation of its networks, including fixed
lines between switches and base stations.
DT's interest: 16.3% (through DeTeMobil).
5. Eucom Holding
Eucom is a holding company which targets industry-
specific applications to the end of developing new
markets for telecommunications value-added services in
the international arena. Eucom's current holdings are
spread throughout Europe and are concentrated in the
transportation industry (Euro-Log) but the company is
also active in the field of consultency (Eutelis),
system integration (Oxia/Translatel) and multimedia
(Picture Systems, Media Nova, Monitor Journal).
DT's interest: 50%.
6. Eutelsat
The main purpose of Eutelsat is the design,
development, construction, establishment, operation
and maintenance of the space segment of the European
telecommunications satellite system. Its prime
objective is the provision of the space segment
required for international public telecommunications
services in Europe. The Eutelsat space segment is
made available on the same basis as international public
telecommunications services in Europe and can also be
made available for other domestic or international
public telecommunications services. If so requested
(and subject to certain conditions) the space segment
may be utilized in Europe for specialized
telecommunications services. Eutelsat also engages in
research and experimentation in fields directly
connected with its purposes.
DT's interest: 11%
7. Inmarsat
The purpose of Inmarsat is to make provision for
the space segment necessary for improving maritime
communications and, as practicable, aeronautical and
land mobile communications and communication on
waters not part of the marine environment, thereby
assisting in improving communications for distress
and safety of life, communications for air traffic services,
the efficiency and management of transportation by sea,
air and on land, maritime, aeronautical and other mobile
public correspondence services and radiodetermination
capabilities.
DT's interest: 4.6%
8. Intelsat
Intelsat's prime objective is the provision, on a
commercial basis, of the space segment required for
international public telecommunications services of
high quality and reliability available on a non-
discriminatory basis to all areas of the world.
Intelsat provides domestic public telecommunications
services between areas separated by areas not under the
jurisdiction of the State concerned, or between areas
separated by the high seas. It also provides domestic
public telecommunications services between areas which
are not linked by any terrestrial wideband facilities
and which are separated by natural barriers of such an
exceptional nature that they impede the viable
establishment of terrestrial wideband facilities
between such area
DT's interest: 4%
9. Intersputnik
The purpose of Intersputnik is to provide
satellite capacity to Intersputnik members and to
other users who agree only to use the transponders
made available by Intersputnik for peaceful purposes.
Intersputnik makes available its own satellites in
addition to satellite capacity of its members and third-
parties. This capacity may be used in connection with
any service capable of being offered via satellite
absent agreements between the members and third
parties to restrict such usage. Currently, 80% of
Intersputnik's transponders are used by third-parties
with the remaining 20% being used by the members;
10% is used for the public network and 90% is used for
television transmission and other services.
Intersputnik is a global organization in that
membership is available to any national government
interested in joining the Intersputnik organization.
DT's interest: 2.3%
10. SES
SES (Societe Europeenne des Satellites) is an
international satellite operator. Its main purpose is
to operate, under license, satellites for the purpose
of broadcasting video (television) and audio signals in
addition to the construction and operation of related
ground stations. SES also supports research,
experimentation, and standardization in areas related
to its purposes.
DT's interest: 11%
11. DETECON & subsidiaries
DETECON is an independent and impartial consulting
company specializing in communications and information
technology. Within the overall scope of the individual
assignments and projects, DETECON offers its clients a
complete range of support services--from strategy
consulting and preliminary studies to planning,
implementation and even operations and marketing.
DT's interest: 30%.
12. Romantis
The purpose of Romantis is the construction and
operation of satellite-supported telecommunications
networks for national and international long-distance
traffic (voice, data and television transmission),
including the provision of related services within the
territory of the former USSR and in other eastern
European countries. The aim of Romantis' activities is
to improve the telecommunications infrastructure in
these countries and in particular to provide
connections to, from and through Germany.
DT's interest: 51%.
13. InfoTel A.G. - Moscow
The main purpose of InfoTel is to construct and
operate a packet-switched data communications network
and to provide data transmission services as well as
related X.400 E-mail and Fax-Store-&-Forward services
within the territory of the Russian Federation and
other countries of the former USSR. In addition,
InfoTel may also offer the following services in the
same region: international voice and data
telecommunications offered on an agency basis; fax and
telex connections as well as organizing video and
teleconferences; marketing and sales of
telecommunications and data transmission equipment as
well as radio equipment; production and sales of
hardware and software; the construction and operation
of databases; foreign trade activities.
DT's interest: 25%.
14. Maritime
Maritime activities consist of a wide range of
maritime communication services, ranging from coastal
VHF radio telephone to Inmarsat-based satellite
communications for ships and aircraft in maritime
areas.
15. Infonet (& Infonet GmbH)
DT's interest to be divested six months after
Phoenix's Closing.
16. "50-50"
The "50-50" project is a joint effort between DT,
FT, U.S. West and the Russian operator Rostelecom to
build fifty telephone exchanges and a fiber optic
overlay network to connect 50 Russian cities to the end
of establishing a national and international operator
owning and operating a new overlay digital network in
Russia and providing associated services. "50-50" is
not yet operational, nor have final agreements been
signed.
17. Dekatel
The main purpose of Dekatel is the construction
and operation of an international exchange in Akmola,
Kazakhstan (with fiber-optical links to neighboring
larger cities) and a satellite ground station. It also
offers services in the area of telecommunications
technology, particularly engineering and consulting
services, in addition to related personnel training.
Dekatel is permitted to construct and operate
additional network components as well as implementing
associated projects throughout Kazakhstan and other
Asian countries of the former USSR.
DT's interest: 49%.
18. Satelindo
Satelindo is a telecommunications operator based
in Indonesia offering services on the basis of the
three following licenses: a national license for a GSM-
standard mobile communications network, a license to
operate satellites and a license for international
direct dialing. These licenses authorize Satelindo to
offer various services in these fields and to develop
and operate the underlying requisite networks. The
geographical focus of Satelindo's activities is, with
the exception of satellite services, Indonesia. The
main focus of Satelindo is mobile communications.
Within this context, it also offers roaming services,
currently with Germany, Hong Kong, and Singapore.
As for satellite services, Satelindo's goal is to expand
its strong presence in the Asian market for television,
data and voice transmission. To this end it is
launching a new generation of Palapa satellites.
Finally, Satelindo operates an international gateway
for the provision of IDDD services for traffic
originating both in Indonesia as well as abroad.
DT's interest: 25%.
B. France Telecom
1. Keystone
Keystone is a US satellite transmission company
offering US domestic services to video broadcasters.
Keystone operates several teleports in the US.
Keystone and Maxat in Europe are the foundations for
building a France Telecom global video transport
service for broadcasters. The two companies have
already started jointly developing a transatlantic
offering.
FT's interest: 45% (through FCR).
2. Maxat
Maxat's primary business consists in offering UK
domestic as well as international satellite
transmission services to broadcasters and business TV
customers. Maxat is based in the UK and operates
several teleports. In addition to its mainstream video
transmission activities, Maxat has recently deployed
data transmission infrastructures and has started
offering satellite data transmission services (one-way
and two-way). Maxat data business will be divested.
FT's interest: 100% (through FCR).
3. Globalstar
Globalstar is a project for the construction and
operation of a global wireless voice and data network
using satellite communications. The project was
initiated by two US companies, Loral and Qualcom. It
will rely on the use of 48 low-orbit satellites.
Globalstar coverage is intended to complement GSM
terrestrial networks and bimodal terminals will be
developed so that a seamless access to either
terrestrial or space communications is allowed.
FT's interest is held through TESAM
(Telecommunications par Satellites Mobiles), a joint
subsidiary of France Telecom Mobiles (51%) and Alcatel
Telspace (49%). TESAM owns an interest of
approximately 10% in the joint venture developing the
Globalstar project.
4. FNA
FNA's mission is to improve and extend the range
and quality of global telecommunications services
available to the business community, with a primary
emphasis on the financial industry. By pooling the
resources of its members, FNA offers seamless services
irrespective of the customer's location. Pursuant to
this purpose, FNA also cooperates with third parties
via strategic commercial relationships. FNA's
principal product is "TeleConnect" which is based on
the provision of high-quality international digital
fixed connections with end-to-end character for the
transmission of data, voice, text and images.
FT's interest: 8.3%.
5. Telecom Argentina
Telecom Argentina has been granted a 7-year
exclusive license for telephone services in the
northern half of Argentina from 1990. In addition,
Telecom Argentina and Telefonica de Argentina (Telecom
Argentina's counterpart for Southern Argentina) jointly
formed subsidiaries to address specific markets:
Movistar, which operates a wireless, cellular network
in the Buenos Aires region; Startel, which offers
nationwide telex, data communications and satellite
services; Telintar, the international carrier for
Argentina; and Radio Llamada, which offers paging
services.
FT's interest is held through FCR which owns a
32.5% equity interest in Nortel, a holding company
which in turn has a 60% equity interest in Telecom
Argentina.
6. Telmex
Telemex is the leading telecom carrier in Mexico.
FT's interest: 5%.
7. ITJ
ITJ is one of three Japanese licensed
international carriers. FT is one of hundreds of
shareholders and therefore has minimal influence
regarding operating decisions.
FT's interest: 2.5%.
8. Telecom Plus Senegal
Telecom Plus Senegal is a joint venture with
Sonatel, the public domestic and international
telephone carrier for Senegal. Telecom Plus Senegal
markets various value-added telecommunications products
such as network design and engineering, CPE's
management.
FT's interest: 51%.
9. Telecom Vanuatu
Telecom Vanuatu is the public domestic and
international telephone carrier for Vanuatu.
FT's interest: 33.3% (through FCR).
10. Getesa
Getesa is the international carrier for the
Republic of Guinea.
FT's interest: 40% (through FCR).
11. Socatel
Socatel is the public international carrier for
the Republic of Central Africa.
FT's interest: 40% (through FCR).
12. CC Team
CC Team is a consulting company offering services
only in France.
FT's interest: 49.9% (through FCR).
13. GIE Expertel
GIE Expertel conducts certain systems integration
activities. All of the GIE Expertel activities are
limited in scope to the French national territory.
FT's interest: 100% (together with FCR).
14. CNITCom
CNITCom is a company operating and marketing the
internal communications resources of the CNIT
Exhibition Center.
FT's interest: 51% (through FRC).
15. Eucom Holding
Eucom is a holding company which targets industry-
specific applications to the end of developing new
markets for telecommunications value-added services in
the international arena. Eucom's current holdings are
spread throughout Europe and are concentrated in the
transportation industry (Euro-Log) but the company is
also active in the field of consultency (Eutelis),
system integration (Oxia/Translatel) and multimedia
(Picture Systems, Media Nova, Monitor Journal).
FT's interest: 50%.
16. Systemia
Systemia is a venture marketing communications and
networking training services in France.
FT's interest: 13% (held by Transpac).
17. Telinvest - Cofratel and Sogestel
Telinvest offers system integration and more
specifically PBX installation activities. Telinvest
has currently two such subsidiaries with essentially
domestic activities, Cofratel and Sogestel. CoFratel
provides, installs and maintains PABX and other
customer's premises telecommunications equipment.
They also provide consulting services in this domain.
They offer their services within France and in a limited
number of countries outside France.
FT's interest: 100% (through FCR).
18. Eutelsat
The main purpose of Eutelsat is the design,
development, construction, establishment, operation
and maintenance of the space segment of the
European telecommunications satellite system.
Its prime objective is the provision of the space
segment required for international public tele
communications services in Europe. The Eutelsat
space segment is made available on the same basis
as international public telecommunications services
in Europe and can also be made available for other
domestic or international public telecommunications
services. If so requested (and subject to certain conditions)
the space segment may be utilized in Europe for specialized
telecommunications services. Eutelsat also engages in
research and experimentation in fields directly
connected with its purposes.
19. Inmarsat
The purpose of Inmarsat is to make provision for
the space segment necessary for improving maritime
communications and, as practicable, aeronautical and
land mobile communications and communication on waters
not part of the marine environment, thereby assisting
in improving communications for distress and safety of
life, communications for air traffic services, the
efficiency and management of transportation by sea, air
and on land, maritime, aeronautical and other mobile
public correspondence services and radiodetermination
capabilities.
20. Intelsat
Intelsat's prime objective is the provision, on a
commercial basis, of the space segment required for
international public telecommunications services of
high quality and reliability available on a non-
discriminatory basis to all areas of the world.
Intelsat provides domestic public telecommunications
services between areas separated by areas not under the
jurisdiction of the State concerned, or between areas
separated by the high seas. It also provides domestic
public telecommunications services between areas which
are not linked by any terrestrial wideband facilities
and which are separated by natural barriers of such an
exceptional nature that they impede the viable
establishment of terrestrial wideband facilities
between such areas.
21. France Telecom Mobiles Data
France Telecom Mobiles Data operates and markets
wireless data services (called Mobipac services) and
uses the international Mobitex standard. France
Telecom Mobiles Data is essentially domestic.
FT's interest: 100%.
22. Polycom
Polycom was formed to offer news distribution
services by satellite from France (one-way VSAT).
Polycom is a Paris based company and offers services
from satellite hubs located in France and accessing
satellites having a worldwide coverage. Polycom's main
revenue stream comes from one-way data distribution.
They have recently added a two-way capability to their
system.
FT's interest: 66% (through FCR).
23. Cruisephone
Cruisephone is a company based in the US offering
maritime telephone services to boat owners in the
Caribbean. Cruisephone essentially sells service
packages (including the procurement of the on-board
terminals) based on the use of Inmarsat capacity.
FT's interest: 33% (through FCR).
24. France Antilles Boatphone (FAB)
FAB is operating a wireless maritime network in
the French West Indies.
FT's interest: 70% (through FCR).
25. Jetphone
Jetphone markets communications services (voice
and data) to and from airplanes in Europe. Jetphone's
network is based on the operation of 45 ground-based
stations and allows a comprehensive coverage of Western
Europe which should also progressively be extended to
Eastern Europe.
FT's interest: 50%.
26. Intelmatique
Intelmatique operates and markets videotex
services outside France, leveraging Telecom Minitel
expertise, through its subsidiaries listed under no.
27.
FT's interest is held 11% through FCR and 85%
through Transpac.
27. Minitel Services Company, FT West, ITP, Minitel
Communications LTD, and Videotex Nederland
These companies are subsidiaries of Intelmatique
(no. 26) which were formed to address specific national
projects in the U.S., Ireland and the Netherlands.
28. Sofrecom
Sofrecom's mission is to offer engineering,
strategic and organizational consulting services as
well as information systems design services (network
modeling, billing) to public carriers (operating
terrestrial as well as mobile networks). Sofrecom
operates globally and has formed several subsidiaries
outside France to handle specific markets and projects
such as Consultora in Argentina or Telemate in the US
(along with an American partner, LCC).
FT's interest: 100% (through FCR).
29. ViaFax
ViaFax offers value-added store-and forward fax
services. ViaFax has established subsidiaries in Spain
and in Belgium to market its services in these
countries. Further expansion projects are considered
in Brazil and in China.
FT's interest: 100%.
30. Westbalt
Westbalt Telecom's objective is to install 120,00
new telephone lines in the free trading zone of
Kaliningrad over the next 10 years. Westbalt has
recently extended the scope of its activities by
starting a domestic data network and offering
international voice services to businesses.
International voice traffic from Kaliningrad is hubbed
back to France where it is transported over France
Telecom's international network.
FT's interest: 48% (through FCR).
31. Maritime
Maritime activities consist of a wide range of
maritime communications services, ranging from coastal
VHF radio telephone to Inmarsat-based satellite
communications for ships and aircraft in maritime
areas.
32. Infonet
FT's interest in Infonet will be divested six
months after Phoenix's closing. Interpac France,
Interpac Italy and Interpac Luxembourg are jointly
owned with Infonet and are exclusive distributors of
Infonet's data transmission services in France, Italy
and Luxembourg. France Telecom (currently owning 85%
of Interpac France, 65% for Transpac and 20% for France
Cables et Radio) is expected to acquire 100% of
Interpac France while Infonet will establish a wholly
owned subsidiary in France. FT will divest Interpac
Italy and Luxembourg along with Infonet.
33. INFO AG
Transpac owns 96.5% of INFO AG, a domestic X.25
carrier and provider of disaster recover services in
Germany. In compliance with the European Commission
request. France Telecom is in the process of divesting
its interests in INFO AG.
34. 50/50 Project
The "50-50" project is a joint effort between DT,
FT, U.S. West and the Russian operator Rostelecom to
build fifty telephone exchanges and a fiber optic
overlay network to connect 50 Russian cities to the end
of establishing a national and international operator
owning and operating a new overlay digital network in
Russia and providing associated services. "50-50" is
not yet operational, nor have final agreements been
signed.
35. Cordiale
Cordiale operates and markets telecommunications
services using infrastructures to be deployed in the
Channel tunnel. Cordiale provides private
telecommunication networks to the operators and users
of the Channel Tunnel facilities (security networks,
communications between the British and the French
facilities.)
FT interest: 50%.
C. Sprint
1. Iridium
Iridium's mission is to build and operate a global
wireless telephone network to allow people to
communicate anywhere in the world. These services will
be delivered through a network infrastructure
incorporating a low earth orbiting satellite
constellation. The Iridium communications system is
expected to provide voice, digital data, facsimile and
paging services to subscribers. The North American
Gateway is a consortium consisting of Iridium Canada
Inc., Motorola, and Sprint. Sprint is the US gateway
linking Iridium and the US PSTN.
Sprint's interest: 5%.
2. Maritime
The maritime area includes a wide range of
maritime communication services, ranging from coastal
VHF radiotelephone to Inmarsat-based satellite
communications for ships and aircraft in maritime
areas.
3. Alcatel Data Networks
Alcatel Data Networks' mission is to design,
develop, manufacture or have manufactured, Alcatel-
Listed Products, Sprint-Listed Products and Replacement
Products which shall be sold to Alcatel and its
Affiliates, to Sprint and its affiliates, and to any
third party. These products currently include packet-
switched data communications equipment and software,
frame relay equipment and software, and network
management equipment and software. Future products
include ATM-based switching systems. It is the intent
of Sprint and of Alcatel that Alcatel Data Networks
will develop its own marketing and distribution
channels.
Sprint's interest: 49%.
4. Sprint RPT
SRPT's mission is to build and operate modern,
broadband telecommunications networks and offer local
telephone services, initially in the areas of Pila and
Silesia in Poland, and possible later within the
districts of Gorzow and Bydgoszc. The license covers
the district/voivodeship of Katowice, excluding the
areas served by the local networks in the cities of
Katowice, Bytom, Mikolow, Sosnowiec, Tychy, and
Gliwice. Sprint management is considering divesting or
restructuring its investment in SPRT.
Sprint's interest: 58% (through NewCo I).
5. Call-Net Enterprises
Call-Net Enterprises is a holding company in which
Sprint acquired a 25% interest in return for providing
Sprint's technology and brand for use in Canada. Call-
Net Enterprises currently holds interests in the
following companies:
+ MicroCell 1-2-1, a PCS company, 21%-held
by CallNet. Other major investors include:
Shaw Communications which is the third largest
Cable TV company in Canada (10%), Groupe
Videotron which is the second largest Cable TV
(10% w/option to 15%). Government will be
awarding national licenses within the next six
months. Unlike the US, there will not be an auction
process.
+ Inflight Phone. Has option to exercise
up to 17%. Provides air to ground phone service
within Canada.
+ Sprint Canada (100% owned) provides long
distance and other telecommunications services in
Canada including seamless network connectivity
between the U.S. and Canada. Sprint Canada
provides "enhanced traffic" or international
simple resale out of Canada which will evolve as
regulation changes.
6. Sprint International Caribe--SIC (Puerto Rico & the
U.S. Virgin Islands)
SIC's mission is to serve the residential voice
and corporate markets of Puerto Rico and the U.S.
Virgin Islands. The company, based in San Juan,
currently provides long distance (IDDD) service in both
Puerto Rico and the U.S. Virgin Islands. SIC is
planning to enter the Puerto Rico intra-Island long
distance market in the summer of 1996 when the market
will be deregulated. In addition, SIC represents
interests of Sprint and provides various services to
Phoenix ROW.
Sprint's interest: 100%.
7. Sprint Guam
Sprint Guam's mission is to provide both business
and residential communications services. The company
provides voice services for the Guam market via a
switch in Stockton, CA. connected via fiber to a POP in
Agana, Guam. The Sprint Guam voice business is geared
to prepare for carrier pre-selection access; customers
today dial a pre-fix code to access Sprint voice
services. Sprint Guam is classified by the FCC as a
domestic operation since it is a U.S. Territory.
Sprint Guam is launching a business in Saipan,
another U.S. territory that falls under the
jurisdiction of the FCC. Initially Sprint Guam will
deploy an X-25 node and a card service; the company
expects to enter the voice market by year end 1996.
Eventually a voice service will be launched. Sprint
Guam also has plans to enter businesses in the Republic
of Belau (a.k.a. Palau), a freely-associated state with
the United States that has its own national PTT. Other
businesses will be launched in American Samoa, another
U.S. territory that falls under the jurisdiction of the
FCC. Sprint Guam also has plans to launch businesses
in the Federated States of Micronesia and the Republic
of the Marshall Islands which are not under FCC
jurisdiction. Sprint Guam represents certain interests
of Sprint and provides various services to Phoenix ROW.
Sprint's interest: 100%.
<PAGE>
SCHEDULE 13.1(a)(viii)
to Amendment No. 1
to the Joint Venture Agreement
Governmental Approvals Relating to Atlas
(Capitalized terms not defined herein shall have the
meanings ascribed to such terms in the Atlas Joint Venture
Agreement)
1. Approval of the transfer of the shares of Atlas
France to Atlas by the French minister in charge
of economic affairs and finance (ministre charge
de l'economie et des finances) and the French
minister in charge of posts and telecommunications
(ministre charge des postes et des
telecommunications) pursuant to Article 32 of the
Cahier des Charges of FT, as approved by decret
n'90-1213 of December 29, 1990.
2. Prior approval of the proposed investment of Atlas
in Atlas France by the French minister in charge
of economic affairs and finance (ministre charge
de l'economie et des finances) for the purpose of
Article 12 of decret n-89-938 of December 29,
1989.
<PAGE>
SCHEDULE 14.1(c)
to Amendment No. 1
to the Joint Venture Agreement
Sprint Governmental Approvals
1. Notification pursuant to the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended,
and the expiration or termination of all
applicable waiting periods thereunder and any
extensions thereof.
2. Exemption by the Commission of the European
Communities, pursuant to Article 85(3) of the
Treaty of Rome, of the Joint Venture Agreement and
each other Operative Agreement and the
Transactions from the operation of Article 85(1)
of the Treaty of Rome.
3. The approval of the Bundeskartellamt to carry out
the transactions contemplated by the Atlas Joint
Venture Documents.
4. The approval of the Bundeskartellamt to carry out
the Transactions.
5. An exemption from the Commission of the European
Communities pursuant to Article 85(3) of the
Treaty of Rome exempting the transactions
contemplated by the Atlas Joint Venture Documents
from the operation of Article 85(1) of the Treaty
of Rome.
<PAGE>
SCHEDULE 14.2(a)(iii)
to Amendment No. 1
to the Joint Venture Agreement
FT Governmental Approvals
1. Notification pursuant to the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended,
and the expiration or termination of all
applicable waiting periods thereunder and any
extensions thereof.
2. An exemption from the Commission of the European
Communities pursuant to Article 85(3) of the
Treaty of Rome exempting this Agreement, each
other Operative Agreement and the Transactions
from the operation of Article 85(1) of the Treaty
of Rome.
3. The approval of the Bundeskartellamt to carry out
the transactions contemplated by the Atlas Joint
Venture Documents.
4. The approval of the Bundeskartellamt to carry out
the Transactions.
5. An exemption from the Commission of the European
Communities pursuant to Article 85(3) of the
Treaty of Rome exempting the transactions
contemplated by the Atlas Joint Venture Documents
from the operation of Article 85(1) of the Treaty
of Rome.
<PAGE>
SCHEDULE 14.2(b)(ii)
to Amendment No. 1
to the Joint Venture Agreement
FT Governmental
Approvals Relating to Atlas
1. An exemption from the Commission of the European
Communities, pursuant to Article 85(3) of the
Treaty of Rome, exempting the Atlas Joint Venture
Documents and the transactions contemplated
thereby from the operation of Article 85(1) of the
Treaty of Rome.
2. The approval of the Bundeskartellamt to carry out
the transactions contemplated by the Atlas Joint
Venture Documents.
<PAGE>
SCHEDULE 14.3(a)(iii)
to Amendment No. 1
to Joint Venture Agreement
DT Governmental Approvals
1. Notification pursuant to the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended,
and the expiration or termination of all
applicable waiting periods thereunder and any
extensions thereof.
2. An exemption from the Commission of the European
Communities pursuant to Article 85(3) of the
Treaty of Rome exempting this Agreement, each
other Operative Agreement and the Transactions
from the operation of Article 85(1) of the Treaty
of Rome.
3. The approval of the Bundeskartellamt to carry out
the transactions contemplated by the Atlas Joint
Venture Documents.
4. The approval of the Bundeskartellamt to carry out
the Transactions.
5. An exemption from the Commission of the European
Communities pursuant to Article 85(3) of the
Treaty of Rome exempting the transactions
contemplated by the Atlas Joint Venture Documents
from the operation of Article 85(1) of the Treaty
of Rome.
<PAGE>
SCHEDULE 14.3(b)(ii)
to Amendment No. 1
to the Joint Venture Agreement
DT Governmental
Approvals Relating to Atlas
1. An exemption from the Commission of the European
Communities, pursuant to Article 85(3) of the
Treaty of Rome, exempting the Atlas Joint Venture
Documents and the transactions contemplated
thereby from the operation of Article 85(1) of the
Treaty of Rome.
2. The approval of the Bundeskartellamt to carry out
the transactions contemplated by the Atlas Joint
Venture Documents.
<PAGE>
SCHEDULE 14.4(c)
to Amendment No. 1
to the Joint Venture Agreement
Atlas Governmental Approvals
1. An exemption from the Commission of the European
Communities, pursuant to Article 85(3) of the
Treaty of Rome, exempting this Agreement, each
other Operative Agreement and the Transactions
from the operation of Article 85(1) of the Treaty
of Rome.
2. The approval of the Bundeskartellamt to carry out
the Transactions.
3. Notification pursuant to the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended,
and the expiration or termination of all
applicable waiting periods thereunder and any
extensions thereof.
4. The approval of the Bundeskartellamt to carry out
the transactions contemplated by the Atlas Joint
Venture Documents.
5. An exemption from the Commission of the European
Communities, pursuant to Article 85(3) of the
Treaty of Rome, exempting the Atlas Joint Venture
Documents and the transactions contemplated
thereby from the operation of Article 85(1) of the
Treaty of Rome.
<PAGE>
SCHEDULE 14.4(e)
to Amendment No. 1
to the Joint Venture Agreement
Litigation Involving Atlas
1. Proceedings in connection with the
Governmental Approvals described in Schedule
14.2(b)(ii), Schedule 14.3(b)(ii) and Schedule 14.4(c).
<PAGE>
SCHEDULE 22.2
to Amendment No. 1
to the Joint Venture Agreement
Transition Principles
1. From the date it informs the parties of its decision
to withdraw from the Joint Venture and until the date
which is one year after the date of actual withdrawal
from the Joint Venture (such actual date of withdrawal
or other termination of the Joint Venture is herein
referred to as the "Withdrawal Date"), a
withdrawing party shall cooperate fully with the Joint
Venture in notifying Joint Venture customers of the
change in the relationship between the Joint Venture
and the withdrawing party provided, however, that no
such notification or public announcement of the
withdrawal of a party from the Joint Venture shall be
made until the Withdrawal Date, unless an earlier
announcement shall be required by law or stock
market rules. For purposes of identifying customers
under contracts in existence on the Withdrawal Date,
(i) if Sprint is the withdrawing party, customers for
which Sprint is the Distributing Entity will be
considered customers of Sprint with respect to
contracts in existence on the Withdrawal Date, (ii) if
FT is the withdrawing party, customers for which FT
is the Distributing Entity will be considered customers
of FT with respect to contracts in existence on the
Withdrawal Date, (iii) if DT is the withdrawing party,
customers for which DT is the Distributing Entity will be
considered customers of DT with respect to contracts
in existence on the Withdrawal Date, and (iv) all other
customers under contracts in existence on the
Withdrawal Date will be considered customers of the
Joint Venture.
2. At the request of the Joint Venture, for a period of one
year after the Withdrawal Date, the withdrawing party
shall continue to support on a cost reimbursement
basis the marketing/sales negotiations of the Joint
Venture that are underway at the time of such
withdrawal until such time as the Joint Venture
secures alternative support capabilities.
3. Article 10 of the JVA (noncompete) shall cease to
apply to a withdrawing party after the Withdrawal
Date. During the one-year period after the
Withdrawal Date, the withdrawing party shall not
offer products or services to customers of the Joint
Venture in competition with the Joint Venture or
offer products or services in competition with the
Joint Venture to prospective customers of the Joint
Venture with which the Joint Venture has engaged
in confidential communications or negotiations prior
to the Withdrawal Date. In addition, during such
period, neither the Joint Venture nor any non-
withdrawing party shall offer products or services in
competition with the withdrawing party to customers
of the withdrawing party. Nothing in this paragraph 3
shall be deemed to prohibit any activities that would
be permitted under the noncompete provisions of
Article 10 of the JVA were it still in effect during such
period. Further, nothing in this paragraph 3 shall be
deemed to prohibit a withdrawing party from indirectly
offering products or services to such customers or
prospective customers of the Joint Venture through
another international telecommunications alliance
with which the withdrawing party becomes associated
following its withdrawal from the Joint Venture;
provided, however, that if a party withdraws from the
Joint Venture following its default or bankruptcy, such
withdrawing party shall not be permitted to compete
with the Joint Venture through another international
telecommunications alliance during the one-year
period after the Withdrawal Date.
4. The withdrawing party shall continue to support
Joint Venture customers in its home country under
contracts of the Joint Venture in existence on the
Withdrawal Date on the same terms and conditions
until the Joint Venture is able to secure alternative
support in the home country of the withdrawing party,
but in any event for a period which shall continue until
the earlier of (i) the "pay back" date of such contracts
of the Joint Venture which are supported by the
withdrawing party and (ii) the expiration of such
contracts of the Joint Venture which are supported by
the withdrawing party. The withdrawing party shall
also continue to support new sales of Joint Venture
products and services, such support not to continue
beyond two years after the Withdrawal Date. Similarly,
the Joint Venture and each non-withdrawing party shall
continue to support the customers of the withdrawing
party under contracts of the withdrawing party in
existence on the Withdrawal Date on the same terms
and conditions until the withdrawing party is able to
secure alternative support, but in any event for a period
which shall continue until the earlier of (i) the "pay
back" date of such contracts of the withdrawing party
which are supported by the Joint Venture and (ii) the
expiration of such contracts of the withdrawing party
which are supported by the Joint Venture. The Joint
Venture, the withdrawing party and each non-withdrawing
party shall use all commercially reasonable efforts to
secure such alternative support as promptly as
practicable after the Withdrawal Date.
5. The transition rules with respect to trademarks and
intellectual property of a withdrawing party and
trademarks and intellectual property of the Joint
Venture or the other parties used by the withdrawing
party shall be as provided in the Intellectual Property
Agreements.
6. Subject to paragraph 7, all outsourcing, service bureau
and similar service and support contracts between the
withdrawing party and the Joint Venture shall remain in
place on the same terms and conditions at the
discretion of the Joint Venture for a period of up to 2
years after the Withdrawal Date to provide for an orderly
and timely transition, or for such longer period as may
be necessary to permit the Joint Venture to fulfill
contracts with customers which are supported by such
outsourcing, service bureau and similar service and
support arrangements, and the withdrawing party shall
cooperate at its own expense during such period in
transferring capabilities, processes and systems to
alternative support capabilities.
7. To the extent practicable, the Joint Venture shall have
the right to purchase at fair market value the systems,
capital equipment and other assets of the withdrawing
party and, to the extent permitted by Applicable Law,
employ the personnel of the withdrawing party to the
extent that such personnel, systems, capital equipment
and other assets are dedicated substantially to providing
support and services to the Joint Venture under
outsourcing or service bureau or similar service and
support contracts.
8. A Plan Action project that can be accounted for
separately and that can be transferred to the Joint
Venture under the JVA shall be considered an integral
part of the Joint Venture, and the Joint Venture shall
have the right to buy out the withdrawing party at the
time of the withdrawal of such party from the Joint
Venture (within the same two-year period and on the
same terms as would apply to the buy out rights of a
non-Plan Action party with respect to such Plan Action
project) and to integrate the Plan Action project into the
Joint Venture.
9. All Affiliation Agreements between the Joint Venture and
operating companies (such as National Operations and
Public Telephone Operators) in which the withdrawing
party may have an equity interest on the Withdrawal Date
shall remain in place in accordance with their terms and
conditions.
10. If only one European party is the withdrawing party, the
withdrawing European party shall have the rights and
obligations of the withdrawing party contained in this
Transition Plan. The non-withdrawing European party
shall have the rights and obligations of a non-
withdrawing party contained in this Transition Plan.
Exhibit 99C
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
MAJORCO, L.P.,
A DELAWARE LIMITED PARTNERSHIP
dated as of January 31, 1996
among
SPRINT SPECTRUM, L.P.
TCI NETWORK SERVICES
COMCAST TELEPHONY SERVICES
and
COX TELEPHONY PARTNERSHIP
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<C> <C>
SECTION 1. THE PARTNERSHIP 1
1.1 Continuation of the Partnership 1
1.2 Name 2
1.3 Purpose 2
1.4 Principal Executive Office 2
1.5 Term 3
1.6 Filings; Agent for Service of Process 3
1.7 Title to Property 3
1.8 Payments of Individual Obligations 4
1.9 Independent Activities 4
1.10 Definitions 4
1.11 Additional Definitions 26
1.12 Terms Generally 30
SECTION 2. PARTNERS' CAPITAL CONTRIBUTIONS 30
2.1 Percentage Interests; Preservation of
Percentages of Interests Held as General
Partners and as Limited Partners 30
2.2 Partners' Original Capital Contributions 31
2.3 Additional Capital Contributions 31
2.4 Failure to Contribute Capital 35
2.5 Other Additional Capital Contributions 43
2.6 Partnership Funds 43
2.7 Partner Loans; Other Borrowings 43
2.8 Other Matters 45
SECTION 3. ALLOCATIONS 45
3.1 Profits 45
3.2 Losses 46
3.3 Special Allocations 46
3.4 Curative Allocations 48
3.5 Loss Limitation 49
3.6 Other Allocation Rules 49
3.7 Tax Allocations: Code Section 704c 49
SECTION 4. DISTRIBUTIONS 50
4.1 Available Cash 50
4.2 Tax Distributions 50
4.3 Amounts Withheld 51
SECTION 5. MANAGEMENT 51
5.1 Authority of the Partnership Board 51
5.2 Business Plan and Annual Budget 56
5.3 Employees 59
5.4 Limitation of Agency 59
5.5 Liability of Partners, Representatives and
Partnership Employees 60
5.6 Indemnification 60
5.7 Temporary Investments 62
5.8 Deadlocks 62
5.9 Conversion to Corporate Form 63
SECTION 6. PARTNERSHIP OPPORTUNITIES;
CONFIDENTIALITY 65
6.1 Competitive Activities 65
6.2 Enforceability and Enforcement 68
6.3 General Exceptions to Section 6.1 68
6.4 Comcast Exceptions 72
6.5 Freedom of Action 77
6.6 Confidentiality 77
SECTION 7. ROLE OF EXCLUSIVE LIMITED PARTNERS 80
7.1 Rights or Powers 80
7.2 Voting Rights 80
SECTION 8. TRANSACTIONS WITH PARTNERS;
OTHER AGREEMENTS 80
8.1 Sprint Cellular 80
8.2 Sprint Brand Licensing Agreement 81
8.3 Marketing; Branding of Partnership Services. 81
8.4 Preferred Provider 83
8.5 MFJ 84
8.6 Interested Party Transactions 84
8.7 Access to Technical Information 84
8.8 Parent Undertaking 85
8.9 Certain Additional Covenants 85
8.10 PioneerCo Preemptive Rights 86
8.11 Foreign Ownership 86
8.12 Product Integration 88
8.13 Provision of Services 91
8.14 Comcast Representative 91
8.15 Purchasing 92
8.16 Advertising Reimbursement 92
SECTION 9. REPRESENTATIONS AND WARRANTIES 93
9.1 Representations and Warranties by Partners 93
9.2 Representation and Warranty of Sprint 95
SECTION 10. ACCOUNTING, BOOKS AND RECORDS 95
10.1 Accounting, Books and Records. 95
10.2 Reports. 95
10.3 Tax Returns and Information 97
10.4 Proprietary Information 98
SECTION 11. ADVERSE ACT 99
11.1 Remedies 99
11.2 Adverse Act Purchase 101
11.3 Net Equity 104
11.4 Gross Appraised Value 105
11.5 Extension of Time 106
SECTION 12. DISPOSITIONS OF INTERESTS 106
12.1 Restriction on Dispositions 106
12.2 Permitted Transfers 106
12.3 Conditions to Permitted Transfers 107
12.4 Right of First Refusal 110
12.5 Tagalong Rights 114
12.6 Offer and Registration Rights 116
12.7 Right of First Offer 123
12.8 Prohibited Dispositions 128
12.9 Representations Regarding Transfers 128
12.10 Distributions and Allocations in Respect of 128
SECTION 13. CONVERSION OF INTERESTS 129
13.1 Termination of Status as General Partner 129
13.2 Restoration of Status as General Partner 129
SECTION 14. DISSOLUTION AND WINDING UP 130
14.1 Liquidating Events 130
14.2 Winding Up 131
14.3 Compliance With Certain Requirements
of Regulations 132
14.4 Deemed Distribution and Recontribution 133
14.5 Rights of Partners 133
14.6 Notice of Dissolution 133
14.7 Buy/Sell Arrangements 133
SECTION 15. MISCELLANEOUS 136
15.1 Notices 136
15.2 Binding Effect 137
15.3 Construction 137
15.4 Time 137
15.5 Table of Contents; Headings 137
15.6 Severability 137
15.7 Incorporation by Reference 137
15.8 Further Action 137
15.9 Governing Law 138
15.10 Waiver of Action for Partition; No Bill For 138
15.11 Counterpart Execution 138
15.12 Sole and Absolute Discretion 138
15.13 Specific Performance 138
15.14 Entire Agreement 139
15.15 Limitation on Rights of Others 139
15.16 Waivers; Remedies 139
15.17 Jurisdiction; Consent to Service of Process 139
15.18 Waiver of Jury Trial 140
15.19 No Right of Set-Off 140
</TABLE>
*****
<TABLE>
<CAPTION>
SCHEDULES
<C> <C>
Schedule Number
Excluded Businesses; Non-Exclusive Services
and Wireless Exclusive Services 1.10(a)
Sprint Cellular Service Area 1.10(b)
Initial Percentage Interests 2.1
Notice Addresses 2.2
Simple Majority Vote 5.1(i)
Required Majority Vote 5.1(j)
Unanimous Vote 5.1(k)
Unanimous Partner Vote 5.1(l)
Temporary Investments Guidelines 5.7
</TABLE>
<TABLE>
<CAPTION>
EXHIBITS
<C> <C>
Exhibit Number
Form of Amended and Restated Parent
Undertaking 1.10(a)
Form of Parents Agreement 1.10(b)
Form of Default Loan Promissory Note 2.4(c)(ii)
Form of Partner Loan Promissory Note 2.7
Form of Amended and Restated Sprint
Trademark License Agreement 8.2
******
</TABLE>
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
MAJORCO, L.P.,
A DELAWARE LIMITED PARTNERSHIP
This AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
is entered into as of the 31st day of January, 1996, by and among
Sprint Spectrum, L.P., a Delaware limited partnership ("Sprint"),
TCI Network Services, a Delaware general partnership ("TCI"),
Comcast Telephony Services, a Delaware general partnership
("Comcast"), and Cox Telephony Partnership, a Delaware general
partnership ("Cox"), each as a General Partner and a Limited
Partner, pursuant to the provisions of the Delaware Revised
Uniform Limited Partnership Act, on the following terms and
conditions:
WHEREAS, Sprint, TCI, Comcast and Cox entered into that
certain Agreement of Limited Partnership of MajorCo, L.P., dated
as of March 28, 1995 (as amended by that certain First Amendment
to Agreement of Limited Partnership dated as of August 31, 1995,
the "Prior Partnership Agreement"), providing for the formation
of the Partnership by the filing of a Certificate of Limited
Partnership with the Secretary of State of Delaware;
WHEREAS, Sprint, TCI, Comcast and Cox wish to further amend
the Prior Partnership Agreement and to restate the Prior
Partnership Agreement, as so amended, in its entirety; and
WHEREAS, Sprint, TCI, Comcast and Cox wish to continue the
Partnership upon the terms and conditions set forth in this
Agreement;
NOW, THEREFORE, in consideration of the premises and mutual
covenants and agreements contained herein, and in order to set
forth the respective rights, obligations, and interests of the
parties to one another, the parties, intending to be legally
bound, hereby agree as follows:
SECTION 1. THE PARTNERSHIP
1.1 Continuation of the Partnership.
The Partnership was formed on March 28, 1995. The Partners
hereby agree to continue the Partnership as a limited partnership
pursuant to the provisions of the Act and upon the terms and
conditions set forth in this Agreement. This Agreement
completely amends, restates and supersedes the Prior Partnership
Agreement.
1.2 Name.
The name of the Partnership shall be MajorCo, L.P., and all
business of the Partnership shall be conducted in such name or,
in the discretion of the Partnership Board, under any other names
(but excluding a name that includes the name of a Partner unless
such Partner has consented thereto).
1.3 Purpose.
(a) Subject to, and upon the terms and conditions of
this Agreement, the purposes of the Partnership shall be to
engage in the Wireless Business and in the provision of
Non-Exclusive Services, either directly or through one or more
Subsidiaries, and to perform such activities in the furtherance
of such Wireless Business and provision of Non-Exclusive Services
as may be approved from time to time by the Partnership
Board. Without a Unanimous Partner Vote, the Partnership shall
not engage in any other business, including any of the Excluded
Businesses. Notwithstanding the preceding sentence, the Partners
acknowledge that (i) pursuant to the Prior Partnership Agreement,
the Partnership conducted certain activities relating to the
provision of wireline telecommunications services, (ii) such
activities will be terminated in an orderly manner as soon as
practicable following the date of this Agreement, but in no event
earlier than the end of such period as the Partnership Board may
determine is needed to ensure an orderly disposition by the
Partnership of any assets or rights relating exclusively to such
activities and (iii) any assets or other rights relating
exclusively to such activities that are owned by the Partnership
shall be disposed of in such a manner as determined by a
Unanimous Vote of the Partnership Board.
(b) The Partnership shall have all the powers now or
hereafter conferred by the laws of the State of Delaware on
limited partnerships formed under the Act and, subject to the
limitations of this Agreement, may do any and all lawful acts or
things that are necessary, appropriate, incidental or convenient
for the furtherance and accomplishment of the purposes of the
Partnership. Without limiting the generality of the foregoing,
and subject to the terms of this Agreement, the Partnership may
enter into, deliver and perform all contracts, agreements and
other undertakings and engage in all activities and transactions
as may be necessary or appropriate to carry out its purposes and
conduct its business.
1.4 Principal Executive Office.
The principal executive office of the Partnership shall be
located in such place as determined by the Partnership Board, and
the Partnership Board may change the location of the principal
executive office of the Partnership to any other place within or
without the State of Delaware upon ten (10) Business Days prior
notice to each of the Partners, provided that such principal
executive office shall be located in the United States. The
Partnership Board may establish and maintain such additional
offices and places of business of the Partnership, within or
without the State of Delaware, as it deems appropriate.
1.5 Term.
The term of the Partnership commenced on the date the
certificate of limited partnership described in Section 17-201 of
the Act (the "Certificate") was filed in the office of the
Secretary of State of Delaware in accordance with the Act and
shall continue until the winding up and liquidation of the
Partnership and its business is completed following a Liquidating
Event, as provided in Section 14.
1.6 Filings; Agent for Service of Process.
(a) The General Partners caused the Certificate to be
filed in the office of the Secretary of State of Delaware in
accordance with the Act. The Partnership Board shall take any
and all other actions reasonably necessary to perfect and
maintain the status of the Partnership as a limited partnership
under the laws of Delaware. The General Partners shall cause
amendments to the Certificate to be filed whenever required by
the Act. The Partners shall be provided with copies of each
document filed or recorded as contemplated by this Section 1.6
promptly following the filing or recording thereof.
(b) The General Partners shall execute and cause to be
filed original or amended Certificates and shall take any and all
other actions as may be reasonably necessary to perfect and
maintain the status of the Partnership as a limited partnership
or similar type of entity under the laws of any other states or
jurisdictions in which the Partnership engages in business.
(c) The registered agent for service of process on the
Partnership shall be The Corporation Trust Company or any
successor as appointed by the Partnership Board in accordance
with the Act. The registered office of the Partnership in the
State of Delaware is located at Corporation Trust Center, 1209
Orange Street, Wilmington, Delaware 19801.
1.7 Title to Property.
No Partner shall have any ownership interest in its
individual name or right in any real or personal property owned,
directly or indirectly, by the Partnership, and each Partner's
Interest shall be personal property for all purposes. The
Partnership shall hold all of its real and personal property in
the name of the Partnership or its nominee and not in the name of
any Partner.
1.8 Payments of Individual Obligations.
The Partnership's credit and assets shall be used solely for
the benefit of the Partnership, and no asset of the Partnership
shall be Transferred or encumbered for, or in payment of, any
individual obligation of any Partner.
1.9 Independent Activities.
Each Partner and any of its Affiliates shall be required to
devote only such time to the affairs of the Partnership as such
Partner determines in its sole discretion may be necessary to
manage and operate the Partnership to the extent contemplated by
this Agreement, and each such Person, except as expressly
provided herein, shall be free to serve any other Person or
enterprise in any capacity that it may deem appropriate in its
discretion.
1.10 Definitions.
Capitalized words and phrases used in this Agreement have
the following meanings:
"Accountants" means, as of any time, such firm of
nationally recognized independent certified public accountants
that, as of such time, has been appointed by the Partnership
Board as the accountants for the Partnership.
"Act" means the Delaware Revised Uniform Limited
Partnership Act, as set forth in Del. Code Ann. tit. 6, 17-101 to
17-1109.
"Additional Capital Contributions" means, with respect
to each Partner, the Capital Contributions made by such Partner
pursuant to Section 2.3 of the Prior Partnership Agreement on or
after January 1, 1996 and prior to the date of this Agreement,
and the Capital Contributions made by such Partner pursuant to
Sections 2.3 (except as otherwise provided in Sections 2.3(a)(i)
and (ii)), 2.4, 2.5 and 8.10, but excluding Special
Contributions, reduced in each case by the amount of any
liabilities of such Partner assumed by the Partnership in
connection with such Capital Contribution or any Nonrecourse
Liabilities of such Partner that are secured by any property
contributed by such Partner as a part of such Capital
Contribution. In the event all or a portion of an Interest is
Transferred in accordance with the terms of this Agreement, the
transferee shall succeed to the Additional Capital Contributions
of the transferor to the extent they relate to the Transferred
Interest.
"Additional Contribution Agreement" means a
contribution agreement the terms of which have been approved by
the Unanimous Vote of the Partnership Board pursuant to which a
Partner makes an Additional Capital Contribution to the
Partnership pursuant to Section 2.5.
"Additional Contribution Notice" means a written notice
given to all Partners, which shall (i) state the Additional
Contribution Amount being requested of all Partners and each
Partner's proportionate share thereof determined as provided in
Section 2.3(b)(i) (or, in the case of a required Additional
Capital Contribution in respect of a Declined Accelerated
Contribution, as provided in Section 2.3(b)(ii)(B)), (ii) if
applicable, state that the Additional Capital Contribution being
requested is a Second Tranche Call, (iii) specify in reasonable
detail the purposes for which the Additional Contribution Amount
is required, (iv) identify a date (the "Contribution Date"), not
more than forty-five (45) days nor less than thirty (30) days
after the date of such notice, upon which the Additional Capital
Contributions are to be made, (v) specify the account of the
Partnership to which the contribution is to be made and (vi) if
the Additional Capital Contribution is being requested at such
time as the aggregate amount of Original Capital Contributions
and Additional Capital Contributions (including the Additional
Capital Contribution being requested) made or requested to be
made in accordance with this Agreement (excluding any PioneerCo
Contribution) exceeds Five Billion Dollars ($5,000,000,000),
state the Base Value, the estimated Gross Appraised Value and the
estimated aggregate Adjusted Net Equity of all Partners as of the
applicable Contribution Date.
"Adjusted Capital Account Deficit" means, with respect
to any Exclusive Limited Partner, the deficit balance, if any, in
such Exclusive Limited Partner's Capital Account as of the end of
the relevant Allocation Year, after giving effect to the
following adjustments:
(i) Credit to such Capital Account any amounts
which such Exclusive Limited Partner is obligated to restore
pursuant to any provision of this Agreement or is deemed to be
obligated to restore pursuant to the penultimate sentences of
Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5); and
(ii) Debit to such Capital Account the items
described in Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-
1(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6) of the Regulations.
The foregoing definition of Adjusted Capital Account Deficit is
intended to comply with the provisions of Section 1.704-
1(b)(2)(ii)(d) of the Regulations and shall be interpreted
consistently therewith.
"Adverse Act" means, with respect to any Partner, any
of the following:
(i) Such Partner becomes a Defaulting Partner;
(ii) Such Partner Disposes of all or any part of
its Interest except as required or permitted by this Agreement;
provided, however, that no Adverse Act shall be considered to
have occurred until thirty (30) days following the involuntary
encumbrance of all or any part of such Interest if during such
thirty (30) day period the affected Partner acts diligently to,
and prior to the end of such thirty (30) day period does, remove
any such encumbrance, including effecting the posting of a bond
to prevent foreclosure where necessary;
(iii) Such Partner has committed a material
breach of any material covenant contained in this Agreement
(other than as otherwise expressly enumerated in this definition)
or a material default on any material obligation provided for in
this Agreement (other than as otherwise expressly enumerated in
this definition) and such breach or default continues for thirty
(30) days after the date written notice thereof has been given to
such Partner by any General Partner (with a copy to the
Partnership Board and each other Partner); provided that if such
breach or default is not a failure to pay money and is of such a
nature that it cannot reasonably be cured within such thirty (30)
day period, but is curable and such Partner in good faith begins
efforts to cure it within such thirty (30) day period and
continues diligently to do so, such Partner shall have a
reasonable additional period thereafter to effect the cure (which
shall not exceed an additional ninety (90) days unless otherwise
approved by the Partnership Board by Required Majority Vote); and
provided further that if, within thirty (30) days after the date
written notice of such breach or default has been given to such
Partner, such Partner delivers written notice (the "Contest
Notice") to the Partnership Board and all other Partners that it
contests such notice of breach or default, such breach or default
shall not constitute an Adverse Act unless and until (and
assuming that such breach or default has not theretofore been
cured in full and that any applicable cure period has expired)
(A) the disinterested Representatives determine in good faith by
Required Majority Vote that such Partner has committed such a
breach or default or (B) there is a Final Determination that such
Partner's actions or failures to act constituted such a breach or
default; and provided further that this clause (iii) shall not
apply in the event of a breach of Section 8.5 hereof, which
breach shall constitute an Adverse Act (if at all) pursuant to
clause (vii) below;
(iv) The Bankruptcy of such Partner or the
occurrence of any other event which would permit a trustee or
receiver to acquire control of the affairs or assets of such
Partner;
(v) The occurrence of a Change in Control of
such Partner without the unanimous written consent of the other
General Partners;
(vi) An IXC Transaction has occurred with
respect to such Partner;
(vii) The occurrence of any event with respect
to such Partner (A) that causes such Partner or the Partnership
or any of its Subsidiaries to become a BOC or (B) that causes the
Partnership or any of its Subsidiaries to become a BOC Affiliated
Enterprise or an entity subject to any restriction or limitation
under Section II of the MFJ, provided, however, that (a) the
circumstances that constitute an Adverse Act under clause (B)
above must have a material adverse effect on the business,
assets, liabilities, results of operations, financial condition
or prospects of the Partnership and its Subsidiaries and (b) no
Adverse Act shall be considered to have occurred if such Partner
has taken actions which have cured the circumstances that would
otherwise have constituted an Adverse Act under clause (A) or
(B), as applicable, of this clause (vii) within ninety (90) days
following the date written notice of the occurrence of such event
has been given to such Partner by any General Partner (with a
copy to the Partnership Board and each other Partner); and
provided further that if, within ninety (90) days after the date
written notice of such occurrence has been given to such Partner,
such Partner delivers a Contest Notice to the Partnership Board
and all other Partners that it contests such occurrence (or
contests whether such occurrence constitutes an Adverse Act under
this clause (vii)), such occurrence shall not constitute an
Adverse Act unless and until (and assuming that such
circumstances have not theretofore been cured in full and that
the applicable cure period has expired) (a) the disinterested
Representatives determine in good faith by Required Majority Vote
that such occurrence constitutes an Adverse Act under this clause
(vii) or (b) there is a Final Determination that such occurrence
constitutes an Adverse Act under this clause (vii); or
(viii) Such Partner otherwise causes a
dissolution of the Partnership in contravention of the terms of
this Agreement (other than solely by reason of the Bankruptcy of
such Partner).
An "Adverse Partner" is any Partner with respect to
which an Adverse Act has occurred.
"Affiliate" means, with respect to any Person, any
other Person that directly or indirectly through one or more
intermediaries controls, is controlled by, or is under common
control with such Person. For purposes of this definition, the
term "controls" (including its correlative meanings "controlled
by" and "under common control with") shall mean the possession,
direct or indirect, of the power to direct or cause the direction
of the management and policies of a Person, whether through the
ownership of voting securities, by contract or
otherwise. Notwithstanding the foregoing, (i) neither the
Partnership nor MinorCo, nor any Person controlled by the
Partnership or MinorCo (including WirelessCo), shall be deemed to
be an Affiliate of any Partner or of any Affiliate of any Partner
and (ii) no Partner or any Affiliate thereof shall be deemed to
be an Affiliate of any other Partner or any Affiliate thereof
solely by virtue of the ownership by such Partner or any of its
Affiliates of any equity interest in the Partnership, MinorCo or
PhillieCo.
"Agreed Value" means the agreed upon value of a Capital
Contribution by a Partner of the Property identified below,
determined as provided below:
(i) with respect to the Property included in the
Original Capital Contribution of such Partner, the amount set
forth next to such Partner's name in Schedule 2.2 to the Prior
Partnership Agreement;
(ii) with respect to the License Contribution by
Cox, $17,647,059; and
(iii) with respect to the Omaha License, an
amount equal to the sum of (A) $995,564.00, together with
interest at the rate of 13.4% per annum computed from November
17, 1994 through the date that the Omaha License is contributed
to the Partnership pursuant to Section 2.3(a)(ii) plus (B)
$4,062,400.00, together with interest at the rate of 13.4% per
annum computed from June 30, 1995 through the date that the Omaha
License is contributed to the Partnership pursuant to Section
2.3(a)(ii).
"Agreement" or "Partnership Agreement" means this
Amended and Restated Agreement of Limited Partnership, including
all Schedules hereto, as amended from time to time.
"Allocation Year" means (i) the period commencing on
the date of the Prior Partnership Agreement and ending on
December 31, 1995, (ii) any subsequent twelve (12) month period
commencing on January 1 and ending on December 31, or (iii) any
portion of the period described in clauses (i) or (ii) for which
the Partnership is required to allocate Profits, Losses, and
other items of Partnership income, gain, loss or deduction
pursuant to Section 3.
"Available Cash" means as of any date the cash of the
Partnership as of such date less such portion thereof as the
Partnership Board determines to reserve for Partnership expenses,
debt payments, capital improvements, replacements, and
contingencies.
"Bankruptcy" means, with respect to any Person, a
"Voluntary Bankruptcy" or an "Involuntary Bankruptcy." A
"Voluntary Bankruptcy" means, with respect to any Person, the
inability of such Person generally to pay its debts as such debts
become due (other than any obligation of such Person to make
capital contributions under this Agreement), or an admission in
writing by such Person of its inability to pay its debts
generally or a general assignment by such Person for the benefit
of creditors; the filing of any petition or answer by such Person
seeking to adjudicate it bankrupt or insolvent, or seeking for
itself any liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of such Person or
its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking, consenting to,
or acquiescing in the entry of an order for relief or the
appointment of a receiver, trustee, custodian or other similar
official for such Person or for any substantial part of its
property; or corporate action taken by such Person to authorize
any of the actions set forth above. An "Involuntary Bankruptcy"
means, with respect to any Person, without the consent or
acquiescence of such Person, the entering of an order for relief
or approving a petition for relief or reorganization or any other
petition seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or other similar relief
under any present or future bankruptcy, insolvency or similar
statute, law or regulation, or the filing of any such petition
against such Person which petition shall not be dismissed within
ninety (90) days, or, without the consent or acquiescence of such
Person, the entering of an order appointing a trustee, custodian,
receiver or liquidator of such Person or of all or any
substantial part of the property of such Person which order shall
not be dismissed within sixty (60) days.
"BOC" means a "BOC" or one of the "Bell Operating
Companies" as defined in Section IV.C of the MFJ.
"BOC Affiliated Enterprise" has the same meaning as the
term "affiliated enterprise" as used with respect to "BOC" or
"Bell Operating Companies" in Section II.D of the MFJ.
"BTA" means a Basic Trading Area, as defined in the FCC
rules to be codified at 47 C.F.R. 24.13.
"Business Day" means a day of the year on which banks
are not required or authorized to close in the State of New York.
"Cable Partners" means Comcast, Cox and/or TCI, as the
context may require.
"Cable Subsidiary" has the meaning set forth in the
form of Parents Agreement attached as Exhibit 1.10(b).
"Capital Account" means, with respect to any Partner,
the Capital Account maintained for such Partner in accordance
with the following provisions:
(i) To each Partner's Capital Account there
shall be credited such Partner's Capital Contributions, such
Partner's distributive share of Profits and any items in the
nature of income or gain which are specially allocated pursuant
to Section 3.3 or Section 3.4, and the amount of any Partnership
liabilities which are assumed by such Partner or secured by any
Property distributed to such Partner as permitted by this
Agreement.
(ii) To each Partner's Capital Account there
shall be debited the amount of cash and the Gross Asset Value of
any Property distributed or deemed to be distributed to such
Partner pursuant to any provision of this Agreement, such
Partner's distributive share of Losses and any items in the
nature of expenses or losses which are specially allocated
pursuant to Section 3.3 or Section 3.4, and the amount of any
liabilities of such Partner assumed by the Partnership or any
Nonrecourse Liabilities of such Partner that are secured by any
Property contributed by such Partner to the Partnership.
(iii) In the event all or a portion of an
Interest is Transferred in accordance with the terms of this
Agreement, the transferee shall succeed to the Capital Account of
the transferor to the extent it relates to the Transferred
Interest.
(iv) In determining the amount of any liability
for purposes of the definitions of "Additional Capital
Contributions" and "Original Capital Contribution" and
subparagraphs (i) and (ii) of this definition of "Capital
Account," there shall be taken into account Code Section 752(c)
and any other applicable provisions of the Code and Regulations.
The foregoing provisions and the other provisions of this
Agreement relating to the maintenance of Capital Accounts are
intended to comply with Regulations Section 1.704-1(b), and shall
be interpreted and applied in a manner consistent with such
Regulations. In the event the Partnership Board determines that
it is prudent to modify the manner in which the Capital Accounts,
or any debits or credits thereto (including debits or credits
relating to liabilities which are secured by contributed or
distributed property or which are assumed by the Partnership or
any Partner), are computed in order to comply with such
Regulations, the Partnership Board may make such modification,
provided that it is not likely to have a material effect on the
amounts distributable to any Partner pursuant to Section 14 upon
the dissolution and winding up of the Partnership. The
Partnership Board also shall (i) make any adjustments that are
necessary or appropriate to maintain equality between the Capital
Accounts of the Partners and the amount of Partnership capital
reflected on the Partnership's balance sheet, as computed for
book purposes, in accordance with Regulations Section 1.704-
1(b)(2)(iv)(q), and (ii) make any appropriate modifications in
the event unanticipated events might otherwise cause this
Agreement not to comply with Regulations Section 1.704-1(b). Any
such decision or action permitted to be taken by the Partnership
Board under this paragraph shall require the Unanimous Vote of
the Partnership Board.
"Capital Commitment" of any Partner means (i) with
respect to the first Fiscal Year in the Initial Two-Year Period,
an amount equal to the product of (A) such Partner's initial
Percentage Interest and (B) the Planned Capital Amount for such
Fiscal Year, and (ii) with respect to the last Fiscal Year in the
Initial Two-Year Period, an amount equal to the excess, if any,
of (A) the product of (1) such Partner's initial Percentage
Interest and (2) the sum of (a) the Planned Capital Amount for
such Fiscal Year plus (b) any Prior Year's Carryforward, over (B)
that portion of the cumulative Accelerated Contribution Amounts
requested of and made by such Partner in the first Fiscal Year in
the Initial Two-Year Period that the Partnership Board has
determined pursuant to Section 2.3(b)(i) shall be applied to
reduce the Planned Capital Amount for such last Fiscal Year. In
the event all or a portion of an Interest is Transferred in
accordance with this Agreement, the transferee shall succeed to
the Capital Commitment of the transferor to the extent it relates
to the Transferred Interest and has not been called in full.
"Capital Contribution" means, with respect to any
Partner, the amount of money and the Gross Asset Value at the
time of contribution of any Property (other than money)
contributed to the Partnership with respect to the Interest held
by such Partner (including any contribution expressly excluded
from the definition of Additional Capital Contribution). The
principal amount of a promissory note which is not readily traded
on an established securities market and which is contributed to
the Partnership by the maker of the note (or a Partner related to
the maker of the note within the meaning of Regulations Section
1.704-1(b)(2)(ii)(c)) shall not be included in the Capital
Account of any Partner until the Partnership makes a taxable
disposition of the note or until (and to the extent) principal
payments are made on the note, all in accordance with Regulations
Section 1.704-1(b)(2)(iv)(d)(2).
"Carrier" has the meaning set forth in the definition
of "IXC" below.
"Change in Control" means, with respect to any Partner
that has a Parent other than itself, such Partner's ceasing to be
a Subsidiary of its Parent other than in connection with a
Permitted Transaction.
"Chief Executive Officer" means the chief executive
officer of the Partnership, including any interim chief executive
officer.
"Code" means the Internal Revenue Code of 1986.
"Comcast Parent" means Comcast Corporation, a
Pennsylvania corporation and any successor (by merger,
consolidation, Transfer or otherwise) to all or substantially all
of its business and assets.
"Consumer Price Index" means the Consumer Price Index
"All Urban Consumers: U.S. city average, all items" (1982-1984 =
100) published by the Bureau of Labor Statistics of the United
States Department of Labor, or any equivalent successor or
substitute index selected by the Partnership Board and published
by the Bureau of Labor Statistics or a successor or substitute
governmental agency selected by the Partnership Board.
"Contest Notice" has the meaning set forth in clause
(iii) of the definition of "Adverse Act."
"Contribution Date" has the meaning set forth in the
definition of "Additional Contribution Notice."
"Controlled Affiliate" of any Person means the Parent
of such Person and each Subsidiary of such Parent. As used in
Sections 6, 8.5, 8.9 and 8.11 the term "Controlled Affiliate"
shall also include any Affiliate of a Person that such Person or
its Parent can directly or indirectly unilaterally cause to take
or refrain from taking any of the actions required, prohibited or
otherwise restricted by such Section, whether through ownership
of voting securities, contractually or otherwise. As used in
Sections 2.4, 5.1(c), 11.2, 12.4 and 12.5 the term "Controlled
Affiliate" shall also include any Affiliate of a Person that such
Person or its Parent can directly or indirectly unilaterally
cause to take or refrain from taking any action regarding the
Partnership, whether through ownership of voting securities,
contractually or otherwise.
"Cox Parent" means Cox Communications, Inc., a Delaware
corporation, and any successor (by merger, consolidation,
Transfer or otherwise) to all or substantially all of its
business and assets.
"Cox Pioneer Partnership" means a general partnership
to be formed by a Subsidiary of Cox Parent and a Subsidiary of
Cox Enterprises, Inc., a Delaware corporation.
"Cox Pioneer Preference License" means the 30 MHz "A"
block PCS license granted to Cox Parent on December 14, 1994, for
the MTA encompassing Los Angeles and San Diego, California, which
MTA is identified in the FCC Public Notice regarding the PCS
Auction as Market No. M-2 (Report No. AUC-94-04, Auction No. 4).
"Cut-Off Time" means the earlier to occur of (i) the
end of the last Fiscal Year covered by the Initial Business Plan
and (ii) such time as the aggregate amount of Original Capital
Contributions and Additional Capital Contributions made or
requested to be made (excluding any PioneerCo Contribution) first
equals or exceeds the Total Mandatory Contributions.
"Debt" means (i) any indebtedness for borrowed money or
deferred purchase price of property whether or not evidenced by a
note, bond, or other debt instrument, (ii) obligations to pay
money as lessee under capital leases, (iii) obligations to pay
money secured by any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind existing on any asset
owned or held by the Partnership whether or not the Partnership
has assumed or become liable for the obligations secured thereby,
(iv) any obligation under any interest rate swap agreement (the
principal amount of such obligation shall be deemed to be the
notional principal amount on which such swap is based), and (v)
obligations under direct or indirect guarantees of (including
obligations (contingent or otherwise) to assure a creditor
against loss in respect of) indebtedness or obligations of the
kinds referred to in clauses (i), (ii), (iii) and (iv) above,
provided that Debt shall not include obligations in respect of
any accounts payable that are incurred in the ordinary course of
the Partnership's business and are not delinquent or are being
contested in good faith by appropriate proceedings.
"Depreciation" means, for each Allocation Year, an
amount equal to the depreciation, amortization, or other cost
recovery deduction allowable with respect to an asset for such
Allocation Year, except that if the Gross Asset Value of an asset
differs from its adjusted basis for federal income tax purposes
at the beginning of such Allocation Year, Depreciation shall be
an amount which bears the same ratio to such beginning Gross
Asset Value as the federal income tax depreciation, amortization,
or other cost recovery deduction for such Allocation Year bears
to such beginning adjusted tax basis; provided, that if the
adjusted basis for federal income tax purposes of an asset at the
beginning of such Allocation Year is zero, Depreciation shall be
determined with reference to such beginning Gross Asset Value
using any reasonable method selected by the Partnership Board;
and provided, further, that, consistent with Section 3.7,
Depreciation with respect to Subsidiary Partnership Property
shall not be determined with regard to the distributive share of
depreciation expense directly or indirectly allocated to the
Partnership by the Subsidiary Partnership, but shall be computed
with respect to the initial Gross Asset Value of the Subsidiary
Partnership interest contributed to the Partnership as if such
Subsidiary Partnership Property (or the equivalent percentage
thereof) were owned directly by the Partnership and were
contributed by the Partners who contributed the Subsidiary
Partnership interests.
"Dispose" (including its correlative meanings,
"Disposed of", "Disposition" and "Disposed"), with respect to any
Interest means to Transfer, pledge, hypothecate or otherwise
dispose of such Interest, in whole or in part, voluntarily or
involuntarily, except by operation of law in connection with a
merger, consolidation or other business combination of the
Partnership and except that such term shall not include any
pledge or hypothecation of, or granting of a security interest
in, an Interest that is approved by the Partnership Board in
connection with any financing obtained on behalf of the
Partnership.
"Excluded Businesses" has the meaning set forth in
Schedule 1.10(a).
"Exclusive Limited Partner" means any Limited Partner
that is not also a General Partner.
"FCC" means the Federal Communications Commission.
"Final Determination" means (i) a determination set
forth in a binding settlement agreement between the Partnership
and the Partner alleged to have committed the Adverse Act, which
has been approved by a Required Majority Vote of the Partnership
Board pursuant to Section 8.6 or (ii) a final judicial
determination, not subject to further appeal, by a court of
competent jurisdiction.
"Fiscal Year" means (i) the period commencing on the
date of the Prior Partnership Agreement and ending on December
31, 1995, (ii) any subsequent twelve (12) month period commencing
on January 1, and ending on December 31, or (iii) the period
commencing on the immediately preceding January 1 and ending on
the date on which all Property is distributed to the Partners
pursuant to Section 14.2.
"GAAP" means generally accepted accounting principles
in effect in the United States of America from time to time.
"General Partner" means any Person who (i) is referred
to as such in the first paragraph of this Agreement or has become
a General Partner pursuant to the terms of this Agreement, and
(ii) has not, at any given time, ceased to be a General Partner
pursuant to the terms of this Agreement. "General Partners"
means all such Persons.
"Gross Asset Value" means, with respect to any asset,
the asset's adjusted basis for federal income tax purposes,
except as follows:
(i) The initial Gross Asset Value of any asset
contributed by a Partner to the Partnership shall be the gross
fair market value of such asset, as determined by the
contributing Partner and the Partnership Board in accordance with
Section 8.6, provided that the initial Gross Asset Value of the
Property contributed by the Partners pursuant to Section 2.2 or
either of clauses (i) or (ii) of Section 2.3(a) shall be the sum
of (1) the Agreed Value of such Property plus (2) the amount of
any liabilities of the contributing Partner assumed by the
Partnership in connection with such contribution or any
Nonrecourse Liabilities of such Partner that are secured by the
contributed Property;
(ii) The Gross Asset Value of all Partnership
assets shall be adjusted to equal their gross fair market value,
as determined by the Partnership Board, as of the following
times: (A) the acquisition of an Interest by any new Partner in
exchange for more than a de minimis Capital Contribution; (B) the
distribution by the Partnership to a Partner of more than a de
minimis amount of Property as consideration for an Interest; (C)
the liquidation of the Partnership within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g); (D) the conversion of a
General Partner to an Exclusive Limited Partner if, and only if,
in the judgment of the Partnership Board, such adjustment would
either cause the Person who is being converted to an Exclusive
Limited Partner to have a deficit balance in its Capital Account
or increase the amount of such a deficit balance; and (E) the
adjustment of the Percentage Interests of the Partners pursuant
to Section 2.4(d)(ii);
(iii) The Gross Asset Value of any Partnership
asset distributed to any Partner shall be adjusted to equal the
gross fair market value of such asset on the date of distribution
as determined by the distributee and the Partnership Board in
accordance with Section 8.6;
(iv) The Gross Asset Values of Partnership
assets shall be increased (or decreased) to reflect any
adjustments to the adjusted basis of such assets pursuant to Code
Section 734(b) or Code Section 743(b), but only to the extent
that such adjustments are taken into account in determining
Capital Accounts pursuant to Regulation Section
1.704-1(b)(2)(iv)(m) and subparagraph (vi) of the definition of
"Profits" and "Losses" and Section 3.3(g); provided, however,
that Gross Asset Values shall not be adjusted pursuant to this
subparagraph (iv) to the extent that an adjustment pursuant to
subparagraph (ii) hereof is made in connection with a transaction
that would otherwise result in an adjustment pursuant to this
subparagraph (iv); and
(v) If Gross Asset Value is required to be
determined for the purpose of Section 11.2 or 14.7, Gross Asset
Value shall be determined in the manner set forth in such
Sections.
If the Gross Asset Value of an asset has been
determined or adjusted pursuant to clause (i), (ii) or (iv) of
this definition, such Gross Asset Value shall thereafter be
adjusted by the Depreciation taken into account with respect to
such asset for purposes of computing Profits and Losses.
"Hypothetical Federal Income Tax Amount" means for any
Fiscal Year the product of (A) the daily weighted average highest
marginal federal income tax rate applicable to domestic
corporations in effect for such Fiscal Year expressed as a
percentage and (B) the excess, if any, of (i) the cumulative
amount of taxable income and gain reported by the Partnership on
its Internal Revenue Service Forms 1065 over its life determined
as of the end of such Fiscal Year, over (ii) the larger of zero
(0) or the cumulative amount of taxable income and gain reported
by the Partnership on its Internal Revenue Service Forms 1065
over its life determined as of the beginning of such Fiscal Year.
"Initial Two-Year Period" means the period from January
1, 1996 through December 31, 1997.
"Intermediate Subsidiary" means, with respect to any
Parent of a Partner, a Subsidiary of such Parent that holds a
direct or indirect equity interest in such Partner.
"Interest" means, as to any Partner, all of the
interests of such Partner in the Partnership, including any and
all benefits to which the holder of an interest in the
Partnership may be entitled as provided in this Agreement and
under the Act, together with all obligations of such Partner to
comply with the terms and provisions of this Agreement.
"IXC" means each of AT&T Corp., MCI Communications
Corporation and British Telecommunications plc (each, a
"Carrier"), each successor to the long distance
telecommunications business of any of the foregoing entities and
each respective Affiliate of each such Carrier or successor.
"IXC Transaction" means, with respect to any Partner,
that (i) an IXC has become the beneficial owner of an equity
interest in such Partner or an equity interest in any
Intermediate Subsidiary (other than a Publicly Held Intermediate
Subsidiary) of the Parent of such Partner, (ii) an IXC has become
the beneficial owner of securities representing fifteen percent
(15%) or more of the voting power of the outstanding voting
securities of the Parent of such Partner or any Publicly Held
Intermediate Subsidiary of such Parent, and, if such Parent or
Publicly Held Intermediate Subsidiary is subject to a State
Statute or has a shareholder rights plan, such Parent or Publicly
Held Intermediate Subsidiary or the board of directors or other
governing body of such Parent or Publicly Held Intermediate
Subsidiary has approved such beneficial ownership or otherwise
has taken action to waive any applicable restrictions with
respect to such ownership or the exercise by the IXC of its
rights arising from such ownership under such State Statute or
shareholder rights plan, (iii) an IXC has become the beneficial
owner of securities representing twenty-five percent (25%) or
more of the voting power of the outstanding voting securities of
any such Parent or Publicly Held Intermediate Subsidiary,
provided that, if such IXC is an Affiliate of a Carrier, such
Affiliate has identified a Carrier as a Person controlling such
Affiliate either (a) pursuant to General Instruction C to
Schedule 13D, in a Schedule 13D (filed with the Securities and
Exchange Commission in accordance with Section 13(d) of the
Securities Exchange Act of 1934) or (b) pursuant to General
Instruction C to Schedule 14D-1, in a Schedule 14D-1 (filed with
the Securities and Exchange Commission in accordance with Section
14(d) of the Securities Exchange Act of 1934), (iv) any such
Parent or Publicly Held Intermediate Subsidiary has sold or
issued beneficial ownership in any equity interest in such Parent
or Publicly Held Intermediate Subsidiary to an IXC or granted to
an IXC any rights with respect to the governance of such Parent
or Publicly Held Intermediate Subsidiary that are not possessed
generally by the owners of outstanding equity interests in such
Parent or Publicly Held Intermediate Subsidiary; or (v) such
Partner has otherwise become an Affiliate of an IXC. Solely for
the purposes of this definition the terms "beneficial owner" and
"beneficial ownership" shall have the same meaning as in Rule
13d-3 under the Securities Exchange Act of 1934, as amended.
"Joint Venture Formation Agreement" means the Second
Amended and Restated Joint Venture Formation Agreement of even
date herewith among each of the Parents providing for the
formation of PioneerCo and certain other matters.
"LEC" means a local exchange carrier.
"Limited Partner" means any Person (i) who is referred
to as such in the first paragraph of this Agreement or who has
become a Limited Partner pursuant to the terms of this Agreement,
and (ii) who, at any given time, holds an Interest. "Limited
Partners" means all such Persons.
"Local Joint Venture" means any joint venture or other
entity formed by, or any agreement or arrangement entered into
between or among, as applicable, Sprint or its Controlled
Affiliates and one or more Cable Partners or their respective
Controlled Affiliates for purposes of providing or offering local
wireline telecommunications services under the Sprint Brand as
contemplated under a Parents Agreement.
"Mandatory Contribution" of any Partner means an amount
equal to the product of (i) such Partner's initial Percentage
Interest times (ii) the Total Mandatory Contributions.
"MFJ" means the Modification of Final Judgment agreed
to by the American Telephone and Telegraph Company and the
U.S. Department of Justice and approved by the U.S. District
Court for the District of Columbia on August 24, 1982, as
reported in United States v. Western Electric Company, Inc., et
al., 552 F. Supp. 131 (D.D.C. 1982), aff'd sub nom Maryland
v. United States, 460 U.S. 1001 (1983) and any subsequent orders
or amendments issued in connection therewith. Any reference in
this Agreement to Section II of the MFJ shall also include any
subsequent statute, rule, regulation, order or decree which
modifies or supersedes Section II of the MFJ (or any material
portion thereof) and imposes any restriction(s) substantially
similar to any of the material restrictions imposed by Section II
of the MFJ.
"Minimum Ownership Requirement" means, with respect to
(i) any Original Partner, as of any date, that the ratio
(expressed as a percentage) of such Original Partner's Percentage
Interest to the aggregate Percentage Interests of all Original
Partners is at least eight percent (8%) or (ii) any Partner not
an Original Partner, as of any date, that such Partner's
Percentage Interest is at least eight percent (8%).
"MinorCo" means MinorCo, L.P., the Delaware limited
partnership formed by the Partners for the purpose of holding a
limited partnership interest in WirelessCo and one or more other
Subsidiaries of the Partnership.
"MinorCo Interest" means, as to any Partner, all of the
interests of such Partner in MinorCo, including any and all
benefits to which the holder of an interest in MinorCo may be
entitled as provided in the partnership agreement of MinorCo and
under the Act, together with all obligations of such Partner to
comply with the terms and provisions of the partnership agreement
of MinorCo.
"MSA" means a Metropolitan Statistical Area, as
determined by the U.S. Department of Commerce.
"MTA" means a Major Trading Area as defined in FCC
rules to be codified at 47 C.F.R. 24.13.
"Non-Exclusive Services" has the meaning set forth in
Schedule 1.10(a) hereto.
"Nonrecourse Deductions" has the meaning set forth in
Section 1.704-2(b)(1) of the Regulations.
"Nonrecourse Liability" has the meaning set forth in
Section 1.704-2(b)(3) of the Regulations.
"Omaha License" means the 30 MHz PCS license acquired
by Cox Parent in the PCS Auction for the MTA encompassing Omaha,
Nebraska, which MTA is identified in the FCC Public Notice
regarding the PCS Auction as Market No. M-45 (Report
No. AUC-94-04, Auction No. 4).
"Original Capital Contribution" means, with respect to
each Partner, the Capital Contributions made by such Partner
prior to January 1, 1996. In the event all or a portion of an
Interest is Transferred in accordance with the terms of this
Agreement, the transferee shall succeed to the Original Capital
Contribution of the transferor to the extent it relates to the
Transferred Interest.
"Original Partners" means collectively Comcast, Cox,
TCI and Sprint and any successors or transferees thereof to the
extent such successors or transferees acquired their Interest in
accordance with this Agreement.
"Parent" means, except as otherwise provided below with
respect to a Permitted Transaction, (i) with respect to Cox (and
its Controlled Affiliates), Cox Parent, (ii) with respect to
Comcast (and its Controlled Affiliates), Comcast Parent, (iii)
with respect to TCI (and its Controlled Affiliates), TCI Parent
and (iv) with respect to Sprint (and its Controlled Affiliates),
Sprint Parent. With respect to any other Person hereafter
admitted to the Partnership as a Partner, the Parent with respect
to such Partner shall be the Person identified as such in a
Schedule to be attached to this Agreement in connection with the
admission of such Partner. In the event of a Permitted
Transaction, the new Parent of the applicable Partner immediately
following such Permitted Transaction will be the ultimate parent
entity (as determined in accordance with the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 and the rules and regulations
promulgated thereunder (the "HSR Act")) of such Partner (or such
Partner if it is its own ultimate parent entity); provided that
if such ultimate parent entity is not a Publicly Held Person then
the next highest corporate entity in the ownership chain from
such ultimate parent entity to and including such Partner which
is a Publicly Held Person shall be deemed to be the new
Parent. If there is no intermediate Publicly Held Person, the
Parent shall be the highest entity in the ownership chain from
the ultimate parent entity to and including such Partner which is
not an individual. For purposes of the definition of Controlled
Affiliate, the Parent of a Person that is neither a Partner nor a
Controlled Affiliate of a Partner is the ultimate parent entity
(as determined in accordance with the HSR Act) of such Person.
"Parent Undertaking" means a written instrument in
substantially the form of Exhibit 1.10(a) executed simultaneously
with the execution of this Agreement by each Parent of a Partner.
"Parents Agreement" means, individually and
collectively, the separate agreements between Sprint Parent and
each of TCI Parent, Comcast Parent and Cox Parent, substantially
in the form of Exhibit 1.10(b), executed simultaneously with the
execution and delivery of this Agreement.
"Partner Nonrecourse Debt" has the meaning set forth in
Section 1.704-2(b)(4) of the Regulations.
"Partner Nonrecourse Debt Minimum Gain" means an
amount, with respect to each Partner Nonrecourse Debt, equal to
the Partnership Minimum Gain that would result if such Partner
Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Section 1.704-2(i)(3) of the
Regulations.
"Partner Nonrecourse Deductions" has the meaning set
forth in Sections 1.704-2(i)(1) and 1.704-2(i)(2) of the
Regulations.
"Partners" means all General Partners and all Limited
Partners. "Partner" means any one of the Partners.
"Partnership" means the partnership formed pursuant to
that certain Agreement of Limited Partnership of MajorCo, L.P.
dated as of March 28, 1995, and continued pursuant to this
Agreement, and the partnership continuing the business of this
Partnership in the event of dissolution as herein provided.
"Partnership Board" means the committee of
Representatives that will have the authority and powers set forth
in Section 5.1.
"Partnership Minimum Gain" has the meaning set forth in
Sections 1.704-2(b)(2) and 1.704-2(d) of the Regulations.
"PCS" means a radio communications system authorized
under the rules for broadband personal communications services
designated as Subpart E of Part 24 of the FCC's rules, including
the network, marketing, distribution, sales, customer interface
and operations functions relating thereto.
"PCS Auction" means the series of simultaneous multiple
round auctions for broadband PCS licenses to be conducted by the
FCC under the authority of Section 309(j) of the Communications
Act of 1934, 47 U.S.C. 309(j) (1993), in accordance with the
rules promulgated thereunder by the FCC.
"Percentage Interest" means, with respect to any
Partner as of any relevant date, the ratio (expressed as a
percentage) of the sum of such Partner's Original Capital
Contribution and aggregate Additional Capital Contributions as of
such date to the sum of the aggregate Original Capital
Contributions and Additional Capital Contributions of all
Partners as of such date; provided, however, that if any Partner
fails for any reason to make its Requested Contribution or any
Preemptive Contribution after such time as the aggregate amount
of Original Capital Contributions and Additional Capital
Contributions made or requested to be made in accordance with
this Agreement (including any Additional Capital Contribution
then being made or requested, but excluding any PioneerCo
Contribution) first equals Five Billion Dollars ($5,000,000,000),
then effective as of the Contribution Date for such Requested
Contribution or, with respect to any Preemptive Contribution, the
applicable PioneerCo Contribution Date, and at all times
thereafter, the Percentage Interest of each Partner shall be
determined in accordance with Section 2.4(d)(ii). Additional
Capital Contributions of Premium Dollars pursuant to Section
2.4(a)(v) shall be valued at their Premium Dollar value for
purposes of calculating Percentage Interests. Such Capital
Contributions will be determined after giving effect to all
Capital Contributions made prior to and on the date as of which
the determination of Percentage Interests is made, subject to the
provisions regarding the adjustment of Percentage Interests set
forth in Section 2.4(d). In the event all or any portion of an
Interest is Transferred in accordance with the terms of this
Agreement, the transferee shall succeed to the Percentage
Interest of the transferor to the extent it relates to the
Transferred Interest. In the case of an adjustment of Gross
Asset Value pursuant to clause (ii) of the definition of such
term or an adjustment of Percentage Interests pursuant to Section
2.4(d)(ii), any references in Section 3 to "Percentage Interest"
shall be deemed to refer to the Percentage Interests of the
Partners as of the day immediately preceding the date of any such
adjustment.
"Permitted Brand" means a trademark, trade name,
service mark and/or logo of a Cable Partner, Teleport or their
respective Controlled Affiliates, other than any trademark, trade
name, service mark or logo of any RBOC or IXC (as each such term
is defined in the form of Parents Agreement attached as Exhibit
1.10(b)).
"Permitted Transaction" with respect to a Partner means
a transaction or series of related transactions in which (i) such
Partner ceases to be a Subsidiary of its Parent or such Partner
Transfers its Interest to a Person that is not a Controlled
Affiliate of such Partner and (ii) the new Parent of such Partner
(or such Partner if it is its own Parent) or the Parent of the
transferee of the Interest after giving effect to such
transaction, or the last transaction in a series of related
transactions, owns, directly and indirectly through its
Controlled Affiliates, all or a Substantial Portion of the cable
television system assets (in the case of a Cable Partner) or long
distance telecommunications business assets (in the case of
Sprint) owned by the Parent of such Partner, directly and
indirectly through its Controlled Affiliates, immediately prior
to the commencement of such transaction or series of
transactions. As used herein, "Substantial Portion" means (x) in
the case of a Cable Partner, cable television systems serving 75%
or more of the aggregate number of basic subscribers served by
cable television systems in the United States of America
(including its territories and possessions other than Puerto
Rico) owned by the Parent of such Cable Partner, directly and
indirectly through its Controlled Affiliates, and (y) in the case
of Sprint, long distance telecommunications business assets
serving 75% or more of the aggregate number of customers served
by the long distance telecommunications business in the United
States of America (including its territories and possessions
other than Puerto Rico) owned by the Parent of Sprint, directly
and indirectly through its Controlled Affiliates.
"Person" means any individual, partnership,
corporation, trust, or other entity.
"PioneerCo" means the Delaware limited partnership to
be formed by Cox Pioneer Partnership and WirelessCo to own the
Cox Pioneer Preference License and to operate a Wireless Business
in connection therewith.
"PioneerCo Contribution" means a Capital Contribution
of all or any portion of Cox Pioneer Partnership's interest in
PioneerCo as contemplated under Section 8.10.
"PioneerCo Contribution Date" means a date on which a
PioneerCo Contribution is made.
"PioneerCo Partnership Agreement" means the Agreement
of Limited Partnership of PioneerCo to be entered into between
WirelessCo and Cox Pioneer Partnership.
"Planned Capital Amount" means, with respect to the
first Fiscal Year in the Initial Two-Year Period, $1,131,000,000,
and with respect to the last Fiscal Year in the Initial Two-Year
Period, $767,000,000, as such amount may be revised by the
Unanimous Vote of the Partnership Board or reduced pursuant to
Section 2.3(b)(i).
"Premium Call" means a Second Tranche Call that has
been converted by a Simple Majority Vote of the Partnership Board
to a Premium Call pursuant to Section 2.4(a)(v).
"Premium Call Contribution Date" has the meaning set
forth in the definition of "Premium Call Notice."
"Premium Call Notice" means a written notice given to
all Partners, which shall state (i) the amount of the Second
Tranche Call originally requested in the corresponding Additional
Contribution Notice, (ii) that such Second Tranche Call has been
converted to a Premium Call, (iii) the Premium Dollar amount for
each dollar to be contributed in response to the Premium Call
Notice, (iv) the date upon which the Premium Call contributions
are to be made (the "Premium Call Contribution Date"), which date
shall not be more than forty-five (45) days nor less than thirty
(30) days after the date of such notice and (v) the account of
the Partnership to which such contribution is to be made.
"Premium Dollar" means, except as otherwise provided in
Section 2.4(a)(v), each dollar contributed by a Partner in
response to a Premium Call Notice or a Premium Call Shortfall
Notice, each of which dollars will be valued for the purposes of
calculating Percentage Interests at an amount equal to (i) one
dollar ($1.00) divided by (ii) the quotient of (x) the aggregate
Adjusted Net Equity of all Partners (provided that for purposes
of determining Adjusted Net Equity pursuant to this definition,
Gross Appraised Value shall be determined by a Simple Majority
Vote of the Partnership Board in connection with the giving of a
Premium Call Notice) divided by (y) the aggregate amount of the
Original Capital Contributions and Additional Capital
Contributions made to the Partnership prior to the date of the
Premium Call Notice.
"Prime Rate" means the rate announced from time to time
by Citibank, N.A. as its prime rate.
"Prior Year's Carryforward" means the amount by which
the aggregate amount of Additional Capital Contributions actually
requested of the Partners pursuant to Section 2.3(b)(i) with
Contribution Dates during the first Fiscal Year in the Initial
Two-Year Period was less than the Planned Capital Amount during
such Fiscal Year.
"Profits" and "Losses" means, for each Allocation Year,
an amount equal to the Partnership's taxable income or loss for
such Allocation Year, determined in accordance with Code Section
703(a) (for this purpose, all items of income, gain, loss, or
deduction required to be stated separately pursuant to Code
Section 703(a)(1) shall be included in taxable income or loss),
with the following adjustments (without duplication):
(i) Any income of the Partnership that is exempt
from federal income tax and not otherwise taken into account in
computing Profits or Losses pursuant to this definition of
"Profits" and "Losses" shall be added to such taxable income or
loss;
(ii) Any expenditures of the Partnership
described in Code Section 705(a)(2)(B) or treated as Code Section
705(a)(2)(B) expenditures pursuant to Regulations Section 1.704-
1(b)(2)(iv)(i), and not otherwise taken into account in computing
Profits or Losses pursuant to this definition of "Profits" and
"Losses," shall be subtracted from such taxable income or loss;
(iii) In the event the Gross Asset Value of any
Partnership asset is adjusted pursuant to subparagraph (ii) or
(iii) of the definition of Gross Asset Value, the amount of such
adjustment shall be taken into account as gain or loss from the
disposition of such asset for purposes of computing Profits or
Losses;
(iv) Gain or loss resulting from any disposition
of Property with respect to which gain or loss is recognized for
federal income tax purposes shall be computed by reference to the
Gross Asset Value of the Property disposed of, notwithstanding
that the adjusted tax basis of such Property differs from its
Gross Asset Value;
(v) In lieu of the depreciation, amortization,
and other cost recovery deductions taken into account in
computing such taxable income or loss, there shall be taken into
account Depreciation for such Allocation Year, computed in
accordance with the definition of Depreciation;
(vi) To the extent an adjustment to the adjusted
tax basis of any Partnership asset pursuant to Code Section
734(b) is required pursuant to Regulations Section 1.704-
1(b)(2)(iv)(m)(4) to be taken into account in determining Capital
Accounts as a result of a distribution other than in liquidation
of a Partner's Interest, the amount of such adjustment shall be
treated as an item of gain (if the adjustment increases the basis
of the asset) or loss (if the adjustment decreases the basis of
the asset) from the disposition of the asset and shall be taken
into account for purposes of computing Profits or Losses; and
(vii) Notwithstanding any other provision of
this definition of "Profits" or "Losses," any items which are
specially allocated pursuant to Section 3.3 or Section 3.4 shall
not be taken into account in computing Profits or Losses.
The amounts of the items of Partnership income, gain, loss or
deduction available to be specially allocated pursuant to
Sections 3.3 and 3.4 shall be determined by applying rules
analogous to those set forth in this definition of "Profits" and
"Losses."
"Property" means all real and personal property
acquired by the Partnership and any improvements thereto, and
shall include both tangible and intangible property.
"Publicly Held" means, with respect to any Person, that
such Person has a class of equity securities registered under
Section 12(b) or 12(g) of the Securities Exchange Act of 1934.
"Publicly Held Intermediate Subsidiary" means, with
respect to any Parent of a Partner, an Intermediate Subsidiary of
such Parent that is Publicly Held.
"Regulations" means the Income Tax Regulations,
including Temporary Regulations, promulgated under the Code.
"Representative" means an individual designated by a
General Partner as a member of the Partnership Board.
"Second Tranche Call" means the first Eight Hundred
Million Dollars ($800,000,000) of Additional Capital
Contributions requested in accordance with Section 2.3(b) after
the Cut-Off Time; provided that in no event may a Second Tranche
Call be made after December 31, 2002.
"Sprint Brand" means the trademark "Sprint" together
with the related "Diamond" logo.
"Sprint Cellular Service Area" means the areas serviced
as of October 24, 1994 by the cellular operations of Controlled
Affiliates of Sprint, as listed in Schedule 1.10(b).
"Sprint Communications" means Sprint Communications
Company, L.P., a Delaware limited partnership.
"Sprint Parent" means Sprint Corporation, a Kansas
corporation, and any successor (by merger, consolidation,
Transfer or otherwise) to all or substantially all of its
business and assets.
"State Statutes" means any business combination
statute, anti-takeover statute, fair price statute, control share
acquisition statute or any other state statute or regulation that
contains any similar prohibition, limitation, obligation,
restriction or other provision adopted and in effect in the
jurisdiction of organization of a Person that affects the rights
of any other Person that acquires a specified percentage
ownership interest in such Person without the consent or approval
of the board of directors or other governing body of such other
Person, and, includes (i) with respect to Cox Parent and TCI
Parent, Section 203 of the Delaware General Corporation Law; (ii)
with respect to Comcast Parent, Subchapters E, F and G of Chapter
25 of the Pennsylvania Business Corporation Law of 1988; and
(iii) with respect to Sprint Parent, Sections 17-12,100 and
17-1286 through 1298, et seq. of the Kansas Corporations Statute.
"Subsidiary" of any Person as of any relevant date
means a corporation, company or other entity (i) more than fifty
percent (50%) of whose outstanding shares or equity securities
are, as of such date, owned or controlled, directly or indirectly
through one or more Subsidiaries, by such Person, and the shares
or securities so owned entitle such Person and/or its
Subsidiaries to elect at least a majority of the members of the
board of directors or other managing authority of such
corporation, company or other entity notwithstanding the vote of
the holders of the remaining shares or equity securities so
entitled to vote or (ii) which does not have outstanding shares
or securities, as may be the case in a partnership, joint venture
or unincorporated association, but more than fifty percent (50%)
of whose ownership interest is, as of such date, owned or
controlled, directly or indirectly through one or more
Subsidiaries, by such Person, and in which the ownership interest
so owned entitles such Person and/or Subsidiaries to make the
decisions for such corporation, company or other entity.
"Subsidiary Partnership Property" means all property,
other than interests in other Subsidiary Partnerships, held by
any Subsidiary Partnership on the date on which the interests in
such Subsidiary Partnership are contributed to the Partnership.
"Substantial Portion" has the meaning set forth in the
definition of "Permitted Transaction."
"TCI Parent" means Tele-Communications, Inc., a
Delaware corporation, and any successor (by merger,
consolidation, Transfer or otherwise) to all or substantially all
of its business and assets.
"Technical Information" means all technical
information, regardless of form and however transmitted and shall
include, among other forms, computer software, including computer
program code, and system and user documentation, drawings,
illustrations, diagrams, reports, designs, specifications,
formulae, know-how, procedural protocols and methods and manuals.
"Technical Information Rights" means all intellectual
property rights which protect or cover Technical Information.
"Teleport" means Teleport Communications Group Inc., a
Delaware corporation, TCG Partners, a New York general
partnership, and their respective Controlled Affiliates, as well
as each local joint venture that is managed by any of the
foregoing entities and in which the foregoing entities
collectively own an equity interest of at least thirty percent
(30%), and any successor (by merger, consolidation, Transfer or
otherwise) to all or substantially all of the business and assets
of any of the foregoing.
"Total Mandatory Contributions" of the Partners means
an amount equal to the sum of $4.2 billion plus the Agreed Values
of the License Contribution and the Omaha License.
"Trading Day" means, with respect to any security, a
day on which the principal national securities exchange on which
such security is listed or admitted to trading, or the Nasdaq
Stock Market, such security is listed or admitted to trading
thereon, is open for the transaction of business (unless such
trading shall have been suspended for the entire day) or, if such
security is not listed or admitted to trading on any national
securities exchange or the Nasdaq Stock Market, any day other
than a Business Day.
"Transfer" means, as a noun, any sale, exchange
assignment or transfer and, as a verb, to sell, exchange, assign
or transfer.
"Voluntary Bankruptcy" has the meaning set forth in the
definition of "Bankruptcy."
"Voting Percentage Interest" means, as of any date and
with respect to any Partner that as of such date is entitled to
designate one or more members of the Partnership Board, the ratio
(expressed as a percentage) of such Partner's Percentage Interest
to the aggregate Percentage Interests of all Partners that are
entitled to designate one or more members of the Partnership
Board.
"Wireless Affiliate" means any Person that is an
affiliate of the Partnership's Wireless Business by entering into
an Affiliation Agreement with WirelessCo.
"Wireless Business" means the business of providing
Wireless Exclusive Services.
"WirelessCo" means WirelessCo, L.P., the Delaware
limited partnership formed by the Partners pursuant to that
certain Agreement of Limited Partnership dated as of October 24,
1994, as amended and restated as of March 28, 1995 to cause
WirelessCo to become a Subsidiary of the Partnership.
"Wireless Exclusive Services" has the meaning set forth
in Schedule 1.10(a).
1.11 Additional Definitions.
<TABLE>
<CAPTION>
Defined Term Defined in
<C> <C>
"1933 Act" Section 5.9(a)
"Accelerated Contribution Amount" Section 2.3(b)(i)
"Accepting Offerees" Section 12.4(d)
"Accepting Partner Note" Section 12.7(e)
"Accepting Partners" Section 12.7(e)
"Additional Contribution Amount" Section 2.3(b)(i)
"Adjusted Net Equity" Section 2.4(d)(ii)
"Adjusted Percentage Interest" Section 2.4(a)(iv)
"Affiliation Agreement" Section 6.1(d)
"Agents" Section 6.6(a)
"Aggregate Contributions" Section 2.4(d)(iv)
"Annual Budget" Section 5.2(c)
"Approved Business Plan" Section 5.2(c)
"Attribution Cap" Section 8.11(a)(v)
"Base Value" Section 2.4(d)(iii)(A)
"Bidding Partner" Section 14.7(e)
"Blocking Limited Partner" Section 5.1(l)(ii)
"Brief" Section 5.8(a)(ii)
"Business Plan" Section 5.2(a)
"Business-Related Information" Section 8.12(b)
"Buy-Sell Price" Section 11.2(a)
"Cable Services" Section 8.3(b)
"Certificate" Section 1.5
"Comcast Area" Section 6.4(g)
"Competitive Activity" Section 6.1(a)
"Confidential Information" Section 6.6(a)
"Contributing Partner" Section 2.4(a)(ii)
"Control Notice" Section 12.5(b)
"Control Offer" Section 12.5(b)
"Control Offer Period" Section 12.5(b)
"Controlling Partner" Section 12.5(b)
"Covered Licensee" Section 8.11(a)(ii)
"Cure Date" Section 2.4(c)(iii)
"Damages" Section 11.1(a)
"Deadlock Event" Section 5.8(b)
"Declining Partner" Section 2.4(a)(i)
"Declined Accelerated Contribution" Section 2.3(b)(ii)(B)
"Default Budget" Section 5.2(d)
"Default Loan" Section 2.4(c)(ii)
"Default Loan Notice" Section 2.4(c)(ii)
"Defaulting Partner" Section 2.4(c)(i)
"Delinquent Partner" Section 2.4(b)
"Designated Matters" Section 8.14
"Election Notice" Section 11.2(a)
"Election Period" Section 11.2(b)
"Excess Contribution Amount" Section 2.3(b)(i)
"extension period" Section 12.6(f) and 12.7(e)
"Firm Offer" Section 12.4(b)
"Firm Offer Commencement Notice" Section 12.6(c)
"First Appraiser" Section 11.4
"First Offer Period" Section 12.7(c)
"First Offer Sale Notice" Section 12.7(e)
"First Public Appraiser" Section 12.6(a)
"Floating Rate" Section 2.4(f)
"Foreign Ownership Restriction" Section 8.11(a)(i)
"Foreign Ownership Safe Harbor" Section 8.11(a)(iv)
"Foreign Ownership Threshold" Section 8.11(a)(iii)
"Free to Sell Period" Section 12.4(f)
"Funding Commitment" Section 2.4(a)(ii)
"General Partner Percentage
Interests" Section 2.1
"Grace Period" Section 2.4(b)
"Gross Appraised Value" Section 11.4
"In-Territory Customers" Section 6.4(e)
"In-Territory Distributors" Section 6.4(e)
"Initial Business Plan" Section 5.2(a)
"Initial Offer" Section 14.7(e)
"Initial Participating Partner" Section 8.12(c)
"Initiating Partner" Section 8.12(b)
"Interested Person" Section 8.6
"Issuance Items" Section 3.3(h)
"Lending Commitment" Section 2.4(c)(ii)
"Lending Partner" Section 2.4(c)(ii)
"License Contribution" Section 2.3(a)(i)
"Liquidating Events" Section 14.1(a)
"Limited Partner Percentage
Interests" Section 2.1
"Loan Date" Section 2.4(c)(ii)
"Make-up Amount" Section 2.4(c)(iii)
"MajorCorp" Section 12.6(a)
"MajorCorp Stock" Section 12.6(a)
"Market Value" Section 12.7(g)
"Mediator" Section 5.8(a)(ii)
"Minimum Offering Amount" Section 12.6(a)
"Minimum Secondary Offering
Amount" Section 12.7(b)
"Net Equity" Section 11.3
"Net Equity Notice" Section 11.3
"Nextel" Section 6.4(f)
"Non-Adverse Partners" Section 11.1(a)
"Non-Selling Partners" Section 12.7(a)
"Notice Partner" Section 12.6(a)
"Offer" Section 6.1(c)
"Offered Interest" Section 12.4
"Offerees" Section 12.4(b)
"Offer Notice" Section 12.4(b)
"Offer Period" Section 12.4(c)
"Offer Price" Section 12.4(a)
"Offer Statement" Section 14.7(b)
"Ownership Restrictions" Section 8.11
"Overlap Cellular Area" Section 8.1
"Partner Loan" Section 2.7
"Partnership's Businesses" Section 6.4(b)
"Partnership Services" Section 8.3(b)
"Partnership Technical Information" Section 8.7
"Paying Partner" Section 2.4(a)(ii)
"Payment Default" Section 2.4(c)(i)
"Penalty Amount" Section 2.4(b)
"Permitted Period" Section 12.7(f)
"Permitted Transfer" Section 12.2
"PhillieCo" Section 6.3(e)
"PMCI Shares" Section 6.4(f)
"PMV Notice" Section 12.6(b)
"Preemptive Contribution" Section 2.3(c)
"Premium Call Shortfall Notice" Section 2.4(a)(v)
"Premium Call Paying Partner" Section 2.4(a)(v)
"Prior Partnership Agreement" Recitals
"Proposed Budget" Section 5.2(c)
"Proposed Business Plan" Section 5.2(c)
"Proprietary Technical Information" Section 8.12(b)
"Public Appraiser" Section 12.6(a)
"Public Market Value" Section 12.6(b)
"Public Offering" Section 5.9(c)
"purchase commitment" Section 11.2(b),
12.4(d), 12.6(e)
and 12.7(d)
"Purchase Notice" Section 11.2(b)
"Purchase Offer" Section 12.4(a)
"Purchaser" Section 12.4(a)
"Purchasing Partner" Section 11.2(b)
"Receiving Party" Section 6.6(a)
"Registered Offering" Section 12.7
"Registering Partner" Section 12.6(c)
"Registration Accepting Offerees" Section 12.6(e)
"Registration Firm Offer" Section 12.6(c)
"Registration Interest" Section 12.6(a)
"Registration Note" Section 12.6(f)
"Registration Notice" Section 12.6(a)
"Registration Offer" Section 12.7(b)
"Registration Offer Period" Section 12.6(d)
"Registration Offerees" Section 12.6(c)
"Registration Sale Notice" Section 12.6(f)
"Regulatory Allocations" Section 3.4
"Related Group" Section 5.1(c)
"Representative" Section 5.1(c)
"Requested Contribution" Section 2.3(b)(i)
"Requested Premium Call Contribution" Section 2.4(a)(v)
"Required Majority Vote" Section 5.1(j)
"Restricted Area" Section 8.14
"Restricted Time" Section 8.14
"Restricted Party" Section 6.6(a)
"Sale Notice" Section 12.4(e)
"Rule 144 Notice" Section 12.7(a)
"Rule 144 Offer" Section 12.7(a)
"Rule 144 Sale" Section 12.7
"Second Appraiser" Section 11.4
"Secondary Registration Notice" Section 12.7(b)
"Second Public Appraiser" Section 12.6(a)
"Section 5.1 Election Period" Section 5.1(l)(ii)
"Seller" Section 12.4
"Selling Partner" Section 12.7
"Senior Credit Agreement" Section 2.7
"Shortfall" Section 2.4(a)(ii)
"Shortfall Notice" Section 2.4(a)(ii)
"Simple Majority Vote Section 5.1(i)
"Special Contribution" Section 2.4(b)
"Sprint Cellular Business" Section 8.1
"Sprint LD" Section 8.3(b)
"Sprint LD Services" Section 8.3(b)
"Subsidiary Partnership" Section 3.7
"Tagalong Notice" Section 12.5(a)
"Tagalong Offer" Section 12.5(a)
"Tagalong Period" Section 12.5(a)
"Tagalong Purchaser" Section 12.5(a)
"Tagalong Transaction" Section 12.5(a)
"Tax Matters Partner" Section 10.3(a)
"Tendering Offeree" Section 12.6(f)
"Tendering Partner" Section 12.7(e)
"Third Appraiser" Section 12.4
"Third Party Provider" Section 8.14
"Timely Partner" Section 2.4(b)
"Trademark License" Section 8.2
"Transferring Partner" Section 12.5(a)
"Unanimous Partner Vote" Section 5.1(l)(i)
"Unanimous Vote" Section 5.1(k)
"Unfunded Shortfall" Section 2.3(b)(ii)(B)
"Unpaid Amount" Section 2.4(b)
"Unreturned Capital" Section 11.2(a)
</TABLE>
1.12 Terms Generally.
The definitions in Section 1.10 and elsewhere in this
Agreement shall apply equally to both the singular and plural
forms of the terms defined. Whenever the context may require,
any pronoun shall include the corresponding masculine, feminine
and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without
limitation." The words "herein", "hereof" and "hereunder" and
words of similar import refer to this Agreement (including the
Schedules) in its entirety and not to any part hereof unless the
context shall otherwise require. All references herein to
Articles, Sections, Exhibits and Schedules shall be deemed
references to Articles and Sections of, and Exhibits and
Schedules to, this Agreement unless the context shall otherwise
require. Unless the context shall otherwise require, any
references to any agreement or other instrument or statute or
regulation are to it as amended and supplemented from time to
time (and, in the case of a statute or regulation, to any
corresponding provisions of successor statutes or regulations).
Any reference in this Agreement to a "day" or number of "days"
(without the explicit qualification of "Business") shall be
interpreted as a reference to a calendar day or number of
calendar days. If any action or notice is to be taken or given
on or by a particular calendar day, and such calendar day is not
a Business Day, then such action or notice shall be deferred
until, or may be taken or given on, the next Business Day.
SECTION 2. PARTNERS' CAPITAL CONTRIBUTIONS
2.1 Percentage Interests; Preservation of Percentages of
Interests Held as General Partners and as Limited
Partners.
The initial Percentage Interest of each Partner as of the
date of this Agreement is set forth on Schedule 2.1 and
represents the sum of the "General Partner Percentage Interest"
and "Limited Partner Percentage Interest" of such Partner as set
forth in such Schedule 2.1. Except as expressly provided in this
Agreement, or as may result from a Transfer of Interests required
or permitted by this Agreement, the Percentage Interest of a
Partner shall not be subject to increase or decrease without such
Partner's prior consent. For purposes of this Agreement, each
Partner is treated as though it holds a single Interest, even
though such Partner (unless and until it becomes an Exclusive
Limited Partner) holds ninety-nine percent (99.0%) of its
Interest as a General Partner and one percent (1.0%) of its
Interest as a Limited Partner. Each Partner, unless and until it
becomes an Exclusive Limited Partner, will hold ninety-nine
percent (99.0%) of its Interest as a General Partner and one
percent (1.0%) of its Interest as a Limited Partner and the
amount of any Capital Contributions made by a Partner pursuant to
Section 2 and any allocations and distributions to a Partner
pursuant to Section 3 or Section 4 shall, except as otherwise
provided therein, be allocated ninety-nine percent (99.0%) to the
Interest held by the Partner as a General Partner and one percent
(1.0%) to the Interest held by the Partner as a Limited Partner.
In the event that a Partner Transfers all or any portion of its
Interest pursuant to this Agreement, ninety-nine percent (99.0%)
of the aggregate Interest so acquired by any Person shall be
treated as attributable to the Interest held by the transferring
Partner as a General Partner and one percent (1.0%) of the
aggregate Interest so acquired shall be treated as attributable
to the Interest held by the transferring Partner as a Limited
Partner. In the event that the Interest of a Partner is
otherwise increased or decreased pursuant to this Agreement, the
amount of the increase or decrease, as the case may be, shall be
allocated ninety-nine percent (99.0%) to the Interest held by
such Partner as a General Partner and one percent (1.0%) to the
Interest held by such Partner as a Limited Partner.
2.2 Partners' Original Capital Contributions.
The Original Capital Contribution of each Partner consists
of the contributions of cash and Property made by such Partner
pursuant to the terms of the Prior Partnership Agreement prior to
January 1, 1996.
2.3 Additional Capital Contributions.
(a) Contributions of Certain Property by Cox.
(i) License Contribution by Cox. Cox shall
contribute to the Partnership an undivided fractional interest in
the Cox Pioneer Preference License and certain associated assets
(the "License Contribution"), which the Partnership in turn shall
contribute through its Subsidiaries to the capital of PioneerCo.
Such contribution shall be made concurrently with the
contribution by Cox Pioneer Partnership to PioneerCo of the
remaining undivided fractional interest in the Cox Pioneer
Preference License and such associated assets, which shall be
made at the date and time provided in, and in accordance with,
the PioneerCo Partnership Agreement. For purposes hereof, such
contributions to the Partnership and then to PioneerCo may be
effected through the direct conveyance by Cox Parent of the Cox
Pioneer Preference License to PioneerCo. The Agreed Value of the
License Contribution shall be credited against the next
Additional Capital Contribution to be made in cash by Cox under
this Agreement to the same extent as if Cox had contributed cash
in the amount of such Agreed Value, and until so credited the
License Contribution shall not constitute an Additional Capital
Contribution for purposes of this Agreement.
(ii) Omaha License Contribution by Cox. As soon
as practicable (taking into account any FCC approval that may be
required in connection with such contribution) following the
divestiture by Sprint and its Controlled Affiliates of their
ownership interests in the Sprint Cellular Businesses, Cox shall
contribute the Omaha License to the Partnership. The Agreed
Value of the Omaha License shall be credited against the next
Additional Capital Contribution to be made in cash by Cox under
this Agreement to the same extent as if Cox had contributed cash
in the amount of such Agreed Value, and until so credited the
contribution of the Omaha License shall not constitute an
Additional Capital Contribution for purposes of this Agreement.
(b) Additional Capital Contributions of Cash.
(i) Additional Cash Contributions Generally.
Subject to the limitations of this Agreement, the Partnership
Board (or the Chief Executive Officer pursuant to (x) the
authority to be granted in each Annual Budget to make requests
for Additional Capital Contributions in the amounts, during the
periods and subject to the limitations set forth therein, and (y)
such authority as may be delegated to the Chief Executive Officer
from time to time by the Partnership Board (which delegation may
occur only by a vote of the members of the Partnership Board
required to take the action so delegated)) may in accordance with
the following procedures request the Partners to make Additional
Capital Contributions to the Partnership in cash from time to
time to fund the cash needs of the Partnership in conformity with
the Annual Budget then in effect, as it may be modified from time
to time in accordance with this Agreement. The aggregate amount
of the Additional Capital Contributions requested pursuant to
this Section 2.3(b)(i) to be made as of any Contribution Date
(the "Additional Contribution Amount") (A) shall be set forth in
an Additional Contribution Notice given to each Partner, (B)
shall not exceed the amount reasonably anticipated by the
Partnership Board to be required to fund the cash needs of the
Partnership for the ensuing six (6) months or such shorter period
as may be determined by the Partnership Board, and (C) when added
to the Additional Contribution Amounts stated in all prior
Additional Contribution Notices with Contribution Dates in the
then-current Fiscal Year, (I) shall not exceed the cumulative
amount of Additional Capital Contributions contemplated to be
required of the Partners during such Fiscal Year as set forth in
the Annual Budget for such Fiscal Year unless otherwise approved
by a Required Majority Vote of the Partnership Board, and (II) if
such Fiscal Year falls within the Initial Two-Year Period, also
shall not exceed, unless otherwise approved by a Unanimous Vote
of the Partnership Board, (a) with respect to the first Fiscal
Year in the Initial Two-Year Period, the product of (1) 150%
times (2) the Planned Capital Amount for such Fiscal Year, and
(b) with respect to the last Fiscal Year in the Initial Two-Year
Period, the sum of (1) the product of (x) 150% times (y) the
Planned Capital Amount for such Fiscal Year (provided that the
amount determined in accordance with this clause (y) will be
decreased by any portion thereof the payment of which the
Partnership Board has previously determined as provided below to
accelerate into the first Fiscal Year in the Initial Two-Year
Period), plus (2) 100% of any Prior Year's Carryforward. For
purposes of this Agreement, amounts contributed on or after
January 1, 1996 pursuant to Section 2.3 of the Prior Partnership
Agreement shall be deemed to be Additional Capital Contributions
made pursuant to an Additional Contribution Notice under this
Section 2.3(b)(i).
To the extent that the cumulative Additional Contribution
Amounts stated in Additional Contribution Notices pursuant to
this Section 2.3(b)(i) with Contribution Dates in any given
Fiscal Year in the Initial Two-Year Period exceed (i) with
respect to the first Fiscal Year in the Initial Two-Year Period,
the Planned Capital Amount for such Fiscal Year and (ii) with
respect to the last Fiscal Year in the Initial Two-Year Period,
the sum of (A) the Planned Capital Amount for such Fiscal Year
plus (B) any Prior Year's Carryforward minus (C) any portion of
such Planned Capital Amount that was accelerated to the prior
Fiscal Year, such excess shall constitute an "Excess Contribution
Amount." The Partnership Board may by Required Majority Vote
designate any Excess Contribution Amount with a Contribution Date
in the first Fiscal Year of the Initial Two-Year Period as an
"Accelerated Contribution Amount." The amount of any Excess
Contribution Amount that the Partnership Board may designate as
an Accelerated Contribution Amount pursuant to the preceding
sentence shall not exceed the Planned Capital Amount for the last
Fiscal Year in the Initial Two-Year Period (after giving effect
to any reduction to such Planned Capital Amount pursuant to the
following sentence with respect to any prior Excess Contribution
Amount). Any Accelerated Contribution Amount will be applied to
reduce the Planned Capital Amount for the last Fiscal Year in the
Initial Two-Year Period.
The amount of the Additional Capital Contribution requested
of any Partner pursuant to this Section 2.3(b)(i) in an
Additional Contribution Notice (the "Requested Contribution")
shall be equal to (i) with respect to Requested Contributions
with Contribution Dates during any Fiscal Year in the Initial
Two-Year Period, that amount which represents the same
percentage of the Additional Contribution Amount specified in
such Additional Contribution Notice as such Partner's initial
Percentage Interest and (ii) with respect to Requested
Contributions with Contribution Dates during any Fiscal Year
after the end of the Initial Two-Year Period, that amount which
represents the same percentage of the Additional Contribution
Amount specified in such Additional Contribution Notice as such
Partner's Percentage Interest as of the date of such Additional
Contribution Notice; provided that if the aggregate amount of the
Original Capital Contributions and Additional Capital
Contributions made or requested to be made (excluding any
PioneerCo Contribution) prior to the end of the Initial Two-Year
Period is less than the Total Mandatory Contributions, then the
Requested Contributions of each Partner shall continue to be the
same percentage of the Additional Contribution Amounts as such
Partner's initial Percentage Interest until the Cut-Off Time.
(ii) Mandatory Additional Capital Contributions.
(A) No Partner may decline to make any of its
Requested Contributions unless, and then only to the extent that,
(I) with respect to Requested Contributions with Contribution
Dates during any Fiscal Year in the Initial Two-Year Period, the
amount of the Requested Contribution of such Partner, when added
to the sum of (a) the cumulative amount of all Requested
Contributions theretofore requested of and made by such Partner
during the same Fiscal Year plus (b) the amount of any Preemptive
Contribution made by such Partner during the same Fiscal Year,
would exceed the sum of (x) such Partner's Capital Commitment
with respect to such Fiscal Year and (y) the product of such
Partner's initial Percentage Interest times any Excess
Contribution Amount for such Fiscal Year if and to the extent
that such Partner's Representative(s) voted for approval of the
Annual Budget pursuant to which the Excess Contribution Amount is
being requested or voted in favor of requesting (or delegating to
the Chief Executive Officer the authority to request) such Excess
Contribution Amount, and (II) with respect to Requested
Contributions with Contribution Dates during any Fiscal Year
after the Initial Two-Year Period, none of such Partner's
Representative(s) voted for approval of the Annual Budget that
provides for the Additional Contribution Amount being requested
and none of such Partner's Representatives voted in favor of
requesting (or delegating to the Chief Executive Officer the
authority to request) such Additional Contribution Amount or such
Partner was an Exclusive Limited Partner at the time of such
vote. Notwithstanding the preceding sentence, a Partner will not
be entitled to decline to make any Requested Contribution with a
Contribution Date during the last Fiscal Year in the Initial Two-
Year Period or in any Fiscal Year thereafter covered by the
Initial Business Plan except to the extent such Requested
Contribution, when added to the aggregate amount of Original
Capital Contributions and Additional Capital Contributions made
or requested to be made by such Partner (excluding any PioneerCo
Contribution) prior to the Contribution Date of such Requested
Contribution, exceeds such Partner's Mandatory Contribution.
(B) Subject to Section 2.3(b)(ii)(A), if a
Partner was a Declining Partner with respect to an Accelerated
Contribution Amount (with respect to any such Partner, its
"Declined Accelerated Contribution"), then, to the extent that
there is a Shortfall in connection with a Requested Contribution
with a Contribution Date during the last Fiscal Year in the
Initial Two-Year Period that is not fully allocated to one or
more Contributing Partners pursuant to Section 2.4(a) (an
"Unfunded Shortfall"), such Partner shall be required to make an
Additional Capital Contribution to the Partnership up to an
amount equal to such Partner's initial Percentage Interest of the
portion of the Planned Capital Amount set forth in the Initial
Business Plan for such last Fiscal Year that was accelerated to
the prior Fiscal Year (but only to the extent of such Declined
Accelerated Contribution and, if there is more than one such
Partner, pro rata in proportion to the aggregate amounts of the
previously unfunded Declined Accelerated Contributions of each
such Partner). Any such required Additional Capital Contribution
shall be contributed by such Partner within ten (10) days of
notice to such Partner by the Chief Executive Officer that there
exists an Unfunded Shortfall with respect to which such Partner
is required to make an Additional Capital Contribution pursuant
to the preceding sentence, which notice shall set forth the
amount of the Additional Capital Contribution required of such
Partner and the applicable Contribution Date and shall otherwise
constitute an Additional Contribution Notice for purposes of this
Agreement.
(c) Additional Contributions Related to PioneerCo
Preemptive Rights. Each of the Partners (other than Cox) may
make Additional Capital Contributions to the Partnership as and
to the extent permitted by Section 8.10 (each a "Preemptive
Contribution").
2.4 Failure to Contribute Capital.
(a) Declining Partners.
(i) Any Partner that is entitled to decline to
make a Requested Contribution as provided in Section 2.3(b)(ii)
may do so by notice given to the Chief Executive Officer (with a
copy to the Partnership Board) within fifteen (15) days of the
date the applicable Additional Contribution Notice was given (any
such Partner that timely exercises such right is herein referred
to as a "Declining Partner").
(ii) If any Partner is a Declining Partner with
respect to an Additional Contribution Notice and the Partnership
Board does not give a Premium Call Notice pursuant to Section
2.4(a)(v), the Chief Executive Officer shall, within five (5)
days after the date notice was required to be received under
Section 2.4(a)(i), give a notice (a "Shortfall Notice") to each
Partner that made its Requested Contribution in full (each a
"Paying Partner") requesting the Paying Partners to make
Additional Capital Contributions in an aggregate amount equal to
the amount not contributed by the Declining Partner(s) in
response to such Additional Contribution Notice (the
"Shortfall"). Each Paying Partner that is willing to commit to
fund all or any portion of the Shortfall (each a "Contributing
Partner") shall so notify the Chief Executive Officer and each
other Paying Partner within ten (10) days after the date the
Shortfall Notice was given, setting forth the maximum amount of
the Shortfall, up to one hundred percent (100%) thereof, that
such Contributing Partner is willing to fund (the "Funding
Commitment"). Except as otherwise provided in Section
2.4(a)(iii), if the aggregate Funding Commitments are less than
or equal to one hundred percent (100%) of the Shortfall, each
Contributing Partner shall be entitled to make an Additional
Capital Contribution to the Partnership in response to a
Shortfall Notice in an amount equal to its Funding Commitment.
If the aggregate Funding Commitments made by the Contributing
Partners exceed one hundred percent (100%) of the Shortfall, then
except as otherwise provided in Section 2.4(a)(iii), each
Contributing Partner shall be entitled to contribute an amount
equal to the same percentage of the Shortfall as such
Contributing Partner's Percentage Interest represents of the
total Percentage Interests of the Contributing Partners (in each
case before giving effect to any adjustments to the Percentage
Interests to be made in connection with the Additional
Contribution Notice with respect to which the Shortfall
occurred), provided that, if any Contributing Partner's Funding
Commitment was for an amount less than its proportionate share of
the Shortfall as so determined, the portion of the Shortfall not
so committed to be funded shall, except as otherwise provided in
Section 2.4(a)(iii), continue to be allocated proportionally, in
the manner provided above in this sentence, among the other
Contributing Partners until each has been allocated by such
process of apportionment an amount equal to its Funding
Commitment or until the entire Shortfall has been allocated among
the Contributing Partners. The amount of the Additional Capital
Contribution to be made by each Contributing Partner in response
to the Shortfall Notice as determined in accordance with this
Section 2.4(a)(ii) shall be specified in a notice delivered by
the Chief Executive Officer to the Contributing Partners and
shall, within ten (10) days after the date of such notice, be
paid to the account of the Partnership designated in the
Shortfall Notice.
(iii) Except as otherwise provided in Section
2.4(a)(iv), if the Declining Partner is a Cable Partner and no
Cable Partner's Percentage Interest, when added to the Percentage
Interests of all Controlled Affiliates of such Partner, is equal
to or greater than Sprint's Percentage Interest, when added to
the Percentage Interests of all Controlled Affiliates of Sprint
(in each case determined without regard to any Additional Capital
Contribution made by any Partner pursuant to the Additional
Contribution Notice with respect to which the Shortfall
occurred), the Shortfall shall be allocated first among those of
the Contributing Partners that are Cable Partners in the manner
provided in Section 2.4(a)(ii) as though Sprint were not a
Contributing Partner, and if and to the extent that the aggregate
Funding Commitments made by such Cable Partners are less than one
hundred percent (100%) of the Shortfall, the balance of the
Shortfall up to Sprint's Funding Commitment shall be allocated to
Sprint.
(iv) The Shortfall shall be allocated among the
Cable Partners in the manner set forth in Section 2.4(a)(iii)
until any Cable Partner would have a Percentage Interest, when
added to the Percentage Interests of all Controlled Affiliates of
such Partner, that is equal to Sprint's Percentage Interest, when
added to the Percentage Interests of all Controlled Affiliates of
Sprint, calculated in each case after giving effect to the
adjustments to the Percentage Interests to be made in connection
with the Additional Contribution Notice with respect to which the
Shortfall occurred assuming that the Additional Capital
Contributions to be made pursuant to this Section 2.4(a) were
made up to the aggregate amount that would yield such result (as
to each Partner, its "Adjusted Percentage Interest"). Any
portion of the Shortfall not yet allocated shall continue to be
allocated proportionately among all of the Contributing Partners
(including Sprint, if applicable) in the manner provided in
Section 2.4(a)(ii) without regard to Section 2.4(a)(iii), but
substituting the Adjusted Percentage Interests of the
Contributing Partners for the Percentage Interests that would
otherwise be used to determine such allocation, until each has
been allocated by such process an amount equal to its Funding
Commitment or until the entire Shortfall has been allocated among
the Contributing Partners.
(v) Notwithstanding the foregoing, if (A) any
Partner is a Declining Partner with respect to an Additional
Contribution Notice that requests a Second Tranche Call and (B)
the Partnership Board determines by Simple Majority Vote that the
aggregate Adjusted Net Equity of all Partners (provided that for
purposes of determining Adjusted Net Equity pursuant to this
Section 2.4(a)(v), Gross Appraised Value shall be determined by a
Simple Majority Vote of the Partnership Board) is less than the
aggregate amount of Original Capital Contributions and Additional
Capital Contributions made to the Partnership through the date of
the applicable Additional Contribution Notice (but excluding the
amount set forth in the Additional Contribution Notice), the
Partnership Board may elect to convert such Second Tranche Call
to a Premium Call by giving a Premium Call Notice (which shall
supercede such Additional Contribution Notice) to each Partner
within five (5) days after the date notice was required to be
received from the Declining Partner under Section 2.4(a)(i).
Each Partner, including the Declining Partner, shall have the
right to make an Additional Capital Contribution in response to a
Premium Call in an amount which represents the same percentage of
the amount of the Second Tranche Call requested in the Premium
Call Notice as such Partner's Percentage Interest as of the date
of such Premium Call Notice (the "Requested Premium Call
Contribution"). If each Partner makes its Requested Premium Call
Contribution, the amounts so contributed will not be treated as
Premium Dollars. If any Partner fails to make its Requested
Premium Call Contribution, then all amounts contributed pursuant
to this Section 2.4(a)(v) with respect to such Premium Call shall
be treated as Premium Dollars. In addition, if any Partner fails
to make its Requested Premium Call Contribution, the Chief
Executive Officer shall, within five (5) days after the Premium
Call Contribution Date, give a notice (a "Premium Call Shortfall
Notice") to each Partner that made its Requested Premium Call
Contribution in full (each a "Premium Call Paying Partner")
requesting the Premium Call Paying Partners to make Additional
Capital Contributions in an aggregate amount equal to the amount
not contributed by the Declining Partner (the "Premium Call
Shortfall"). The amount of the Premium Call Shortfall that each
Premium Call Paying Partner shall be entitled to make to the
Partnership in response to a Premium Call Shortfall Notice shall
be determined in the same manner as provided in Sections
2.4(a)(ii), (iii) and (iv) for the determination of the amount of
the Additional Capital Contribution that each Contributing
Partner is entitled to make in response to a Shortfall Notice.
The amount of the Premium Call Shortfall to be made by each
Premium Call Paying Partner in response to the Premium Call
Shortfall Notice as so determined shall be specified in a notice
delivered by the Chief Executive Officer to the Premium Call
Paying Partners and shall, within ten (10) days after the date of
such notice, be paid to the account of the Partnership designated
in the Premium Call Shortfall Notice and all amounts so paid
shall be treated as Premium Dollars. Any Partner that fails to
make a contribution in response to a Premium Call Notice shall
not be treated as a Delinquent Partner or a Defaulting Partner.
(b) Delinquent Partners. In the event that any Partner
other than a Declining Partner (a "Delinquent Partner") fails to
make all or any portion of its Requested Contribution on or
before the related Contribution Date, an additional amount shall
accrue as a penalty with respect to such unpaid amount (the
"Unpaid Amount") at the applicable Floating Rate from and
including the Contribution Date until the Unpaid Amount and the
full amount of the penalty accrued thereon (as of any date of
determination, the "Penalty Amount") are paid as provided in this
Section 2.4 or the failure to pay the same results in such
Partner becoming a Defaulting Partner. If the Delinquent Partner
pays the Unpaid Amount to the Partnership at any time during the
period ending at the close of business on the tenth (10th) day
following the related Contribution Date (the "Grace Period"), the
Delinquent Partner shall, at the time of such payment, pay to
each other Partner, if any, that made its Requested Contribution
in full on or before the related Contribution Date and has no
uncured Payment Defaults (each a "Timely Partner"), a pro rata
portion of the Penalty Amount (based on the percentage that the
amount of each Timely Partners' Requested Contribution represents
of the total amount of the Timely Partner's Requested
Contributions), but in no event more than the amount that such
Timely Partner would have earned as interest on the amount of its
Requested Contribution, from and including the Contribution Date
to the date the Delinquent Partner pays the Unpaid Amount to the
Partnership, if the Timely Partner had made a loan in such amount
to the Partnership with interest at the Floating Rate applicable
during the Grace Period. The balance of the Penalty Amount, if
any, shall be paid by the Delinquent Partner to the Partnership
and the amount so paid shall be deemed to be a "Special
Contribution" by the Delinquent Partner to the capital of the
Partnership. The portion of the Penalty Amount paid to the
Timely Partners shall not, for any purpose, be deemed to be a
Capital Contribution.
(c) Defaulting Partners.
(i) If a Delinquent Partner fails to pay the
Unpaid Amount together with the Penalty Amount to the Partnership
or the Timely Partners as provided in Section 2.4(b) on or before
the expiration of the Grace Period, such failure shall constitute
a "Payment Default" and, if such Payment Default is not
thereafter cured in full as provided in Section 2.4(c)(iii), the
Delinquent Partner shall for all purposes hereof be considered a
"Defaulting Partner" with the effect described herein.
(ii) If a Payment Default occurs, the Chief
Executive Officer shall, within five (5) days after the
expiration of the related Grace Period, give a notice (a "Default
Loan Notice") to each Partner that was a Paying Partner with
respect to such Additional Contribution Notice requesting the
Paying Partners to make loans (each a "Default Loan") to the
Partnership in an aggregate amount equal to the Unpaid Amount.
Each Paying Partner that is willing to commit to make a Default
Loan (each a "Lending Partner") shall so notify the Chief
Executive Officer and each other Paying Partner within ten (10)
days after the date the Default Loan Notice was given, setting
forth the maximum portion of the Unpaid Amount, up to one hundred
percent (100%) thereof, that such Lending Partner is willing to
lend to the Partnership (the "Lending Commitment"). The amount
of the Default Loan that each Lending Partner shall be entitled
to make to the Partnership in response to a Default Loan Notice
shall be determined in the same manner as provided in Section
2.4(a) for the determination of the amount of the Additional
Capital Contribution that each Contributing Partner is entitled
to make in response to a Shortfall Notice. The amount of the
Default Loan to be made by each Lending Partner in response to
the Default Loan Notice as so determined shall be specified in a
notice delivered by the Chief Executive Officer to the Lending
Partners and within ten (10) days of the date of such notice
shall be paid to the account of the Partnership designated in the
Default Loan Notice. Each Default Loan shall bear interest from
the date made (the "Loan Date") until paid in full or contributed
to the Partnership as provided in this Section 2.4 at the
Floating Rate applicable following the Grace Period and shall be
evidenced by a promissory note of the Partnership in the form of
Exhibit 2.4(c)(ii) (with any changes thereto requested by any
lender under any Senior Credit Agreement and consented to by the
Lending Partner, which consent shall not be unreasonably
withheld).
(iii) A Delinquent Partner may cure its Payment
Default at any time prior to the close of business on the
ninetieth (90th) day following the Loan Date (the "Cure Date") by
transferring to an account of the Partnership designated by the
Chief Executive Officer cash in an amount equal to the sum of the
Unpaid Amount and the Penalty Amount accrued thereon to the date
of such transfer (the "Make-up Amount"). The portion of the
Make-up Amount equal to the Penalty Amount shall be deemed to be
a Special Contribution by the Delinquent Partner to the
Partnership and the balance thereof shall constitute an
Additional Capital Contribution by the Delinquent Partner to the
Partnership. The Chief Executive Officer shall cause the
Partnership to apply the funds so received from the Delinquent
Partner to the payment in full of the unpaid principal of and
accrued interest on each Default Loan in accordance with the
terms of the note evidencing the same.
(iv) If a Delinquent Partner has not timely
cured its Payment Default in full in accordance with Section
2.4(c)(iii), then the Lending Partners shall contribute their
respective Default Loans to the Partnership effective as of the
day following the Cure Date and surrender the notes evidencing
the same to the Partnership for cancellation. The unpaid
principal amount of a Lending Partner's Default Loan through the
Cure Date shall constitute an Additional Capital Contribution
(and the accrued interest on such Default Loan shall constitute a
Special Contribution) by the Lending Partner to the Partnership
as of the effective date of such contribution.
(d) Adjustments to Percentage Interests. The
Percentage Interests of the Partners shall be adjusted in
accordance with this Section 2.4(d). The Partnership Board shall
provide notice of each adjustment to all Partners and Schedule
2.1 shall be revised to reflect such adjustment.
(i) Except as otherwise provided in clause (ii) of
this Section 2.4(d), the Percentage Interests of the Partners
shall be adjusted in accordance with the definition of
"Percentage Interest" to give effect to Additional Capital
Contributions made (or deemed to be made) pursuant to Section
2.3, Section 2.5 (if applicable) and this Section 2.4, provided
that if there are any Declining Partners or Delinquent Partners
with respect to any Additional Contribution Notice, the
determination of the amount of the adjustment of the Percentage
Interests for Additional Capital Contributions made in response
to such notice will be deferred until the later of the last day
for the making of Additional Capital Contributions in connection
with any Shortfall and the expiration of the Grace Period,
provided, however, that such adjustment, whenever determined,
shall be effective as of the Contribution Date. The Percentage
Interests of the Partners will be further adjusted as and when
Additional Capital Contributions, if any, are made as
contemplated by clause (iii) or (iv), as applicable, of Section
2.4(c).
(ii) If any Partner fails for any reason (x) to
make its Requested Contribution with respect to an Additional
Contribution Notice that requests Additional Capital
Contributions in an amount that, when added to the aggregate
amount of Original Capital Contributions and Additional Capital
Contributions made or requested to be made in accordance with
this Agreement (excluding any PioneerCo Contribution), would
exceed Five Billion Dollars ($5,000,000,000), or (y) to make a
Preemptive Contribution at such time as the aggregate amount of
Original Capital Contributions and Additional Capital
Contributions made or requested to be made in accordance with
this Agreement (excluding any PioneerCo Contribution but
including all Preemptive Contributions made or to be made in
connection with the PioneerCo Contribution with respect to which
such Partner failed to make its Preemptive Contribution) exceed
Five Billion Dollars ($5,000,000,000), the Percentage Interests
of the Partners shall be adjusted and thereafter determined in
accordance with this Section 2.4(d)(ii). Such determination
shall be made on the later of the last day for the making of
Additional Capital Contributions in connection with any Shortfall
and the tenth (10th) day following the applicable Contribution
Date (or, with respect to a Preemptive Contribution, such other
date as may be determined by the Partnership Board in connection
with the related PioneerCo Contribution) and shall be effective
as of the Contribution Date (or, with respect to a Preemptive
Contribution, the applicable PioneerCo Contribution Date). The
adjusted Percentage Interest of a Partner shall be equal to a
fraction (expressed as a percentage) the numerator of which shall
be the sum of (A) the Adjusted Net Equity of such Partner plus
(B) either (1) with respect to a Requested Contribution, the
Additional Capital Contribution made by such Partner with respect
to such Additional Contribution Notice (including any Additional
Capital Contributions made by such Partner in connection with any
Shortfall) or (2) with respect to a Preemptive Contribution, the
Preemptive Contribution or PioneerCo Contribution made by such
Partner, as applicable, and the denominator of which shall be the
sum of (C) the aggregate Adjusted Net Equity of all Partners plus
(D) either (i) with respect to a Requested Contribution, the
aggregate Additional Capital Contributions made by all Partners
with respect to such Additional Contribution Notice (including
any Additional Capital Contributions made in connection with any
Shortfall) or (2) with respect to a Preemptive Contribution, the
aggregate Preemptive Contributions made by all Partners and the
PioneerCo Contribution to which such Preemptive Contributions
relate. The "Adjusted Net Equity" of a Partner shall be the
amount that would be distributed as of the applicable
Contribution Date or PioneerCo Contribution Date to such Partner
in liquidation of the Partnership pursuant to Section
14.2(a)(iii) if (I) all of the Partnership's business and assets
(including its partnership interests in WirelessCo, but excluding
the amounts of any Additional Capital Contributions made pursuant
to such Additional Contribution Notice or, with respect to a
Preemptive Contribution, the Preemptive Contributions and
PioneerCo Contribution to which such Preemptive Contribution
relates) were sold substantially as an entirety for Gross
Appraised Value (determined in accordance with Section
2.4(d)(iii)), (II) Profits and Losses and items specially
allocated in accordance with Sections 3.3 and 3.4 for the
Allocation Year ending on the date of such determination,
including any gain or loss resulting from the deemed sale
described in clause (I), were allocated in accordance with
Section 3, (III) the Partnership paid its accrued, but unpaid,
liabilities and established reserves pursuant to Section 14.2 for
the payment of reasonably anticipated contingent or unknown
liabilities and (IV) the Partnership distributed the remaining
proceeds to the Partners in liquidation, all as of such
Contribution Date or applicable PioneerCo Contribution Date.
(iii) (A) Except as otherwise will be provided in
the PioneerCo Partnership Agreement to reflect the principles set
forth in Item 8(c) of Exhibit 1.1(b) to the Joint Venture
Formation Agreement, whenever Adjusted Net Equity is required to
be determined pursuant to Section 2.4(d)(ii), Gross Appraised
Value shall be determined by the Partnership Board by a Simple
Majority Vote based upon the most recent determination of Gross
Appraised Value (the "Base Value") pursuant to Section
2.4(d)(iii)(B). In making its determination of Gross Appraised
Value pursuant to this Section 2.4(d)(iii)(A), the Partnership
Board shall adjust the Base Value for any Capital Contributions
by and distributions to the Partners and for the operating
results and other transactions of the Partnership from the date
as of which the Base Value was determined to the applicable
Contribution Date.
(B) Gross Appraised Value shall be determined
as of December 31 of the Fiscal Year immediately preceding the
Fiscal Year in which the amount of Additional Capital
Contributions contemplated under the Annual Budget (or Default
Budget, if applicable) for the forthcoming Fiscal Year, when
added to the aggregate amount of Original Capital Contributions
and Additional Capital Contributions theretofore made or
requested to be made in accordance with this Agreement (excluding
any PioneerCo Contribution), would exceed Five Billion Dollars
($5,000,000,000), and thereafter shall be determined as of
December 31 of each Fiscal Year. Gross Appraised Value shall be
determined as provided in Section 11.4, and the General Partner
that (together with its Controlled Affiliates) holds the largest
Voting Percentage Interest shall designate the First Appraiser
not less than twenty (20) days prior to the date as of which
Gross Appraised Value is to be determined, and the General
Partner that (together with its Controlled Affiliates) holds the
smallest Voting Percentage Interest shall appoint the Second
Appraiser within ten (10) Business Days of receiving notice of
the appointment of the First Appraiser. The Partnership Board
shall, by Simple Majority Vote, estimate Gross Appraised Value
and the Adjusted Net Equity of the Partners from time to time as
necessary to comply with the notice requirement set forth in
clause (vi) of the definition of Additional Contribution Notice.
(iv) If any Requested Contributions are requested
to be made or any PioneerCo Contribution is made at such time as
the aggregate amount of Original Capital Contributions and
Additional Capital Contributions previously made in accordance
with this Agreement (excluding all PioneerCo Contributions)
(collectively, the "Aggregate Contributions") is less than Five
Billion Dollars ($5,000,000,000), but the aggregate amount of
such Requested Contributions or the aggregate amount of
Preemptive Contributions permitted to be made pursuant to Section
2.3(c) in response to such PioneerCo Contribution, as applicable,
when added to the Aggregate Contributions, exceeds Five Billion
Dollars ($5,000,000,000), then any adjustment of the Percentage
Interests of the Partners pursuant to this Section 2.4(d) shall
be determined (A) with respect to that portion of the amount of
such Requested Contributions or Preemptive Contributions, as
applicable, that, when added to the Aggregate Contributions
equals Five Billion Dollars ($5,000,000,000), in accordance with
Section 2.4(d)(i), and (B) with respect to that portion of the
amount of such Requested Contributions or Preemptive
Contributions, as applicable, that, when added to the Aggregate
Contributions exceeds Five Billion Dollars ($5,000,000,000), in
accordance with Section 2.4(d)(ii).
(e) Paying Partners. A Paying Partner that declines to
make a Funding Commitment or Lending Commitment as contemplated
by this Section 2.4 shall not be deemed to be a Delinquent
Partner or Defaulting Partner as a result thereof, nor shall the
failure to make such a commitment constitute a Payment Default
with respect to such Partner.
(f) Floating Rate. Subject to the last two sentences
of Section 2.7(b), the term "Floating Rate" means the rate per
annum (computed on the basis of the actual number of days elapsed
in a year of 365 or 366 days, as applicable), compounded monthly,
equal to the greater of (i) the Prime Rate (adjusted as and when
changes in the Prime Rate occur) plus (x) during the Grace
Period, two percent (2%) and (y) following the Grace Period, five
percent (5%), and (ii) the rate per annum applicable to
borrowings by the Partnership under its principal credit
facility, if any, or, if a choice of rates is then available to
the Partnership, the highest such rate (in either case adjusted
as and when changes in such applicable rate occur) plus,
following the Grace Period, two percent (2%).
2.5 Other Additional Capital Contributions.
Each Partner may contribute from time to time such
additional cash or other Property as the Partnership Board may
approve by Unanimous Vote or as may be expressly contemplated by
this Agreement, provided that any Capital Contribution of
Property (other than cash or any PioneerCo Contribution) made
pursuant to this Section 2.5 shall be subject to the terms and
provisions of an Additional Contribution Agreement.
2.6 Partnership Funds.
The funds of the Partnership shall be deposited in such bank
accounts or invested in such investments as shall be designated
by the Partnership Board. Partnership funds shall not be
commingled with those of any Person other than any Subsidiary of
the Partnership in which the Partnership and MinorCo own, in the
aggregate, directly or indirectly, one hundred percent (100%) of
the outstanding equity interests, without a Unanimous Vote of the
Partnership Board. The Partnership shall not lend or advance
funds to, or guarantee any obligation of, a Partner or any
Affiliate thereof without the prior written consent of all
Partners.
2.7 Partner Loans; Other Borrowings.
(a) Partner Loans. In order to satisfy the
Partnership's financial needs, the Partnership may, if so
approved by the requisite vote of the Partnership Board, borrow
from (i) banks, lending institutions or other unrelated third
parties, and may pledge Partnership properties or the production
of income therefrom to secure and provide for the repayment of
such loans and (ii) any Partner or an Affiliate of a Partner.
Loans made by a Partner or an Affiliate of a Partner (a "Partner
Loan") shall be evidenced by a promissory note of the Partnership
in the form attached as Exhibit 2.7 and, subject to the last two
sentences of Section 2.7(b), shall bear interest payable
quarterly from the date made until paid in full at a rate per
annum to be determined by the Partnership Board that is no less
favorable to the Partnership than if the loan had been made by an
independent third party. Unless a Partner declines to make such
loan or is a Defaulting Partner or a Partner subject to
Bankruptcy, Partner Loans shall be made pro rata in accordance
with the respective Percentage Interests of the Partners (or in
such other proportion as the Partnership Board may approve by
Unanimous Vote).
(b) Terms of Partner Loans. Unless otherwise
determined by the Partnership Board, all Partner Loans and
Default Loans shall be unsecured and the promissory notes
evidencing the same shall be non-negotiable and, except as
otherwise provided in this Section 2.7 or Section 12.3(c),
nontransferable. Repayment of the principal amount of and
accrued interest on all Partner Loans and Default Loans shall be
subordinated to the repayment of the principal of and accrued
interest on any indebtedness of the Partnership to third party
lenders to the extent required by the applicable provisions of
the instruments creating such indebtedness to third party lenders
("Senior Credit Agreements"). All amounts required to be paid in
accordance with the terms of such notes and all amounts permitted
to be prepaid shall be applied to the notes held by the Partners
in accordance with the order of payment contemplated by Section
14.2(b)(ii) and (iii). Subject to the terms of applicable Senior
Credit Agreements, Partner Loans shall be repaid to the Partners
at such times as the Partnership has sufficient funds to permit
such repayment without jeopardizing the Partnership's ability to
meet its other obligations on a timely basis. Nothing contained
in this Agreement or in any promissory note issued by the
Partnership hereunder shall require the Partnership or any
Partner to pay interest or any amount as a penalty at a rate
exceeding the maximum amount of interest permitted to be
collected from time to time under applicable usury laws. If the
amount of interest or of such penalty payable by the Partnership
or any Partner on any date would exceed the maximum permissible
amount, it shall be automatically reduced to such amount, and
interest or the amount of the penalty for any subsequent period,
to the extent less than that permitted by applicable usury laws,
shall, to that extent, be increased by the amount of such
reduction.
(c) Purchase of Partner Loans. An election by a
Partner to purchase all or any portion of another Partner's
Interest pursuant to Sections 5.1, 6.4(f), 11, 12.4, 12.5, 12.6
or 14.7 shall also constitute an election to purchase an
equivalent portion of any outstanding Partner Loans held by such
selling Partner, and each purchasing Partner shall be obligated
to purchase a percentage of such Partner Loans equal to the
percentage of the selling Partner's Interest such purchasing
Partner is obligated to purchase for a price equal to the same
percentage of the outstanding principal and accrued and unpaid
interest on such Partner Loans through the date of the closing of
such purchase (except in the case of a Transfer pursuant to
Section 12.4, in which case the terms of the Purchase Offer shall
apply).
2.8 Other Matters.
(a) No Partner shall have the right to demand or,
except as otherwise provided in Sections 4.1 and 14.2, receive a
return of all or any part of its Capital Account or its Capital
Contributions or withdraw from the Partnership without the
consent of all Partners. Under circumstances requiring a return
of all or any part of its Capital Account or Capital
Contributions, no Partner shall have the right to receive
Property other than cash.
(b) Subject to Sections 5.4 and 14.3, the Exclusive
Limited Partners shall not be liable for the debts, liabilities,
contracts or any other obligations of the Partnership. Except as
otherwise provided by any other agreements among the Partners or
mandatory provisions of applicable state law, an Exclusive
Limited Partner shall be liable only to make Capital
Contributions to the extent required by Sections 2.3, 2.5 and
14.3 and shall not be required to lend any funds to the
Partnership or, after such Capital Contributions have been made,
to make any additional Capital Contributions to the Partnership.
(c) No Partner shall have any personal liability for
the repayment of any Capital Contributions of any other Partner.
(d) No Partner shall be entitled to receive interest on
its Capital Contributions or Capital Account except as otherwise
specifically provided in this Agreement.
SECTION 3. ALLOCATIONS
3.1 Profits.
After giving effect to the special allocations set forth in
Sections 3.3 and 3.4, Profits for any Allocation Year shall be
allocated in the following order and priority:
(a) First, one hundred percent (100%) to the Partners,
in proportion to, and to the extent of, an amount equal to the
excess, if any, of (i) the cumulative Losses allocated to each
such Partner pursuant to Section 3.5 for all prior Allocation
Years, over (ii) the cumulative Profits allocated to such Partner
pursuant to this Section 3.1(a) for all prior Allocation Years;
(b) Second, one hundred percent (100%) to the Partners,
in proportion to, and to the extent of, an amount equal to the
excess, if any, of (i) the cumulative Losses allocated to each
such Partner pursuant to Section 3.2(c) for all prior Allocation
Years, over (ii) the cumulative Profits allocated to such Partner
pursuant to this Section 3.1(b) for all prior Allocation Years;
(c) Third, to the extent such Profits arise during or
after the Allocation Year in which all or substantially all of
the Partnership's assets are disposed of (or revalued pursuant to
clause (ii) of the definition of Gross Asset Value), to the
Partners in such ratios and amounts as may be necessary to cause
the balances in their Capital Accounts to be as nearly as
practicable in the same ratio as their respective Percentage
Interests; and
(d) The balance, if any, among the Partners in
proportion to their Percentage Interests.
3.2 Losses.
After giving effect to the special allocations set forth in
Sections 3.3 and 3.4, and subject to Section 3.5, Losses for any
Allocation Year shall be allocated in the following order and
priority:
(a) First, one hundred percent (100%) to the Partners,
in proportion to, and to the extent of, the excess, if any, of
(i) the cumulative Profits allocated to each such Partner
pursuant to Section 3.1(d) for all prior Allocation Years, over
(ii) the cumulative Losses allocated to such Partner pursuant to
this Section 3.2(a) for all prior Allocation Years;
(b) Second, to the extent such Losses arise during or
after the Allocation Year in which all or substantially all of
the Partnership's assets are disposed of, to the Partners in such
ratio and amounts as may be necessary to cause the balances in
their Capital Accounts to be as nearly as practicable in the same
ratio as their respective Percentage Interests; and
(c) The balance, if any, among the Partners in
proportion to their Percentage Interests.
3.3 Special Allocations.
The following special allocations shall be made in the
following order:
(a) Minimum Gain Chargeback. Except as otherwise
provided in Section 1.704-2(f) of the Regulations,
notwithstanding any other provision of this Section 3, if there
is a net decrease in Partnership Minimum Gain during any
Allocation Year, each Partner shall be specially allocated items
of Partnership income and gain for such Allocation Year (and, if
necessary, subsequent Allocation Years) in an amount equal to
such Partner's share of the net decrease in Partnership Minimum
Gain, determined in accordance with Regulations Section
1.704-2(g). Allocations pursuant to the previous sentence shall
be made in proportion to the respective amounts required to be
allocated to each Partner pursuant thereto. The items to be so
allocated shall be determined in accordance with Sections
1.704-2(f)(6) and 1.704-2(j)(2) of the Regulations. This Section
3.3(a) is intended to comply with the minimum gain chargeback
requirement in Section 1.704-2(f) of the Regulations and shall be
interpreted consistently therewith.
(b) Partner Minimum Gain Chargeback. Except as
otherwise provided in Section 1.704-2(i)(4) of the Regulations,
notwithstanding any other provision of this Section 3, if there
is a net decrease in Partner Nonrecourse Debt Minimum Gain
attributable to a Partner Nonrecourse Debt during any Allocation
Year, each Partner who has a share of the Partner Nonrecourse
Debt Minimum Gain attributable to such Partner Nonrecourse Debt,
determined in accordance with Section 1.704-2(i)(5) of the
Regulations, shall be specially allocated items of Partnership
income and gain for such Allocation Year (and, if necessary,
subsequent Allocation Years) in an amount equal to such Partner's
share of the net decrease in Partner Nonrecourse Debt Minimum
Gain attributable to such Partner Nonrecourse Debt, determined in
accordance with Regulations Section 1.704-2(i)(4). Allocations
pursuant to the previous sentence shall be made in proportion to
the respective amounts required to be allocated to each Partner
pursuant thereto. The items to be so allocated shall be
determined in accordance with Sections 1.704-2(i)(4) and
1.704-2(j)(2) of the Regulations. This Section 3.3(b) is
intended to comply with the minimum gain chargeback requirement
in Section 1.704-2(i)(4) of the Regulations and shall be
interpreted consistently therewith.
(c) Qualified Income Offset. In the event any
Exclusive Limited Partner unexpectedly receives any adjustments,
allocations, or distributions described in Sections 1.704-
1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) or 1.704-
1(b)(2)(ii)(d)(6) of the Regulations, items of Partnership income
and gain shall be specially allocated to each such Exclusive
Limited Partner in an amount and manner sufficient to eliminate,
to the extent required by the Regulations, the Adjusted Capital
Account Deficit of such Exclusive Limited Partner as quickly as
possible, provided that an allocation pursuant to this Section
3.3(c) shall be made only if and to the extent that such
Exclusive Limited Partner would have an Adjusted Capital Account
Deficit after all other allocations provided for in this Section
3 have been tentatively made as if this Section 3.3(c) were not
in the Agreement.
(d) Gross Income Allocation. In the event any
Exclusive Limited Partner has a deficit Capital Account at the
end of any Allocation Year which is in excess of the sum of (i)
the amount such Exclusive Limited Partner is obligated to restore
pursuant to any provision of this Agreement, and (ii) the amount
such Exclusive Limited Partner is deemed to be obligated to
restore pursuant to the penultimate sentences of Sections
1.704-2(g)(1) and 1.704-2(i)(5) of the Regulations, each such
Exclusive Limited Partner shall be specially allocated items of
Partnership income and gain in the amount of such excess as
quickly as possible, provided that an allocation pursuant to this
Section 3.3(d) shall be made only if and to the extent that such
Exclusive Limited Partner would have a deficit Capital Account in
excess of such sum after all other allocations provided for in
this Section 3 have been made as if Section 3.3(c) and this
Section 3.3(d) were not in the Agreement.
(e) Nonrecourse Deductions. Nonrecourse Deductions for
any Allocation Year shall be specially allocated among the
Partners in proportion to their Percentage Interests.
(f) Partner Nonrecourse Deductions. Any Partner
Nonrecourse Deductions for any Allocation Year shall be specially
allocated to the Partner who bears the economic risk of loss with
respect to the Partner Nonrecourse Debt to which such Partner
Nonrecourse Deductions are attributable in accordance with
Regulations Section 1.704-2(i)(1).
(g) Section 754 Adjustments. To the extent an
adjustment to the adjusted tax basis of any Partnership asset
pursuant to Code Section 734(b) or Code Section 743(b) is
required pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(2)
or 1.704-1(b)(2)(iv)(m)(4) to be taken into account in
determining Capital Accounts as the result of a distribution to a
Partner in complete liquidation of its Interest, the amount of
such adjustment to Capital Accounts shall be treated as an item
of gain (if the adjustment increases the basis of the asset) or
loss (if the adjustment decreases such basis) and such gain or
loss shall be specially allocated to the Partners in accordance
with their interests in the Partnership in the event Regulations
Section 1.704-1(b)(2)(iv)(m)(2) applies, or to the Partner to
whom such distribution was made in the event Regulations Section
1.704-1(b)(2)(iv)(m)(4) applies.
(h) Special Interest Allocation. In the event that the
Partnership makes any payment in respect of interest accrued on
any Default Loan in any Allocation Year, the deduction
attributable to such payment shall be specially allocated to the
Delinquent Partner with respect to which such Default Loan was
made.
3.4 Curative Allocations.
The allocations set forth in Sections 3.3(a), 3.3(b),
3.3(c), 3.3(d), 3.3(e), 3.3(f), 3.3(g) and 3.5 (the "Regulatory
Allocations") are intended to comply with certain requirements of
the Regulations. It is the intent of the Partners that, to the
extent possible, all Regulatory Allocations shall be offset
either with other Regulatory Allocations or with special
allocations of other items of Partnership income, gain, loss or
deduction pursuant to this Section 3.4. Therefore,
notwithstanding any other provision of this Section 3 (other than
the Regulatory Allocations), the Partnership Board shall make
such offsetting special allocations of Partnership income, gain,
loss or deduction in whatever manner it determines appropriate so
that, after such offsetting allocations are made, each Partner's
Capital Account balance is, to the extent possible, equal to the
Capital Account balance such Partner would have had if the
Regulatory Allocations were not part of the Agreement and all
Partnership items were allocated pursuant to Sections 3.1, 3.2
and 3.3(h). In exercising its discretion under this Section 3.4,
the Partnership Board shall take into account future Regulatory
Allocations under Sections 3.3(a) and 3.3(b) that, although not
yet made, are likely to offset other Regulatory Allocations
previously made under Section 3.3(e) and 3.3(f).
3.5 Loss Limitation.
The Losses allocated pursuant to Section 3.2 shall not
exceed the maximum amount of Losses that can be so allocated
without causing (or increasing the amount of) any Exclusive
Limited Partner to have an Adjusted Capital Account Deficit at
the end of any Allocation Year. All Losses in excess of such
limitation shall be allocated to the Partners who are not
Exclusive Limited Partners in proportion to their Percentage
Interests.
3.6 Other Allocation Rules.
(a) For purposes of determining the Profits, Losses, or
any other items allocable to any period, Profits, Losses, and any
such other items shall be determined on a daily, monthly, or
other basis, as determined by a Required Majority Vote of the
Partnership Board using any permissible method under Code Section
706 and the Regulations thereunder.
(b) The Partners are aware of the income tax
consequences of the allocations made by this Section 3 and hereby
agree to be bound by the provisions of this Section 3 in
reporting their shares of Partnership income and loss for income
tax purposes.
(c) Solely for purposes of determining a Partner's
proportionate share of the "excess nonrecourse liabilities" of
the Partnership within the meaning of Section 1.752-3(a)(3) of
the Regulations, the Partners' interests in Partnership profits
are in proportion to their Percentage Interests.
(d) To the extent permitted by Section 1.704-2(h)(3) of
the Regulations, the Partnership Board shall endeavor to treat
distributions of cash as having been made from the proceeds of a
Nonrecourse Liability or a Partner Nonrecourse Debt only to the
extent that such distributions would cause or increase an
Adjusted Capital Account Deficit for any Exclusive Limited
Partner.
3.7 Tax Allocations: Code Section 704(c).
In accordance with Code Section 704(c) and the Regulations
thereunder, income, gain, loss, and deduction with respect to any
property contributed to the capital of the Partnership shall,
solely for tax purposes, be allocated among the Partners so as to
take account of any variation between the adjusted basis of such
property to the Partnership for federal income tax purposes and
its initial Gross Asset Value using the traditional method with
curative allocations as described in Section 1.704-3 of the
Regulations, applied as necessary in any reasonable manner not
expressly precluded by Section 1.704-3 of the Regulations. In
making such allocations, Section 704(c) shall be applied as if
the Partnership's proportionate share of the assets owned by any
partnership, interests in which are contributed to the
Partnership ("Subsidiary Partnership"), were owned directly by
the Partnership and were contributed by the Partners who
contributed the Subsidiary Partnership interests.
In the event the Gross Asset Value of any Partnership asset
is adjusted pursuant to subparagraph (ii) of the definition of
Gross Asset Value, subsequent allocations of income, gain, loss,
and deduction with respect to such asset shall take account of
any variation between the adjusted basis of such asset for
federal income tax purposes and its Gross Asset Value in the same
manner as under Code Section 704(c) and the Regulations
thereunder.
Any elections or other decisions relating to such
allocations shall be made by the Partnership Board in any manner
that reasonably reflects the purpose and intention of this
Agreement. Allocations pursuant to this Section 3.7 are solely
for purposes of federal, state, and local taxes and shall not
affect, or in any way be taken into account in computing, any
Partner's Capital Account or share of Profits, Losses, other
items, or distributions pursuant to any provision of this
Agreement.
SECTION 4. DISTRIBUTIONS
4.1 Available Cash.
From time to time the Partnership Board by a Required
Majority Vote may determine to distribute Available Cash to the
Partners. Except as otherwise provided in Section 14.2,
Available Cash, if any, shall be distributed to the Partners in
proportion to their respective Percentage Interests in such
amounts and at such times as the Partnership Board shall
determine by Required Majority Vote. Prior to making any cash
distributions to the Partners pursuant to this Section 4.1, the
Partnership shall have paid in full all Partner Loans (in
accordance with the order of payment contemplated by Section
14.2(b)).
4.2 Tax Distributions.
(a) Subject to Section 4.2(b), Available Cash shall be
distributed to the Partners in proportion to their Percentage
Interests within one hundred thirty-five (135) days after the end
of each Fiscal Year of the Partnership in an aggregate amount
equal to the Hypothetical Federal Income Tax Amount for such
Fiscal Year.
(b) Prior to making any cash distributions to the
Partners pursuant to Section 4.2(a), the Partnership shall have
paid in full all Partner Loans (in accordance with the order of
payment contemplated by Section 14.2(b)).
4.3 Amounts Withheld.
All amounts withheld pursuant to the Code or any provision
of any state or local tax law from any payment or distribution to
a Partner shall be treated as amounts paid or distributed to such
Partner pursuant to this Section 4 for all purposes under this
Agreement. The Partnership is authorized to withhold from
payments and distributions to any Partner and to pay over to any
federal, state, or local government any amounts required to be so
withheld pursuant to the Code or any provisions of any other
federal, state, or local law.
SECTION 5. MANAGEMENT
5.1 Authority of the Partnership Board.
(a) General Authority. Subject to the limitations and
restrictions set forth in this Agreement, the General Partners
shall conduct the business and affairs of the Partnership, and
all powers of the Partnership, except those specifically reserved
to the Partners by the Act or this Agreement, are hereby granted
to and vested in the General Partners, which shall conduct such
business and exercise such powers through their Representatives
on the Partnership Board.
(b) Delegation. The Partnership Board shall have the
power to delegate authority to such officers, employees, agents
and representatives of the Partnership as it may from time to
time deem appropriate. Any delegation of authority to take any
action must be approved in the same manner as would be required
for the Partnership Board to approve such action directly.
(c) Number and Term of Office. The Partnership Board
initially shall have six voting members, one of which shall be
designated by each Cable Partner and three of which shall be
designated by Sprint. The Chief Executive Officer shall be a
non-voting member of the Partnership Board. During the term of
this Agreement, except as otherwise provided below, each General
Partner shall be entitled to designate one Representative to the
Partnership Board, provided that (i) for so long as Sprint is
entitled to representation on the Partnership Board (except as
otherwise provided below), Sprint shall be entitled to designate
three Representatives to the Partnership Board; provided,
however, that at any time any other Partner holds a greater
Voting Percentage Interest than Sprint (except as otherwise
provided below), Sprint shall be entitled to designate only two
Representatives to the Partnership Board; and provided, further,
that at any time any other Partner holds a greater Voting
Percentage Interest than Sprint and Sprint's Percentage Interest
is less than twenty percent (20%), Sprint shall be entitled to
designate only one Representative to the Partnership Board, and
(ii) those Partners, if any, that are Controlled Affiliates of
the same Parent (a "Related Group") shall collectively be
entitled to designate only the largest number of Representatives
as is entitled to be designated by any single member of the
Related Group, which Representative(s) shall be designated by the
Partner that has the largest Percentage Interest of the Partners
in the Related Group. Any Partner whose Percentage Interest,
together with the Percentage Interest(s) of each other Partner,
if any, that is a member of the same Related Group, is, in the
aggregate, less than the Minimum Ownership Requirement shall, for
so long as its Percentage Interest or the aggregate Percentage
Interest of its Related Group, as applicable, is less than the
Minimum Ownership Requirement, not be entitled to designate a
Representative to the Partnership Board, and the Representative
of such Partner or Related Group, as applicable, shall
immediately cease to be a member of the Partnership Board,
without any further act by the affected Partner.
Any Partner who becomes an Adverse Partner shall immediately
forfeit the right to designate a member of the Partnership Board,
and the Representative(s) of the affected Partner shall
immediately cease to be a member of the Partnership Board,
without any further act by the affected Partner; provided that if
a Partner becomes an Adverse Partner as the result of the
occurrence of an Adverse Act described in clause (iii), (iv),
(vi) or (vii) of the definition of such term in Section 1.10,
such Partner will regain (or its transferee will be entitled to,
as applicable) the right to designate a Representative on the
Partnership Board (if otherwise so entitled thereto under this
Agreement) if (i) in the case of a Partner that is an Adverse
Partner other than as a result of the occurrence of an Adverse
Act described in clause (iii) of the definition of such term in
Section 1.10, such Partner Transfers its Interest in compliance
with Section 12 to a Person that is not an Adverse Partner and
does not become an Adverse Partner as a result of such Transfer,
(ii) in the case of a Partner that is an Adverse Partner as a
consequence of the occurrence of an Adverse Act described in
clause (iii) of the definition of such term in Section 1.10,
there is a Final Determination that such Partner's actions or
failure to act did not constitute such an Adverse Act, (iii) in
the case of a Partner that is an Adverse Partner as a consequence
of Bankruptcy, such Partner ceases to be in a state of
Bankruptcy, (iv) in the case of a Partner that is an Adverse
Partner as a consequence of the occurrence of any IXC
Transaction, such Partner ceases to have the relationship with
the IXC which caused such IXC Transaction to occur, or (v) in the
case of a Partner that is an Adverse Partner as a consequence of
the occurrence of an event described in clause (vii) of the
definition of the term "Adverse Act" in Section 1.10, such
Partner takes actions that eliminate the circumstances that
constituted such an Adverse Act within the meaning of such clause
(vii). The membership of the Partnership Board shall be
increased or decreased from time to time in accordance with the
foregoing provisions of this Section 5.1(c).
Each Representative shall hold office at the pleasure of the
Partner that designated such Representative. Any Partner may at
any time, and from time to time, by written notice to the other
Partners remove any or all of the Representatives designated by
such Partner, with or without cause, and appoint substitute
Representatives to serve in their stead. Each Partner shall be
entitled to name one or more alternate Representatives to serve
in the place of any Representative appointed by such Partner
should any such Representative not be able to attend a meeting or
meetings or any portion thereof, including in the case of a
Representative of Comcast not being able to attend a meeting to
the extent required in order to comply with the provisions of
Section 8.14. Each such alternate shall be deemed to be a
Representative hereunder with respect to any action taken at such
meeting or meetings or any portion thereof. Each Partner shall
bear the costs incurred by each Representative or alternate
designated by it to serve on the Partnership Board, and no
Representative or alternate shall be entitled to compensation
from the Partnership for serving in such capacity.
The written notice of a Partner's appointment of a
Representative or alternate shall in each case set forth such
Representative's or alternate's business and residence addresses
and business telephone number. Each Partner shall promptly give
written notice to the other Partners of any change in the
business or residence address or business telephone number of any
of its Representatives. Each Partner shall cause its
Representatives on the Partnership Board to comply with the terms
of this Agreement. In the absence of prior written notice to the
contrary, any action taken by a Representative of a Partner shall
be deemed to have been duly authorized by the Partner that
appointed such Representative.
(d) Vacancy. In the event any Representative dies or
is unwilling or unable to serve as such or is removed from office
by the Partner that designated him or her, such Partner shall
promptly designate a successor to such Representative.
(e) Place of Meeting/Action by Written Consent. The
Partnership Board may hold its meetings at such place or places
within or outside the State of Delaware as the Partnership Board
may from time to time determine or as may be designated in the
notice calling the meeting. If a meeting place is not so
designated, the meeting shall be held at the Partnership's
principal office. Notwithstanding anything to the contrary in
this Section 5.1, the Partnership Board may take without a
meeting any action contemplated to be taken by the Partnership
Board under this Agreement if such action is approved by the
unanimous written consent of a Representative of each of the
Partners then entitled to designate a Representative to the
Partnership Board (which may be executed in counterparts). The
Partnership Board may meet in person or by means of conference
telephone or similar communications equipment. Each
Representative shall have the right to participate in any meeting
by means of conference telephone or similar communications
equipment.
(f) Regular Meetings. The Partnership Board shall hold
regular meetings no less frequently than quarterly and shall
establish meeting times, dates and places and requisite notice
requirements and adopt rules or procedures consistent with the
terms of this Agreement. At such meetings the members of the
Partnership Board shall transact such business as may properly be
brought before the meeting.
(g) Special Meetings. Special meetings of the
Partnership Board may be called by any Representative. Notice of
each such meeting shall be given to each member of the
Partnership Board by telephone, telecopy, telegram or similar
method (in which case notice shall be given at least twenty-four
(24) hours before the time of the meeting) or sent by first-class
mail (in which case notice shall be given at least five (5) days
before the meeting), unless a longer notice period is established
by the Partnership Board. Each such notice shall state (i) the
time, date, place (which shall be at the principal office of the
Partnership unless otherwise agreed to by all Representatives) or
other means of conducting such meeting and (ii) the purpose of
the meeting to be so held. Any Representative may waive notice
of any meeting in writing before, at or after such meeting. The
attendance of a Representative at a meeting shall constitute a
waiver of notice of such meeting, except when a Representative
attends a meeting for the express purpose of objecting to the
transaction of any business because the meeting was not properly
called.
(h) Voting. The Representative(s) of each General
Partner or of the General Partners in a Related Group shall
together have voting power equal to the Voting Percentage
Interest held by such General Partner or the aggregate Voting
Percentage Interest of the General Partners in such Related
Group, as applicable, as in effect from time to time. If a
General Partner or a Related Group designates only one
Representative, such Representative shall be entitled to vote the
entire voting power held by such General Partner or the General
Partners in such Related Group, as applicable. If a General
Partner or Related Group designates more than one Representative,
such Representatives shall vote the entire voting power of such
General Partner or the General Partners in such Related Group as
a single unit. None of the Partners (other than the Partners in
a Related Group) shall enter into any agreements with any other
Partner or such other Partner's Controlled Affiliates regarding
the voting of their Interests or such other Partner's
Representatives on the Partnership Board.
(i) Simple Majority Vote. No action may be taken by
the Partnership in connection with any of the matters listed on
Schedule 5.1(i) without the prior approval of the Partnership
Board, at a duly called meeting, of Representatives with voting
power of more than fifty percent (50%) of the Voting Percentage
Interests of all Partners whose Representatives are not required
by Section 8.6 or any other express provision of this Agreement
to abstain from such vote (a "Simple Majority Vote").
(j) Required Majority Vote. Except as provided in
Section 5.1(i) or 5.1(k) or as otherwise expressly provided in
this Agreement, all actions required or permitted to be taken by
the Partnership Board (including the matters listed on Schedule
5.1(j)) must be approved by the affirmative vote, at a duly
called meeting, of Representatives with voting power of seventy-
five percent (75%) or more of the Voting Percentage Interests of
all Partners whose Representatives are not required by Section
8.6 or any other express provision of this Agreement to abstain
from such vote (a "Required Majority Vote").
(k) Unanimous Vote (Partnership Board). No action may
be taken by the Partnership in connection with any of the matters
listed on Schedule 5.1(k) without the prior approval of the
Partnership Board by the unanimous vote of all of the
Representatives who are not required to abstain from the vote
with respect to the particular matter as provided for in Section
8.6 of this Agreement or any other express provision of this
Agreement, whether or not present at a Partnership Board meeting
(a "Unanimous Vote").
(l) Unanimous Decisions (Partners).
(i) No action may be taken by the Partnership in
connection with any of the matters listed on Schedule 5.1(l)
without the prior consent of all of the Partners (including
Exclusive Limited Partners) other than any Partner required to
abstain from the vote with respect to a particular matter by
Section 8.6 or any other express provision of this Agreement (a
"Unanimous Partner Vote").
(ii) If any matter listed on Schedule 5.1(l) or
otherwise required by this Agreement to be approved by the
unanimous consent of the Partners is not approved solely as a
result of the failure of one or more Exclusive Limited Partners
to consent to such action (each, a "Blocking Limited Partner"),
the remaining Partners (other than any Exclusive Limited Partner)
may purchase all but not less than all of the respective
Interests of the Blocking Limited Partner(s) pursuant to this
Section 5.1(l)(ii) if the Partnership Board elects to initiate
the procedures in this Section. For a period ending at 11:59
p.m. (local time at the Partnership's principal office) on the
thirtieth (30th) day following the date on which such Blocking
Limited Partner failed to consent to such matter, the Partnership
Board may elect to cause the Net Equity of the Blocking Limited
Partner's Interest to be determined in accordance with Section
11.3. For purposes of such determination of Net Equity, the
Partnership Board shall designate the First Appraiser as required
by Section 11.4 and the Blocking Limited Partner shall designate
the Second Appraiser within ten (10) days of receiving notice of
the First Appraiser. For a period ending at 11:59 p.m. (local
time at the Partnership's principal office) on the thirtieth
(30th) day following the date on which notice of the Net Equity
of the Blocking Limited Partner's Interest is given pursuant to
Section 11.3 (the "Section 5.1 Election Period"), except as
otherwise provided in Section 11.2(b), each of the Partners
(other than any Exclusive Limited Partner) may elect to purchase
all or any portion of the Interest of the Blocking Limited
Partner. Such elections shall be made, and the purchase of the
Blocking Limited Partner's Interest shall occur, in the manner
and pursuant to the procedures set forth in Section 11.2 as if
the Blocking Limited Partner were an Adverse Partner and the
Election Period referred to in Section 11.2 was the Section 5.1
Election Period; provided that the Buy-Sell Price of the Blocking
Limited Partner's Interest shall be equal to the Net Equity
thereof. Notwithstanding the foregoing, the Blocking Limited
Partner will not be subject to the buy-out provisions of this
Section 5.1(l)(ii) if the matter to which the Blocking Limited
Partner refused to consent would, if approved, have adversely
affected the rights and obligations under this Agreement of such
Blocking Limited Partner or the Exclusive Limited Partners (taken
as a group) in a manner different from the other Partners.
(m) Proxies; Minutes. Each Representative entitled to
vote at a meeting of the Partnership Board may authorize another
Person to act for him by proxy; provided that such proxy must be
signed by the Representative and shall be revocable by such
Representative any time prior to such meeting. Minutes of each
meeting of the Partnership Board shall be prepared by the Chief
Executive Officer or his or her designee and circulated to the
Representatives. Written consents to any action taken by the
Partnership Board shall be filed with the minutes.
5.2 Business Plan and Annual Budget.
(a) At the January 11, 1996 meeting of the Partnership
Board, the Partners adopted by Unanimous Partner Vote (i) a
business plan ("Business Plan") of the Partnership and its
Subsidiaries covering the Fiscal Year ending December 31, 1996
and the succeeding Fiscal Years through the Fiscal Year ending
December 31, 1999, which the Partners hereby agree is the
"Initial Business Plan" for all purposes under this Agreement,
and (ii) the Annual Budget for the Fiscal Year ending December
31, 1996. The Partners contemplate the Partnership's achieving a
capital structure in which debt (including Partner Loans)
represents an equal or greater proportion of the Partnership's
total capitalization than the aggregate Original Capital
Contributions and Additional Capital Contributions and, unless
otherwise approved by Required Majority Vote, the first Proposed
Business Plan presented to the Partnership Board for approval
subsequent to the Initial Business Plan will set forth the means
by which the Partnership proposes to achieve such capital
structure.
(b) Nothing contained in the Initial Business Plan (or
any subsequent Business Plan) shall be binding upon the Partners
or the Partnership, except to the extent specifically set forth
in the applicable provisions of this Agreement. Notwithstanding
anything to the contrary set forth in the Initial Business Plan
(or any subsequent Business Plan) or this Agreement, in the event
of any conflict or inconsistency between the Initial Business
Plan (or any subsequent Business Plan) and this Agreement, such
conflict or inconsistency shall be resolved in favor of the
applicable terms and provisions of this Agreement to the extent
required to give full effect to such applicable terms and
provisions. For example, by voting to approve the Initial
Business Plan (or any subsequent Business Plan), a Partner will
not have thereby agreed that any assumption or set of assumptions
contained in the Initial Business Plan (or any subsequent
Business Plan) (i) is the basis for any agreement by or among the
Partners and/or the Partnership (or any of their respective
Affiliates), (ii) cannot be changed (to the extent any such
change would not thereby become inconsistent with the applicable
terms and provisions of this Agreement), or (iii) is binding with
respect to any transaction or other course of dealing or
otherwise between the Partnership and such Partner or between or
among any of the Partners other than as specifically set forth in
this Agreement.
(c) The Chief Executive Officer shall submit annually
to the Partnership Board at least ninety (90) days prior to the
start of each Fiscal Year after the Fiscal Year ending December
31, 1996, (i) a proposed capital expenditure and operating budget
(the "Proposed Budget") for the forthcoming Fiscal Year including
an income statement prepared on an accrual basis which shall show
in reasonable detail the revenues and expenses projected for the
business of the Partnership and its Subsidiaries for the
forthcoming Fiscal Year and a cash flow statement which shall
show in reasonable detail the receipts and disbursements
projected for the business of the Partnership and its
Subsidiaries for the forthcoming Fiscal Year and the amount of
any corresponding cash deficiency or surplus, and the projected
Additional Capital Contributions, if any, and any contemplated
borrowings of the Partnership and its Subsidiaries and (ii) a
proposed revised Business Plan ("Proposed Business Plan") for the
Fiscal Year covered by the Proposed Budget and the succeeding
four Fiscal Years. Such Proposed Budget and Proposed Business
Plan shall be prepared on a basis consistent with the
Partnership's audited financial statements. If such Proposed
Budget or such Proposed Business Plan is approved by the
Partnership Board, then such Proposed Budget or such Proposed
Business Plan, as the case may be, shall be considered approved
and shall constitute the "Annual Budget" or the "Approved
Business Plan," as the case may be, for all purposes of this
Agreement and shall supersede any previously approved Annual
Budget or Approved Business Plan, as the case may be. Except as
provided in Schedule 5.1(k), the approval of each Proposed Budget
and Proposed Business Plan and action by the Partnership or any
of its Subsidiaries constituting any material deviation from any
Annual Budget or Approved Business Plan shall require the
Required Majority Vote of the Partnership Board. No Approved
Business Plan or Annual Budget shall be inconsistent with the
provisions of this Agreement, nor shall this Agreement be deemed
amended by any provision of an Approved Business Plan or Annual
Budget. If a Proposed Budget or Proposed Business Plan is not
approved by the Required Majority Vote of the Partnership Board,
then the General Partners shall cause their Representatives to
cooperate in good faith and confer with the Chief Executive
Officer and other senior officers of the Partnership for the
purpose of attempting to arrive at a Proposed Budget or Proposed
Business Plan, as the case may be, that can secure the approval
of the Partnership Board.
(d) If, notwithstanding the foregoing procedures, on
January 1 of any Fiscal Year no Proposed Budget has been approved
by the Partnership Board for such Fiscal Year, then the Annual
Budget for the prior Fiscal Year, adjusted (without duplication)
to reflect increases or decreases resulting from the following
events, shall govern until such time as the Partnership Board
approves a new Proposed Budget:
(i) the operation of escalation or de-escalation
provisions in contracts in effect at the time of approval of the
prior Fiscal Year's Annual Budget solely as a result of the
passage of time or the occurrence of events beyond the control of
the Partnership to the extent such contracts are still in effect;
(ii) elections made in any prior Fiscal Year
under contracts contemplated by the Annual Budget for the prior
Fiscal Year regardless of which party to such contracts made such
elections;
(iii) increases or decreases in expenses
attributable to the annualized effect of employee additions or
reductions during the prior Fiscal Year contemplated by the
Annual Budget for the prior Fiscal Year;
(iv) changes in interest expense attributable to
any loans made to or retired by the Partnership or its
Subsidiaries (including Partner Loans);
(v) increases in overhead expenses in an amount
equal to the total of overhead expenses reflected in the Annual
Budget for the prior Fiscal Year multiplied by the increase in
the Consumer Price Index for the prior year, but in no event more
than five percent (5%);
(vi) the anticipated incurrence of costs during
such Fiscal Year for any legal, accounting and other professional
fees or disbursements in connection with events or changes not
contemplated at the time of preparation of the Proposed Budget
for the prior Fiscal Year;
(vii) the continuation of the effects of a
decision made by the Partnership Board or the Partners in the
prior Fiscal Year with respect to any of the matters referred to
on Schedules 5.1(j), 5.1(k) or 5.1(l) that are not reflected in
the Annual Budget for the prior Fiscal Year; and
(viii) decreases in expense attributable to
non-recurring items reflected in the prior Fiscal Year's Annual
Budget.
Any budget established pursuant to this Section 5.2(d) is
herein referred to as a "Default Budget."
(e) If a Proposed Business Plan is submitted for
approval pursuant to this Section 5.2 and is not approved by the
requisite vote of the Partnership Board, the Business Plan most
recently approved by the Partnership Board pursuant to Section
5.2(c) shall remain in effect as the Approved Business Plan;
provided, that, if a Proposed Budget is approved pursuant to
Section 5.2(c) (and the corresponding Proposed Business Plan is
not so approved), the Approved Business Plan then in effect shall
be deemed to be amended so that the Fiscal Year therein
corresponding to the Fiscal Year for which such Annual Budget has
been approved shall be consistent with such Annual Budget.
(f) The day-to-day business and operations of the
Partnership and its Subsidiaries shall be conducted in accordance
with the Approved Business Plan and the Annual Budget (or Default
Budget) then in effect and the policies, strategies and standards
established by the Partnership Board. The Partnership Board and
the officers and employees of the Partnership and its
Subsidiaries shall implement the Annual Budget and Approved
Business Plan.
5.3 Employees.
The Partnership Board will appoint the senior management of
the Partnership and its Subsidiaries and will establish policies
and guidelines for the hiring of employees by the Partnership and
its Subsidiaries. The Partnership Board may adopt appropriate
management incentive plans and employee benefit plans.
5.4 Limitation of Agency.
The Partners agree not to exercise any authority to act for
or to assume any obligation or responsibility on behalf of the
Partnership or any of its Subsidiaries except (i) as approved by
the Partnership Board by Required Majority Vote, (ii) as approved
by written agreement among the General Partners and (iii) as
expressly provided herein. No Partner shall have any authority
to act for or to assume any obligations or responsibility on
behalf of another Partner under this Agreement except (i) as
approved by written agreement among the Partners and (ii) as
expressly provided herein. Subject to Section 5.6, in addition
to the other remedies specified herein, each Partner agrees to
indemnify and hold the Partnership and the other Partners
harmless from and against any claim, demand, loss, damage,
liability or expense (including reasonable attorneys' fees and
disbursements and amounts paid in settlement, but excluding any
indirect, special or consequential damages) incurred by or
against such other Partners or the Partnership and arising out of
or resulting from any action taken by the indemnifying Partner in
violation of this Section 5.4.
5.5 Liability of Partners, Representatives and
Partnership Employees.
No Partner, former Partner or Representative or former
Representative, no Affiliate of any thereof, no partner,
shareholder, director, officer, employee or agent of any of the
foregoing, nor any officer or employee of the Partnership, shall
be liable in damages for any act or failure to act in such
Person's capacity as a Partner or Representative or otherwise on
behalf of the Partnership or any of its Subsidiaries unless such
act or omission constituted bad faith, gross negligence, fraud or
willful misconduct of such Person or a violation by such Person
of this Agreement or an agreement between such Person and the
Partnership or a Subsidiary thereof. Subject to Section 5.6,
each Partner, former Partner, Representative and former
Representative, each Affiliate of any thereof, each partner,
shareholder, director, officer, employee and agent of any of the
foregoing, and each officer and employee of the Partnership,
shall be indemnified and held harmless by the Partnership, its
receiver or trustee from and against any liability for damages
and expenses, including reasonable attorneys' fees and
disbursements and amounts paid in settlement, resulting from any
threatened, pending or completed action, suit or proceeding
relating to or arising out of such Person's acts or omissions in
such Person's capacity as a Partner or Representative or (except
as provided in Section 5.4) otherwise involving such Person's
activities on behalf of the Partnership or any of its
Subsidiaries, except to the extent that such damages or expenses
result from the bad faith, gross negligence, fraud or willful
misconduct of such Person or a violation by such Person of this
Agreement or an agreement between such Person and the Partnership
or any of its Subsidiaries. Any indemnity by the Partnership,
its receiver or trustee under this Section 5.5 shall be provided
out of and to the extent of Partnership Property only.
5.6 Indemnification.
Any Person asserting a right to indemnification under
Section 5.4 or 5.5 shall so notify the Partnership or the other
Partners, as the case may be, in writing. If the facts giving
rise to such indemnification shall involve any actual or
threatened claim or demand by or against a third party, the
indemnified Person shall give such notice promptly (but the
failure to so notify shall not relieve the indemnifying Person
from any liability which it otherwise may have to such
indemnified Person hereunder except to the extent the
indemnifying Person is actually prejudiced by such failure to
notify). The indemnifying Person shall be entitled to control
the defense or prosecution of such claim or demand in the name of
the indemnified Person, with counsel satisfactory to the
indemnified Person, if it notifies the indemnified Person in
writing of its intention to do so within twenty (20) days of its
receipt of such notice, without prejudice, however, to the right
of the indemnified Person to participate therein through counsel
of its own choosing, which participation shall be at the
indemnified Person's expense unless (i) the indemnified Person
shall have been advised by its counsel that use of the same
counsel to represent both the indemnifying Person and the
indemnified Person would present a conflict of interest (which
shall be deemed to include any case where there may be a legal
defense or claim available to the indemnified Person which is
different from or additional to those available to the
indemnifying Person), in which case the indemnifying Person shall
not have the right to direct the defense of such action on behalf
of the indemnified Person, or (ii) the indemnifying Person shall
fail vigorously to defend or prosecute such claim or demand
within a reasonable time. Whether or not the indemnifying Person
chooses to defend or prosecute such claim, the Partners shall
cooperate in the prosecution or defense of such claim and shall
furnish such records, information and testimony and attend such
conferences, discovery proceedings, hearings, trials and appeals
as may reasonably be requested in connection therewith. The
indemnifying Person may not control the defense of any claim or
demand that involves any material risk of the sale, forfeiture or
loss of, or the creation of any lien (other than a judgment lien)
on, any material property of the indemnified Person or could
entail a risk of criminal liability to the indemnified Person,
without the consent of such indemnified Person.
The indemnified Person shall not settle or permit the
settlement of any claim or action for which it is entitled to
indemnification without the prior written consent of the
indemnifying Person (which shall not be unreasonably withheld),
unless the indemnifying Person shall have been entitled to assume
the defense thereof pursuant to this Section 5.6 but failed to do
so after the notice and in the manner provided in the preceding
paragraph.
The indemnifying Person may not without the consent of the
indemnified Person agree to any settlement (i) that requires such
indemnified Person to make any payment that is not indemnified
hereunder, (ii) does not grant a general release to such
indemnified Person with respect to the matters underlying such
claim or action, or (iii) that involves the sale, forfeiture or
loss of, or the creation of any lien on, any material property of
such indemnified Person. Nothing contained in this Section 5.6
is intended to authorize the indemnifying Person, in connection
with any defense or settlement as to which it has assumed
control, to take or refrain from taking, without the consent of
the indemnified Person, any action which would reasonably be
expected to materially impair the indemnification of such
indemnified Person hereunder or would require such indemnified
Person to take or refrain from taking any action or to make any
public statement, which such indemnified Person reasonably
considers to materially adversely affect its interests.
Upon the request of any indemnified Person, the indemnifying
Person shall use reasonable efforts to keep such indemnified
Person reasonably apprised of the status of those aspects of such
defense controlled by the indemnifying Person and shall provide
such information with respect thereto as such indemnified Person
may reasonably request. If the defense is controlled by the
indemnified Person, such indemnified Person, upon the request of
the indemnifying Person, shall use reasonable efforts to keep the
indemnifying Person reasonably apprised of the status of those
aspects of such defense controlled by such indemnified Person and
shall provide such information with respect thereto as the
indemnifying Person may reasonably request.
5.7 Temporary Investments.
All Property in the form of cash not otherwise invested
shall be deposited for the benefit of the Partnership in one or
more accounts of the Partnership, WirelessCo or any other
Subsidiary of the Partnership in which the Partnership and
MinorCo own, in the aggregate, directly or indirectly, one
hundred percent (100%) of the outstanding equity interests,
maintained in such financial institutions as the Partnership
Board shall determine, or shall be invested in accordance with
the guidelines set forth in Schedule 5.7 hereto (which guidelines
may be modified from time to time by the Partnership Board), or
shall be left in escrow, and withdrawals shall be made only for
Partnership purposes on such signature or signatures as the
Partnership Board may determine from time to time.
5.8 Deadlocks.
(a) Escalation Procedures. Upon the occurrence of a
Deadlock Event, the General Partners shall first use their good
faith efforts to resolve such matter in a mutually satisfactory
manner. If, after such efforts have continued for twenty (20)
days, no mutually satisfactory solution has been reached, the
General Partners shall resolve the Deadlock Event as provided
herein:
(i) The General Partners shall (at the
insistence of any of them) refer the matter to the chief
executive officers of their respective Parents for resolution.
(ii) Should the chief executive officers of the
Parents fail to resolve the matter within ten (10) days after it
is referred to them, each General Partner (or any group of
General Partners electing to act together) shall prepare a brief
(a "Brief"), which includes a summary of the issue, its proposed
resolution of the issue and considerations in support of such
proposed resolution, not later than ten (10) days following the
failure of the chief executive officers to resolve such dispute,
and such Briefs shall be submitted to such reputable and
experienced mediation service as is selected by the Partnership
Board by Required Majority Vote or, failing such selection, by
the Chief Executive Officer (the "Mediator"). During a period of
twenty (20) days, the Mediator and the General Partners shall
attempt to reach a resolution of the Deadlock Event.
(iii) In the event that after such twenty (20)
day period (or such longer period as the Partnership Board may
approve by Required Majority Vote), the General Partners are
still unable to reach resolution of the Deadlock Event (such
resolution to be evidenced by the requisite vote of the
Partnership Board with respect to the underlying matters), the
Deadlock Event shall constitute a Liquidating Event as provided
in Section 14.1(a)(iii) unless the Partnership Board determines
by Required Majority Vote not to dissolve.
(b) Deadlock Event. A "Deadlock Event" shall be deemed
to have occurred if (i) after failing to approve a Proposed
Budget or Proposed Business Plan for one Fiscal Year, the
Partnership Board has failed to approve a Proposed Budget or
Proposed Business Plan for the next succeeding Fiscal Year prior
to the commencement of such succeeding Fiscal Year, or (ii) the
position of Chief Executive Officer is vacant for a period of
more than sixty (60) days after at least two Partners with an
aggregate of at least thirty-three percent (33%) of the Voting
Percentage Interests have proposed a candidate to fill such
vacancy.
5.9 Conversion to Corporate Form.
(a) Procedures. In the event that (i) the Partnership
Board shall determine by Required Majority Vote (or such other
vote as may be required by Item B. of Schedule 5.1(j)) that it is
desirable or helpful for the business of the Partnership to be
conducted in a corporate rather than in a partnership form (for
the purposes of conducting a public offering or otherwise) or
(ii) conversion to corporate form is required pursuant to an
election made by a Registering Partner under Section 12.6(c), the
Partnership Board shall incorporate the Partnership in Delaware.
In connection with any incorporation of the Partnership pursuant
to the preceding sentence, the Partnership and MinorCo shall be
consolidated and the Partners shall receive, in exchange for
their Interests and MinorCo Interests, shares of capital stock of
such corporation having the same relative economic interests and
other rights as such Partners hold in the Partnership as set
forth in this Agreement, subject in each case to (i) any
modifications required solely as a result of the conversion to
corporate form and (ii) modifications to the provisions of
Section 5.1 to conform to the provisions relating to actions of
stockholders and a board of directors set forth in the Delaware
General Corporation Law; provided, that the relative number of
representatives on the board of directors and relative voting
power of the outstanding equity interests of such corporation of
each General Partner shall be as nearly as practicable in
proportion to the relative Voting Percentage Interests of the
General Partners immediately prior to such incorporation. For
purposes of the preceding sentence, each Partner's relative
economic interest in the Partnership shall equal such Partner's
Net Equity as compared to the Net Equity of all of the Partners,
as determined in accordance with Section 11.3 except that the
Partnership Board shall by Required Majority Vote select a single
Appraiser to determine Gross Appraised Value. At the time of
such conversion, the Partners shall enter into a stockholders'
agreement providing for (i) rights of first refusal and other
restrictions on Transfer equivalent to those set forth in
Sections 12.1 through 12.5 and Section 12.7, provided that (x)
the restrictions on Transfer set forth in Sections 12.1 through
12.4 shall not apply, following the initial Public Offering by
the corporate successor to the Partnership, to sales in broadly
disseminated Public Offerings or sales in accordance with Rule
144 under the Securities Act of 1933 (the "1933 Act") or Rule 145
under the 1933 Act (in accordance with the applicable provisions
of Rule 144) (or any successor to either of such Rules), in a
transaction that satisfies the manner of sale requirements of
Rule 144 or Rule 145 (whether or not applicable to such sale) and
(y) the restrictions on Transfer set forth in Section 12.5 shall
not apply following the initial Public Offering by the corporate
successor to the Partnership; and (ii) an agreement to vote all
shares of capital stock held by them with respect to the election
of directors of the corporation so as to duplicate as closely as
possible the management structure of the Partnership as set forth
in Section 5.1, modified as contemplated by the second sentence
of this Section 5.9(a).
(b) Registration Rights. Upon conversion to corporate
form, the corporate successor to the Partnership shall grant to
each of the Partners certain rights to require such successor to
register under the 1933 Act the shares of capital stock received
by the Partners in exchange for their Interests. Such rights
shall be as approved by the Required Majority Vote of the
Partnership Board, provided that the registration rights of each
Partner shall be identical on a proportionate basis and, if the
conversion to corporate form was required by Section 12.6(g),
shall consist of not less than two demand registrations on
customary terms and subject to customary conditions.
(c) Preemptive Rights. Each Partner shall have
preemptive rights, exercisable in accordance with procedures to
be established by the Partnership Board in connection with and
following the conversion of the Partnership to corporate form, to
purchase equity securities proposed to be issued from time to
time by a corporate successor to the Partnership or its
successor; provided, however, that no Partner shall have any such
preemptive right with respect to any equity securities which, by
a vote of the board of directors of such corporate successor that
is equivalent to a Required Majority Vote, have been approved for
issuance by such corporate successor in connection with (i) a
Public Offering or (ii) any acquisition (including by way of
merger or consolidation) by the corporate successor of the equity
interests or assets of another entity that is not a Partner or
its Affiliate in a transaction pursuant to which the purchase
price is paid by delivery of such equity securities to the
seller. A "Public Offering" means an offering of the securities
of the corporate successor to the Partnership pursuant to a
registration statement on a form applicable to the sale of
securities to the general public (including an offering by a
Registering Partner pursuant to a registration statement as
contemplated under Section 12.6(g)).
SECTION 6. PARTNERSHIP OPPORTUNITIES; CONFIDENTIALITY
6.1 Competitive Activities.
(a) In General. For so long as any Person is a
Partner, neither such Person nor any of its Controlled Affiliates
shall engage in any Competitive Activity in the United States of
America (including its territories and possessions other than
Puerto Rico) except (i) through the Partnership and its
Subsidiaries, (ii) subject to Section 6.1(d), as provided in
Section 6.1(b) or 6.1(c), (iii) as permitted or contemplated
under Section 8.3, or (iv) as permitted by Section 6.1(f), 6.3,
6.4 or 8.1. The term "Competitive Activity" means to bid on,
acquire or, directly or indirectly, own, manage, operate, join,
control or finance, or participate in the management, operation,
control or financing of, or be connected as a principal, agent,
representative, consultant, beneficial owner of an interest in
any Person, or otherwise with, or use or permit its name to be
used in connection with, any business or enterprise which (i)
engages in the bidding for or acquisition of any Wireless
Business license or engages in any Wireless Business, or (ii)
provides, offers, promotes or brands services that are within the
Wireless Exclusive Services.
(b) Bidding for Wireless Business Licenses. Except as
permitted by Section 6.4, no Partner nor any of its Controlled
Affiliates shall bid in the PCS Auction for any Wireless Business
licenses unless (i) the Partnership Board consents to such bid
following consultation by such Partner with the Representatives
of the other Partners; or (ii) (A) WirelessCo has entered a bid
or bids for such license, but a third-party bid has been entered
which equals or exceeds the maximum amount that WirelessCo has
determined to bid for such license, (B) if a vote was taken, such
Partner's Representative(s) voted in favor of WirelessCo's
increasing the amount it would bid for such license, and (C)
WirelessCo has determined not to increase its bid in response to
such third party bid. This Section 6.1(b) will not permit a
Partner or its Affiliate to bid for or acquire a Wireless
Business license if the bidding for or acquisition of such
license by a Partner or its Affiliate would otherwise violate (or
cause the Partnership or any of the other Partners or their
respective Affiliates to be in violation of) the FCC's rules or
orders relating to Wireless Business license cross-ownership,
license attribution standards, and/or spectrum attribution or
aggregation requirements, including Sections 20.6, 24.204 and
24.229(c) of the FCC's rules to be codified at 47 C.F.R. 20.6,
24.204 and 24.229(c).
(c) Engaging in Wireless Businesses. If any Partner or
any of its Controlled Affiliates proposes to engage in any
Competitive Activity other than as permitted by Section 6.1(b)
(or through a Wireless Business license acquired as permitted by
Section 6.1(b)), 6.3, 6.4 or 8.1, then such Partner shall first
offer to the Partnership the opportunity for the Partnership or
any of its Subsidiaries to engage, in lieu of such Partner and
its Affiliates, in such Competitive Activity (whether by
acquiring such interest itself or itself providing, offering,
promoting or branding such services) (the "Offer"), which Offer
shall be made in writing and shall set forth in reasonable detail
the nature and scope of the activity proposed to be engaged in,
including all material terms of any proposed acquisition. The
Partnership, for itself or any of its Subsidiaries (by Required
Majority Vote of the Partnership Board pursuant to Section 8.6),
shall have thirty (30) days from receipt of the Offer to accept
or reject it. If the Partnership does not accept (for itself or
any of its Subsidiaries), the Offer within such thirty (30) day
period, it shall be deemed to have rejected the Offer, and the
offering Partner or its Controlled Affiliate shall be permitted
to engage in such Competitive Activity on terms no more favorable
to such Partner or its Controlled Affiliate than those described
in the Offer. If the Partnership, for itself or any of its
Subsidiaries, accepts the Offer, the offering Partner and its
Controlled Affiliates shall not pursue such opportunity to engage
in such Competitive Activity; provided, however, that if the
Partnership or such Subsidiary, as applicable, does not within a
commercially reasonable period of time after such acceptance take
reasonable steps to pursue such opportunity, other than as a
result of a violation of this Agreement or wrongful acts or bad
faith on the part of the offering Partner or its Controlled
Affiliates, then the offering Partner or its Controlled Affiliate
shall be permitted to pursue such opportunity on terms no more
favorable to the offering Partner or its Controlled Affiliate
than the terms of the Offer. If the offering Partner or its
Controlled Affiliate does not take reasonable steps to pursue
such opportunity contemplated by the Offer within a reasonable
period of time after acquiring the right to do so in accordance
with the foregoing provisions of this Section 6.1(c) (including,
in the case of an acquisition, by entering into a definitive
agreement (subject solely to obtaining the requisite regulatory
approvals and other customary closing conditions) with respect to
such acquisition within one hundred twenty (120) days
thereafter), then it shall lose its right to pursue such
opportunity and thereafter be required to reoffer the opportunity
to the Partnership in accordance with, and shall otherwise comply
with, this Section 6.1(c). Notwithstanding the foregoing, a
Partner shall not be permitted to present an Offer to the
Partnership (or, except for Competitive Activities relating to an
Offer previously rejected by the Partnership, otherwise engage in
any Competitive Activity in reliance on this Section 6.1(c)) in
any license area (or portion thereof) in which the Partnership or
any of its Subsidiaries is otherwise offering, promoting or
branding Wireless Exclusive Services (or in which the Partnership
or any of its Subsidiaries plans to offer, promote or brand
Wireless Exclusive Services pursuant to or as set forth in the
Initial Business Plan or Approved Business Plan then in effect,
as applicable, or pursuant to any Wireless Business license
acquired by the Partnership or an Affiliation Agreement entered
into with the holder of a Wireless Business license subsequent to
the approval of such Initial Business Plan or Approved Business
Plan, as applicable), including pursuant to an Affiliation
Agreement, without a Unanimous Vote of the Partnership Board
pursuant to Section 8.6.
(d) Wireless Business Affiliation Agreements. (i) Any
Partner or Controlled Affiliate thereof that acquires or owns a
Wireless Business license, or directly engages in a Wireless
Business, as permitted by the exceptions provided by Sections
6.1(b), 6.1(c), 6.3(e), 6.3(h) and 8.1 to the prohibitions on
Competitive Activities contained in Section 6.1(a), shall,
subject to applicable law, as a condition to the availability of
such exceptions, offer to enter into an affiliation agreement
with respect to such Wireless Business with WirelessCo on terms
and conditions comparable to those which WirelessCo offers to
other affiliated Wireless Businesses in similar situations (or if
no such agreement then exists, such terms and conditions shall
include a provision for competitive pricing), under which such
Wireless Business will provide its services to the public as an
affiliate of WirelessCo's business (as entered into with a
Partner or its Controlled Affiliate or any other Person, an
"Affiliation Agreement"). The Partnership Board may waive
compliance with all or any part of this Section 6.1(d) with
respect to any transaction by Required Majority Vote of the
Partnership Board pursuant to Section 8.6.
(ii) Each Partner and its Controlled Affiliates
shall also use all commercially reasonable efforts to cause any
Affiliate of such Partner which acquires or owns a Wireless
Business license, or otherwise engages in any Wireless Business,
and provides services within the Wireless Exclusive Services, to
(if WirelessCo so desires) enter into an Affiliation Agreement
with WirelessCo.
(e) Geographic Restrictions on Wireless Business.
Unless approved by a Unanimous Partner Vote, the Partnership and
its Subsidiaries will not engage in any Competitive Activities in
the Philadelphia, Charlotte, Cleveland, El Paso, Jacksonville,
Knoxville, Omaha or Richmond MTAs, including bidding for or
acquiring any PCS licenses therein; provided that, to the extent
permitted by law, the Partnership and its Subsidiaries may (or,
as provided in Sections 6.3(e) and 8.1, shall) enter into
Affiliation Agreements with Persons engaged in Competitive
Activities in such MTAs; and provided further, that the
Partnership and its Subsidiaries may engage in Competitive
Activities in any MTA (other than Philadelphia) listed in this
Section 6.1(e) from and after the time that Sprint and its
Controlled Affiliates have divested of their ownership interests
in any of the Sprint Cellular Businesses in such MTA.
(f) Unrestricted Activities. Nothing in this Section 6
shall prevent any Person from (i) providing any Non-Exclusive
Services or engaging in any Excluded Business or (ii) complying
with any applicable laws, rules or regulations, including those
requiring that any facilities be made available to any other
Person.
6.2 Enforceability and Enforcement.
(a) The Partners acknowledge and agree that the time,
scope, geographic area and other provisions of Section 6.1 have
been specifically negotiated by sophisticated parties and agree
that such time, scope, geographic area, and other provisions are
reasonable under the circumstances. If, despite this express
agreement of the Partners, a court should hold any portion of
Section 6.1 to be unenforceable for any reason, the maximum
restrictions of time, scope and geographic area reasonable under
the circumstances, as determined by the court, will be
substituted for the restrictions held to be unenforceable.
(b) The Partnership shall be entitled to preliminary
and permanent injunctive relief, without the necessity of proving
actual damages or posting any bond or other security, to prevent
any breach of Section 6.1, which rights shall be cumulative and
in addition to any other rights or remedies to which the
Partnership may be entitled.
6.3 General Exceptions to Section 6.1.
The restrictions set forth in Section 6.1 on Competitive
Activities shall not be construed to prohibit any of the
following actions by a Partner and its Controlled Affiliates,
except to the extent any such action would cause the Partnership
(including the ownership of its assets and the conduct of its
business) to be in violation of any law or regulation or
otherwise result in any restriction or other limitation on the
Partnership's and its Subsidiaries' ownership of their respective
assets or conduct of their respective businesses:
(a) The acquisition or ownership of any debt or equity
securities of a Publicly Held Person, provided that such
securities (i) were not acquired from the issuer thereof in a
private placement or similar transaction, (ii) do not represent
more than five percent (5%) of the aggregate voting power of the
outstanding capital stock of any Person that engages in a
Competitive Activity (assuming the conversion, exercise or
exchange of all such securities held by such Partner or its
Controlled Affiliates that are convertible, exercisable or
exchangeable into or for voting stock) and (iii) in the case of
debt securities, entitle the holder to receive only interest or
other returns that are fixed, or vary by reference to an index or
formula that is not based on the value or results of operations
of such Person;
(b) The acquisition (through merger, consolidation,
purchase of stock or assets, or otherwise) of a Person or an
interest in a Person, which engages (directly or indirectly
through an Affiliate that is controlled by such Person) in any
Competitive Activity if either (i) such acquisition results from
a foreclosure or equivalent action with respect to debt
securities permitted to be held under Section 6.3(a) or (ii) the
Competitive Activity does not constitute the principal activity,
in terms of revenues or fair market value, of the businesses
acquired in such acquisition or conducted by the Person in which
such interest is acquired, provided, in each case, that such
Partner or Controlled Affiliate divests itself of the Competitive
Activity or interest therein as soon as is practicable, but in no
event later than twenty-four (24) months, after the acquisition
unless the Partnership Board approves the entering into of an
Affiliation Agreement with respect to such Competitive Activity
pursuant to Section 8.6;
(c) The continued holding of an equity interest in a
Person that commences a Competitive Activity following the
acquisition of such equity interest if neither the Partner nor
its Controlled Affiliate has any responsibility or control over
the conduct of such Competitive Activity, does not permit its
name to be used in connection with such Competitive Activity and
uses all commercially reasonable efforts, including voting its
equity interest, to cause such Person either (i) to cease such
Competitive Activity or (ii) to offer to enter into an
Affiliation Agreement with the Partnership and its Subsidiaries;
(d) The conduct of any Competitive Activity that is a
necessary component of or an incidental part of the conduct of
any Excluded Business by a Partner or its Controlled Affiliates
or the entering into of an arrangement with an independent third
party for the provision of any services included in the Wireless
Exclusive Services which is a necessary component of or an
incidental part of the conduct of such Excluded Business, so long
as, in each case, such Partner or Controlled Affiliate shall
first use all commercially reasonable efforts to negotiate
agreements with the Partnership or one of its Subsidiaries, which
are reasonable in the independent judgment of both parties,
pursuant to which the Partnership or such Subsidiary would
provide such services included in the Wireless Exclusive Services
on terms no less favorable to the Partner or such Controlled
Affiliate than such Partner or Controlled Affiliate could obtain
from an independent third party or could provide itself;
(e) The ownership and operation by (i) a partnership of
Sprint, TCI and Cox and/or their respective Affiliates of a PCS
license and an associated Wireless Business in the Philadelphia
MTA ("PhillieCo"), (ii) Cox or its Affiliate of a PCS License and
an associated Wireless Business in the Omaha MTA and (iii) any of
Cox, Comcast and TCI or their Affiliates (acting singly or
jointly through a partnership or other entity) of a PCS license
and an associated Wireless Business in any of the Charlotte,
Cleveland, El Paso, Jacksonville, Knoxville and Richmond MTAs,
provided in each case that, subject to applicable law, such
owners or entities holding the licenses enter into Affiliation
Agreements with the Partnership and its Subsidiaries; and
provided further, that (x) the exception provided in clause (ii)
of this Section 6.3(e) shall terminate at such time as Cox is
obligated to contribute the Omaha License to the Partnership
pursuant to Section 2.3(a)(ii) and (y) except for any Competitive
Activities conducted in the MTAs listed in clause (iii) of this
Section 6.3(e) pursuant to an agreement entered into or PCS
license acquired during the period beginning on July 1, 1996 and
ending on the date that Sprint and its Controlled Affiliates have
divested of their ownership interests in the Sprint Cellular
Businesses, the exception provided in such clause (iii) shall
terminate at such time as Sprint and its Controlled Affiliates
have divested of their ownership interests in the Sprint Cellular
Businesses;
(f) The conduct of any Competitive Activity involving
the provision of any product or service that is an ancillary
value-added addition to a Wireless Business and which does not
itself require an FCC license (including operator services,
location services and weather, sports and other information
services);
(g) The ownership and operation by Sprint's Controlled
Affiliates of their cellular businesses within the Sprint
Cellular Service Area until such time as Sprint and its
Controlled Affiliates have divested of their ownership interests
in the Sprint Cellular Businesses; provided that the entities
succeeding to the Sprint Cellular Businesses shall be entitled to
use the Sprint Brand for a period not to exceed one (1) year
following the closing of such divestiture;
(h) The ownership and operation by Cox or its Affiliate
of PioneerCo, so long as PioneerCo, subject to applicable law,
enters into an Affiliation Agreement with the Partnership prior
to offering or providing any Wireless Exclusive Services;
(i) The continuing ownership by an Affiliate of Sprint
of its current ownership interest in Iridium and the provision of
any services by Iridium so long as Iridium is not an Affiliate of
Sprint;
(j) The ownership by a Controlled Affiliate of Comcast
of any ownership interest in Nextel and the provision of any
services by Nextel, subject to Section 6.4(f) of this Agreement;
(k) The continuing ownership by a Controlled Affiliate
of TCI of its current ownership interest in Nextel and the
provision of any services by Nextel so long as Nextel is not an
Affiliate of TCI;
(l) The continuing ownership by a Controlled Affiliate
of TCI of its current ownership interest in MTS Limited
Partnership ("MTS") and the provision of any services by MTS so
long as MTS is not an Affiliate of TCI;
(m) The continuing ownership by a Controlled Affiliate
of TCI of its current ownership interest in General Communication
Inc. ("GCI") and the provision of any services by GCI so long as
GCI is not an Affiliate of TCI;
(n) The continuing ownership by a Controlled Affiliate
of TCI of its current ownership interest in Western Tele-
Communications, Inc. ("WTCI") and the conduct by WTCI of its
current business;
(o) The continuing ownership and operation by Sprint's
Controlled Affiliates of their IMTS (mobile radio telephony
service) and paging businesses as such businesses currently are
being conducted, so long as the aggregate annual revenue derived
from the operation of such businesses does not exceed
$15,000,000;
(p) The provision by a Partner and its Controlled
Affiliates of Wireless Exclusive Services on a resale basis in
geographic areas where neither the Partnership nor any of its
Subsidiaries or Wireless Affiliates is then providing, offering,
promoting or branding Wireless Exclusive Services and either (i)
with respect to Sprint, a Controlled Affiliate of Sprint owns a
LEC property as of the date of this Agreement in such geographic
area or (ii) in the reasonable judgment of such Partner, such
Partner or its Controlled Affiliate must offer in such geographic
area Wireless Exclusive Services in a package with other products
and services of such Partner or its Controlled Affiliates in
order to compete with an actual or anticipated initiative by a
service provider that is not a Controlled Affiliate of such
Partner; provided in each case that such Partner or its
Controlled Affiliate must (x) first offer, or cause to be
offered, to the Partnership the opportunity to be the provider of
such Wireless Exclusive Services on terms no less favorable to
the Partnership than those made available to such Partner or its
Controlled Affiliate and (y) use its commercially reasonable
efforts to insure that any provision of such Wireless Exclusive
Services is in accordance with the Partnership's technical
requirements in a manner that would facilitate the transition of
such business to the Partnership. At such time as the
Partnership commences providing, offering, promoting or branding
Wireless Exclusive Services within such geographic area, such
Partner shall, promptly following its receipt of written notice
from the Partnership, offer, or cause its Controlled Affiliate to
offer, to Transfer to the Partnership such Partner's or its
Controlled Affiliate's business of providing Wireless Exclusive
Services in such geographic area, and (at the Partnership's
option) to Transfer, lease or otherwise make available (at the
election of such Partner or its Controlled Affiliate) to the
Partnership the assets that are utilized in the provision of such
Wireless Exclusive Services, such offer in each case to be at a
price equal to the costs that the Partnership would incur to
achieve a like business, including the costs associated with the
creation or acquisition of the customer base of such business and
the replacement cost of any assets so Transferred, leased or
otherwise made available;
(q) Prior to the termination of a Parents Agreement,
the offering, promotion and branding by the Cable Partner whose
Parent is a party to such Parents Agreement and its Controlled
Affiliates of the Partnership's Wireless Exclusive Services under
a Permitted Brand at such times and in such geographic areas as
to which Section 2(a)(i) of such Parents Agreement has ceased to
be applicable to the Parent of such Cable Partner pursuant to
Section 4(b) or 4(c) of such Parents Agreement;
(r) Following the termination of a Parents Agreement,
the offering, promotion and branding by the Cable Partner whose
Parent is a party to such Parents Agreement and its Controlled
Affiliates of the Partnership's Wireless Exclusive Services under
a Permitted Brand in any geographic area where (i) neither such
Cable Partner, its Controlled Affiliates nor any Local Joint
Venture between such Cable Partner or its Controlled Affiliate
and Sprint or its Controlled Affiliate is providing Local
Telephony Services (as defined in the Parents Agreement) under
the Sprint Brand and (ii) Sprint Parent has not provided or
caused to be provided to such Cable Partner or its applicable
Controlled Affiliate on competitive economic terms Long Distance
Telephony Services (as defined in the Parents Agreement) under
the Sprint Brand to offer and promote, and package with other
products and services to offer and promote, to its customers, and
for which it is authorized to act as a non-exclusive sales agent
in that geographic area; and
(s) The offering or promotion on a sales agency basis
of any product or service offered by any Wireless Affiliate
pursuant to or in accordance with an Affiliation Agreement.
Notwithstanding anything to the contrary in this Section 6, any
investment fund in which a Partner or any of its Affiliates has
an investment (including pension funds) that invests funds on
behalf of and has a fiduciary duty to third party investors shall
be permitted to engage in or invest in entities engaged in any
activity whatsoever; provided that, neither such Partner nor any
of its Controlled Affiliates, directly or indirectly, exercises
any management or operational control whatsoever in any such
entity engaging in a Wireless Business.
6.4 Comcast Exceptions.
The restrictions set forth in Section 6.1 shall not
apply with respect to the following:
(a) Subject to the limitations set forth in this
Section 6.4, Comcast and its Controlled Affiliates may engage in
any Competitive Activities with respect to any Wireless Business
in the Comcast Area.
(b) Comcast and its Controlled Affiliates may
participate in a bid for and/or acquire any interest in a 10 MHz
PCS license only in any of the BTAs in the Philadelphia MTA or
the Allentown, Pennsylvania BTA. Comcast and its Controlled
Affiliates may acquire any interest in a 10 MHz PCS license in
any of the following cellular license areas in New Jersey:
Hunterdon County, Middlesex County, Monmouth County and Ocean
County; provided, that at the time of such acquisition Comcast
and its Controlled Affiliates own a controlling interest in a
cellular license for such area and further provided, that the
license area of such 10 MHz license shall not extend beyond such
area in other than an immaterial manner. In the event Comcast
and its Controlled Affiliates own a controlling interest in any
such 10 MHz PCS license, then Comcast and its Controlled
Affiliates will, to the extent permitted by applicable law,
provide for their customers receiving services under any such 10
MHz PCS license to receive roaming services from any of
WirelessCo's or its Affiliate's businesses providing services
under any PCS license (the "Partnership's Businesses"), subject
to the conditions that (i) such roaming is technically feasible,
(ii) such roaming is at competitive rates and on other terms and
conditions reasonably acceptable to Comcast and its Controlled
Affiliates, (iii) the Partnership's Businesses support the
features and services provided by Comcast and its Controlled
Affiliates to their customers and (iv) subject to the same
conditions, the Partnership's Businesses will provide for their
customers to receive reciprocal roaming services from Comcast and
its Controlled Affiliates in the areas described above at such
times as neither PhillieCo nor WirelessCo owns or has an
affiliation with respect to a Wireless Business license for such
areas. Notwithstanding the foregoing, if the ownership by
Comcast or any of its Controlled Affiliates of any 10 MHz PCS
license outside of the Philadelphia MTA (A) causes WirelessCo
(including the ownership of its assets and the conduct of its
business) to be in violation of any law or regulation or
otherwise results in any restriction or other limitation on
WirelessCo's ownership of its assets or conduct of its business
or (B) in any way impairs, prevents or delays the ability of
WirelessCo to bid for or acquire a Wireless Business license in
any license area in which WirelessCo plans to engage in a
Competitive Activity pursuant to or as set forth in the Initial
Business Plan or its then-current Approved Business Plan, Comcast
and its Controlled Affiliates will be prohibited from making such
acquisition or, if such acquisition has already occurred, will
cure the circumstances described above (including, if required,
by divesting its ownership of the 10 MHz PCS license) within a
commercially reasonable period of time after its receipt of
notice from WirelessCo of the existence of such circumstances;
provided that, in the event of such divestiture, Comcast and its
Controlled Affiliates will have the right to resell service in
such area provided such resale shall occur using WirelessCo's
facilities if they are available and it is technically feasible
to do so.
(c) The Partnership will, at the request of Comcast and
Affiliates and to the extent permitted by applicable law, (i)
provide for customers receiving Wireless Business services from
Comcast and its Controlled Affiliates in the Comcast Area, to
receive roaming services in areas outside of the Comcast Area at
competitive rates and on commercially reasonable terms and
conditions where the Partnership Businesses own or have an
affiliation with respect to a Wireless Business license, subject
to the condition that such roaming is technically feasible; (ii)
provide Comcast and its Controlled Affiliates' Wireless
Businesses in the Comcast Area with SS7 interconnection to the
Partnership's facilities on commercially reasonable terms and
conditions and (iii) in the event the Partnership or its
Subsidiaries allow or are required by law to allow resale of
their Wireless Exclusive Services in any part of the Comcast
Area, allow Comcast and its Controlled Affiliates to resell such
services in such part of the Comcast Area on commercially
reasonable terms and conditions.
(d) Comcast and its Controlled Affiliates may engage in
any Competitive Activities with respect to any Wireless Business
in the Kankakee, Illinois RSA cellular license area as well as
the cellular license area served by Indiana Cellular Holdings,
Inc., Harrisburg Cellular Telephone Company, Aurora/Elgin
Cellular Telephone Company, Inc. and Joliet Cellular Telephone
Company, Inc.; provided that such Competitive Activities are
confined to the geographic territories of the cellular licenses
currently held by such businesses.
(e) Comcast and its Controlled Affiliates may
participate in regional marketing activities within the Comcast
Area for the purpose of: (i) selling to its "In-Territory
Customers" (as defined below) wireless services within the
Washington, D.C., New York and Philadelphia MTAs; and (ii)
obtaining distribution from its "In-Territory Distributors" (as
defined below) of wireless services within the Washington, D.C.,
New York and Philadelphia MTAs; provided that (A) Comcast and its
Controlled Affiliates do not maintain or deploy any sales
personnel, sales office or other direct sales presence, or
otherwise advertise or promote the Comcast brand or any other
brand, in either the New York MTA or the Washington, D.C. MTA
outside of the Comcast Area, (B) Comcast and its Controlled
Affiliates do not own or lease any wireless transmission
facilities outside of the Comcast Area in connection therewith
and (C) in obtaining the distribution contemplated by Section
6.4(e)(ii), Comcast and its Controlled Affiliates subcontract the
provision of wireless services outside the Comcast Area to a
third party provider only if such services cannot be
subcontracted to WirelessCo without material adverse consequences
for Comcast's and its Controlled Affiliates' ability to
participate in such regional marketing activities. For the
purposes hereof, an "In-Territory Customer" is a customer that
has a business location in the Comcast Area and places the order
for the services described above through Comcast and its
Controlled Affiliates in the Comcast Area. For the purposes
hereof, an "In-Territory Distributor" is a distributor that has a
business location in the Comcast Area and requires a regional
contract be entered into by Comcast and its Controlled Affiliates
in the Comcast Area. For purposes of this Section 6.4(e), the
term "Comcast Area" shall include any area in which Comcast and
its Controlled Affiliates at such time own a controlling interest
in a PCS license which was permitted to be acquired under Section
6.4(b).
(f) Comcast and its Controlled Affiliates may hold an
interest in Nextel Communications, Inc. ("Nextel"), provided that
(i) none of Comcast's or its Controlled Affiliates' Agents
participate in or are present at any discussions, or receive any
information, regarding Nextel's PCS bidding strategies; and (ii)
at the election of Comcast, no later than October 24, 1995,
either (A) Comcast and its Controlled Affiliates shall own
securities representing less than 5.4% of the voting power and
equity of all of the outstanding capital stock of Nextel, (B) no
Agent of Comcast or any of its Controlled Affiliates shall be a
director or officer of Nextel, and no director of Nextel shall be
an appointee of Comcast or its Controlled Affiliates pursuant to
any contractual right of Comcast and its Controlled Affiliates to
appoint any director of Nextel, or (C) Comcast shall elect to
become an Exclusive Limited Partner as of such date by giving
written notice of such election to the Partnership; provided,
however, that if Comcast and its Controlled Affiliates (x) fail
to satisfy either of clauses (A) or (B) above at any time after
October 24, 1995 or (y) acquire any additional common stock or
other voting securities (or securities convertible into or
exchangeable for common stock or other voting securities) of
Nextel (as to (y) only, other than common stock acquired as a
result of (I) the exercise of its stock option to acquire
25,000,000 shares and warrant to acquire 230,000 shares, (II) the
consummation of its sale of the assets of Philadelphia Mobile
Communications, Inc. to Nextel (the "PMCI Shares") or (III) the
exercise by Comcast and its Controlled Affiliates of purchase
rights to maintain, in the event of certain future share
issuances by Nextel, the then current percentage ownership of
Comcast and its Controlled Affiliates in Nextel assuming the
exercise of such stock option and warrant in full and the receipt
of the PMCI Shares (which percentage shall in no event exceed
15%), granted under that certain Stock Purchase Agreement dated
as of September 14, 1992, among Comcast Parent, Comcast FCI, Inc.
and Fleet Call, Inc., as amended; provided, that as a result of
any such purchases pursuant to clauses (I), (II) and (III),
Comcast and its Controlled Affiliates do not own 10% or more of
the common stock of Nextel (determined in accordance with Rule
13d-3 under the Securities Exchange Act of 1934)), then Comcast
will automatically (without any action required to be taken by
the Partnership or any Partner) become an Exclusive Limited
Partner. Notwithstanding the second proviso in the preceding
sentence, if (1) such acquisition is the result of the exercise
by Comcast and its Controlled Affiliates of such purchase rights
and as a result thereof Comcast and its Controlled Affiliates own
10% or more of the common stock of Nextel as so determined, (2)
Comcast and its Controlled Affiliates exercise any available
registration rights within thirty (30) days following the
acquisition of common stock pursuant to the exercise of such
purchase rights and otherwise seek to Transfer such common stock
as soon as practicable, and (3) an amount of Nextel common stock
is Transferred within two hundred forty (240) days following the
date of such acquisition such that thereafter Comcast and its
Controlled Affiliates do not own 10% or more thereof as so
determined, then Comcast will automatically (without any action
required by the Partnership or any Partner) be returned to the
status of General Partner if it satisfies either of clauses (A)
or (B) above and is not otherwise required to be an Exclusive
Limited Partner under this Section 6.4(f). If at any time
following the date hereof Comcast and its Controlled Affiliates
own more than 31% of the common stock of Nextel on a fully
diluted basis (provided that at such time Nextel has a total
market capitalization of at least $2,000,000,000), or own 50% or
more of the common stock of Nextel on a fully-diluted basis
(regardless of Nextel's total market capitalization), Comcast
shall provide written notice to the Partnership and to each other
Partner of the acquisition of such ownership interest (or the
occurrence of any event causing Comcast and its Controlled
Affiliates to exceed such ownership threshold) within five (5)
days of such acquisition (or the occurrence of such event). The
other Partners will have the option, exercisable within ninety
(90) days of the date of such notice, to purchase the Interest of
Comcast for a purchase price equal to the Net Equity thereof for
cash at a closing to be held no later than ninety (90) days from
the date such option is exercised. Such purchase shall occur in
accordance with the procedures set forth in Section 11 as if
Comcast were an "Adverse Partner" and each of the other Partners
were a "Purchasing Partner.
(g) The term "Comcast Area" means (i) the following
cellular license areas (or portions thereof) in New Jersey:
Hunterdon NJ1 RSA, New Brunswick MSA, Long Branch MSA, Trenton
MSA, Allentown, PA MSA, Philadelphia MSA, Ocean NJ2 RSA, Atlantic
City MSA, Vineland-Millville MSA, and Wilmington, DE MSA; (ii)
Delaware; (iii) Maryland RSA2; (iv) counties in Pennsylvania in
which Comcast and its Controlled Affiliates engaged in the
cellular business as of October 24, 1994, and all counties in
Pennsylvania contiguous thereto; (v) the Philadelphia MTA; and
(vi) minor overlaps into any territory adjoining any of the areas
included in (i) - (v) required to efficiently provide services in
such area.
(h) The obligations under Section 6.1(d) shall not
apply to Comcast and its Controlled Affiliates with respect to
any Competitive Activities permitted pursuant to this Section
6.4.
(i) Comcast and its Controlled Affiliates may co-brand
or package any Wireless Exclusive Services permitted to be
provided pursuant to this Section 6.4 together with their cable
television offerings; provided that in such event the only brand
name(s) which may be used for any such Wireless Exclusive
Services are any of the following, any combination thereof or any
variants thereof substantially similar thereto: Comcast, Comcast
Cellular, Comcast Metrophone, Metrophone, Comcast Cellular One
and Cellular One, which Comcast represents are currently utilized
by its cellular business in the Comcast Area as of the date
hereof; provided further, however, that Comcast may request that
the Partnership approve the use by Comcast and its Controlled
Affiliates of another brand name (other than that of an inter-
exchange carrier), in which case the Partnership's consent to the
use thereof will not be unreasonably withheld.
6.5 Freedom of Action.
Except as set forth in this Section 6, no Partner or
Affiliate shall have any obligation not to (i) engage in the same
or similar activities or lines of business as the Partnership or
its Subsidiaries or develop or market any products or services
that compete, directly or indirectly, with those of the
Partnership or its Subsidiaries, (ii) invest or own any interest
publicly or privately in, or develop a business relationship
with, any Person engaged in the same or similar activities or
lines of business as, or otherwise in competition with, the
Partnership or its Subsidiaries, (iii) do business with any
client or customer of the Partnership or its Subsidiaries, or
(iv) employ or otherwise engage a former officer or employee of
the Partnership or its Subsidiaries.
6.6 Confidentiality.
(a) Maintenance of Confidentiality. Each Partner and
its Controlled Affiliates and the Partnership (each a "Restricted
Party"), shall cause their respective officers and directors (in
their capacity as such) to, and shall take all reasonable
measures to cause their respective employees, attorneys,
accountants, consultants and other agents and advisors
(collectively, and together with their respective officers and
directors, "Agents") to, keep secret and maintain in confidence
all confidential and proprietary information and data of the
Partnership and the other Partners or their Affiliates disclosed
to it (in each case, a "Receiving Party") in connection with the
formation of the Partnership and the conduct of the Partnership's
business and in connection with the transactions contemplated by
the Joint Venture Formation Agreement (the "Confidential
Information") and shall not, shall cause their respective
officers and directors not to, and shall take all reasonable
measures to cause their respective other Agents not to, disclose
Confidential Information to any Person other than the Partners,
their Controlled Affiliates and their respective Agents that need
to know such Confidential Information, or the Partnership. Each
Partner further agrees that it shall not use the Confidential
Information for any purpose other than monitoring and evaluating
its investment, determining and performing its obligations and
exercising its rights under this Agreement. The Partnership and
each Partner shall take all reasonable measures necessary to
prevent any unauthorized disclosure of the Confidential
Information by any of their respective Controlled Affiliates or
any of their respective Agents. The measures taken by a
Restricted Party to protect Confidential Information shall not be
deemed unreasonable if the measures taken are at least as strong
as the measures taken by the disclosing party to protect such
Confidential Information.
(b) Permitted Disclosures. Nothing herein shall
prevent any Restricted Party or its Agents from using,
disclosing, or authorizing the disclosure of Confidential
Information it receives in the course of the business of the
Partnership which:
(i) has been published or is in the public
domain, or which subsequently comes into the public domain,
through no fault of the Receiving Party; (ii) prior to
receipt hereunder (or under that certain Agreement for Use
and Non-Disclosure of Proprietary Information, dated as of
May 4, 1994, among Affiliates of the Partners) was properly
within the legitimate possession of the Receiving Party or,
subsequent to receipt hereunder (or under such agreement),
is lawfully received from a third party having rights
therein without restriction of the third party's right to
disseminate the Confidential Information and without notice
of any restriction against its further disclosure; (iii) is
independently developed by the Receiving Party through
Persons who have not had, either directly or indirectly,
access to or knowledge of such Confidential Information;
(iv) is disclosed to a third party with the written approval
of the party originally disclosing such information,
provided that such Confidential Information shall cease to
be confidential and proprietary information covered by this
Agreement only to the extent of the disclosure so consented
to; (v) subject to the Receiving Party's compliance with
paragraph (d) below, is required to be produced under order
of a court of competent jurisdiction or other similar
requirements of a governmental agency, provided that such
Confidential Information to the extent covered by a
protective order or its equivalent shall otherwise continue
to be Confidential Information required to be held
confidential for purposes of this Agreement; or (vi) subject
to the Receiving Party's compliance with paragraph (d)
below, is required to be disclosed by applicable law or a
stock exchange or association on which such Receiving
Party's securities (or those of its Affiliate) are listed.
(c) Notwithstanding this Section 6.6, any Partner may
provide Confidential Information (i) to other Persons considering
the acquisition (whether directly or indirectly) of all or a
portion of such Partner's Interest in the Partnership pursuant to
Section 12 of this Agreement, (ii) to other Persons considering
the consummation of a Permitted Transaction with respect to such
Person or (iii) to any financial institution in connection with
borrowings from such financial institution by such Partner or any
of its Controlled Affiliates, so long as prior to any such
disclosure such other Person or financial institution executes a
confidentiality agreement that provides protection substantially
equivalent to the protection provided the Partners and the
Partnership in this Section 6.6.
(d) In the event that any Receiving Party (i) must
disclose Confidential Information in order to comply with
applicable law or the requirements of a stock exchange or
association on which such Receiving Party's securities or those
of its Affiliates are listed or (ii) becomes legally compelled
(by oral questions, interrogatories, requests for information or
documents, subpoenas, civil investigative demands or otherwise)
to disclose any Confidential Information, the Receiving Party
shall provide the disclosing party with prompt written notice so
that in the case of clause (i), the disclosing party can work
with the Receiving Party to limit the disclosure to the greatest
extent possible consistent with legal obligations, or in the case
of clause (ii), the disclosing party may seek a protective order
or other appropriate remedy or waive compliance with the
provisions of this Agreement. In the case of clause (ii), (A) if
the disclosing party is unable to obtain a protective order or
other appropriate remedy, or if the disclosing party so directs,
the Receiving Party shall, and shall cause its employees to,
exercise all commercially reasonable efforts to obtain a
protective order or other appropriate remedy at the disclosing
party's reasonable expense, and (B) failing the entry of a
protective order or other appropriate remedy or receipt of a
waiver hereunder, the Receiving Party shall furnish only that
portion of the Confidential Information which it is advised by
opinion of its counsel is legally required to be furnished and
shall exercise all commercially reasonable efforts to obtain
reliable assurance that confidential treatment shall be accorded
such Confidential Information, it being understood that such
reasonable efforts shall be at the cost and expense of the
disclosing party whose Confidential Information has been sought.
(e) Any press release concerning the business, affairs
and operation of the Partnership shall be approved in advance by
a Required Majority Vote of the Partnership Board.
(f) The obligations under this Section 6.6 shall
survive for a period of two (2) years from (i) as to all Partners
and their respective Controlled Affiliates, the termination of
the Partnership and (ii) as to any Partner and its Controlled
Affiliates, such Partner's withdrawal therefrom (or otherwise
ceasing to be a Partner); provided that such obligations shall
continue indefinitely with respect to any trade secret or similar
information which is proprietary to the Partnership and provides
the Partnership with an advantage over its competitors.
(g) All references in this Section 6.6 to the
Partnership shall, unless the context otherwise requires, be
deemed to refer also to each Subsidiary of the Partnership.
SECTION 7. ROLE OF EXCLUSIVE LIMITED PARTNERS
7.1 Rights or Powers.
The Exclusive Limited Partners shall not have any right or
power to take part in the management or control of the
Partnership or its business and affairs or to act for or bind the
Partnership in any way.
7.2 Voting Rights.
The Exclusive Limited Partners shall have the right to vote
only on the matters specifically reserved for the vote or
approval of Partners (including the Exclusive Limited Partners)
set forth in this Agreement, including those matters listed on
Schedule 5.1(l).
SECTION 8. TRANSACTIONS WITH PARTNERS; OTHER AGREEMENTS
8.1 Sprint Cellular.
In the event (i) WirelessCo is the winning bidder in the PCS
Auction for a PCS license with respect to a license area and at
such time Sprint and its Controlled Affiliates have an ownership
interest in a cellular business or businesses (a "Sprint Cellular
Business") having a service area which is included within such
license area in whole or in part (an "Overlap Cellular Area") or
(ii) WirelessCo has decided, at any time prior to September 28,
1997, to acquire a PCS license in a license area which includes
an Overlap Cellular Area; and as a result of Sprint's ownership
interest in a Sprint Cellular Business WirelessCo would not be
awarded on an unconditional basis (in the event of clause (i)
above) or be permitted to acquire (in the event of clause (ii)
above) such PCS license under FCC rules and regulations relating
to CMRS spectrum cap limitations, then Sprint agrees that it will
divest such portion of such Sprint Cellular Business, within the
time period provided by FCC rules in the event of clause (i)
above, and as soon as commercially reasonable (e.g., to avoid
"fire sale" prices) in the event of clause (ii) above, or take
any other action as is necessary, so that WirelessCo will not be
impaired from holding or acquiring such PCS license. Nothing
herein prevents one or more Partners from acquiring such PCS
license if Sprint is unable to divest the overlap property in a
timely manner, provided that, subject to applicable law, such
Partner or Partners enter into an Affiliation Agreement with the
Partnership and its Subsidiaries. This Section 8.1 shall not
require Sprint to divest, or take any other action with respect
to, any of the Sprint Cellular Businesses in the Charlotte,
Cleveland, El Paso, Jacksonville, Knoxville, Omaha or Richmond
MTAs.
8.2 Sprint Brand Licensing Agreement.
Simultaneously with the execution and delivery of this
Agreement, the Partnership and Sprint Communications have entered
into an Amended and Restated Trademark License Agreement, a copy
of which is attached hereto as Exhibit 8.2 (the "Trademark
License").
8.3 Marketing; Branding of Partnership Services.
(a) Marketing Channels. The Partnership Services will
be marketed directly by the Partnership and through its marketing
channels, which will include Sprint LD, the Cable Subsidiaries
and other Controlled Affiliates of the Cable Partners, and
Wireless Affiliates. The Partnership may enter into sales agency
agreements with others, including (if and to the extent permitted
by the original agency agreement) sub-agency agreements for
Sprint LD Services and Cable Services; provided, however, that
such appointment shall be subject to all of the terms and
conditions of the original agency agreement (including
performance and quality standards), and the appointing agent
shall be responsible for ensuring compliance by its distributors
and sub-agents with such terms and conditions.
(b) Sales Agency. Sprint LD, the Cable Subsidiaries
and other Controlled Affiliates of the Cable Partners (except for
Cable Subsidiaries and other Controlled Affiliates of Comcast
with respect to the Comcast Area) will be non-exclusive
commission sales agents for the Partnership's Wireless Exclusive
Services and Non-Exclusive Services ("Partnership Services")
pursuant to agency agreements that conform to the provisions of
this Section 8.3 and are otherwise in form and substance
reasonably satisfactory to the parties thereto. The agency
agreements will provide that all Partnership Services will be
made available to each of Sprint LD and the Cable Subsidiaries
and other Controlled Affiliates of the Cable Partners to offer,
promote and package.
The Partnership will be a non-exclusive commission sales
agent for such long distance services of Sprint and its
Affiliates (other than Sprint Cellular and any LEC properties
owned by Controlled Affiliates of Sprint) (collectively, "Sprint
LD") as Sprint LD may agree to make available to the Partnership
("Sprint LD Services") and for such services offered by a Cable
Subsidiary or other Controlled Affiliate of a Cable Partner in
the areas served by its local cable system as such Cable
Subsidiary (or Controlled Affiliate) may agree to make available
to the Partnership ("Cable Services"), in each case pursuant to
agency agreements that conform to the provisions of this Section
8.3 and are otherwise in form and substance reasonably
satisfactory to the parties thereto.
Subject to Section 8.3(a), Sprint LD will be a sub-agent of
the Partnership for Cable Services, and the Cable Subsidiaries
and other Controlled Affiliates of the Cable Partners will be
sub-agents of the Partnership for Sprint LD Services, in each
case only if and to the extent that such sub-agency is permitted
by the original agency agreement relating to such services. The
Partnership will establish the commission structure and level for
its sub-agents, provided that sub-agents that are Partners or
their Controlled Affiliates will be paid commissions on a pass-
through basis without deduction by the Partnership.
No Partner or Controlled Affiliate thereof shall be required
(i) to make any of its product or service offerings available to
the Partnership to offer or promote pursuant to the first
sentence of the second paragraph of this Section 8.3(b), (ii) to
authorize the Partnership to include any product or service
offerings that are made available by such Partner or Controlled
Affiliate in a bilateral package with any Partnership Services or
in a multilateral package with Partnership Services and product
or service offerings of any other Partner or its Controlled
Affiliates, or (iii) to authorize the Partnership to appoint any
distributors or sub-agents for any product or service offerings
that such Partner or its Controlled Affiliates make available to
the Partnership, whether as a condition of its appointment as an
agent for Partnership Services or otherwise.
The sales agency agreements referenced to in this Section
8.3(b) will include appropriate customer and territorial
restrictions. Sprint LD and the Cable Subsidiaries and other
Controlled Affiliates of the Cable Partners will retain the
"retail margins" on the sales of their respective services by the
Partnership, and will pay a sales commission to the Partnership.
(c) Commissions. Commissions payable to the
Partnership under sales agency agreements for Sprint LD Services
and for Cable Services and commissions payable to Sprint LD and
the Cable Subsidiaries and other Controlled Affiliates of the
Cable Partners under sales agency agreements for Partnership
Services will be not less favorable to the agent than those for
comparable agency arrangements (considering churn, marketing
support provided by agent, etc.) of the relevant principal with
third parties, irrespective of volume. The Partners acknowledge
that commission arrangements between Cable Subsidiaries and other
Controlled Affiliates of the Cable Partners and owners of
multiple dwelling units, shared tenant services companies and the
like are not comparable agency arrangements for this purpose.
Commissions will be paid on the basis of net customer growth
(i.e., after taking into account churn) and in the case of a sale
to an existing customer will only be paid on the basis of
incremental sales revenue from such customer resulting from such
sale, if any.
(d) Exclusivity. The Partnership will require as a
condition to its appointment of Sprint LD, each Cable Subsidiary
or other Controlled Affiliate of the Cable Partners and each
Wireless Affiliate as sales agents for the Partnership Services,
that Sprint LD, such Cable Subsidiary or other Controlled
Affiliate of the Cable Partners and such Wireless Affiliate agree
that, except as permitted under Section 6, it will not offer,
promote or package any Wireless Exclusive Services other than the
Partnership Services and, in the case of a Wireless Affiliate,
the products and services of such Wireless Affiliate, during the
term of such agency.
(e) Brand. The Partnership Services will be offered,
promoted and packaged solely under the Licensed Mark (as defined
in the Sprint Trademark License Agreement attached as Exhibit
8.2), except that the foregoing shall not preclude (i) the
inclusion of Partnership Services bearing the Licensed Mark (or,
if permitted under clause (ii), a Permitted Brand) in a package
with any products or services offered, promoted or packaged by a
Cable Subsidiary or other Controlled Affiliate of a Cable Partner
(whether such package is offered by any of the foregoing or by
any of their respective sub-agents or distributors) that bear a
mark or brand other than the Licensed Mark or (ii) to the extent
expressly permitted by Sections 6.3(q) and 6.3(r), the offering,
promoting and packaging of Partnership Services under a Permitted
Brand.
(f) Right to Market Own Products. Nothing in this
Section 8.3 shall govern or restrict the right of Sprint LD or
any Cable Subsidiary or other Controlled Affiliate of a Cable
Partner to market, sell or distribute its own products or
services.
8.4 Preferred Provider.
The Partnership and its Subsidiaries shall contract with
each Partner, its Affiliates and third parties, as appropriate,
on a negotiated arms-length basis, for services they may require,
which may include billing and information systems and marketing
and sales services. The Partnership and its Subsidiaries may in
the normal course of their respective businesses enter into
transactions with the Partners and their respective Affiliates,
provided that the Partnership Board by the requisite vote
pursuant to Section 8.6 has determined that the price and other
terms of such transactions are fair to the Partnership and its
Subsidiaries and that the price and other terms of such
transaction are not less favorable to the Partnership and its
Subsidiaries than those generally prevailing with respect to
comparable transactions involving non-Affiliates of Partners.
Subject to the foregoing, the Partnership Board, acting in
accordance with Section 8.6, may in its discretion elect from
time to time to provide rights of first opportunity to various
Partners or their Affiliates to provide services to the
Partnership and its Subsidiaries; provided that the Partnership
Board shall have adopted, by Unanimous Vote, procedures
(including conflict avoidance procedures) relating generally to
such right of first opportunity arrangements, and the provision
of such rights and all matters related to the exercise thereof
shall be subject to and effected in a manner consistent with such
procedures. The Partnership and its Subsidiaries are expressly
authorized to enter into the agreements expressly referred to in
this Section 8.
8.5 MFJ.
Each Partner agrees that neither it nor any of its
Controlled Affiliates shall take any action that (i) causes such
Partner or the Partnership to become a BOC or (ii) causes the
Partnership to become a BOC Affiliated Enterprise or an entity
subject to any restriction or limitation under Section II of the
MFJ, if, in the case of clause (ii) above, the results referred
to in such clause (ii) would have a material adverse effect on
the business, assets, liabilities, results of operations,
financial condition or prospects of the Partnership and its
Subsidiaries.
8.6 Interested Party Transactions.
Any contract, agreement, relationship or transaction between
the Partnership or any of its Subsidiaries, on the one hand, and
any Partner or any Person in which a Partner (or any of its
Controlled Affiliates) has a direct or indirect material
financial interest (other than the Partnership, MinorCo,
PhillieCo and their respective Subsidiaries) or which has a
direct or indirect material financial interest in such Partner
(provided that a Person shall not be deemed to have such an
interest solely as a result of its ownership of less than 10% (by
value) of the outstanding economic interests in a Publicly Held
Parent of a Partner (or a Publicly Held Intermediate Subsidiary
of such Parent)) (each, an "Interested Person") on the other
hand, shall be approved and all decisions with respect thereto
(including a decision to accept or reject an Offer pursuant to
Section 6.1(c), the determination to amend, terminate or abandon
any such contract or agreement, whether there has been a breach
thereof and whether to exercise, waive or release any rights of
the Partnership with respect thereto) shall be made (after full
disclosure by the interested Partner of all material facts
relating to such matter) by the Partnership Board (with the
Representatives of the interested Partner(s) absent from the
deliberations and abstaining from the vote with respect thereto)
by the requisite affirmative vote of the Representatives of the
disinterested General Partners. For purposes of the foregoing, a
disinterested General Partner is a General Partner that is not a
party to, and does not have an Interested Person that is a party
to, the contract, agreement, relationship or transaction in
question.
8.7 Access to Technical Information. Subject to the
provisions of Sections 6 and 10.4 of this Agreement and
to applicable confidentiality restrictions, the
Partnership and its Subsidiaries shall grant to each
Partner and its Controlled Affiliates access to
Technical Information of the Partnership and its
Subsidiaries ("Partnership Technical Information").
Such access shall be granted at such reasonable times
and locations and on such other reasonable terms as the
Partnership Board may approve by Required Majority Vote
pursuant to Section 8.6. Subject to Section 6, the
Partnership and its Subsidiaries shall grant to any
such Partner or its Controlled Affiliate a license to
use any Partnership Technical Information to which it
is granted access pursuant to this Section 8.7 (and to
make copies thereof at such Partner's expense), which
license shall provide for royalties and fees and other
terms and conditions that are generally prevailing with
respect to comparable transactions involving unrelated
third parties and are at least as favorable to such
Partner or its Controlled Affiliate as those generally
prevailing with respect to comparable licenses (if any)
granted to non-Affiliates of Partners; provided that,
except as expressly provided in Section 8.12, the
Partnership shall not grant any Partner or its
Controlled Affiliates access to any Proprietary
Technical Information. The rights of access granted
pursuant to this Section 8.7 shall be subject to the
pre-existing rights of any third party to such
Partnership Technical Information.
8.8 Parent Undertaking.
Simultaneously with the execution and delivery of this
Agreement, each Parent has executed and delivered to the
Partnership and the other Partners a Parent Undertaking.
8.9 Certain Additional Covenants.
(a) Each Cable Partner agrees that for so long as such
Cable Partner is a Partner during the Term (as defined in the
Parents Agreement) of the Parents Agreement to which the Parent
of such Cable Partner is a party, neither it nor any of its
Controlled Affiliates will engage in any transaction or series of
related transactions, other than a Permitted Transaction, in
which cable television system assets owned directly or indirectly
by the Parent of such Partner are Transferred if, after giving
effect to such transaction or the last transaction in such series
of related transactions, the number of basic subscribers served
by the cable television systems in the United States of America
(including its territories and possessions other than Puerto
Rico) owned by the Parent of such Partner, directly and
indirectly through its Controlled Affiliates, is equal to twenty-
five percent (25%) or less of the number of basic subscribers
served by the cable television systems in the United States of
America (including its territories and possessions other than
Puerto Rico) owned by the Parent of such Partner, directly and
indirectly through its Controlled Affiliates, before giving
effect to such transaction or the first transaction in such
series of related transactions.
(b) Sprint agrees that for so long as Sprint is a
Partner during the Term (as defined in the Parents Agreement) of
any Parents Agreement, neither it nor any of its Controlled
Affiliates will engage in any transaction or series of related
transactions, other than a Permitted Transaction, in which long
distance telecommunications business assets owned directly or
indirectly by Sprint Parent are Transferred if, after giving
effect to such transaction or the last transaction in such series
of related transactions, the number of customers served by the
long distance telecommunications business in the United States of
America (including its territories and possessions other than
Puerto Rico) owned by Sprint Parent, directly and indirectly
through its Controlled Affiliates, is equal to twenty-five
percent (25%) or less of the number of customers served by the
long distance telecommunications business in the United States of
America (including its territories and possessions other than
Puerto Rico) owned by Sprint Parent, directly and indirectly
through its Controlled Affiliates, before giving effect to such
transaction or the first transaction in such series of related
transactions.
8.10 PioneerCo Preemptive Rights.
The PioneerCo Partnership Agreement will provide that Cox
Pioneer Partnership and the Partnership (or a Subsidiary of the
Partnership) will have certain put and call rights that may
result in the acquisition by the Partnership of Cox Pioneer
Partnership's interest in PioneerCo in exchange for an additional
Interest in the Partnership. At the time of such exchange, each
of the Partners (other than Cox) will be permitted to make
Additional Capital Contributions in cash up to the amount
necessary to permit such Partner to avoid any reduction in its
Percentage Interest as a consequence of such exchange (assuming
that all such other Partners were to exercise such right).
8.11 Foreign Ownership.
(a) Certain Definitions and Concepts. For purposes of
this Section 8.11:
(i) "Foreign Ownership Restriction" means any
federal law or regulation restricting the amount of ownership or
voting control that may be held by non-citizens of the United
States in holders of licenses or other authorizations issued by
the FCC or in Persons controlling such holders (including 47
U.S.C. 310(b) and the rules and regulations promulgated
thereunder by the FCC). (ii) "Covered Licensee" means any of the
Partnership or any Subsidiary thereof that holds any license or
other authorization issued by the FCC or that controls the holder
of any license or other authorization for purposes of any Foreign
Ownership Restriction.
(iii) "Foreign Ownership Threshold" means, with
respect to any Covered Licensee, the maximum amount of foreign
ownership or foreign voting control of such Covered Licensee that
is permitted by any Foreign Ownership Restriction applicable to
such Covered Licensee, less the amount of foreign ownership or
foreign voting control of such Covered Licensee that is
attributable from any Person other than a Partner.
(iv) "Foreign Ownership Safe Harbor" means, with
respect to any Covered Licensee, ninety percent (90%) of the
Foreign Ownership Threshold of such Covered Licensee.
(v) Except as provided in clause (vi) of this
Section 8.11(a), a Partner's "Attribution Cap" equals, with
respect to the Foreign Ownership Threshold of any Covered
Licensee:
(A) in the case of Sprint, the product of the
Percentage Interest of Sprint times twenty-eight percent (28%),
and
(B) in the case of any Cable Partner, the
product of (x) the Foreign Ownership Threshold of such Covered
Licensee minus Sprint's Attribution Cap times (y) the Percentage
Interest of such Cable Partner divided by the aggregate
Percentage Interests of all Cable Partners.
(vi) Notwithstanding clause (v) of this Section
8.11(a), if (A) the proposed transaction among Deutsche Telekom,
France Telecom and Sprint Parent providing for the purchase by
Deutsche Telekom and France Telecom of certain shares of stock of
Sprint Parent is abandoned without the consummation of all of the
stock purchases contemplated thereby and (B) definitive
agreements with respect to a similar alternative transaction with
a non-citizen of the United States have not been entered into by
Sprint Parent prior to March 28, 1997 or such transaction has not
been consummated prior to March 28, 1998, then, with respect to
any Covered Licensee, each Partner's Attribution Cap shall equal
the product of the Percentage Interest of such Partner times the
Foreign Ownership Threshold of such Covered Licensee.
(vii) Notwithstanding clause (v) of this Section
8.11(a), if the Foreign Ownership Threshold with respect to any
Covered Licensee exceeds 28%, each Partner's Attribution Cap
shall equal the product of the such Partner's Percentage Interest
times the Foreign Ownership Threshold of such Covered Licensee.
(b) Covenant Regarding Foreign Ownership. Subject to
Section 8.11(c), no Partner shall cause or permit the amount of
foreign ownership or foreign voting control attributable to any
Covered Licensee from such Partner and its Controlled Affiliates
(determined in accordance with the method of attribution
prescribed in the applicable Foreign Ownership Restrictions) to
exceed the Attribution Cap of such Partner applicable to such
Covered Licensee, increased by any portion of any other Partner's
applicable Attribution Cap that such other Partner has authorized
such Partner to use for purposes of determining compliance with
this Section 8.11(b), and decreased by any portion of such
Partner's applicable Attribution Cap that such Partner has
authorized any other Partner to use for purposes of determining
compliance with this Section 8.11(b). (c) Right to Cure
Potential Violations. So long as a Partner and its Controlled
Affiliates are using their respective commercially reasonable
efforts to cause the amount of foreign ownership and foreign
voting control attributable to each Covered Licensee from such
Partner and its Controlled Affiliates to be reduced below the
maximum amount permitted by Section 8.11(b) (without regard to
this Section 8.11(c)), such Partner shall not be deemed to be in
violation of its covenant in Section 8.11(b) until the earlier
of:
(i) such time as the aggregate amount of foreign
ownership or foreign voting control attributable to any Covered
Licensee (including the foreign ownership and foreign voting
control attributable from such Partner and its Controlled
Affiliates) exceeds the Foreign Ownership Safe Harbor, or
(ii) thirty (30) days after such Partner
receives written notice from any other Partner that such other
Partner or any of its Controlled Affiliates desires to engage in
any transaction permitted by section 8.11(b) that, if
consummated, would cause the aggregate amount of foreign
ownership or foreign voting control attributable to any Covered
Licensee to exceed the Foreign Ownership Safe Harbor if the
foreign ownership attributable to such Covered Licensee from such
Partner and its Controlled Affiliates continued to exceed the
maximum amount permitted by Section 8.11(b).
(d) Authorization to Use the Attribution Cap of Another
Partner. Any authorization by one Partner to another Partner of
the right to use any portion of the authorizing Partner's
applicable Attribution Cap for purposes of determining compliance
with Section 8.11(b) shall be evidenced by a written instrument
delivered by the authorizing Partner to the Partnership and each
other Partner.
8.12 Product Integration.
(a) The Partnership shall undertake to architect and
design its systems, platforms, networks and products in a manner
that facilitates seamless integration of the Partnership's
Wireless Exclusive Services with the telecommunications products
and services offered by the Partnership and its Subsidiaries,
each Partner and its Controlled Affiliates, Teleport and any
Local Joint Venture. The adoption of all budgets, plans and
procedures by the Partnership regarding the planning, design and
development activities of the Partnership with respect to the
architecture and design of all systems, platforms, networks and
products shall require a Required Majority Vote of the
Partnership Board, and each Partner shall have the right to
participate fully in such planning, design and development
activities and shall have access to and rights to use all
Partnership Technical Information relating to such activities in
accordance with Section 8.7 (except to the extent otherwise
provided in Sections 8.12(b), (c) and (d) below with respect to
any Proprietary Technical Information).
(b) Following July 31, 1996, each Partner shall have
the right to cause the Partnership to undertake, in cooperation
with such Partner and at such Partner's cost and expense, the
development of Technical Information that such Partner reasonably
believes is necessary to integrate the Partnership's Wireless
Exclusive Services with the wireline telecommunications products
and services of (x) Sprint and its Controlled Affiliates, if such
Partner is Sprint, (y) such Partner and its Controlled Affiliates
and/or Teleport, if such Partner is a Cable Partner, or (z) any
Local Joint Venture in which such Partner or its Controlled
Affiliate has an interest (or to which such Partner or its
Controlled Affiliate is a party) ("Proprietary Technical
Information"); provided, that such undertaking by the Partnership
shall not materially interfere with the Partnership's ongoing
planning, design and development activities and any such
integration shall not adversely impact in any material respect
the operating characteristics of the Partnership's existing
systems, platforms, networks or products. The Partner causing
the Partnership to develop any such Proprietary Technical
Information (the "Initiating Partner") shall have the
irrevocable, royalty-free exclusive right and license to make (or
have made), use, sell, copy, modify and sublicense such
Proprietary Technical Information; provided, that (i) the
Initiating Partner shall have no such exclusive right as to any
pre-existing Partnership Technical Information used in the
development of any such Proprietary Technical Information, (ii)
if (A) the Initiating Partner is Sprint, each other Partner that
has, or has a Controlled Affiliate that has, entered a Local
Joint Venture with Sprint or a Controlled Affiliate of Sprint, or
(B) the Initiating Partner is a Cable Partner, each other Cable
Partner and, if Sprint or a Controlled Affiliate of Sprint has
entered a Local Joint Venture with such Initiating Partner or a
Controlled Affiliate of such Initiating Partner, Sprint, shall be
entitled to participate in the development of Proprietary
Technical Information in cooperation with the Initiating Partner
(except that neither Sprint (if a Cable Partner is the Initiating
Partner) nor any of the Cable Partners (if Sprint is the
Initiating Partner) shall be entitled to participate in the
development of any Proprietary Technical Information integrating
the Partnership's Wireless Exclusive Services with
telecommunications products and services designed primarily for
non-residential customers ("Business-Related Information")), and
(iii) if one or more other Partners participates in the
development of any Proprietary Technical Information pursuant to
clause (ii) above, the Initiating Partner and each such other
Partner shall have the exclusive (other than as among the
Initiating Partner and each such other Partner) irrevocable,
royalty-free right and license to make (or have made), use, sell,
copy, modify and sublicense such Proprietary Technical
Information; however, in such case, no Initiating Partner or such
other Partner having the foregoing rights as to any such
Proprietary Technical Information developed pursuant to this
Section 8.12(b) shall sublicense or otherwise grant rights with
respect to such Proprietary Technical Information to any Person
other than such Partner and its Controlled Affiliates, the
Partnership and its Subsidiaries, any Local Joint Venture in
which the Initiating Partner (or its Controlled Affiliate) or
such other Partner (or its Controlled Affiliate) that
participated in the development of such Proprietary Technical
Information has an interest (or to which any of the foregoing is
otherwise a party), and Teleport (if a Cable Partner is the
Initiating Partner) (provided that the restrictions set forth in
this clause (iii) shall apply only to the use of such Proprietary
Technical Information in connection with the provision of
telecommunications products and services to customers located in
the United States and its territories, other than Puerto Rico).
Subject to Section 8.12(c), the costs and expenses incurred in
the development of Proprietary Technical Information shall be
borne by the Initiating Partner and each such other Partner that
elects to participate in the development of such Proprietary
Technical Information ratably in proportion to their respective
Percentage Interests.
(c) To the extent that following the development of any
Business-Related Information, the Initiating Partner or any of
its Controlled Affiliates uses or licenses or permits a sub-
license (or otherwise grants any right) for the use of all or any
portion of such Business-Related Information for an application
thereof to a telecommunications product or service for
residential customers to any material extent (other than the
provision by a non-residential customer of access to any such
product or service solely for business purposes, provided that
such product or service is not offered, promoted or packaged to
residential customers), the Initiating Partner shall promptly
notify each other Partner that would have been entitled to
participate in such development but for the restriction on its
right to participate in the development of Business-Related
Information contained in the second sentence of Section 8.12(b),
and each such other Partner shall be entitled to an irrevocable
right and license to make (or have made), use, sell, copy, modify
or sub-license any such portion of such Business-Related
Information (but subject to the restriction in clause (iii) of
the proviso in the second sentence of Section 8.12(b) above),
subject to the payment by such Partner of a pro rata portion of
the development costs and expenses attributable to the
development of such portion of such Business-Related Information
used for such application for residential customers (which shall
be borne by the Initiating Partner, any other Partner initially
participating in the development of such Business-Related
Information (an "Initial Participating Partner"), and any
Partner(s) exercising rights under this paragraph ratably in
proportion to their respective Percentage Interests). Such
payment shall be made as a direct reimbursement to the Initiating
Partner and each Initial Participating Partner of the applicable
portion of the development costs and expenses previously paid to
the Partnership by the Initiating Partner and the Initial
Participating Partner.
(d) In connection with the proposed development of any
Proprietary Technical Information, the applicable Partners and
the Partnership shall agree in writing to processes and
procedures related to such development and the actual scope of
use, ownership, license and sub-license rights with respect to
such Proprietary Technical Information (including the nature and
extent of any pre-existing Partnership Technical Information to
be used in the development of such Proprietary Technical
Information), which in any such case shall be consistent with
this Section 8.12, unless otherwise agreed by the applicable
Partners and the Partnership. If, in connection with any
development pursuant to Section 8.12, any Partner or the
Partnership develops or invents any technology or other
intellectual property giving rise to any patent rights, subject
to the other provisions of this Section 8.12, common law
principles relating to the ownership of and rights to use
patentable inventions shall govern the ownership of and rights to
use such technology or other intellectual property, unless
otherwise agreed by the parties participating in the development
of such technology or other intellectual property.
Notwithstanding anything in this Agreement to the contrary,
without such Partner's prior written consent, no licenses, either
express or implied, are granted to the Partnership, any other
Partner or any other entity for any Proprietary Technical
Information or other Technical Information Rights owned or solely
developed by a Partner.
8.13 Provision of Services.
To the extent permitted by applicable law, each Partner
agrees that it and its Controlled Affiliates shall use all
commercially reasonable efforts to cause its local cable
television and/or telephone operations to provide appropriate
services to WirelessCo in all its owned and operated markets as
well as markets operating under an Affiliation Agreement with
WirelessCo, including any Affiliation Agreement with PioneerCo.
Such services may include antenna sites and/or strand mounting of
RF and transmission equipment owned by WirelessCo or any
Affiliate thereof and transmission facilities between cell sites
and designated switching locations. Services may also include
provision of primary power, standby power and maintenance.
Pricing of the foregoing services will be negotiated at a local
level and is expected to reflect all relevant costs plus a
reasonable return. Notwithstanding the foregoing, Comcast will
not be required to provide any services to WirelessCo under this
Section 8.13 in any territories in which Comcast or its
Controlled Affiliates operate Wireless Businesses in the Comcast
Area.
8.14 Comcast Representative.
Notwithstanding any other provision of this Agreement, for
such time (the "Restricted Time") as Comcast or any of its
Controlled Affiliates engages in any Competitive Activity in any
portion of the Comcast Area, Comcast agrees to cause any
Representative of Comcast who participates in Designated Matters
(as defined below) not to (i) be involved in any Competitive
Activities engaged in by Comcast or its Controlled Affiliates in
the Restricted Area (as defined below) and (ii) disclose or
discuss the Designated Matters with any Agent of Comcast that is
involved in Competitive Activities in the Restricted Area.
During the Restricted Time, each Partner (other than Comcast) and
its Controlled Affiliates and the Partnership and its
Subsidiaries shall not, shall cause their respective officers and
directors (in their capacity as such) not to, and shall take all
reasonable measures to cause their respective other Agents not
to, disclose any information (including any financial
projections, budgets or other operating or business plans)
regarding the provision, by the Partnership and its Subsidiaries
or by any Third Party Provider (as defined below) of Wireless
Exclusive Services in any portion of the Comcast Area, to Comcast
or any of its Controlled Affiliates or Agents other than such
Representative of Comcast. As used herein, "Designated Matters"
means the participation in any discussions regarding, the
obtaining of any information or the casting of any votes, in each
case with respect to any matter concerning the provision by the
Partnership or its Subsidiaries of Wireless Exclusive Services in
a portion (the "Restricted Area") of the Comcast Area (including
the terms of any Affiliation Agreement with any Person providing
such Wireless Exclusive Services (a "Third Party Provider")).
8.15 Purchasing.
The Partners and their respective Controlled Affiliates will
cooperate with each other in a commercially reasonable manner to
structure arrangements whereby the Partners, their respective
Controlled Affiliates, and the Partnership and its Subsidiaries
would, to the extent permitted by applicable law and regulation,
coordinate their respective buying efforts from third party
vendors in a manner such that the benefits of such coordinated
efforts would be available to the Partnership and its
Subsidiaries, each Partner and each Partner's respective
Controlled Affiliates in making such purchases of equipment and
materials as may be required for (i) the accomplishment of the
purposes of the Partnership and its Subsidiaries and (ii) the
operations of the permitted businesses of any Partner or its
Controlled Affiliates.
8.16 Advertising Reimbursement.
On December 31, 1996, if by such date Sprint and the Cable
Partners have not entered into an agreement regarding Teleport as
contemplated under Section 3(b) of the Parents Agreements between
Sprint and each Parent of the Cable Partners in the form executed
and delivered as of the date hereof, Sprint will pay to each of
the Cable Partners an amount, together with interest thereon at
the rate of six percent (6%) per annum from and including
February 1, 1996 until the date on which such amount is paid, in
cash equal to the sum of (A) the value of the advertising
availability previously made available to the Partnership by such
Partner and its Controlled Affiliates at no charge pursuant to
Section 9.13(b) of the Prior Partnership Agreement and (B) an
amount equal to such Cable Partner's Percentage Interest times
the value of the advertising availability previously purchased by
the Partnership and its Subsidiaries pursuant to Section 9.13(b)
of the Prior Partnership Agreement.
SECTION 9. REPRESENTATIONS AND WARRANTIES
9.1 Representations and Warranties by Partners.
Each Partner hereby represents and warrants that as of the
date hereof:
(a) Due Incorporation or Formation; Authorization of
Agreement. Such Partner is a corporation duly organized or a
partnership duly formed, validly existing and, if applicable, in
good standing under the laws of the jurisdiction of its
incorporation or formation and has the corporate or partnership
power and authority to own its property and carry on its business
as owned and carried on at the date hereof and as contemplated
hereby. Such Partner is duly licensed or qualified to do
business and, if applicable, in good standing in each of the
jurisdictions in which the failure to be so licensed or qualified
would have a material adverse effect on its financial condition
or its ability to perform its obligations hereunder. Such
Partner has the corporate or partnership power and authority to
execute and deliver this Agreement and to perform its obligations
hereunder and the execution, delivery and performance of this
Agreement have been duly authorized by all necessary corporate or
partnership action. Assuming the due execution and delivery by
the other parties hereto, this Agreement constitutes the legal,
valid and binding obligation of such Partner enforceable against
such Partner in accordance with its terms, subject as to
enforceability to limits imposed by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and the
availability of equitable remedies.
(b) No Conflict with Restrictions; No Default. Neither
the execution, delivery and performance of this Agreement nor the
consummation by such Partner of the transactions contemplated
hereby (i) will conflict with, violate or result in a breach of
any of the terms, conditions or provisions of any law,
regulation, order, writ, injunction, decree, determination or
award of any court, any governmental department, board, agency or
instrumentality, domestic or foreign, or any arbitrator,
applicable to such Partner or any of its Controlled Affiliates,
(ii) will conflict with, violate, result in a breach of or
constitute a default under any of the terms, conditions or
provisions of the articles of incorporation, bylaws or
partnership agreement of such Partner or any of its Controlled
Affiliates or of any material agreement or instrument to which
such Partner or any of its Controlled Affiliates is a party or by
which such Partner or any of its Controlled Affiliates is or may
be bound or to which any of its material properties or assets is
subject (other than any such conflict, violation, breach or
default that has been validly and unconditionally waived), (iii)
will conflict with, violate, result in a breach of, constitute a
default under (whether with notice or lapse of time or both),
accelerate or permit the acceleration of the performance required
by, give to others any material interests or rights or require
any consent, authorization or approval under any indenture,
mortgage, lease agreement or instrument to which such Partner or
any of its Controlled Affiliates is a party or by which such
Partner or any of its Controlled Affiliates is or may be bound,
or (iv) will result in the creation or imposition of any lien
upon any of the material properties or assets of such Partner or
any of its Controlled Affiliates, which in any such case could
reasonably be expected to have a material adverse effect on the
Partnership or to materially impair such Partner's ability to
perform its obligations under this Agreement or to have a
material adverse effect on the consolidated financial condition
of such Partner or its Parent.
(c) Governmental Authorizations. Any registration,
declaration or filing with, or consent, approval, license, permit
or other authorization or order by, any governmental or
regulatory authority, domestic or foreign, that is required to be
obtained by such Partner in connection with the valid execution,
delivery, acceptance and performance by such Partner under this
Agreement or the consummation by such Partner of any transaction
contemplated hereby has been or will be completed, made or
obtained, except for any FCC or other regulatory approvals,
licenses, permits or other authorizations required to be obtained
by the Partnership in connection with the acquisition and
ownership of Wireless Business licenses relating to PCS.
(d) Litigation. There are no actions, suits,
proceedings or investigations pending or, to the knowledge of
such Partner or its Parent, threatened against or affecting such
Partner or any of its Controlled Affiliates or any of their
properties, assets or businesses in any court or before or by any
governmental department, board, agency or instrumentality,
domestic or foreign, or any arbitrator which could, if adversely
determined (or, in the case of an investigation could lead to any
action, suit or proceeding, which if adversely determined could),
reasonably be expected to materially impair such Partner's
ability to perform its obligations under this Agreement or to
have a material adverse effect on the consolidated financial
condition of such Partner or its Parent; and such Partner or any
of its Controlled Affiliates has not received any currently
effective notice of any default, and such Partner or any of its
Controlled Affiliates is not in default, under any applicable
order, writ, injunction, decree, permit, determination or award
of any court, any governmental department, board, agency or
instrumentality, domestic or foreign, or any arbitrator, which
default could reasonably be expected to materially impair such
Partner's ability to perform its obligations under this Agreement
or to have a material adverse effect on the consolidated
financial condition of such Partner or its Parent.
(e) MFJ. Such Partner is not a BOC, a BOC Affiliated
Enterprise or an entity subject to any restrictions under Section
II of the MFJ.
(f) Subsidiaries. Such Partner is a direct or indirect
wholly owned Subsidiary of its Parent.
9.2 Representation and Warranty of Sprint.
Sprint hereby represents and warrants that as of the date
hereof Sprint Communications is the primary entity through which
Sprint Parent conducts its long distance telecommunications
business in the United States of America (including its
territories and possessions other than Puerto Rico).
SECTION 10. ACCOUNTING, BOOKS AND RECORDS
10.1 Accounting, Books and Records.
The Partnership shall maintain at its principal office
separate books of account for the Partnership which (i) shall
fully and accurately reflect all transactions of the Partnership,
all costs and expenses incurred, all charges made, all credits
made and received, and all income derived in connection with the
conduct of the Partnership and the operation of its business in
accordance with GAAP or, to the extent inconsistent therewith, in
accordance with this Agreement and (ii) shall include all
documents and other materials with respect to the Partnership's
business as are usually entered and maintained by persons engaged
in similar businesses. The Partnership and its Subsidiaries
shall use the accrual method of accounting in preparation of
their annual reports and for tax purposes and shall keep their
books and records accordingly. Subject to Section 10.4, any
Partner or its designated representative shall have the right, at
any reasonable time and for any lawful purpose related to the
affairs of the Partnership and its Subsidiaries or the investment
in the Partnership and its Subsidiaries by such Partner, (i) to
have access to and to inspect and copy the contents of such books
or records, (ii) to visit the facilities of the Partnership and
its Subsidiaries and (iii) to discuss the affairs of the
Partnership and its Subsidiaries with their respective officers,
employees, attorneys, accountants, customers and suppliers.
Neither the Partnership nor its Subsidiaries shall charge such
Partner for such examination and each Partner shall bear its own
expenses in connection with any examination made for any such
Partner's account.
10.2 Reports.
(a) In General. The chief financial officer of the
Partnership shall be responsible for the preparation of financial
reports of the Partnership and the coordination of financial
matters of the Partnership with the Accountants.
(b) Periodic and Other Reports. The Partnership shall
cause to be delivered to each Partner the financial statements
listed in clauses (i) through (iii) below, prepared, in each
case, in accordance with GAAP (and, if required by any Partner
for purposes of reporting under the Securities Exchange Act of
1934, Regulation S-X), and such other reports as any Partner may
reasonably request from time to time, provided that, if the
Partnership Board so determines within thirty (30) days thereof,
such other reports shall be provided at such requesting Partner's
sole cost and expense. Such financial statements shall be
accompanied by an analysis, in reasonable detail, of the variance
between the financial condition and results of operations
reported therein and the corresponding amounts for the applicable
period or periods in the Approved Business Plan. The monthly and
quarterly financial statements referred to in clauses (ii) and
(iii) below may be subject to normal year-end audit adjustments.
(i) As soon as practicable following the end of
each Fiscal Year (and in any event not later than
seventy-five (75) days after the end of such Fiscal Year)
and at such time as distributions are made to the Partners
pursuant to Section 14.2 following the occurrence of a
Liquidating Event, a consolidated balance sheet of the
Partnership and its Subsidiaries as of the end of such
Fiscal Year and the related statements of operations,
Partners' Capital Accounts and changes therein, and cash
flows for such Fiscal Year, together with appropriate notes
to such financial statements and supporting schedules, all
of which shall be audited and certified by the Accountants,
and in each case, to the extent the Partnership was in
existence, setting forth in comparative form the
corresponding figures for the immediately preceding Fiscal
Year (in the case of the balance sheet) and the two (2)
immediately preceding Fiscal Years (in the case of the
statements). (ii) As soon as practicable following the end
of each of the first three calendar quarters of each Fiscal
Year (and in any event not later than forty (40) days after
the end of each such calendar quarter), a consolidated
balance sheet of the Partnership as of the end of such
calendar quarter and the related consolidated statements of
operations, Partners' Capital Accounts and changes therein,
and cash flows for such calendar quarter and for the Fiscal
Year to date, in each case, to the extent the Partnership
was in existence, setting forth in comparative form the
corresponding figures for the prior Fiscal Year's calendar
quarter and interim period corresponding to the calendar
quarter and interim period just completed. (iii) As soon as
practicable following the end of each of the first two
calendar months of each calendar quarter (and in any event
not later than thirty (30) days after the end of such
calendar month), a consolidated balance sheet as of the end
of such month and consolidated statements of operations for
the interim period through such month and the monthly period
then ended, setting forth in comparative form the
corresponding figures from the Business Plan for such month
and the interim period through such month.
The quarterly or monthly statements described in clauses
(ii) and (iii) above shall be accompanied by a written
certification of the chief financial officer of the Partnership
that such statements have been prepared in accordance with GAAP
or this Agreement, as the case may be.
10.3 Tax Returns and Information.
(a) Sprint, acting in its capacity as a General
Partner, shall act as the "Tax Matters Partner" of the
Partnership within the meaning of Section 6231(a)(7) of the Code
(and in any similar capacity under applicable state or local law)
(the "Tax Matters Partner"). If Sprint shall cease to be a
General Partner, then the Partner with the greatest Voting
Percentage Interest, acting in its capacity as a General Partner,
shall thereafter act as the Tax Matters Partner. The Tax Matters
Partner shall take reasonable action to cause each other Partner
to be treated as a "notice partner" within the meaning of Section
6231(a)(9) of the Code. All reasonable expenses incurred by a
Partner while acting in its capacity as Tax Matters Partner shall
be paid or reimbursed by the Partnership. Each Partner shall be
given at least five (5) Business Days advance notice from the Tax
Matters Partner of the time and place of, and shall have the
right to participate (and the Partnership and the Tax Matters
Partner shall take such action as may be necessary to cause the
tax matters partner of any Subsidiary to extend to the Partners
the right to participate) in (i) any material aspect of any
administrative proceeding relating to the determination of
partnership items at the Partnership level (or at the level of
any Subsidiary thereof) and (ii) any material discussions with
the Internal Revenue Service relating to the allocations pursuant
to Section 3 of this Agreement or pursuant to the partnership
agreement of any Subsidiary. The Tax Matters Partner shall not,
and the Partnership shall not permit the tax matters partner of
any Subsidiary to, initiate any action or proceeding in any
court, extend any statute of limitations, or take any other
action contemplated by Sections 6222 through 6232 of the Code
that would legally bind any other Partner, the Partnership or any
Subsidiary without approval of the Partnership Board by a
Required Majority Vote. The Tax Matters Partner shall from time
to time upon request of any other Partner confer, and cause the
Partnership's and any Subsidiary's tax attorneys and Accountants
to confer, with such other Partner and its attorneys and
accountants on any matters relating to a Partnership or
Subsidiary tax return or any tax election.
(b) The Tax Matters Partner shall cause all federal,
state, local and other tax returns and reports (including amended
returns) required to be filed by the Partnership or any
Subsidiary thereof to be prepared and timely filed with the
appropriate authorities and shall cause all income or franchise
tax returns or reports required to be filed by the Partnership or
any Subsidiary thereof to be sent to each Partner for review at
least fifteen (15) Business Days prior to filing. Unless
otherwise determined by the Partnership Board, all such income or
franchise tax returns of the Partnership shall be prepared by the
Accountants. The cost of preparation of any returns by the
Accountants or other outside preparers shall be borne by the
Partnership or the applicable Subsidiary, as the case may be. In
the event of a Transfer of all or part of an Interest, the Tax
Matters Partner shall at the request of the transferee cause the
Partnership to elect, pursuant to Section 754 of the Code, to
adjust the basis of the Partnership's property (and the
Partnership shall cause the tax matters partner of any Subsidiary
to make a corresponding Section 754 election with respect to such
Subsidiary's property); provided, however, that such transferee
shall reimburse the Partnership and any Subsidiary promptly for
all costs associated with such basis adjustment, including
bookkeeping, appraisal and other similar costs. Except as
otherwise expressly provided herein, all other elections required
or permitted to be made by the Partnership or any Subsidiary
under the Code (or applicable state or local tax law) shall be
made in such manner as may be determined by the Partnership Board
to be in the best interests of the Partners as a group.
(c) The Tax Matters Partner shall cause to be provided
to each Partner as soon as possible after the close of each
Fiscal Year (and, in any event, no later than one hundred thirty-
five (135) days after the end of each Fiscal Year), a schedule
setting forth such Partner's distributive share of the
Partnership's income, gain, loss, deduction and credit as
determined for federal income tax purposes and any other
information relating to the Partnership that is reasonably
required by such Partner to prepare its own federal, state, local
and other tax returns. At any time after such schedule and
information have been provided, upon at least two (2) Business
Days' notice from a Partner, the Tax Matters Partner shall also
provide each Partner with a reasonable opportunity during
ordinary business hours to review and make copies of all work
papers related to such schedule and information or to any return
prepared under paragraph (b) above. The Tax Matters Partner
shall also cause to be provided to each Partner, at the time that
the quarterly financial statements are required to be delivered
pursuant to Section 10.2(b)(ii) above, an estimate of each
Partner's share of all items of income, gain, loss, deduction and
credit of the Partnership for the calendar quarter just completed
and for the Fiscal Year to date for federal income tax purposes.
10.4 Proprietary Information.
Notwithstanding anything to the contrary in this Section 10,
an Exclusive Limited Partner shall only have access to such
information regarding the Partnership as is required by
applicable law and shall not have access for such time as the
Partnership Board deems reasonable to such information relating
to the Partnership's business which the Partnership Board
reasonably believes to be in the nature of trade secrets or other
information the disclosure of which the Partnership Board in good
faith believes is not in the best interest of the Partnership or
could damage the Partnership or its business or which the
Partnership is required by law or by agreement with a third party
to keep confidential.
SECTION 11. ADVERSE ACT
11.1 Remedies.
(a) If an Adverse Act has occurred with respect to any
Partner, (x) in the case of an Adverse Act specified in clause
(vii) of the definition of such term in Section 1.10, any General
Partner may elect or (y) in the case of any other Adverse Act,
the Partnership Board (with the Representatives of the affected
Partner abstaining) may elect:
(i) to cause the Partnership to commence the
procedures specified in Section 11.2 for the purchase of the
Adverse Partner's Interest; or (ii) to cause the Partnership
to seek to enjoin such Adverse Act or to obtain specific
performance of the Adverse Partner's obligations or Damages
(as defined and subject to the limitations specified below)
in respect of such Adverse Act. Notwithstanding anything to
the contrary contained in this Section 11, (x) none of the
remedies specified above (nor any other provision of this
Section 11) shall apply to an Adverse Act specified in
clause (vi) of the definition of such term in Section 1.10,
(y) the remedies specified in clause (ii) shall not be
available to the Partners with respect to an Adverse Act
specified in clause (vii) of such definition unless the
circumstances under which such event arose also constituted
a breach by the Adverse Partner of the covenant contained in
Section 8.5 of this Agreement, and (z) the remedy specified
in clause (i) above and the right to seek Damages under
clause (ii) above may not be pursued and Section 11.1(b)
will not apply to an Adverse Act specified in clause (iii)
of the definition of such term until such time as there is a
Final Determination that the Partner's actions or failure to
act constituted an Adverse Act, if the affected Partner
timely delivered a Contest Notice.
In the event of an Adverse Act specified in any clause of
the definition of such term in Section 1.10 other than clause
(vii), the vote of the Partnership Board required to elect to
exercise a remedy specified in clause (i) or (ii) of the first
sentence of this Section 11.1(a) shall be the Required Majority
Vote of Representatives of the Partners that are not actual or
alleged Adverse Partners (the "Non-Adverse Partners"), provided
that in the event more than one (1) Partner is alleged to be an
Adverse Partner, such vote shall be taken separately with respect
to each alleged Adverse Partner excluding from such vote only the
Partner(s) that is alleged to be an Adverse Partner as a result
of the specific facts or circumstances with respect to which such
vote is being taken. The election to pursue a remedy specified
in clause (i) or (ii) of the first sentence of this Section
11.1(a) with respect to an Adverse Act for which such remedy is
available may be exercised by notice given to the Adverse Partner
(x) in the case of an Adverse Act specified in clause (i) of the
definition of the term "Adverse Act" in Section 1.10, within
ninety (90) days after the occurrence of such Adverse Act or (y)
in the case of any other Adverse Act, within ninety (90) days
after the Partnership Board or the Partner making such election,
as the case may be, obtains actual knowledge of the occurrence of
such Adverse Act, including, if applicable, that any cure period
has expired; provided that, if an election pursuant to clause
(ii) of the first sentence of this Section 11.1(a) is made to
seek an injunction, specific performance or other equitable
relief, an action seeking such relief is commenced promptly
thereafter and a final judgment in such action is rendered
denying such equitable remedy and no election was made pursuant
to clause (i) of the first sentence of this Section 11.1(a),
then, by notice given within ten (10) days after such final
judgment is rendered, the Partnership Board may elect to pursue
the remedy specified in clause (i) of the first sentence of this
Section 11.1(a) unless (x) prior to the giving of such notice,
the Adverse Partner has cured in full (or caused to be cured in
full) the Adverse Act in question (other than an Adverse Act
specified in clause (i) of the definition of such term in Section
1.10, which may only be cured with the Unanimous Vote of, and on
the terms prescribed by, the Partnership Board) and no other
Adverse Act with respect to such Partner has occurred and is
continuing or (y) the final judgment denying equitable relief
specifically held that there was no Adverse Act.
The foregoing remedies shall not be deemed to be mutually
exclusive, and, subject to the requirements of this Section
11.1(a) regarding the timing of the election of such remedies,
selection or resort to any thereof shall not preclude selection
or resort to the others. The resort to any remedy pursuant to
this Section 11.1(a) shall not for any purpose be deemed to be a
waiver of any other available remedy. Except as provided in
Section 11.1(b), the failure to elect to pursue a remedy within
the time periods provided in the preceding paragraph shall be
conclusively presumed to be a waiver of the remedies provided in
this Section 11 with respect to the subject Adverse Act.
Unless resort to such remedy has been waived as set forth in
the immediately preceding paragraph, the Partnership shall be
entitled to recover from the Adverse Partner in an appropriate
proceeding any and all damages, losses and expenses (including
reasonable attorneys' fees and disbursements) (collectively,
"Damages") suffered or incurred by the Partnership as a result of
such Adverse Act; provided that the Partnership shall not have or
assert any claim against the Adverse Partner for punitive Damages
or for indirect, special or consequential Damages suffered or
incurred by the Partnership as a result of an Adverse Act; and
provided further, that if an election is made pursuant to clause
(i) of the first sentence of this Section 11.1(a), the amount the
Partnership may recover in any action for Damages shall be
reduced by an amount equal to the difference, if any, between the
Net Equity of the Adverse Partner's Interest determined in
accordance with Section 11.2(a) and the applicable Buy-Sell
Price.
(b) If the Partnership is dissolved pursuant to Section
14.1(a) at any time as a result of a Liquidating Event that
occurs prior to a remedy having been elected pursuant to Section
11.1(a) with respect to any Adverse Partner, the time periods for
such election shall thereupon expire and the Partnership Board
shall deduct from any amounts to be paid to such Adverse Partner
that amount which it reasonably estimates to be sufficient to
compensate the Non-Adverse Partners for Damages incurred by them
as a result of the Adverse Act (subject to the limitations of
Section 11.1(a)) and shall pay the same to the Non-Adverse
Partners.
11.2 Adverse Act Purchase.
(a) Determination of Net Equity of Adverse Partner's
Interest. If the Partnership Board or any General Partner makes
an election pursuant to Section 11.1(a)(i) to commence the
purchase procedures set forth in this Section 11.2, the Net
Equity of the Adverse Partner's Interest shall be determined in
accordance with this Section 11 as of the last day of the
calendar quarter immediately preceding the calendar quarter in
which notice of such election (the "Election Notice") was given
to the Adverse Partner, and the Adverse Partner shall be
obligated to sell to the Purchasing Partners, if any, all but not
less than all of the Adverse Partner's Interest in accordance
with this Section 11.2 at a purchase price (the "Buy-Sell Price")
equal to (A) in the case of any Adverse Act (other than (1) an
Adverse Act identified in clause (i) of the definition of such
term that occurs prior to the Cut-Off Time, (2) an Adverse Act
identified in clause (iv) of the definition of such term or (3)
unless such Adverse Act occurred in connection with any breach by
such Partner of its obligations under Section 8.5, an Adverse Act
identified in clause (vii) of the definition of such term),
ninety percent (90%) of the Net Equity thereof as so determined,
(B) in the case of an Adverse Act specified in clause (iv) or,
unless such Adverse Act occurred in connection with any breach by
such Partner of its obligations under Section 8.5, clause (vii)
of the definition of such term in Section 1.10, the Net Equity
thereof, and (C) in the case of an Adverse Act specified in
clause (i) of the definition of such term in Section 1.10 that
occurred prior to the Cut-Off Time, the lesser of (A) ninety
percent (90%) of the Net Equity thereof as so determined or (B)
eighty percent (80%) of the remainder of (1) the sum of such
Adverse Partner's Original Capital Contribution and aggregate
Additional Capital Contributions minus (2) the cumulative
distributions made to such Partner pursuant to Section 4
("Unreturned Capital"), with the amount of such Unreturned
Capital determined as of the date on which the Adverse Partner's
Interest is purchased. Such Election Notice shall designate the
First Appraiser as required by Section 11.4 and the Adverse
Partner shall appoint the Second Appraiser within ten (10)
Business Days of receiving such notice designating the First
Appraiser.
(b) Election to Purchase Interest of Adverse Partner.
For a period ending at 11:59 p.m. (local time at the
Partnership's principal office) on the thirtieth (30th) day
following the day on which notice of the Adverse Partner's Net
Equity is given pursuant to Section 11.3 (the "Election Period"),
except as otherwise provided in Section 11.2(b)(i), each of the
Partners (other than the Adverse Partner and any Exclusive
Limited Partner) may elect, by notice to the Adverse Partner and
each other Partner (the "Purchase Notice"), to purchase all or
any portion of the Adverse Partner's Interest, which notice shall
state the maximum Percentage Interest that such Partner (a
"Purchasing Partner") is willing to purchase (each a "purchase
commitment"). If the aggregate purchase commitments made by the
Purchasing Partners are equal to at least one hundred percent
(100%) of the Adverse Partner's Interest, then subject to the
following sentence, each Purchasing Partner shall be obligated to
purchase, and the Adverse Partner shall be obligated to sell to
such Purchasing Partner, that portion of the Adverse Partner's
Interest that corresponds to the ratio of the Percentage Interest
of such Purchasing Partner to the aggregate Percentage Interests
of the Purchasing Partners, provided that, if any Purchasing
Partner's purchase commitment was for an amount less than its
proportionate share of the Adverse Partner's Interest as so
determined, then the portion of the Adverse Partner's Interest
not so committed to be purchased shall continue to be allocated
proportionally in the manner provided above in this sentence
among the other Purchasing Partners until each has been
allocated, by such process of apportionment, a percentage of the
Adverse Partner's Interest equal to the maximum percentage such
Purchasing Partner committed to purchase or until the Adverse
Partner's entire Interest has been allocated among the Purchasing
Partners. In the event that the other Partners do not elect to
purchase the entire Interest of the Adverse Partner, the Adverse
Partner shall be under no obligation to sell any portion of its
Interest to any Partner.
(i) Except as otherwise provided in Section
11.2(b)(ii), if an Adverse Partner is a Cable Partner and no
Cable Partner's Percentage Interest, when added to the Percentage
Interests of all Controlled Affiliates of such Partner, is equal
to or greater than Sprint's Percentage Interest when added to the
Percentage Interests of all Controlled Affiliates of Sprint, then
the Adverse Partner's Interest shall be allocated first among
those of the Purchasing Partners that are Cable Partners as
though Sprint were not a Purchasing Partner and if and to the
extent that the aggregate purchase commitments made by such Cable
Partners are less than one hundred percent (100%) of the Adverse
Partner's Interest, the balance of the Adverse Partner's Interest
up to Sprint's purchase commitment shall be allocated to Sprint.
(ii) The Adverse Partner's Interest shall be
allocated among the Cable Partners in the manner set forth in
Section 11.2(b)(i) until any Cable Partner would have a
Percentage Interest, when added to the Percentage Interests of
all Controlled Affiliates of such Partner, equal to Sprint's
Percentage Interest, when added to the Percentage Interests of
all Controlled Affiliates of Sprint, calculated in each case
after giving effect to the adjustments to the Percentage
Interests to be made in connection with the purchases of the
Adverse Partner's Interest by the Cable Partners in accordance
with Section 11.2(b)(i) assuming that such purchases were made up
to the amount that would yield such result (as to each Partner,
its "Adjusted Percentage Interest"). Any portion of the Adverse
Partner's Interest not yet allocated shall continue to be
allocated proportionately among all Purchasing Partners
(including Sprint, if applicable) in the manner set forth in this
Section 11.2(b) without regard to Section 11.2(b)(i), but
substituting the Adjusted Percentage Interests of the Purchasing
Partners for the Percentage Interests that would otherwise be
used to determine such allocation until each has been allocated
an amount equal to its purchase commitment or until the Adverse
Partner's entire Interest has been allocated among the Purchasing
Partners.
(c) Terms of Purchase; Closing. Unless the Purchasing
Partners and the Adverse Partner otherwise agree, the closing of
the purchase and sale of the Adverse Partner's Interest, MinorCo
Interest (as required by Section 12.3(d)) and Partner Loans (as
required by Section 12.3(c)) shall occur at the principal office
of the Partnership at 10:00 a.m. (local time at the place of the
closing) on the first Business Day occurring on or after the
thirtieth (30th) day following the last day of the Election
Period (subject to Section 11.5). At the closing, each
Purchasing Partner shall pay to the Adverse Partner, by cash or
other immediately available funds, that portion of the purchase
price for the Adverse Partner's Interest, MinorCo Interest and
Partner Loans for which such Purchasing Partner is liable
(determined in the case of the MinorCo Interest and Partner Loans
in accordance with Section 12.3) and the Adverse Partner shall
deliver to each Purchasing Partner good title, free and clear of
any liens, claims, encumbrances, security interests or options
(other than those created by this Agreement and those securing
financing obtained by the Partnership), to the portion of the
Adverse Partner's Interest, MinorCo Interest and Partner Loans
thus purchased. Each Purchasing Partner shall be liable to the
Adverse Partner only for its allocable portion of the purchase
price for the Adverse Partner's Interest, MinorCo Interest and
Partner Loans.
At the closing, the Partners shall execute such documents
and instruments of conveyance as may be necessary or appropriate
to effectuate the transactions contemplated hereby, including the
Transfer of the Adverse Partner's Interest, MinorCo Interest and
Partner Loans to the Purchasing Partner and the assumption by
each Purchasing Partner of the Adverse Partner's obligations with
respect to the portion of the Adverse Partner's Interest
Transferred to such Purchasing Partner. The Partnership and each
Partner shall bear its own costs of such Transfer and closing,
including attorneys' fees and filing fees. The cost of
determining Net Equity shall be borne one-half by the Adverse
Partner and one-half by the Partnership and the amount borne by
the Partnership shall be treated as an expense of the Partnership
for purposes of such determination.
In the event that any Purchasing Partner shall fail to
perform its obligation to purchase hereunder on the scheduled
closing date, and no other Purchasing Partner elects to purchase
the portion of the Adverse Partner's Interest, MinorCo Interest
and Partner Loans thus not purchased (such election to be made by
notice given to the Adverse Partner within five (5) Business Days
thereafter), the Adverse Partner will not be obligated to sell
any portion of its Interest, MinorCo Interest or Partner Loans to
any Purchasing Partner. If one or more of the other Purchasing
Partners timely elects to purchase such portion of the Adverse
Partner's Interest, MinorCo Interest and Partner Loans, such
Purchasing Partner(s) shall be provided an additional fifteen
(15) days from the previously scheduled closing date in which to
tender payment therefor.
11.3 Net Equity.
The "Net Equity" of a Partner's Interest, as of any day,
shall be the amount that would be distributed to such Partner in
liquidation of the Partnership pursuant to Section 14.2(a)(iii)
if (i) all of the Partnership's business and assets (including
its partnership interests in WirelessCo) were sold substantially
as an entirety for Gross Appraised Value, (ii) Profits and Losses
and items specially allocated in accordance with Sections 3.3 and
3.4 for the Allocation Year ending on the date that Net Equity is
determined, including any gain or loss resulting from the deemed
sale described in clause (i), were allocated in accordance with
Section 3, (iii) the Partnership paid its accrued, but unpaid,
liabilities and established reserves pursuant to Section 14.2 for
the payment of reasonably anticipated contingent or unknown
liabilities, and (iv) the Partnership distributed the remaining
proceeds to the Partners in liquidation, all as of such day,
provided that in determining such Net Equity, no reserve for
contingent or unknown liabilities shall be taken into account if
such Partner (or its successor in interest) (other than a Partner
that is an Adverse Partner as a result of Bankruptcy) agrees to
indemnify the Partnership and all other Partners for that portion
of any such reserve as would be treated as having been withheld
pursuant to Section 14.3 from the distribution such Partner would
have received pursuant to Section 14.2 if no such reserve were
established.
The Net Equity of a Partner's Interest shall be determined,
without audit or certification, from the books and records of the
Partnership by the Accountants. The Net Equity of a Partner's
Interest shall be determined within thirty (30) days of the day
upon which the Accountants are apprised in writing of the Gross
Appraised Value, and the amount of such Net Equity shall be
disclosed to the Partnership and each of the Partners by written
notice ("Net Equity Notice"). The Net Equity determination of
the Accountants shall be final and binding in the absence of a
showing of manifest error.
11.4 Gross Appraised Value.
"Gross Appraised Value," as of any day, means the price at
which a willing seller would sell, and a willing buyer would buy,
the business and assets of the Partnership (including the
Partnership interests in WirelessCo), free and clear of all liens
and encumbrances, substantially as an entirety and as a going
concern in a single arm's-length transaction for cash, without
time constraints and without being under any compulsion to buy or
sell.
Each provision of this Agreement that requires a
determination of Gross Appraised Value (other than Sections
2.4(a)(v) and 2.4(d)(iii) and the definition of "Premium Dollar"
in Section 1.10) also provides the manner and time for the
appointment of two (2) appraisers (the "First Appraiser" and the
"Second Appraiser"). If the Second Appraiser is not timely
designated, the determination of the Gross Appraised Value shall
be made by the First Appraiser. The First Appraiser, or each of
the First Appraiser and the Second Appraiser if the Second
Appraiser is timely designated, shall submit its determination of
the Gross Appraised Value to the Partnership, the Partners and
the Accountants within forty-five (45) days of the date of its
selection (or the selection of the Second Appraiser, as
applicable). If there are two (2) Appraisers and their
respective determinations of the Gross Appraised Value vary by
less than ten percent (10%) of the higher determination, the
Gross Appraised Value shall be the average of the two
determinations. If such determinations vary by ten percent (10%)
or more of the higher determination, the two Appraisers shall
promptly designate a third appraiser (the "Third Appraiser").
Neither the Partnership nor any Partner shall provide, and the
First Appraiser and Second Appraiser shall be instructed not to
provide, any information to the Third Appraiser as to the
determinations of the First Appraiser and the Second Appraiser or
otherwise influence such Third Appraiser's determination in any
way. The Third Appraiser shall submit its determination of the
Gross Appraised Value to the Partnership, the Partners and the
Accountants within forty-five (45) days of the date of its
selection. The Gross Appraised Value shall be equal to the
average of the two closest of the three determinations, provided
that, if the difference between the highest and middle
determinations is no more than one hundred and five percent
(105%) and no less than ninety-five percent (95%) of the
difference between the middle and lowest determinations, then the
Gross Appraised Value shall be equal to the middle determination.
The determination of the Gross Appraised Value in accordance with
this Section 11.4 shall be final and binding on the Partnership
and each Partner. If any Appraiser is only able to provide a
range in which Gross Appraised Value would exist, the average of
the highest and lowest value in such range shall be deemed to be
such Appraiser's determination of the Gross Appraised Value.
Each Appraiser selected pursuant to the provisions of this
Section 11.4 shall be an investment banking firm or other
qualified Person with prior experience in appraising businesses
comparable to the business of the Partnership and that is not an
Interested Person with respect to any Partner.
11.5 Extension of Time.
If any Transfer of a Partner's Interest in accordance with
this Section 11 or Sections 5.1(l)(ii), 12 or 14.7 requires the
consent, approval, waiver, or authorization of any government
department, board, bureau, commission, agency or instrumentality
as a condition to the lawful and valid Transfer of such Partner's
Interest to the proposed transferee thereof, then each of the
time periods provided in this Section 11 or Sections 5.1(l)(ii),
12 or 14.7, as applicable, for the closing of such Transfer shall
be suspended for the period of time during which any such
consent, approval, waiver, or authorization is being diligently
pursued; provided, however, that in no event shall the suspension
of any time period pursuant to this Section 11.5 extend for more
than three hundred sixty-five (365) days other than in the case
of a purchase of an Adverse Partner's Interest. Each Partner
agrees to use its diligent efforts to obtain, or to assist the
affected Partner or the Partnership Board in obtaining, any such
consent, approval, waiver, or authorization and shall cooperate
and use its diligent efforts to respond as promptly as
practicable to all inquiries received by it, by the affected
Partner or by the Partnership Board from any government
department, board, bureau, commission, agency or instrumentality
for initial or additional information or documentation in
connection therewith.
SECTION 12. DISPOSITIONS OF INTERESTS
12.1 Restriction on Dispositions.
Except as otherwise permitted by this Agreement, no Partner
shall Dispose of all or any portion of its Interest.
12.2 Permitted Transfers.
Subject to the conditions and restrictions set forth in
Section 12.3, a Partner may at any time Transfer all or any
portion of its Interest (a) to any Controlled Affiliate of such
Partner, (b) in connection with a Permitted Transaction involving
such Partner, (c) to the administrator or trustee of such Partner
to whom such Interest is Transferred in an Involuntary
Bankruptcy, (d) pursuant to and in compliance with Section
5.1(l)(ii), 6.4(f), 11.2, 12.4, 12.5, 12.6, 12.7 or 14.7 or (e)
with the prior written consent of the other Partners (each a
"Permitted Transfer").
After any Permitted Transfer, the Transferred Interest shall
continue to be subject to all the provisions of this Agreement,
including the provisions of this Section 12 with respect to the
Disposition of Interests. Except in the case of a Transfer of a
Partner's entire Interest made in compliance herewith, no Partner
shall withdraw from the Partnership, except upon the Unanimous
Vote of the Partnership Board. The withdrawal of a Partner,
whether or not permitted, shall not relieve the withdrawing
Partner of its obligations under Section 5.4 or 6.6 and shall not
relieve such Partner or any of its Affiliates of its obligations
under, or result in a termination of or otherwise affect, any
agreement between the Partnership and such Partner or Affiliate
then in effect, except to the extent provided therein.
12.3 Conditions to Permitted Transfers.
A Transfer shall not be treated as a Permitted Transfer
unless and until the following conditions are satisfied:
(a) Except in the case of a Transfer involuntarily by
operation of law, the transferor and transferee shall execute and
deliver to the Partnership such documents as may be necessary or
appropriate in the opinion of counsel to the Partnership to
effect such Transfer. In the case of a Transfer of an Interest
involuntarily by operation of law, the Transfer shall be
confirmed by presentation to the Partnership of legal evidence of
such Transfer, in form and substance satisfactory to counsel to
the Partnership. In all cases, the Partnership shall be
reimbursed by the transferor and/or transferee for all costs and
expenses that it reasonably incurs in connection with such
Transfer (including reasonable attorneys' fees and expenses, but
excluding the portion of the costs of determining Net Equity that
are to be borne by the Partnership as provided in Section
11.2(b));
(b) Except in the case of a Transfer involuntarily by
operation of law, the transferee of an Interest (other than, with
respect to clauses (A) and (B) below, a transferee that was a
Partner prior to the Transfer) shall, by written instrument in
form and substance reasonably satisfactory to the Partnership
Board (and, in the case of clause (C) below, the transferor
Partner), (A) make representations and warranties to the
nontransferring Partners equivalent to those set forth in Section
9.1, (B) accept and adopt the terms and provisions of this
Agreement, including this Section 12, and (C) assume the
obligations of the transferor Partner under this Agreement with
respect to the Transferred Interest. The transferor Partner
shall be released from all such assumed obligations except (x) as
otherwise provided in Section 6 in the case of a Transfer to a
Controlled Affiliate, (y) those obligations or liabilities of the
transferor Partner arising out of a breach of this Agreement or
pursuant to Section 5.4 or 6.6 and (z) in the case of a Transfer
to any Person other than a Partner or any of its Controlled
Affiliates, those obligations or liabilities of the transferor
Partner based on events occurring, arising or maturing prior to
the date of Transfer;
(c) Except in the case of a Transfer involuntarily by
operation of law, the transferor of any Interest and its
Affiliates will be obligated to sell to the transferee, and the
transferee will be obligated to buy from the transferor and its
Affiliates, a percentage of the Partner Loans (if any) held
directly or indirectly by the transferor or an Affiliate thereof
equal to the percentage of the transferor's Interest being
Transferred to the transferee. If the transferee is a Partner or
a Controlled Affiliate thereof, the terms of such purchase will
be as provided in Section 2.7. In connection with any such
purchase of Partner Loans, the transferee shall surrender to the
Partnership the promissory note or notes evidencing such Partner
Loans in exchange for the issuance by the Partnership of a new
promissory note made payable to the order of the transferee in a
principal amount equal to the outstanding balance of such Partner
Loans and otherwise having the same terms as the promissory note
surrendered therefor;
(d) Except in the case of a Transfer involuntarily by
operation of law, the transferor of an Interest will be obligated
to sell to the transferee, and the transferee will be obligated
to buy from the transferor, a portion of the MinorCo Interest
owned by the transferor representing the same percentage of the
transferor's MinorCo Interest as the percentage of the
transferor's Interest being Transferred to the transferee.
Election by a Partner to purchase all or any portion of another
Partner's Interest pursuant to Section 5.1(l)(ii), 6.4(f), 11,
12.4, 12.5, 12.6 or 14.7 shall also constitute an election to
purchase an equivalent portion of the transferor's MinorCo
Interest, and each purchasing Partner shall be obligated to
purchase a portion of such MinorCo Interest equal to the
percentage of the transferor's Interest such purchasing Partner
is obligated to purchase for a price equal to the "Net Equity" of
the transferor's MinorCo Interest (determined as provided in
Section 11.3 as if all references therein and in any defined term
used therein to the Partnership were deemed references to MinorCo
and all references to Section 14 contained therein were deemed
references to the corresponding provisions of the Agreement of
Limited Partnership of MinorCo dated as of March 28, 1995)
(except in the case of a Transfer pursuant to Section 12.4, in
which case the terms of the Purchase Offer shall apply, and
except in the case of a Transfer pursuant to Section 12.6, in
which case the Public Market Value shall apply);
(e) Except in the case of a Transfer involuntarily by
operation of law, if required by the Partnership Board, the
transferee shall deliver to the Partnership an opinion,
satisfactory in form and substance to the Partnership Board, of
counsel reasonably satisfactory to the Partnership Board to the
effect that the Transfer of the Interest is in compliance with
applicable state and Federal securities laws;
(f) Except in the case of a Transfer involuntarily by
operation of law, if required by the Partnership Board, the
transferee (other than a transferee that was a Partner prior to
the Transfer) shall deliver to the Partnership evidence of the
authority of such Person to become a Partner and to be bound by
all of the terms and conditions of this Agreement, and the
transferee and transferor shall each execute and deliver such
other instruments as the Partnership Board reasonably deems
necessary or appropriate to effect, and as a condition to, such
Transfer, including amendments to the Certificate or any other
instrument filed with the State of Delaware or any other state or
governmental agency;
(g) Unless otherwise approved by the Partnership Board
(with the Representatives of the transferor General Partner
abstaining), no Transfer of an Interest shall be made except upon
terms which would not, in the opinion of counsel chosen by and
mutually acceptable to the Partnership Board and the transferor
Partner, result in the termination of the Partnership within the
meaning of Section 708 of the Code or cause the application of
the rules of Sections 168(g)(1)(B) and 168(h) of the Code or
similar rules to apply to the Partnership. If the immediate
Transfer of such Interest would, in the opinion of such counsel,
cause a termination within the meaning of Section 708 of the
Code, then if, in the opinion of such counsel, the following
action would not precipitate such termination, the transferor
Partner shall be entitled (or required, as the case may be) (i)
immediately to Transfer only that portion of its Interest as may,
in the opinion of counsel to the Partnership, be Transferred
without causing such a termination and (ii) to enter into an
agreement to Transfer the remainder of its Interest, in one or
more Transfers, at the earliest date or dates on which such
Transfer or Transfers may be effected without causing such
termination. The purchase price for the Interest shall be
allocated between the immediate Transfer and the deferred
Transfer or Transfers pro rata on the basis of the percentage of
the aggregate Interest being Transferred, each portion to be
payable when the respective Transfer is consummated, unless
otherwise agreed by the parties to the Transfer. In the case of
a Transfer by one Partner to another Partner, the deferred
purchase price shall be deposited in an interest-bearing escrow
account unless another method of securing the payment thereof is
agreed upon by the transferor Partner and the transferee
Partner(s). In determining whether a particular proposed
Transfer will result in a termination of the Partnership, counsel
to the Partnership shall take into account the existence of prior
written commitments to Transfer made pursuant to this Agreement
and such commitments shall always be given precedence over
subsequent proposed Transfers. Each Partner agrees that, solely
for purposes of this Section 12.3(g), any Transfer of an
ownership interest in a Partner that has the same effect as a
Transfer of such Partner's Interest for purposes of determining
whether the Partnership has been terminated within the meaning of
Section 708 of the Code shall be treated as a Transfer of such
Partner's Interest. Each Partner shall notify the Partnership
and each other Partner in writing not less than five (5) days
prior to any Transfer of an ownership interest in such Partner to
which this Section 12.3(g) applies. No Partner shall be deemed
to have breached this Section 12.3(g) to the extent that such
Partner's failure to comply with the foregoing provisions in
connection with a Transfer of an ownership interest in such
Partner resulted solely from the failure of any other Partner to
comply with the notice obligation set forth in the preceding
sentence;
(h) The transferor or transferee shall furnish the
Partnership with the transferee's taxpayer identification number,
sufficient information to determine the transferee's initial tax
basis in the Interest Transferred, and any other information
reasonably necessary to permit the Partnership to file all
required federal and state tax returns and other legally required
information statements or returns. Without limiting the
generality of the foregoing, the Partnership shall not be
required to make any distribution otherwise provided for in this
Agreement with respect to any Transferred Interest until it has
received such information;
(i) Except in the case of a Transfer of an Interest
involuntarily by operation of law, if the transferor is a General
Partner, the transferor and transferee shall provide the
Partnership with an opinion of counsel, which opinion of counsel
shall be reasonably satisfactory to the other Partners, to the
effect that such Transfer will not cause the Partnership to
become taxable as a corporation for federal income tax purposes;
and
(j) If the Parent of a transferee is not the same
Person as the Parent of the transferring Partner, then the Parent
of the transferee (other than a transferee Partner) shall execute
and deliver to the Partnership and the other Parents a Parent
Undertaking. If a Partner ceases to be a Controlled Affiliate of
its former Parent as a result of a Permitted Transaction, then
the new Parent of such Partner shall execute and deliver a Parent
Undertaking to the Partnership and the other Parents.
Upon completion of any Permitted Transfer and compliance
with the provisions of this Section 12.3, the transferee of the
Interest (if not already a Partner) shall be admitted as a
Partner without any further action.
12.4 Right of First Refusal.
After March 1, 2000, a Partner may Transfer all or any
portion of its Interest (the "Offered Interest") if (i) such
Partner (the "Seller") first offers to sell the Offered Interest
pursuant to the terms of this Section 12.4, and (ii) the Transfer
of the Offered Interest to the Purchaser (as defined below) would
not cause an Adverse Act under clause (vii) of the definition
thereof.
(a) Limitation on Transfers. No Transfer may be made
under this Section 12.4 unless the Seller has received a bona
fide written offer (the "Purchase Offer") from a Person
(including another Partner) who is not a Controlled Affiliate of
such Partner (the "Purchaser") to purchase the Offered Interest
for a purchase price (the "Offer Price") denominated and payable
in United States dollars at closing, which offer shall be in
writing signed by the Purchaser and shall be irrevocable for a
period ending no sooner than the Business Day following the end
of the Offer Period, as hereinafter defined. (b) Offer Notice.
Prior to accepting the Purchase Offer, the Seller shall give to
the Partnership and each other Partner other than any Exclusive
Limited Partner written notice (the "Offer Notice") which shall
include a copy of the Purchase Offer and an offer (the "Firm
Offer") to sell the Offered Interest to the other Partners (the
"Offerees") for the Offer Price, payable according to the same
terms as (or on more favorable terms than) those contained in the
Purchase Offer, provided that the Firm Offer shall be made
without regard to the requirement of any earnest money or similar
deposit required of the Purchaser prior to closing. If the
Person making the Purchase Offer is not an entity that is subject
to the periodic reporting requirements of Section 13 or Section
15(d) of the Securities Exchange Act of 1934, the Seller shall
also provide any information concerning the ownership of the
Person making the Purchase Offer that may be reasonably requested
by any other Partner, to the extent such information is available
to the Seller.
(c) Offer Period. The Firm Offer shall be irrevocable
for a period (the "Offer Period") ending at 11:59 P.M., local
time at the Partnership's principal place of business, on the
sixtieth (60th) day following the day of the Offer Notice.
(d) Acceptance of Firm Offer. At any time during the
Offer Period, any Offeree may accept the Firm Offer as to all or
any portion of the Offered Interest, by giving written notice of
such acceptance to the Seller and each other Offeree, which
notice shall indicate the maximum Percentage Interest that such
Offeree is willing to purchase (the "purchase commitment"). If
the aggregate purchase commitments made by Offerees accepting the
Firm Offer ("Accepting Offerees") are equal to at least one
hundred percent (100%) of the Offered Interest, then, except as
otherwise provided in Section 12.4(d)(i), each Accepting Offeree
shall be obligated to purchase, and the Seller shall be obligated
to sell to such Accepting Offeree that portion of the Offered
Interest that corresponds to the ratio of the Percentage Interest
of such Accepting Offeree to the aggregate Percentage Interests
of the Accepting Offerees, provided that if any Accepting
Offeree's purchase commitment was for an amount less than its
proportionate share of the Offered Interest as so determined,
then the portion of the Offered Interest not so committed to be
purchased shall continue to be allocated proportionally in the
manner provided above in this sentence among the other Accepting
Offerees until each has been allocated, by such process of
apportionment, a percentage of the Offered Interest equal to the
maximum percentage such Accepting Offeree committed to purchase
or until the entire Offered Interest has been allocated among the
Accepting Offerees. If Offerees do not accept the Firm Offer as
to all of the Offered Interest during the Offer Period, the Firm
Offer shall be deemed to be rejected in its entirety.
(i) Except as otherwise provided in Section
12.4(d)(ii), if a Seller is a Cable Partner and no Cable
Partner's Percentage Interest, when added to the Percentage
Interests of all Controlled Affiliates of such Partner, is equal
to or greater than Sprint's Percentage Interest, when added to
the Percentage Interests of all Controlled Affiliates of Sprint,
then the Offered Interest shall be allocated first among those of
the Accepting Offerees that are Cable Partners as though Sprint
were not an Accepting Offeree and if and to the extent that the
aggregate purchase commitments made by such Cable Partners are
less than one hundred percent (100%) of the Offered Interest, the
balance of the Offered Interest up to Sprint's purchase
commitment shall be allocated to Sprint.
(ii) The Offered Interest shall be allocated
among the Cable Partners in the manner set forth in Section
12.4(d)(i) until any Cable Partner would have a Percentage
Interest, when added to the Percentage Interests of all
Controlled Affiliates of such Partner, that is equal to Sprint's
Percentage Interest, when added to the Percentage Interests of
all Controlled Affiliates of Sprint, calculated in each case
after giving effect to the adjustments to Percentage Interests to
be made in connection with the purchase of the Offered Interest
by the Cable Partners in accordance with Section 12.4(d)(i)
assuming that such purchase was made up to the amount that would
yield such result (as to each Partner, its "Adjusted Percentage
Interest"). Any portion of the Offered Interest not yet
allocated shall continue to be allocated proportionately among
all Accepting Offerees (including Sprint, if applicable) in the
manner set forth in this Section 12.4(d) without regard to
Section 12.4(d)(i), but substituting the Adjusted Percentage
Interests of the Offerees for the Percentage Interests that would
otherwise be used to determine such allocation, until each has
been allocated an amount equal to its purchase commitment or
until the entire Offered Interest has been allocated among the
Accepting Offerees.
(e) Closing of Purchase Pursuant to Firm Offer. If all
of the Offered Interest has been subscribed for in accordance
with the terms of Section 12.4(d), the Seller shall give notice
to such effect (the "Sale Notice") to all Offerees within five
days after the end of the Offer Period. Unless the Accepting
Offerees and the Seller otherwise agree, the closing of any
purchase pursuant to this Section 12.4 shall be held at the
principal office of the Seller at 10:00 a.m. (local time at the
place of closing) on the first Business Day on or after the
thirtieth (30th) day following the date on which the Sale Notice
is given (subject to Section 11.5). At the closing, each
Accepting Offeree shall pay to the Seller, by cash or other
immediately available funds, that portion of the purchase price
for the Offered Interest, MinorCo Interest and Partner Loans of
the Seller for which such Accepting Offeree is liable, and the
Seller shall deliver to each Accepting Offeree good title, free
and clear of any liens, claims, encumbrances, security interests
or options (other than those created by this Agreement and those
securing financing obtained by the Partnership), to the portion
of the Offered Interest, MinorCo Interest and Partner Loans thus
purchased. Each Accepting Offeree shall be liable to the Seller
only for its allocable portion of the purchase price for the
Offered Interest, MinorCo Interest and Partner Loans.
At the closing, the Partners shall execute such documents
and instruments of conveyance as may be necessary or appropriate
to effectuate the transactions contemplated hereby, including the
Transfer of the Offered Interest, MinorCo Interest and Partner
Loans of the Seller to the Accepting Offerees and the assumption
by each Accepting Offeree of the Seller's obligations with
respect to the portion of the Seller's Interest and MinorCo
Interest Transferred to such Accepting Offerees. Each Partner
and the Partnership shall bear its own costs of such Transfer and
closing, including attorneys' fees and filing fees.
(f) Sale Pursuant to Purchase Offer If Firm Offer
Rejected. If the Firm Offer is not accepted in the manner
hereinabove provided, or the Accepting Offerees fail to close the
purchase on the closing date, then in either such event, but
subject to the last sentence of this Section 12.4(f) and subject
to Section 12.3, the Seller shall be free for the period
described below (the "Free to Sell Period") to sell the Offered
Interest to the Purchaser upon terms and conditions that are the
same as, or more favorable to the Seller than, those contained in
the Purchase Offer (including at the same or greater price). The
Free to Sell Period shall be the applicable of (i) if the Firm
Offer is not accepted, sixty (60) days after the last day of the
Offer Period (subject to Section 11.5) or (ii) if the Firm Offer
is accepted but the purchase is not closed, sixty (60) days
(subject to Section 11.5) after the scheduled closing date,
provided that if the last sentence of this Section 12.4(f)
becomes applicable, then such sixty (60) day period shall be
measured from the fifth (5th) Business Day after the previously
scheduled closing date or, if applicable, from the subsequently
scheduled closing date contemplated by such sentence (assuming
the required purchase elections are made). If the Offered
Interest is not so sold within the Free to Sell Period, the
Seller's right to Transfer its Interest shall again be subject to
the foregoing restrictions. Notwithstanding the foregoing, if
more than one Offeree elected to purchase the Offered Interest
and at least one Accepting Offeree tendered its proportionate
share of the purchase price therefor at the closing but any other
Accepting Offeree failed to make such tender, then any tendering
Accepting Offeree may elect, by notice given to the Seller within
five (5) Business Days thereafter, to purchase the portion of the
Offered Interest for which payment was not tendered (provided
that, after giving effect to such election, the entire Offered
Interest is being purchased) and shall be provided an additional
fifteen (15) days from the previously scheduled closing date in
which to tender payment therefor.
(g) Restrictions on Notice. No notice initiating the
procedures contemplated by this Section 12.4 may be given by any
Partner while any notice, purchase or Transfer is pending under
Section 11 or this Section 12.4 or after a Liquidating Event has
occurred. No notice initiating the procedures contemplated by
this Section 12.4 may be given by an Adverse Partner nor any
Delinquent Partner prior to the applicable Cure Date unless such
Partner has cured the underlying Payment Default, and no Seller
shall be required to offer any portion of its Interest to an
Adverse Partner during the period that the Partnership is
pursuing any remedy specified in Section 11.1 with respect to
such Adverse Partner. No Partner may accept a Purchase Offer
during any period that, as provided above, such Partner may not
give the notice initiating the procedures contemplated by this
Section 12.4 or thereafter until it has given such notice and
otherwise complied with the provisions of this Section 12.4.
12.5 Tagalong Rights.
(a) Direct Transfers. In the event that (i) a Partner
proposes to Transfer its Interest (as part of a single
transaction or any series of related transactions) to any Person
other than a Controlled Affiliate of such Partner after March 1,
2000, and such Transfer would cause the proposed transferee (a
"Tagalong Purchaser") and its Controlled Affiliates to own more
than fifty-five percent (55%) of the Percentage Interests (a
"Tagalong Transaction") and (ii) the Firm Offer is not accepted
in the manner provided in Section 12.4, the Tagalong Transaction
shall not be permitted hereunder unless the Tagalong Purchaser
offers to purchase the entire Interest of any other Partner that
desires to sell its Interest to the Tagalong Purchaser at the
same price per each one percent (1%) Percentage Interest and on
the same terms and conditions as the Tagalong Purchaser has
offered to the Partner proposing to make such Transfer (the
"Transferring Partner"). If such Transfer occurs as part of a
series of related transactions, the price and terms shall be the
price and terms most favorable to the Transferring Partner for
which any portion of the Interest of the Transferring Partner is
Transferred as part of such series of transactions. Prior to
effecting any Tagalong Transaction, the Transferring Partner
shall deliver to each other Partner a binding, irrevocable offer
(the "Tagalong Offer") by the Tagalong Purchaser to purchase the
entire Interest of the other Partners at the same price per each
one percent (1%) Percentage Interest and on the same terms and
conditions as the Tagalong Purchaser has offered to the
Transferring Partner (the "Tagalong Notice"). The "Tagalong
Offer" shall be irrevocable for a period (the "Tagalong Period")
ending at 11:59 p.m., local time at the Partnership's principal
place of business, (x) with respect to a Tagalong Purchaser that
is an existing Partner or a Controlled Affiliate of an existing
Partner, on the one hundred eightieth (180th) day following the
date of the Tagalong Notice and (y) with respect to any other
Tagalong Purchaser, on the first anniversary of the date of the
Tagalong Notice. At any time during the Tagalong Period, any
Partner may accept the Tagalong Offer as to the entire amount of
its Interest by giving written notice of such acceptance to the
Tagalong Purchaser.
(b) Indirect Transfers. Within five (5) days of the
Parent of any Partner (such Partner, a "Controlling Partner")
acquiring, indirectly, Interests in the Partnership (other than
through such Controlling Partner's acquisition of additional
Interests), causing such Parent to own, directly and indirectly
through its Controlled Affiliates, more than fifty-five percent
(55%) of the Percentage Interests, such Controlling Partner shall
give to each other Partner written notice of such acquisition (a
"Control Notice"), which shall include an offer (the "Control
Offer") by the Controlling Partner to purchase the entire
Interest of each other Partner at a price equal to the Net Equity
thereof (as determined pursuant to Section 11.3) and shall
designate a First Appraiser (as required by Section 11.4). The
Representatives of the other General Partners shall by Required
Majority Vote pursuant to Section 8.6 appoint the Second
Appraiser within ten (10) Business Days following the date the
Control Notice was given. The Control Offer shall be irrevocable
for a period (the "Control Offer Period") ending at 11:59 p.m.,
local time at the Partnership's principal place of business, on
the one hundred eightieth (180th) day following the date of the
Net Equity Notice. At any time during the Control Offer Period,
any Partner may accept the Control Offer as to the entire amount
of its Interest by giving written notice of such acceptance to
the Controlling Partner. The costs of determining the Net Equity
shall be borne one-half by the Controlling Partner and one-half
by the Partners that accept the Control Offer (pro rata based on
their respective Percentage Interests) or, if no Partner accepts
the Control Offer, then such costs shall be borne entirely by the
Partnership.
(c) Limitations on Acceptance of Offers. No Adverse
Partner may accept a Tagalong Offer or a Control Offer during any
period that an election may be made to pursue the remedies
specified in Section 11.1(a) against such Partner and, if an
election pursuant to clause (i) of the first sentence thereof to
purchase the Adverse Partner's Interest is made, pending the
closing of the purchase thereof, unless, in any such case, such
Adverse Partner agrees that the purchase price for its Interest
under this Section 12.5 will not be greater than the price at
which its Interest could then be purchased under Section 11.
(d) Closing Matters. Unless the Tagalong Purchaser or
the Controlling Partner, as the case may be, on the one hand, and
the Partners accepting the Tagalong Offer or the Control Offer,
as the case may be, on the other hand, otherwise agree, the
closing of the purchase and sale of Interests pursuant to this
Section 12.5 shall occur at the principal office of the
Partnership at 10:00 a.m. (local time at the place of the
closing) on the first Business Day occurring on or after the
sixtieth (60th) day following the expiration of the Tagalong
Period or the Control Offer Period, as applicable, subject to
Section 11.5. At the closing, the Tagalong Purchaser or
Controlling Partner shall pay to the Partners who have accepted
the applicable offer, by cash or other immediately available
funds, the purchase price for the Interests, MinorCo Interests
and Partner Loans being Transferred, and the Partners selling
their Interests, MinorCo Interests and Partner Loans shall
deliver to the Tagalong Purchaser or Controlling Partner, as
applicable, good title, free and clear of any liens, claims,
encumbrances, security interest or options (other than those
created by this Agreement and those securing financing obtained
by the Partnership), to the Interest, MinorCo Interest and
Partner Loans thus purchased.
At the closing, the Partners shall execute such documents
and instruments of conveyance as may be necessary or appropriate
to effectuate the transactions contemplated hereby, including the
Transfer of the Interests, MinorCo Interests and Partner Loans to
the Tagalong Purchaser or Controlling Partner, as applicable, and
the assumption by the Tagalong Purchaser or Controlling Partner,
as applicable, of the obligations with respect to the Interests
and MinorCo Interests so Transferred. Each Partner and the
Partnership shall bear its own costs of such Transfer and
closing, including attorneys' fees and filing fees.
12.6 Offer and Registration Rights.
(a) Registration Notice. At any time on or after
August 1, 2003 and on or before September 30, 2003 and during the
corresponding two-month periods of each calendar year thereafter,
any Partner or group of Partners (individually, a "Notice
Partner" and collectively the "Notice Partners"), by notice (a
"Registration Notice") given to the Partnership Board and each
other Partner, may request that the Partnership convert to
corporate form pursuant to Section 5.9 and that the corporate
successor to the Partnership ("MajorCorp") register under the
1933 Act for resale by the Notice Partner(s) all or a portion of
the shares of common stock ("MajorCorp Stock") that would be
issued in exchange for such Notice Partner's Interest and MinorCo
Interest upon such conversion to corporate form. Each
Registration Notice shall (i) identify the Notice Partner(s)
giving the Registration Notice, (ii) specify the percentage (or
respective percentages) of the MajorCorp Stock to be issued in
exchange for the Interest(s) (and MinorCo Interest(s)) of the
Notice Partner(s) upon such conversion of the Partnership that
such Notice Partner(s) desire to have registered for resale (as
to each Notice Partner, subject to increase as provided in
Section 12.6(c), its "Registration Interest"), (iii) identify the
Public Appraiser selected by the Notice Partner(s) to make the
determination of Public Market Value and the Minimum Offering
Amount (the "First Public Appraiser") and (iv) set forth the
First Public Appraiser's estimate of the Minimum Offering Amount.
If, during the period specified above of any calendar year, one
or more Registration Notices are timely given as provided above,
then each Partner that did not timely give a Registration Notice
will have until October 15th of the same calendar year to give a
Registration Notice, which Registration Notice shall contain only
the information required to be set forth in a Registration Notice
by clauses (i) and (ii) of the second sentence of this Section
12.6(a), and a Partner giving such a Registration Notice shall be
deemed to concur in the selection of the First Public Appraiser
made in the initial Registration Notice given during the
applicable calendar year. All Registration Notices shall be
deemed void if the aggregate Registration Interests specified in
such Registration Notices are less than the Minimum Offering
Amount. If a Registration Notice has been timely given in any
calendar year and is not deemed void pursuant to the previous
sentence, then by October 31st of such year, the Partnership
Board shall inform the Partners of its selection of a Public
Appraiser (the "Second Public Appraiser"); provided that if the
Partnership Board has not timely designated the Second Public
Appraiser, then the Second Public Appraiser shall be the Public
Appraiser proposed to the Partnership Board by the General
Partner (other than any Notice Partner) that (together with its
Controlled Affiliates) holds the largest Voting Percentage
Interest. For purposes of this Section 12.6 and Section 12.7, a
"Public Appraiser" must be an investment banking firm of national
reputation, must not be an Interested Person with respect to any
Partner, and must be one of the ten leading investment banking
firms based on aggregate proceeds of public offerings of common
stock in the United States for which it acted as a managing
underwriter during the preceding two full calendar years.
"Minimum Offering Amount" means the percentage (which shall not
be less than one percent (1%)) of the total equity of MajorCorp
that the First Public Appraiser and Second Public Appraiser
jointly determine would be necessary to effect a viable initial
public offering and to result in a sufficient public float for
MajorCorp Stock to be actively traded and to satisfy the
applicable listing requirements for the Nasdaq National Market or
The New York Stock Exchange and any applicable market
capitalization requirements for use of the shortest form of
registration statement (excluding Form S-4 and Form S-8) then
available for the registration of a primary offering by an issuer
of common stock under the 1933 Act (which form currently is Form
S-3) assuming the satisfaction of all other requirements,
including any duration of public reporting requirements.
(b) Determination of Public Market Value. The "Public
Market Value" of the Registration Interests of the Notice
Partners shall equal the aggregate cash proceeds, net of
underwriters' fees, discounts and commissions and other selling
expenses customarily borne by selling stockholders, that would be
received by the Notice Partners from the sale in an underwritten
public offering registered under the 1933 Act of the MajorCorp
Stock issued in exchange for such Registration Interests if such
offering were carried out in an orderly manner over a period not
exceeding eighteen (18) months (excluding any changes in value of
MajorCorp over such time, but otherwise considering all factors
that the Public Appraisers may deem relevant). In determining
the Public Market Value of the Registration Interests, the Public
Appraisers shall assume the conversion of the Partnership to a
corporation in accordance with Section 5.9 and the consolidation
of the assets of MinorCo with the Partnership in connection
therewith. The Public Market Value of the Registration Interests
will be determined in accordance with the procedures set forth in
the second paragraph of Section 11.4, substituting the term
"Public Market Value" for the term "Gross Appraised Value", the
term "First Public Appraiser" for the term "First Appraiser" and
the term "Second Public Appraiser" for the term "Second
Appraiser." The Public Appraisers shall agree on the Minimum
Offering Amount. The fees and expenses of the Public Appraisers
in making such determination will be paid by the Partnership.
Within five (5) days after the final determination of Public
Market Value, the Public Appraisers shall provide written notice
(the "PMV Notice") of such Public Market Value and the Minimum
Offering Amount to each Notice Partner and each other Partner.
The Public Market Value of each Notice Partner's Registration
Interest shall be its allocable share of the Public Market Value
of the Registration Interests.
(c) Offer. By notice given to the Partnership and each
other Partner (other than any Exclusive Limited Partner) within
thirty (30) days after the date of the PMV Notice, any Notice
Partner (any such Notice Partner to then be referred to as a
"Registering Partner") may make an offer (the "Registration Firm
Offer") to sell to the other Partners (including any Notice
Partner who has not given a Registration Firm Offer within the
thirty (30) day period for the delivery of such Registration Firm
Offer but excluding any other Registering Partner and any
Exclusive Limited Partner) (the "Registration Offerees") its
Registration Interest for the Public Market Value of such
Registration Interest. If the Partnership receives (i)
Registration Firm Offers from all of the Notice Partners prior to
the expiration of such thirty (30) day period or (ii)
Registration Firm Offers from at least one Notice Partner on or
before the thirtieth (30th) day after the date of the PMV Notice,
the Partnership shall promptly give notice (the "Firm Offer
Commencement Notice") to each Partner stating that such
Registration Firm Offers have been delivered as of the date of
such Firm Offer Commencement Notice. If the aggregate amount of
Registration Interest(s) for which Registration Firm Offers are
given is less than the Minimum Offering Amount, then each
Registering Partner shall have the right to increase the
Registration Interest so offered by it by the amount by which the
aggregate Registration Interest(s) for which Registration Firm
Offer(s) have previously been given is less than the Minimum
Offering Amount (which right as among the Registering Partners
shall be apportioned pro rata based upon the relative
Registration Interests of the Registering Partners unless
otherwise agreed), by giving notice to the Partnership Board and
each other Partner amending its Registration Firm Offer to effect
such increase by the tenth (10th) day following the date of the
Firm Offer Commencement Notice; provided, that in such event the
Firm Offer Commencement Notice shall be deemed to have been given
as of the end of such ten (10) day period. If, as of the end of
such ten (10) day period, the aggregate Registration Interest(s)
so offered pursuant to the Registration Firm Offer(s), as so
amended, are less than the Minimum Offering Amount, then all of
such Registration Firm Offers shall be deemed to have been
rejected and withdrawn.
(d) Registration Offer Period. Subject to the last
sentence of Section 12.6(c), each Registration Firm Offer shall
be irrevocable for a period (the "Registration Offer Period")
ending at 11:59 p.m., local time at the Partnership's principal
place of business, on the thirtieth (30th) day following the date
of the Firm Offer Commencement Notice; provided that if, as of
the end of such period, at least one but fewer than all of the
Registration Offerees have accepted the Registration Firm Offer
pursuant to Section 12.6(e), the Registration Offer Period shall
be extended for an additional fifteen (15) days and any remaining
Registration Offeree(s) shall have the right to accept the
Registration Firm Offer during such fifteen (15) day period.
(e) Acceptance of Registration Firm Offer. At any time
during the Registration Offer Period (as extended by Section
12.6(d), if applicable), any Registration Offeree may accept the
Registration Firm Offer as to all or any portion of the
Registration Interest(s) covered thereby, by giving notice of
such acceptance to each Partner (other than any Exclusive Limited
Partner) which notice shall indicate the maximum percentage of
the Registration Interest of each Registering Partner that such
Registration Offeree is willing to purchase (the "purchase
commitment"); provided that if more than one Registration
Interest is being offered, such Registration Offeree must accept
the Registration Firm Offer as to the same percentage of the
Registration Interest of each such Registering Partner. If the
aggregate purchase commitments made by Registration Offerees
accepting the Registration Firm Offer(s) ("Registration Accepting
Offerees") exceed one hundred percent (100%) of each Registration
Interest, then, each Registration Accepting Offeree shall
purchase, and each Registering Partner shall sell to such
Registration Accepting Offeree, that portion of such Registering
Partner's Registration Interest that corresponds to the ratio of
the Percentage Interest of such Registration Accepting Offeree to
the aggregate Percentage Interests of all Registration Accepting
Offerees; provided that if any Registration Accepting Offeree's
purchase commitment was for an amount less than its proportionate
share of the applicable Registration Interest as so determined,
then the portion of the Registration Interest not so committed to
be purchased by such Registration Accepting Offeree shall
continue to be allocated proportionally in the manner provided
above in this sentence among the other Registration Accepting
Offerees until each has been allocated, by such process of
apportionment, a percentage of the Registration Interest equal to
the maximum percentage such Registration Accepting Offeree
committed to purchase or until the entire amount of each
Registration Interest has been allocated among the Registration
Accepting Offerees. Notwithstanding any purported acceptance of
a Registration Firm Offer, all Registration Firm Offers shall be
deemed to be rejected by all such Registration Accepting Offerees
in their entirety if the portion not accepted is in the aggregate
greater than zero but less than the Minimum Offering Amount;
provided that all Registration Firm Offers will not be deemed
rejected in their entirety if, within ten (10) days after the
expiration of the Registration Offer Period, the Registration
Accepting Offerees increase or decrease their purchase
commitments, by giving notice to the Partnership Board and each
other Partner amending their respective purchase commitments to
the extent required to effect any such increase or decrease, as
applicable, such that the amount accepted for purchase by the
Registration Accepting Offerees constitutes all of the
Registration Interest(s) or the amount not accepted equals or
exceeds the Minimum Offering Amount.
(f) Closing of Purchase Pursuant to Registration Firm
Offer. If the Registration Firm Offer(s) have been accepted in
whole or in part in accordance with the terms of Section 12.6(e),
the Registering Partner(s) shall give notice to such effect (the
"Registration Sale Notice") to all Registration Offerees within
five (5) days after the end of the Registration Offer Period.
Unless the Registration Accepting Offerees and the Registering
Partner(s) otherwise agree, the closing of any purchase pursuant
to this Section 12.6 shall be held at the principal office of the
Partnership at 10:00 a.m. (local time at the place of closing) on
the first Business Day on or after the thirtieth (30th) day
following the date on which such Registration Sale Notice is
given (subject to Section 11.5). At the closing, each
Registration Accepting Offeree shall (i) pay to each Registering
Partner an amount in cash or other immediately available funds
equal to at least one-third of that portion of the purchase price
for the applicable portion of the Registration Interest and
Partner Loans of the Registering Partner for which such
Registration Accepting Offeree is liable and (ii) issue to each
Registering Partner a promissory note (the "Registration Note")
of the Registration Accepting Offeree or its Controlled Affiliate
in a principal amount equal to the remaining portion of the
purchase price for the applicable portion of the Registration
Interest and Partner Loans of the Registering Partner for which
such Registration Accepting Offeree is liable, and the
Registering Partner shall deliver to each Registration Accepting
Offeree good title, free and clear of any liens, claims,
encumbrances, security interests or options (other than those
created by this Agreement and those securing financing obtained
by the Partnership), to the applicable portion of the
Registration Interest and Partner Loans thus purchased. The
principal amount of the Registration Note shall be payable in two
equal annual installments beginning on the first anniversary of
the closing date under this Section 12.6(f), and shall bear
interest, payable quarterly, in arrears at the rate specified
below from the closing date until the principal amount thereof
and all accrued interest thereon is paid in full. The
Registration Note will contain customary terms, conditions and
remedies, including an increased rate of interest payable after a
default in the payment of principal and/or interest. The
interest rate on the Registration Note shall be determined in
connection with the closing and shall be the average of the
interest rates determined independently by the First Public
Appraiser and the Second Public Appraiser as the rate that would
be necessary to cause publicly traded securities with terms,
conditions and remedies comparable to the Registration Note to
trade at face value on a fully distributed basis. Each
Registration Accepting Offeree shall be liable to each
Registering Partner only for its allocable portion of the
purchase price for the Registration Interest and corresponding
portion of such Registering Partner's Partner Loans.
At the closing, the Partners shall execute such documents
and instruments of conveyance as may be necessary or appropriate
to effectuate the transactions contemplated hereby, including the
Transfer of an allocable portion of the Registration Interest and
Partner Loans of each Registering Partner to each of the
Registration Accepting Offerees and the assumption by each
Registration Accepting Offeree of each Registering Partner's
obligations with respect to such portion of the Registering
Partner's Registration Interest Transferred to such Registration
Accepting Offeree. Each Partner and the Partnership shall bear
its own costs of such Transfer and closing, including attorneys'
fees and filing fees.
In the event that any Registration Accepting Offeree shall
fail to perform its obligation to purchase hereunder on the
scheduled closing date and any other Registration Accepting
Offeree(s) were prepared to perform their respective obligations
at the closing on such date (each a "Tendering Offeree"), then
the Tendering Offerees shall be entitled to elect by notice given
to the Partnership Board, the Registering Partner(s) and each
other Tendering Offeree within ten (10) days after the originally
scheduled closing date (the "extension period") to increase or
decrease their purchase commitments such that the amount accepted
for purchase by the Tendering Offerees constitutes all of the
Registration Interest(s) or the amount not accepted equals or
exceeds the applicable Minimum Offering Amount, and the closing
of the purchase of the Registration Interest(s) shall be delayed
until the date determined in accordance with the following
sentence; provided, however, that the Registering Partner(s) will
not be obligated to sell any portion of their Registration
Interest(s) or Partner Loans if the amount of the Registration
Interest(s) not accepted for purchase after giving effect to such
elections is greater than zero but less than the applicable
Minimum Offering Amount. If, after giving effect to all
elections timely made in accordance with the preceding sentence,
the Registering Partner(s) would be required to sell all or any
portion of their Registration Interest(s), then the closing of
the purchase of such Registration Interest(s) and Partner Loans
shall be held (i) on the first Business Day following the
expiration of the extension period if no Tendering Offeree has
timely elected to increase its purchase commitment or (ii) on the
fifth (5th) Business Day following the expiration of the
extension period if any Tendering Offeree has timely elected to
increase its purchase commitment. If, pursuant to this
paragraph, (x) any Tendering Offeree decreases its purchase
commitment or (y) the Registering Partner(s) are not obligated to
sell any portion of their Registration Interest(s) to any
Tendering Offeree, the eighteen (18) month period described in
the last two sentences of Section 12.6(g) shall be extended to
account for the number of days elapsed between the last day of
the applicable Registration Offer Period and the end of the
extension period.
(g) Registration. If the Registration Firm Offer(s) in
the aggregate are for Registration Interest(s) that in the
aggregate are equal to or greater than the Minimum Offering
Amount and are not accepted with respect to all of the
Registration Interest(s) in the manner provided in Section
12.6(e), (i) the Partners will cause the Partnership to be
converted to corporate form in accordance with Section 5.9 no
later than the effective date of the registration contemplated
hereunder and will cause the Partnership and MajorCorp to
register the shares of MajorCorp Stock to be received by such
Registering Partner in exchange for its Registration Interest
(other than any portion of such Registration Interest purchased
by the Registration Accepting Offerees pursuant to Sections
12.6(e) and (f)) for sale under the 1933 Act (and any applicable
state securities laws) in accordance with the offering
contemplated hereunder and (ii) subject to such registration, the
Registering Partner will sell such shares to the public in a
broadly disseminated firm commitment underwritten offering
subject to customary cutbacks on a pro rata basis. MajorCorp
shall select the managing underwriter for such offering subject
to the approval of the Registering Partner(s) which approval
shall not be unreasonably withheld. To effectuate such offers,
MajorCorp and the Registering Partner(s) will enter into an
underwriting agreement with such managing underwriter on terms
and conditions customary for underwriting agreements in a firm
commitment underwritten secondary offering. If the first
sentence of this Section 12.6(g) applies to any Registration Firm
Offer and for any reason the Partnership has not converted to
corporate form in accordance with Section 5.9 within eighteen
(18) months from the expiration of the Registration Offer Period,
such Registering Partner's right to Transfer its Registration
Interest shall again be subject to the restrictions set forth in
this Section 12.6. If any shares of MajorCorp Stock registered
and offered pursuant to this Section 12.6(g) are not sold within
eighteen (18) months from the expiration of the Registration
Offer Period, any Transfer of such shares will be subject to the
provisions of the stockholders' agreement contemplated under
Section 5.9(a).
(h) Restrictions on Notice. Subject to the provisions
of Section 12.6(a), no notice initiating the procedures
contemplated by this Section 12.6 may be given by any Partner
while the Partnership is undertaking to effect the registration
of MajorCorp Stock pursuant to the exercise by any Partner of its
rights under this Section 12.6 in a prior year or after a
Liquidating Event has occurred. No notice initiating the
procedures contemplated by this Section 12.6 may be given by an
Adverse Partner, and no Registering Partner shall be required to
offer any portion of its Interest to an Adverse Partner during
the period that the Partnership is pursuing any remedy specified
in Section 11.1 with respect to such Adverse Partner.
(i) Right of First Refusal/Tagalong Rights. The
provisions of Sections 12.4 and 12.5 shall not apply to the
purchase and sale of a Registration Interest pursuant to this
Section 12.6.
12.7 Right of First Offer.
If the Partnership is converted to corporate form pursuant
to Section 12.6(g), the stockholders' agreement contemplated
under Section 5.9(a) shall incorporate the provisions of this
Section 12.7, mutatis mutandis. Any Partner (a "Selling
Partner") that proposes to sell its shares of MajorCorp Stock (i)
in accordance with Rule 144 under the 1933 Act or Rule 145 under
the 1933 Act (in accordance with the applicable provisions of
Rule 144) (or any successor to either of such Rules), in a
transaction that satisfies the manner of sale requirements of
Rule 144 or Rule 145 (whether or not applicable to such sale) (a
"Rule 144 Sale"), or (ii) in a broadly disseminated Public
Offering pursuant to a registration statement filed under the
1933 Act (a "Registered Offering"), must first comply with the
requirements of this Section 12.7.
(a) Open Market Sales. Prior to any sale or
disposition by a Selling Partner of any of its shares of
MajorCorp Stock in a Rule 144 Sale, such Selling Partner shall
give notice (a "Rule 144 Notice") to the Board of Directors of
MajorCorp and each other Partner (excluding any Partner that was
an Exclusive Limited Partner at the time the Partnership
converted to corporate form, the "Non-Selling Partners") of the
number of shares of MajorCorp Stock proposed to be sold and the
intended manner of disposition. The Rule 144 Notice shall
constitute an irrevocable offer (a "Rule 144 Offer") by such
Selling Partner to the Non-Selling Partners to sell the number of
shares of MajorCorp Stock so proposed to be sold at a price equal
to the Market Value of such shares determined as provided in
Section 12.7(g).
(b) Registered Offerings. If, pursuant to the
registration rights agreement contemplated under Section 5.9(b)
or otherwise, a Selling Partner intends to sell any of its shares
of MajorCorp Stock in a Registered Offering, such Selling Partner
shall first give notice to each Non-Selling Partner (the
"Secondary Registration Notice"). The Secondary Registration
Notice shall (i) specify the number of shares of MajorCorp Stock
proposed to be so registered, (ii) identify the Public Appraiser
selected by such Selling Partner to make the determination of the
Minimum Secondary Offering Amount, which Public Appraiser shall
be reasonably acceptable to MajorCorp, (iii) set forth the Public
Appraiser's determination of the Minimum Secondary Offering
Amount (or state that such Selling Partner has elected to waive
the Minimum Secondary Offering Amount limitations set forth in
the following sentence and in Sections 12.7(d) and 12.7(e)), and
(iv) set forth the intended method of distribution. The shares
of MajorCorp Stock so specified in the Secondary Registration
Notice shall not be less than the Minimum Secondary Offering
Amount (if any) specified in such Secondary Registration Notice.
The Secondary Registration Notice shall constitute an irrevocable
offer (a "Registration Offer") by such Selling Partner to each
Non-Selling Partner to sell such number of shares of MajorCorp
Stock so proposed to be registered at a price equal to the Market
Value of such shares determined in accordance with Section
12.7(g). "Minimum Secondary Offering Amount" means the number of
shares of MajorCorp Stock that the Public Appraiser selected by
the Selling Partner determines would be necessary to effect a
viable secondary public offering of the MajorCorp Stock
considering all relevant factors, including the intended method
of distribution set forth in the Secondary Registration Notice.
Two or more Selling Partner(s) may jointly give a Secondary
Registration Notice.
(c) First Offer Period. A Rule 144 Offer or a
Registration Offer, as applicable, shall be irrevocable for a
period (the "First Offer Period") commencing on the date of
delivery by the Selling Partner of the applicable notice to the
Non-Selling Partners and ending at 11:59 p.m., local time at
MajorCorp's principal place of business, (i) with respect to a
Rule 144 Offer, on the fifth (5th) full Trading Day following the
date of the Rule 144 Notice, and (ii) with respect to a
Registration Offer, on the twentieth (20th) full Trading Day
following the date of the Secondary Registration Notice.
(d) Acceptance of Offers. At any time during the
applicable First Offer Period, any Non-Selling Partner may accept
a Rule 144 Offer or Registration Offer, as applicable, as to all
or any portion of the shares of MajorCorp Stock covered by such
Rule 144 Offer or Registration Offer, as applicable, by giving
notice of such acceptance to the applicable Selling Partner and
each other Non-Selling Partner, which notice shall indicate the
maximum number of shares of MajorCorp Stock that such Non-Selling
Partner is willing to purchase (the "purchase commitment") and,
with respect to a Registration Offer in which the aggregate
Market Value of the shares of MajorCorp Stock proposed to be
registered exceeds $150,000,000, if applicable, identify the
Public Appraiser selected by such Non-Selling Partner to
determine the interest rate of the Accepting Partner Note. If
the aggregate purchase commitments made by Non-Selling Partners
accepting a Rule 144 Offer or Registration Offer, as applicable
("Accepting Partners"), exceed the number of shares of MajorCorp
Stock covered by such Rule 144 Offer or Registration Offer, as
applicable, then each Accepting Partner shall purchase, and the
Selling Partner shall sell to such Accepting Partner, that
portion of the number of shares of MajorCorp Stock covered by
such Rule 144 Offer or Registration Offer, as applicable, that
corresponds to the ratio of the Percentage Interest of such
Accepting Partner to the aggregate Percentage Interests of all
Accepting Partners; provided that if any Accepting Partner's
purchase commitment was for an amount less than its proportionate
share of the number of shares of MajorCorp Stock as so
determined, then the number of shares of MajorCorp Stock not so
committed to be purchased shall continue to be allocated
proportionally in the manner provided above in this sentence
among the other Accepting Partners until each has been allocated,
by such process of apportionment, a number of shares of MajorCorp
Stock equal to the maximum number of shares such Accepting
Partner committed to purchase or until all of the shares of
MajorCorp Stock covered by such Rule 144 Offer or Registration
Offer, as applicable, have been allocated among the Accepting
Partners. Notwithstanding any purported acceptance of a
Registration Offer, the Registration Offer shall be deemed to be
rejected by all such Accepting Partners in their entirety if the
portion not accepted is in the aggregate greater than zero but
less than the Minimum Secondary Offering Amount; provided that
such Registration Offer will be deemed accepted if, within ten
(10) days after the expiration of the First Offer Period, the
Accepting Partners increase or decrease their purchase
commitments, by giving notice to the Board of Directors of
MajorCorp and each other Partner amending their respective
purchase commitments to the extent required to effect any such
increase or decrease, as applicable, such that the amount
accepted for purchase by the Accepting Partners constitutes all
of the shares of MajorCorp Stock covered by such Registration
Offer or the amount not accepted equals or exceeds the Minimum
Secondary Offering Amount.
(e) Closing of Purchase Pursuant to First Offer. If
the Rule 144 Offer or Registration Offer, as applicable has been
accepted in whole or in part in accordance with the terms of
Section 12.7(d), the Selling Partner shall give notice to such
effect (the "First Offer Sale Notice") to all Non-Selling
Partners within five (5) days after the end of the applicable
First Offer Period. Unless the Accepting Partners and the
Selling Partner otherwise agree, the closing of any purchase
pursuant to this Section 12.7 shall be held at the principal
office of MajorCorp at 10:00 a.m. (local time at the place of
closing) on the first Business Day on or after (x) with respect
to a Rule 144 Offer, the fifth (5th) Business Day following the
date on which the First Offer Sale Notice is given, and (y) with
respect to a Registration Offer, the thirtieth (30th) day
following the date on which the First Offer Sale Notice is given.
At the closing, each Accepting Partner shall (i) with respect to
a Rule 144 Offer, pay to the Selling Partner an amount in cash or
other immediately available funds equal to that portion of the
purchase price for the shares of MajorCorp Stock of the Selling
Partner for which such Accepting Partner is liable, and (ii) with
respect to a Registration Offer, (A) if the aggregate Market
Value of the shares of MajorCorp Stock covered by the applicable
Registration Offer exceeds $150,000,000, (1) pay to the Selling
Partner an amount in cash or other immediately available funds
equal to at least one-third of that portion of the purchase price
for the shares of MajorCorp Stock of the Selling Partner for
which such Accepting Partner is liable and (2) issue to the
Selling Partner a promissory note (an "Accepting Partner Note")
of such Non-Selling Partner or its Controlled Affiliate in a
principal amount equal to the remaining portion of the purchase
price for the shares of MajorCorp Stock of the Selling Partner
for which such Accepting Partner is liable, or (B) if the
aggregate Market Value of the shares of MajorCorp Stock covered
by the applicable Registration Offer is equal to or less than
$150,000,000, pay to the Selling Partner an amount in cash or
other immediately available funds equal to that portion of the
purchase price for the shares of MajorCorp Stock of the Selling
Partner for which such Accepting Partner is liable, and the
Selling Partner shall deliver to each Accepting Partner good
title, free and clear of any liens, claims, encumbrances,
security interests or options (other than those created by any
stockholders' agreement contemplated under Section 5.9(a)) to the
shares of MajorCorp Stock thus purchased. The principal amount
of each Accepting Partner Note shall be payable in two equal
annual installments beginning on the first anniversary of the
closing date under this Section 12.7(e), and shall bear interest,
payable quarterly, in arrears at the rate specified below from
the closing date until the principal amount thereof and all
accrued interest thereon is paid in full. The Accepting Partner
Note will contain customary terms, conditions and remedies,
including an increased rate of interest payable after a default
in the payment of principal and/or interest. The interest rate
on the Accepting Partner Note shall be determined in connection
with the closing and shall be the average of the interest rates
determined independently by the Public Appraiser selected by the
Selling Partner and the Public Appraiser selected by the
applicable Accepting Partner as the rate that would be necessary
to cause publicly traded securities with terms, conditions and
remedies comparable to the Accepting Partner Note to trade at
face value on a fully distributed basis. Each Accepting Partner
shall be liable to the Selling Partner only for its allocable
portion of the purchase price for the shares of MajorCorp Stock
purchased hereunder. The provisions of the stockholders'
agreement contemplated under Section 5.9(a) will incorporate
provisions comparable to this Section 12.7 and additional
appropriate provisions that will address the Partners' relative
rights and obligations in the event the circumstances described
in Section 11.5 prevent the Accepting Partners from purchasing
any shares of MajorCorp Stock offered by a Selling Partner
hereunder within the time periods specified in this Section
12.7(e).
At the closing, the Partners and MajorCorp shall execute
such documents and instruments of conveyance as may be necessary
or appropriate to effectuate the transactions contemplated
hereby, including the Transfer of the shares of MajorCorp Stock
of the Selling Partner to the Accepting Partners. Each Partner
and MajorCorp shall bear its own costs of such Transfer and
closing, including attorneys' fees and filing fees.
In the event that any Accepting Partner shall fail to
perform its obligation to purchase hereunder on the scheduled
closing date and any other Accepting Partner(s) were prepared to
perform their respective obligations at the closing on such date
(each a "Tendering Partner"), then the Tendering Partners shall
be entitled to elect by notice given to the Board of Directors of
MajorCorp, the Selling Partner(s) and each other Tendering
Partner within ten (10) days after the originally scheduled
closing date (the "extension period") to increase or decrease
their purchase commitments such that the amount accepted for
purchase by the Tendering Partners constitutes all of the shares
of MajorCorp Stock offered or the amount not accepted equals or
exceeds the applicable Minimum Secondary Offering Amount, and the
closing of the purchase of the shares of MajorCorp Stock shall be
delayed until the date determined in accordance with the
following sentence; provided, however, that the Selling
Partner(s) will not be obligated to sell any portion of their
shares of MajorCorp Stock if the amount of the shares of
MajorCorp Stock not accepted for purchase after giving effect to
such elections is greater than zero but less than the applicable
Minimum Secondary Offering Amount. If, after giving effect to
all elections timely made in accordance with the preceding
sentence, the Selling Partner(s) would be required to sell all or
any portion of their shares of MajorCorp Stock, then the closing
of the purchase of such shares of MajorCorp Stock shall be held
(i) on the first Business Day following the expiration of the
extension period if no Tendering Partner has timely elected to
increase its purchase commitment or (ii) on the fifth (5th)
Business Day following the expiration of the extension period if
any Tendering Partner has timely elected to increase its purchase
commitment.
(f) Sale if First Offer Rejected. Any shares of
MajorCorp Stock not purchased in the manner provided in this
Section 12.7 (including any shares that are not purchased because
of the failure of the Accepting Partners to close any purchase in
accordance with Section 12.7(e)), but subject to the last
sentence of this Section 12.7(f), may be sold during the period
described below (the "Permitted Period") in the manner described
in the Rule 144 Notice or pursuant to the intended method of
distribution set forth in the Secondary Registration Notice, as
applicable. Except as otherwise provided in the following
sentence, the Permitted Period shall be the applicable of (i)
with respect to shares of MajorCorp Stock covered by a Rule 144
Notice, twenty (20) full Trading Days after the last day of the
applicable First Offer Period, or (ii) with respect to shares of
MajorCorp Stock covered by a Secondary Registration Notice, one
hundred eighty (180) days after the last day of the applicable
First Offer Period (in each case commencing on the first day
following the applicable First Offer Period), provided that such
180-day period may be extended for an additional period of up to
ninety (90) days if at the end of such 180-day period the Selling
Partner has caused a registration statement to be filed by
MajorCorp with the Securities and Exchange Commission relating to
such Registered Offering and is actively pursuing the
consummation of such Registered Offering in good faith.
Notwithstanding the foregoing, if, pursuant to the third
paragraph of Section 12.7(e), (x) any Tendering Partner decreases
its purchase commitment or (y) the Selling Partner is not
obligated to sell any portion of its shares of MajorCorp Stock to
any Tendering Partner, the Permitted Period shall be extended to
account for the number of days elapsed between the last day of
the applicable First Offer Period and the end of the extension
period under Section 12.7(e). Any such shares of MajorCorp Stock
not sold within the applicable Permitted Period shall again be
subject to the restrictions set forth in this Section 12.7.
(g) Market Value. The "Market Value" of any shares of
MajorCorp Stock purchased pursuant to this Section 12.7 shall be
(i) with respect to shares of MajorCorp Stock offered pursuant to
a Rule 144 Offer, an amount equal to the product of (A) the
number of shares of MajorCorp Stock offered times (B) the average
of the last reported sales prices, regular way, for the five (5)
full Trading Days preceding the date of the Rule 144 Notice as
reported on the principal national securities exchange on which
MajorCorp Stock is listed or admitted for trading or, if
MajorCorp Stock is not listed or admitted for trading on any
national securities exchange, on the Nasdaq National Market or
(ii) with respect to shares of MajorCorp Stock offered pursuant
to a Registration Offer, the product of (A) the number of shares
of MajorCorp Stock offered times (B) the average of the last
reported sales prices, regular way, for the twenty (20) full
Trading Days preceding the date of the Secondary Registration
Notice as reported on the principal national securities exchange
on which MajorCorp Stock is listed or admitted for trading or, if
MajorCorp Stock is not listed or admitted for trading on any
national securities exchange, on the Nasdaq National Market.
12.8 Prohibited Dispositions.
Any purported Disposition of all or any part of an Interest
that is not a Permitted Transfer shall be null and void and of no
force or effect whatever; provided that, if the Partnership is
required to recognize a Disposition that is not a Permitted
Transfer (or if the Partnership Board, in its sole discretion,
elects to recognize a Disposition that is not a Permitted
Transfer), the Interest Disposed of shall be strictly limited to
the transferor's rights to allocations and distributions as
provided by this Agreement with respect to the Transferred
Interest, which allocations and distributions may be applied
(without limiting any other legal or equitable rights of the
Partnership) to satisfy any debts, obligations, or liabilities
for damages that the transferor or transferee of such Interest
may have to the Partnership.
12.9 Representations Regarding Transfers.
Each Partner hereby represents and warrants to the
Partnership and the other Partners that such Partner's
acquisition of Interests hereunder is made as principal for such
Partner's own account and not for resale or distribution of such
Interests.
12.10 Distributions and Allocations in Respect of
Transferred Interests.
If any Interest is Transferred during any Fiscal Year in
compliance with the provisions of this Section 12, Profits,
Losses, each item thereof, and all other items attributable to
the Transferred Interest for such Fiscal Year shall be divided
and allocated between the transferor and the transferee by taking
into account their varying Percentage Interests during the Fiscal
Year in accordance with Code Section 706(d), using any
conventions permitted by law and selected by the Partnership
Board. All distributions on or before the date of such Transfer
shall be made to the transferor, and all distributions thereafter
shall be made to the transferee. Solely for purposes of making
such allocations and distributions, the Partnership shall
recognize such Transfer not later than the end of the calendar
month during which it is given notice of such Transfer, provided
that, if the Partnership is given notice of a Transfer at least
ten (10) Business Days prior to the Transfer, the Partnership
shall recognize such Transfer as of the date of such Transfer,
and provided further that if the Partnership does not receive a
notice stating the date such Interest was Transferred and such
other information as the Partnership Board may reasonably require
within thirty (30) days after the end of the Fiscal Year during
which the Transfer occurs, then all such items shall be
allocated, and all distributions shall be made, to the Person
who, according to the books and records of the Partnership, was
the owner of the Interest on the last day of such Fiscal Year.
Neither the Partnership nor the Partnership Board shall incur any
liability for making allocations and distributions in accordance
with the provisions of this Section 12.10, whether or not the
Partnership Board or the Partnership has knowledge of any
Transfer of ownership of any Interest.
SECTION 13. CONVERSION OF INTERESTS
13.1 Termination of Status as General Partner. (a) A
General Partner shall cease to be a General Partner
upon the first to occur of (i) the Transfer of such
Partner's entire Interest as a Partner in a Permitted
Transfer (in which event the transferee of such
Interest shall be admitted as a successor General
Partner and a Limited Partner upon compliance with
Section 12.3), (ii) the Unanimous Vote of the
Partnership Board to approve a request by such General
Partner to withdraw, (iii) any Adverse Act with respect
to such Partner, (iv) such Partner's failure to satisfy
the Minimum Ownership Requirement or (v) in the case of
Comcast only, the occurrence of any of the events
described in Section 6.4(f) that cause Comcast to
become an Exclusive Limited Partner. In the event a
Person ceases to be a General Partner pursuant to
clauses (ii), (iii), (iv) or (v), the Interest of such
Person as a General Partner shall automatically and
without any further action by the Partners be converted
into an Interest solely as a Limited Partner, and such
Partner shall thereafter be an Exclusive Limited
Partner.
(b) The Partners intend that the Partnership not
dissolve as a result of the cessation of any Person's status as a
General Partner; provided, however, that if it is determined by a
court of competent jurisdiction that the Partnership has
dissolved, the provisions of Section 14.1 shall govern.
13.2 Restoration of Status as General Partner.
An Exclusive Limited Partner whose rights to representation
on the Partnership Board have been restored as provided in
Section 5.1(c) shall be restored to the status of a General
Partner and its Interest shall thereafter be deemed held in part
as a General Partner and in part as a Limited Partner as provided
in Section 2.1. If Comcast becomes an Exclusive Limited Partner
pursuant to Section 6.4(f), it shall not be entitled to be
restored to the status of General Partner except as expressly
provided in such Section.
SECTION 14. DISSOLUTION AND WINDING UP
14.1 Liquidating Events.
(a) In General. Subject to Section 14.1(b), the
Partnership shall dissolve and commence winding up and
liquidating upon the first to occur of any of the following
("Liquidating Events"):
(i) The sale of all or substantially all of the
Property;
(ii) A Unanimous Vote of the Partnership Board
to dissolve, wind up, and liquidate the Partnership in accordance
with Section 5.1;
(iii) The failure of the General Partners to
resolve a Deadlock Event as provided in Section 5.8(a)(iii)
unless the Partnership Board determines by Required Majority Vote
not to dissolve; and
(iv) The withdrawal of a General Partner, the
assignment by a General Partner of its entire Interest or any
other event that causes a General Partner to cease to be a
general partner under the Act, provided that any such event shall
not constitute a Liquidating Event if the Partnership is
continued pursuant to this Section 14.1. The Partners hereby
agree that, notwithstanding any provision of the Act or the
Delaware Uniform Partnership Act, the Partnership shall not
dissolve prior to the occurrence of a Liquidating Event. Upon
the occurrence of any event set forth in Section 14.1(a)(iv), the
Partnership shall not be dissolved or required to be wound up if
(x) at the time of such event there is at least one remaining
General Partner, or (y) if there is not at least one remaining
General Partner, within ninety (90) days after such event all
remaining Partners agree in writing to continue the business of
the Partnership and to the appointment, effective as of the date
of such event, of one or more additional General Partners.
(b) Special Rules. The events described in Sections
14.1(a)(ii), 14.1(a)(iii) or 14.1(a)(iv) shall not constitute
Liquidating Events until such time as the Partnership is
otherwise required to dissolve, and commence winding up and
liquidating, in accordance with Section 14.7.
14.2 Winding Up.
(a) Upon the occurrence of a Liquidating Event, the
Partnership shall continue solely for the purposes of winding up
its affairs in an orderly manner, liquidating its assets, and
satisfying the claims of its creditors and Partners and neither
the Partnership Board nor any Partner shall take any action that
is inconsistent with, or not appropriate for, the winding up of
the Partnership's business and affairs. To the extent not
inconsistent with the foregoing, this Agreement shall continue in
full force and effect until such time as the Partnership's
Property has been distributed pursuant to this Section 14.2 and
the Certificate has been cancelled in accordance with the Act.
The Partnership Board shall be responsible for overseeing the
winding up and dissolution of the Partnership, shall take full
account of the Partnership's liabilities and Property, shall
cause the Partnership's Property to be liquidated as promptly as
is consistent with obtaining the fair value thereof, and shall
cause the proceeds therefrom, to the extent sufficient therefor,
to be applied and distributed in the following order:
(i) First, to the payment of all of the
Partnership's debts and liabilities (other than Partner Loans) to
creditors other than the Partners and to the payment of the
expenses of liquidation;
(ii) Second, to the payment of all Partner Loans
and all of the Partnership's debts and liabilities to the
Partners in the following order and priority:
(A) first, to the payment of all debts and
liabilities owed to any Partner other than in respect of Partner
Loans;
(B) second, to the payment of all accrued and
unpaid interest on Partner Loans, such interest to be paid to
each Partner and its Affiliates (considered as a group) pro rata
in proportion to the interest owed to each such group; and
(C) third, to the payment of the unpaid
principal amount of all Partner Loans, such principal to be paid
to each Partner and its Affiliates (considered as a group) pro
rata in proportion to the outstanding principal owed to each such
group; and
(iii) The balance, if any, to the Partners in
accordance with their Capital Accounts, after giving effect to
all contributions, distributions, and allocations for all
periods.
(b) In the discretion of the Partnership Board, a
portion of the distributions that would otherwise be made to the
Partners pursuant to this Section 14.2 may be: (i) distributed to
a trust established for the benefit of the Partners for the
purposes of liquidating Partnership assets, collecting amounts
owed to the Partnership, and paying any contingent or unforeseen
liabilities or obligations of the Partnership or of the General
Partners arising out of or in connection with the Partnership.
The assets of any such trust shall be distributed to the Partners
from time to time, in the reasonable discretion of the
Partnership Board in the same proportions as the amount
distributed to such trust by the Partnership would otherwise have
been distributed to the Partners pursuant to Section 14.2; or
(ii) withheld to provide a reasonable reserve
for Partnership liabilities (contingent or otherwise) and to
reflect the unrealized portion of any installment obligations
owed to the Partnership, provided that such withheld amounts
shall be distributed to the Partners as soon as practicable.
Each Partner and each of its Affiliates (as to Partner Loans
only) agrees that by accepting the provisions of this Section
14.2 setting forth the priority of the distribution of the assets
of the Partnership to be made upon its liquidation, such Partner
or Affiliate expressly waives any right which it, as a creditor
of the Partnership, might otherwise have under the Act to receive
distributions of assets pari passu with the other creditors of
the Partnership in connection with a distribution of assets of
the Partnership in satisfaction of any liability of the
Partnership, and hereby subordinates to said creditors any such
right.
14.3 Compliance With Certain Requirements of Regulations;
Deficit Capital Accounts.
In the event the Partnership is "liquidated" within the
meaning of Regulations Section 1.704-1(b)(2)(ii)(g), (a)
distributions shall be made pursuant to this Section 14 to the
Partners who have positive Capital Accounts in compliance with
Regulations Section 1.704-1(b)(2)(ii)(b)(2), and (b) if any
Partner's Capital Account has any deficit balance (after giving
effect to all contributions, distributions, and allocations for
all taxable years, including the year during which such
liquidation occurs), such Partner shall contribute to the capital
of the Partnership the amount necessary to restore such deficit
balance to zero in compliance with Regulations Section 1.704-
1(b)(2)(ii)(b)(3); provided, however, that the obligation of an
Exclusive Limited Partner to contribute capital pursuant to this
sentence shall be limited to the amount of the deficit balance,
if any, that existed in such Exclusive Limited Partner's Capital
Account at the time it became an Exclusive Limited Partner
(taking into account for this purpose any revaluation of
Partnership assets pursuant to subparagraph (ii)(D) of the
definition of Gross Asset Value made as a result of such
Partner's becoming an Exclusive Limited Partner).
14.4 Deemed Distribution and Recontribution.
Notwithstanding any other provision of this Section 14, in
the event the Partnership is liquidated within the meaning of
Section 1.704-1(b)(2)(ii)(g) of the Regulations but no
Liquidating Event has occurred, the Property shall not be
liquidated, the Partnership's liabilities shall not be paid or
discharged, and the Partnership's affairs shall not be wound up.
Instead, solely for federal income tax purposes, the Partnership
shall be deemed to have distributed the Property in kind to the
Partners, who shall be deemed to have assumed and taken subject
to all Partnership liabilities, all in accordance with their
respective Capital Accounts and, if any Partner's Capital Account
has a deficit balance that such Partner would be required to
restore pursuant to Section 14.3 (after giving effect to all
contributions, distributions, and allocations for all Fiscal
Years, including the Fiscal Year during which such liquidation
occurs), such Partner shall contribute to the capital of the
Partnership the amount necessary to restore such deficit balance
to zero in compliance with Regulations Section 1.704-
1(b)(2)(ii)(b)(3). Immediately thereafter, the Partners shall be
deemed to have recontributed the Property to the Partnership,
which shall be deemed to have assumed and taken subject to all
such liabilities.
14.5 Rights of Partners.
Except as otherwise provided in this Agreement, (a) each
Partner shall look solely to the assets of the Partnership for
the return of its Capital Contributions and shall have no right
or power to demand or receive property other than cash from the
Partnership, and (b) no Partner shall have priority over any
other Partner as to the return of its Capital Contributions,
distributions, or allocations. If, after the Partnership ceases
to exist as a legal entity, a Partner is required to make a
payment to any Person on account of any activity carried on by
the Partnership, such paying Partner shall be entitled to
reimbursement from each other Partner consistent with the manner
in which the economic detriment of such payment would have been
borne had the amount been paid by the Partnership immediately
prior to its cessation.
14.6 Notice of Dissolution.
In the event a Liquidating Event occurs or an event
described in Section 14.1(a)(iv) occurs that would, but for
provisions of Section 14.1, result in a dissolution of the
Partnership, the Partnership Board shall, within thirty (30) days
thereafter, provide written notice thereof to each of the
Partners.
14.7 Buy/Sell Arrangements.
(a) As soon as practicable after the occurrence of an
event described in Section 14.1(a)(ii), 14.1(a)(iii) or, subject
to the proviso contained therein, Section 14.1(a)(iv), the Net
Equity of the Interests shall be determined in accordance with
Section 11.3 and notice of such determination shall be delivered
to each Partner. For purposes of such determination of Net
Equity pursuant to this Section 14.7(a), the General Partner that
(together with its Controlled Affiliates) holds the largest
Voting Percentage Interest shall designate the First Appraiser as
required by Section 11.4 within thirty (30) days after an
occurrence of the applicable Liquidating Event, and the General
Partner that (together with its Controlled Affiliates) holds the
smallest Voting Percentage Interest shall appoint the Second
Appraiser within ten (10) Business Days of receiving notice of
the appointment of the First Appraiser.
(b) Prior to 5:00 p.m. (local time at the principal
office of the Partnership) on the first Business Day on or after
the thirtieth (30th) day following its receipt of notice of the
determination of Net Equity pursuant to Section 14.7(a), each
General Partner (individually or together with one or more other
General Partners) must submit sealed statements (the "Offer
Statement") to the Chief Executive Officer notifying the Chief
Executive Officer in writing either (i) that such General Partner
or group of General Partners offers to sell all of its
Interest(s), or (ii) that such General Partner or group of
General Partners offers to buy all of the other Partners'
Interests. Except as provided in Section 14.7(g), each Exclusive
Limited Partner shall be automatically deemed to have offered to
sell its Interest hereunder and shall for all purposes under this
Section 14.7 be treated as a General Partner that has offered to
sell its Interest. The Chief Executive Officer shall provide a
copy of each Offer Statement to each of the Partners within five
(5) days following the last day for submission of the Offer
Statements.
(c) If the Offer Statements indicate that one General
Partner or group of General Partners wishes to buy and all of the
other Partners wish to sell, the Net Equity of the Interests
shall thereupon be the price at which the Interests will be sold.
(d) If the Offer Statements indicate that all Partners
wish to sell their Interests, the Partnership shall dissolve, and
commence winding up and liquidating in accordance with Section
14.2.
(e) If the Offer Statements indicate that more than one
General Partner or group of General Partners wishes to purchase
the other Partners' Interests, then the General Partners or
groups of General Partners wishing to purchase (each General
Partner or group of Partners, a "Bidding Partner") shall begin
the bidding process described below and the highest bidder
(determined as the amount bid per each one percent (1%)
Percentage Interest in the Partnership) shall buy all the other
Partners' Interests. Each of the Bidding Partners may make an
initial offer (an "Initial Offer") to purchase the Interests of
the other Partners, which offer may not be less than the Net
Equity of the Interests to be purchased and shall be made within
fifteen (15) days of the last day for submission of the Offer
Statements. If no Bidding Partner makes an Initial Offer by 5:00
p.m. (local time at the principal office of the Partnership) on
the last day of such fifteen (15) day period, the Partnership
shall dissolve, and commence winding up and liquidating in
accordance with Section 14.2. If only one Bidding Partner timely
makes an Initial Offer, such offer shall thereupon be the price
at which all other Partners' Interests shall be sold to such
Bidding Partner. If more than one Bidding Partner timely makes
an Initial Offer, each such Bidding Partner must respond within
fifteen (15) days of the last day of the 15-day period for
submitting such Initial Offers either by accepting the highest of
such Initial Offers or delivering a counteroffer to purchase the
Interests of the other Partners. A counteroffer must be at least
one percent (1%) higher than the prior offer of which the Bidding
Partner has received notice. The bidding process shall continue
until all Bidding Partners have either responded by accepting the
highest immediate prior offer or failed to make a timely
response, in which case the highest immediate prior offer shall
be deemed accepted. An acceptance of an offer shall, if the
bidding process thereafter continues, be deemed to be an
acceptance of the highest succeeding counteroffer. For purposes
of this Section 14.7, all offers, acceptances and counteroffers
must be in writing, in a form which is firm and binding and
delivered to the Chief Executive Officer at the principal office
of the Partnership (who shall promptly notify each other Partner
of the identity of the bidder and the amount of such bid); all
offers must be responded to within fifteen (15) days of the last
day of the immediately preceding 15-day period for submitting
offers. If no response to an offer or counteroffer is received
by 5:00 p.m. (local time at the principal office of the
Partnership) on the last day of such fifteen (15) day period, the
highest immediate prior offer shall be deemed to be accepted.
(f) The closing of the purchase and sale of each
selling Partner's Interest, MinorCo Interest and Partner Loans
shall occur at the principal office of the Partnership at 10:00
a.m. (local time at the place of the closing) on the first
Business Day occurring on or after the thirtieth (30th) day
following the date of the final determination of the purchase
price pursuant to Section 14.7(e) (subject to Section 11.5). At
the closing, the purchasing Partner(s) shall pay to each selling
Partner, by cash or other immediately available funds, the
purchase price for such selling Partners' Interest, MinorCo
Interest and Partner Loans, and the selling Partner shall deliver
to the purchasing Partner(s) good title, free and clear of any
liens, claims, encumbrances, security interests or options (other
than those created by this Agreement and those securing financing
obtained by the Partnership), to the selling Partner's Interest,
MinorCo Interest and Partner Loans thus purchased.
At the closing, the Partners shall execute such documents
and instruments of conveyance as may be necessary or appropriate
to effectuate the transactions contemplated hereby, including the
Transfer of the Interests, MinorCo Interests and Partner Loans of
the selling Partner(s) to the purchasing Partner(s) and the
assumption by each purchasing Partner of the selling Partner's
obligations with respect to the selling Partner's Interest
Transferred to the purchasing Partner(s). Each Partner shall
bear its own costs of such Transfer and closing, including
attorneys' fees and filing fees. The costs of determining Net
Equity shall be borne by the Partners (pro rata based on their
respective Percentage Interests as of the occurrence of the
Liquidating Event).
(g) Solely for the purposes of this Section 14.7,
Comcast will have the same rights and obligations as a General
Partner hereunder even if it has become an Exclusive Limited
Partner under Section 6.4(f) so long as Comcast would not
otherwise then be an Exclusive Limited Partner under Section
13.1(a).
SECTION 15. MISCELLANEOUS
15.1 Notices.
Any notice, payment, demand, or communication required or
permitted to be given by any provision of this Agreement shall be
in writing and mailed (certified or registered mail, postage
prepaid, return receipt requested) or sent by hand or overnight
courier, or by facsimile (with acknowledgment received), charges
prepaid and addressed as follows, or to such other address or
number as such Person may from time to time specify by notice to
the Partners:
(a) If to the Partnership, to the address or number set
forth on Schedule 2.2;
(b) If to a Partner or its designated
Representative(s), to the address or number set forth in Schedule
2.2; and
(c) If to the Partnership Board, to the Partnership and
to each General Partner and its designated Representative(s).
Any Person may from time to time specify a different address by
notice to the Partnership and the Partners. All notices and
other communications given to a Person in accordance with the
provisions of this Agreement shall be deemed to have been given
and received (i) four (4) Business Days after the same are sent
by certified or registered mail, postage prepaid, return receipt
requested, (ii) when delivered by hand or transmitted by
facsimile (with acknowledgment received and, in the case of a
facsimile only, a copy of such notice is sent no later than the
next Business Day by a reliable overnight courier service, with
acknowledgment of receipt) or (iii) one (1) Business Day after
the same are sent by a reliable overnight courier service, with
acknowledgment of receipt.
15.2 Binding Effect.
Except as otherwise provided in this Agreement, this
Agreement shall be binding upon and inure to the benefit of the
Partners and their respective successors, transferees, and
assigns.
15.3 Construction.
This Agreement shall be construed simply according to its
fair meaning and not strictly for or against any Partner.
15.4 Time.
Time is of the essence with respect to this Agreement.
15.5 Table of Contents; Headings.
The table of contents and section and other headings
contained in this Agreement are for reference purposes only and
are not intended to describe, interpret, define or limit the
scope, extent or intent of this Agreement.
15.6 Severability.
Every provision of this Agreement is intended to be
severable. If any term or provision hereof is illegal, invalid
or unenforceable for any reason whatsoever, that term or
provision will be enforced to the maximum extent permissible so
as to effect the intent of the Partners, and such illegality,
invalidity or unenforceability shall not affect the validity or
legality of the remainder of this Agreement. If necessary to
effect the intent of the Partners, the Partners will negotiate in
good faith to amend this Agreement to replace the unenforceable
language with enforceable language which as closely as possible
reflects such intent.
15.7 Incorporation by Reference.
Every exhibit and other appendix (other than schedules)
attached to this Agreement and referred to herein is not
incorporated in this Agreement by reference unless this Agreement
expressly otherwise provides.
15.8 Further Action.
Each Partner, upon the reasonable request of the Partnership
Board, agrees to perform all further acts and execute,
acknowledge, and deliver any documents which may be reasonably
necessary, appropriate, or desirable to carry out the intent and
purposes of this Agreement.
15.9 Governing Law.
The internal laws of the State of Delaware (without regard
to principles of conflict of law) shall govern the validity of
this Agreement, the construction of its terms, and the
interpretation of the rights and duties of the Partners.
15.10 Waiver of Action for Partition; No Bill For
Partnership Accounting.
Each Partner irrevocably waives any right that it may have
to maintain any action for partition with respect to any of the
Property; provided that the foregoing shall not be construed to
apply to any action by a Partner for the enforcement of its
rights under this Agreement. Each Partner waives its right to
seek a court decree of dissolution (other than a dissolution in
accordance with Section 14) or to seek appointment of a court
receiver for the Partnership as now or hereafter permitted under
applicable law. To the fullest extent permitted by law, each
Partner covenants that it will not (except with the consent of
the Partnership Board) file a bill for Partnership accounting.
15.11 Counterpart Execution.
This Agreement may be executed in any number of counterparts
with the same effect as if all the Partners had signed the same
document. All counterparts shall be construed together and shall
constitute one agreement.
15.12 Sole and Absolute Discretion.
Except as otherwise provided in this Agreement, all actions
which the Partnership Board may take and all determinations which
the Partnership Board may make pursuant to this Agreement may be
taken and made at the sole and absolute discretion of the
Partnership Board.
15.13 Specific Performance.
Each Partner agrees with the other Partners that the other
Partners would be irreparably damaged if any of the provisions of
this Agreement are not performed in accordance with their
specific terms and that monetary damages would not provide an
adequate remedy in such event. Accordingly, in addition to any
other remedy to which the nonbreaching Partners may be entitled,
at law or in equity, the nonbreaching Partners shall be entitled
to injunctive relief to prevent breaches of this Agreement and
specifically to enforce the terms and provisions hereof.
15.14 Entire Agreement.
The provisions of this Agreement set forth the entire
agreement and understanding between the Partners as to the
subject matter hereof and supersede all prior agreements, oral or
written, and other communications between the Partners relating
to the subject matter hereof.
15.15 Limitation on Rights of Others.
Nothing in this Agreement, whether express or implied, shall
be construed to give any Person other than the Partners any legal
or equitable right, remedy or claim under or in respect of this
Agreement.
15.16 Waivers; Remedies.
The observance of any term of this Agreement may be waived
(either generally or in a particular instance and either
retroactively or prospectively) by the party or parties entitled
to enforce such term, but any such waiver shall be effective only
if in a writing signed by the party or parties against which such
waiver is to be asserted. Except as otherwise provided herein,
no failure or delay of any Partner in exercising any power or
right under this Agreement shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power,
or any abandonment or discontinuance of steps to enforce such
right or power, preclude any other or further exercise thereof or
the exercise of any other right or power.
15.17 Jurisdiction; Consent to Service of Process. (a) Each
Partner hereby irrevocably and unconditionally submits,
for itself and its property, to the nonexclusive
jurisdiction of any New York State court sitting in the
County of New York or any Federal court of the United
States of America sitting in the Southern District of
New York, and any appellate court from any such court,
in any suit, action or proceeding arising out of or
relating to the Partnership or this Agreement, or for
recognition or enforcement of any judgment, and each
Partner hereby irrevocably and unconditionally agrees
that all claims in respect of any such suit, action or
proceeding may be heard and determined in such New York
State court or, to the extent permitted by law, in such
Federal court.
(b) Each Partner hereby irrevocably and unconditionally
waives, to the fullest extent it may legally do so, any objection
which it may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to the
Partnership or this Agreement in any New York State court sitting
in the County of New York or any Federal court sitting in the
Southern District of New York. Each Partner hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such suit, action or
proceeding in any such court and further waives the right to
object, with respect to such suit, action or proceeding, that
such court does not have jurisdiction over such Partner.
(c) Each Partner irrevocably consents to service of
process in the manner provided for the giving of notices pursuant
to this Agreement, provided that such service shall be deemed to
have been given only when actually received by such Partner.
Nothing in this Agreement shall affect the right of a party to
serve process in any other manner permitted by law.
15.18 Waiver of Jury Trial.
Each Partner waives, to the fullest extent permitted by
applicable law, any right it may have to a trial by jury in
respect of any action, suit or proceeding arising out of or
relating to the Partnership or this Agreement.
15.19 No Right of Set-Off.
No Partner shall be entitled to offset against any of its
financial obligations to the Partnership under this Agreement,
any obligation owed to it or any of its Affiliates by any other
Partner or any of such other Partner's Affiliates.
IN WITNESS WHEREOF, the parties have entered into this
Amended and Restated Agreement of Limited Partnership of MajorCo,
L.P. as of the date first above set forth.
SPRINT SPECTRUM, L.P.
By: US Telecom, Inc.,
Its General Partner
By: /s/ Don A. Jensen
Title: Vice President
TCI NETWORK SERVICES
By: TCI Network, Inc.,
Its General Partner
By: /s/ Gerald W. Gaines
Title:
COMCAST TELEPHONY SERVICES
By: Comcast Telephony Services, Inc.,
Its General Partner
By: /s/ Arthur R. Block
Title: Vice President
THIS IS A SIGNATURE PAGE TO THE AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP OF MAJORCO, L.P.
COX TELEPHONY PARTNERSHIP
By: Cox Communications Wireless, Inc.,
Its Managing General Partner
By: /s/ David M. Woodrow
Title: Vice President
Exhibit 99D
PARENTS AGREEMENT
This PARENTS AGREEMENT (the "Agreement") is entered into as of the 31st
day of January, 1996, by TELE-COMMUNICATIONS, INC., a Delaware
corporation ("TCI Parent") and SPRINT CORPORATION, a Kansas corporation
("Sprint Parent").
WHEREAS, subsidiaries of each of TCI Parent, Sprint Parent, Cox
Communications, Inc., a Delaware corporation ("Cox Parent"), and Comcast
Corporation, a Pennsylvania corporation ("Comcast Parent", and together
with Cox Parent and TCI Parent, the "Cable Parents") (such subsidiaries,
the "Partners") have entered into that certain Agreement of Limited
Partnership of MajorCo, L.P., dated as of March 28, 1995, as amended by
that certain First Amendment to Agreement of Limited Partnership, dated
as of August 31, 1995 (the "Prior Partnership Agreement"), pursuant to
which MajorCo, L.P., a Delaware limited partnership ("MajorCo") was
formed;
WHEREAS, as of the date hereof, the Partners are further amending the
Prior Partnership Agreement and restating it in its entirety (as so
amended and restated, the "Partnership Agreement") and, in connection
therewith, each Cable Parent has agreed to make certain undertakings to
Sprint Parent, and Sprint Parent has agreed to make certain undertakings
to each Cable Parent.
NOW, THEREFORE, in consideration of the mutual promises and agreements
of the parties, and other good and valuable consideration the receipt of
which is hereby acknowledged, Sprint Parent and TCI Parent do hereby
agree as follows:
SECTION 1. Definitions.
(a) The following capitalized words and phrases as used in this
Agreement have the meanings indicated below:
"Advanced Data Services" has the meaning set forth in Schedule 1.
"Brand" of any Person means a trademark, tradename, service mark and/or
logo of such Person.
"Bulk Purchaser" means a purchaser of cable television service that
provides such service to multiple dwelling units (whether in one or more
buildings or whether in one or more complexes or locations) of which it
is the owner or for which it acts as manager or agent or with which it
otherwise has a relationship, by contract or otherwise.
"Cable Subsidiary" means (i) any Controlled Affiliate of TCI Parent that
owns a cable television system and (ii) any Person that TCI Parent or
its Controlled Affiliates has a unilateral right to cause to comply with
Section 2 hereof with respect to cable television systems owned by such
Person.
"Controlled Affiliate" means (i) when used with respect to TCI Parent,
each Subsidiary of TCI Parent, (ii) when used with respect to Sprint
Parent, each Subsidiary of Sprint Parent, and (iii) when used with
respect to any Person in Section 2 hereof, including TCI Parent and
Sprint Parent, any Affiliate of such Person that such Person can
directly or indirectly unilaterally cause to take or refrain from taking
any of the actions required, prohibited or otherwise restricted by such
Section, whether through ownership of voting securities, contractually
or otherwise.
"Entertainment Services" has the meaning set forth in Schedule 1.
"Excluded Businesses" has the meaning set forth in Schedule 1.
"Households Passed" means, as of any relevant date, the aggregate number
of residential dwelling units to which the facilities of TCI Parent's
Cable Subsidiaries either (i) are capable, as of such date, of providing
Local Telephony Service by means of an existing customer drop or other
similar connection or (ii) could legally provide Local Telephony Service
using a customer drop or other similar connection no more than two
hundred (200) feet in length (exclusive of any wiring within the
applicable structure and assuming that the applicable owner or occupant
consented to receipt of Local Telephony Service). For purposes of this
definition, each residential dwelling unit in a multiple dwelling unit
that is otherwise within the foregoing definition will be counted as one
Household Passed.
"IXC" means each of the following Persons, each successor to the long
distance telephony business of any such Person and each of the
respective Affiliates of each such Person or successor: AT&T Corp., MCI
Communications Corporation, British Tele-Communications plc, Worldcom,
Inc., Cable & Wireless plc, LCI International Inc. and Frontier
Corporation.
"Local JV" has the meaning set forth in Section 3.
"Local Telephony Services" has the meaning set forth in Schedule 1.
"Long Distance Telephony Services" has the meaning set forth in Schedule
1.
"Non-Exclusive Services" has the meaning set forth in Schedule 1.
"RBOC" means each of the following Persons, each successor to the local
exchange carrier business of any such Person and each of the respective
Affiliates of each such Person or successor: each BOC, GTE Corporation
and Frontier Corporation.
"Rights of Use" means rights to use the distribution facilities of a
Cable Subsidiary's cable system to provide Local Telephony Services or
Advanced Data Services, as applicable, to end users connected to such
distribution facilities.
"Satellite Carrier" means each of the following Persons, each successor
to the direct broadcast satellite business of any such Person and each
of the respective Affiliates of each such Person or successor: DIRECTV,
Inc., U.S. Satellite Broadcasting, Inc. and EchoStar Communications
Corporation.
"Sprint LECs" means, as of any relevant date, those local exchange
carriers that are Subsidiaries of Sprint Parent.
"Teleport Contribution Agreement" means that certain Contribution
Agreement among the Cable Partners, MajorCo and NewTelco, L.P., dated as
of March 28, 1995.
"Term" means the period commencing on the date hereof and ending on the
date this Agreement terminates in accordance with Section 13.
"Territory" shall mean the United States, including all territories and
possessions thereof, except for Puerto Rico, but excluding as of any
date those geographic areas in which a Sprint LEC is providing Local
Telephony Services primarily through its owned facilities at such date.
(b) The following capitalized words and phrases as used in this
Agreement have the meanings ascribed thereto in the Partnership
Agreement: "Affiliate", "BOC", "Business Day", "Cable Partner", "MFJ",
"Parent", "Person", "Sprint Brand", "Subsidiary", "Substantial Portion",
"Teleport".
(c) The definitions in this Section 1 and elsewhere in this Agreement
shall apply equally to both the singular and plural forms of the terms
defined. Whenever the context may require, any pronoun shall include
the corresponding masculine, feminine and neuter forms. The words
"include", "includes" and "including" shall be deemed to be followed by
the phrase "without limitation". The words "herein", "hereof" and
"hereunder" and words of similar import refer to this Agreement
(including the Schedules) in its entirety and not to any part hereof
unless the context shall otherwise require. All references herein to
Sections and Schedules shall be deemed references to Sections of, and
Schedules to, this Agreement unless the context shall otherwise require.
Unless the context shall otherwise require, any references to any
agreement or other instrument or statute or regulation are to it as
amended and supplemented from time to time (and, in the case of a
statute or regulation, to any corresponding provisions of successor
statutes or regulations). Any reference in this Agreement to a "day" or
number of "days" (without the explicit qualification of "Business")
shall be interpreted as a reference to a calendar day or number of
calendar days. If any action or notice is to be taken or given on or by
a particular calendar day, and such calendar day is not a Business Day,
then such action or notice shall be deferred until, or may be taken or
given on, the next Business Day.
SECTION 2. Undertakings.
(a) Exclusive Packaging/Marketing.
(i) TCI Parent agrees that, during the Term, it will not directly or
through any Subsidiary formed for such purpose, and it will cause
its Cable Subsidiaries (and each other Controlled Affiliate of TCI
Parent that is authorized to offer or promote, or package, any of
the products or services of its Cable Subsidiaries) not to, (A)
offer or promote, or package any of the products or services of such
Cable Subsidiary with, or act as sales agent for, any Long Distance
Telephony Services or Local Telephony Services in the Territory
under the Brand of an RBOC or an IXC, other than the Sprint Brand,
or (B) package any of the Non-Exclusive Services referred to in
clause (2), (3), (4), (5), (6), (7) or (8) of the definition of such
term in Section V of Schedule 1 under the Brand of an RBOC or an
IXC, other than the Sprint Brand, with Local Telephony Services
being offered by TCI Parent or its Controlled Affiliates in the
Territory under the Brand of TCI Parent, an Affiliate of TCI Parent
or Teleport, in each case except as permitted by Section 2(a)(ii)
and Section 4 and except as may otherwise be required by applicable
law, and provided that TCI Parent shall not be deemed to be in
violation of this covenant solely because advertising relating to
RBOC- or IXC-Branded Local Telephony Services, Long Distance
Telephony Services or Non-Exclusive Services being offered or
promoted, or packaged, by TCI Parent or any of such Cable
Subsidiaries or other such Controlled Affiliates solely in one or
more geographic areas outside of the scope of this Section 2(a)(i)
appears in or is broadcast to one or more geographic areas within
the scope of this Section 2(a)(i) so long as such advertising is
designed to reach primarily potential customers in such geographic
areas outside the scope of this Section 2(a)(i). The inclusion,
whether alone or in a package, of offers or promotions of Long
Distance Telephony Services or Local Telephony Services under the
brand of an RBOC or an IXC (including advertising on advertising
availabilities sold by a Cable Subsidiary) in programming or other
content contained in products or services of a Cable Subsidiary
shall not be deemed to be a violation of this Section 2(a)(i) unless
such offers or promotions (other than offers or promotions included
in the content of a shopping channel or similar service) would
otherwise involve a violation of this Section. The foregoing shall
not be construed to in any way limit the right of TCI Parent and any
of its Controlled Affiliates that are providing Local Telephony
Service in a market to provide any of its customers in that market
with any Long Distance Telephony Service, including an IXC-branded
Long Distance Telephony Service, that such customer may request and
to receive payment therefor from the provider of such Long Distance
Telephony Service in the form of an access fee or such other form,
including commission, as may be customary in the particular market
in the absence of a pre-existing sales agency agreement with a
provider. TCI Parent and Sprint Parent further agree to negotiate
in good faith for TCI Parent and its Cable Subsidiaries to act, and
Sprint Parent agrees that TCI Parent and its Cable Subsidiaries will
be authorized to act, as non-exclusive sales agents for the Long
Distance Telephony Services of Sprint Parent and its Controlled
Affiliates during the Term on a most favored nation commission basis
and on such other terms as the parties may agree. The immediately
preceding sentence sets forth the intention of the parties with
respect to such sales agency but is not intended to create any
legally binding obligation or give rise to any legal or equitable
right or remedy.
(ii) Except as otherwise required by law, Sprint Parent agrees that,
during the Term, Sprint Parent will not, and will cause its
Controlled Affiliates not to, offer or promote, or package any of
the products or services of Sprint Parent or its Controlled
Affiliates with, any Entertainment Services under the Brand of an
RBOC or a Satellite Carrier in any geographic area in the Territory
in which a Cable Subsidiary of TCI Parent is providing cable
television service as of the date hereof or as of any relevant date
hereafter; provided that Sprint Parent shall not be deemed to be in
violation of this covenant solely because advertising relating to
RBOC- or Satellite Carrier-Branded Entertainment Services being
offered or promoted, or packaged, by Sprint Parent or its
Controlled Affiliates solely in one or more geographic areas
outside of the scope of this Section 2(a)(ii) appears in or is
broadcast to one or more geographic areas within the scope of this
Section 2(a)(ii) so long as such advertising is designed to reach
primarily potential customers in such geographic areas outside the
scope of this Section 2(a)(ii); and provided, further, that Sprint
Parent shall not be deemed in violation of this covenant as a
result of its offering, promoting or packaging any of its products
or services with Entertainment Services under an RBOC- or Satellite
Carrier-Brand in a particular geographic area if each of the
following conditions is met: (x) at the time Sprint Parent or its
Controlled Affiliates entered into the agreement with such RBOC or
Satellite Carrier, no Cable Subsidiary was providing cable
television services in the geographic area covered by such
agreement and (y) subject to the following sentence, such agreement
is terminated by Sprint Parent or its applicable Controlled
Affiliate as soon as practicable after notice (specifically
referring to this Section of this Agreement) is given to it by TCI
Parent of the applicability of this covenant to such geographic
area, but in any event not later than (A) one year following the
giving of such notice or (B) such later date as the agreement may
be terminated by Sprint Parent or the applicable Controlled
Affiliate without penalty, but this clause (B) shall only apply if
Sprint Parent was unable to negotiate on commercially reasonable
terms an earlier right of termination that would have complied with
clause (A), notwithstanding its good faith efforts.
Notwithstanding the preceding sentence, Sprint Parent or its
Controlled Affiliate, as applicable, may elect, by notice
(specifically referring to this Section of this Agreement) given to
TCI Parent within 60 days after its receipt of notice from TCI
Parent pursuant to clause (y) above, not to terminate its agreement
with an RBOC or Satellite Carrier in the applicable market unless
TCI Parent provides or causes to be provided to Sprint Parent or
its applicable Controlled Affiliate on competitive economic terms
the same or substantially similar kinds of Entertainment Services
under a TCI Parent Brand to offer and promote, and package with
other products and services to offer and promote, to its customers
in such market. If Sprint Parent makes the foregoing election and
TCI Parent does not make such Entertainment Services so available
within 30 days of its receipt of such notice from Sprint Parent,
then (x) Sprint Parent and its applicable Controlled Affiliate
shall not be deemed to be in breach of this Section 2(a)(ii) solely
as a result of its failure to terminate its agreement with the RBOC
or Satellite Carrier with respect to the applicable market and (y)
TCI Parent and its Controlled Affiliates shall be released from
their obligations under Section 2(a)(i) with respect to such
market, and Sprint Parent and its Controlled Affiliates shall be
released from their obligations under Section 2(a)(ii) with respect
to such market.
(b) Right of Use.
(i) TCI Parent agrees that, during the Term: (x) if a Cable Subsidiary
of TCI Parent makes Rights of Use for Local Telephony Services
available on its distribution facilities in a particular market to
any Person other than (A) an Affiliate of such Cable Subsidiary, (B)
Teleport, (C) MajorCo or (D) a Local JV, TCI Parent will cause that
Cable Subsidiary to make Rights of Use available to Sprint Parent
and its Controlled Affiliates (or, if TCI Parent or a Controlled
Affiliate of TCI Parent and Sprint Parent or a Controlled Affiliate
of Sprint Parent have entered a Local JV with regard to such market,
the Local JV in such market) on the same facilities in such market
for the same or similar kinds (including, subject to the following
paragraph, specifications and standards, capacity and quality
metrics) of Local Telephony Services and, if applicable, the same or
similar kinds of Non-Exclusive Services, on no less favorable terms;
and (y) if a Cable Subsidiary of TCI Parent makes Rights of Use
available on its distribution facilities in a particular market to
any IXC or RBOC for the provision of Advanced Data Services, TCI
Parent will cause that Cable Subsidiary to make Rights of Use
available to Sprint Parent and its Controlled Affiliates (or, if TCI
Parent or a Controlled Affiliate of TCI Parent and Sprint Parent or
a Controlled Affiliate of Sprint Parent have entered a Local JV with
regard to such market, the Local JV in such market) on the same
facilities in such market for the same or similar kinds (including,
subject to the following paragraph, specifications and standards,
capacity and quality metrics) of Advanced Data Services on no less
favorable terms. TCI Parent will notify Sprint Parent immediately
of any agreement that may be reached for Rights of Use that would be
subject to the preceding sentence.
The parties understand and agree that if, by virtue of physical
limitations of the applicable facilities, the Cable Subsidiary
cannot ensure identical specifications and standards or quality
metrics for Rights of Use to multiple parties, then the Cable
Subsidiary may make economic distinctions with respect to the Rights
of Use it offers that would be taken into account in determining
whether the covenant of TCI Parent in this Section 2(b)(i) to offer
the applicable services on no less favorable terms has been
satisfied. By way of example, if an IXC were willing to pay a
premium for Rights of Use that included a guarantee of no blocking,
Sprint Parent would be required to pay that premium in order for it
to exercise its rights under this Section 2(b)(i) to obtain that
guarantee on no less favorable terms, notwithstanding that it would
then be paying more for its Rights of Use than the other IXCs that
did not have such guarantee or than any other IXC if such guarantee
could not be made available to more than one Person.
(ii) Sprint Parent agrees that if, during the Term, it or any of its
Controlled Affiliates proposes to provide Local Telephony Services
on a resale basis in any market in the Territory in which a Cable
Subsidiary has facilities, it will promptly so notify TCI Parent
and (x) if the facilities that are in place meet Sprint Parent's
specifications and standards (including time to market) for the
provision of such Local Telephony Services, then Sprint Parent
will, and will cause its Controlled Affiliates to, cooperate with
TCI Parent in good faith to negotiate (and TCI Parent will
cooperate with Sprint Parent in good faith to negotiate) mutually
satisfactory terms for the provision of Local Telephony Services
under the Sprint Brand using the facilities of such Cable
Subsidiary and (y) if the facilities that are in place do not meet
Sprint Parent's specifications and standards (including time to
market) for the provision of Local Telephony Services or if the
parties have not reached agreement upon the terms of the provision
of such services as contemplated by clause (x) above, then Sprint
Parent will or will cause its applicable Controlled Affiliate to
provide TCI Parent with a non-exclusive sales agency agreement for
such Local Telephony Services on terms and conditions no less
favorable to TCI Parent and its Controlled Affiliates than are
offered to any other non-exclusive sales agent for such Local
Telephony Services in such market, provided such obligation shall
terminate if TCI Parent or any of its Controlled Affiliates
commence the offering of facilities-based Local Telephony Services
in the applicable geographic area. The parties acknowledge that
there will be a presumption of good faith in the negotiations
pursuant to clause (x) above and that a party will not be deemed to
have failed to act in good faith solely as a result of taking
non-negotiable positions or different or inconsistent positions
with respect to different markets or a position that is different
from any position that has been accepted by another Cable Parent.
The obligations of Sprint Parent and TCI Parent to engage in such
negotiations under this Section 2(b)(ii) with respect to a
particular market will continue for a period of 90 days following
the receipt by TCI Parent of the notice referred to in the first
sentence of this Section 2(b)(ii) and will terminate at the end of
such 90-day period. Nothing contained in this Section 2(b)(ii)
shall be construed to restrict Sprint Parent or its Controlled
Affiliates from rolling out Local Telephony Services in any market
or delay such rollout, subject to compliance with the applicable
requirements of Section 2(a) above, provided that neither Sprint
Parent nor its Controlled Affiliates will enter into any agreements
that are not terminable by it on not less than 30 days' notice if
the parties reach agreement within the 90-day period.
SECTION 3. Local Joint Agreement; Teleport
(a) During the Term, TCI Parent will notify Sprint Parent whenever a
Cable Subsidiary of TCI Parent intends to upgrade its distribution
facilities for Local Telephony Services (or through some other means
offer Local Telephony Services) in a particular market (other than in
the context contemplated by Section 4(a)) but in no event earlier than
one year prior to the date it intends to commence offering Local
Telephony Services in such market. There will be a presumption that if
TCI Parent notifies Sprint Parent that a Cable Subsidiary of TCI Parent
intends to upgrade its distribution facilities in a particular market
(or through some other means offer Local Telephony Services) that it
intends to commence offering Local Telephony Services in such market
within one year. TCI Parent and Sprint Parent will cooperate with each
other in good faith to negotiate mutually satisfactory terms for the
provision of Local Telephony Services under the Sprint Brand in such
market using the local distribution facilities of the applicable Cable
Subsidiary (or such other means). The parties acknowledge that there
will be a presumption of good faith in such negotiations and that a
party will not be deemed to have failed to act in good faith solely as a
result of taking non-negotiable positions or different or inconsistent
positions with respect to different markets or a position that is
different from any position that has been accepted by another Cable
Parent. For a period of 90 days following Sprint Parent's receipt of
the notice required pursuant to the first sentence of this Section 3
with respect to a particular market, TCI Parent, Sprint Parent and their
respective Controlled Affiliates shall not negotiate with any other
Person regarding the provision of Local Telephony Services in such
market; provided, however, that TCI Parent and Sprint Parent will
commence immediately such negotiation with respect to those markets
listed on Schedule 2 attached hereto (the "Specified Markets") and the
period of exclusive negotiation with respect to the Specified Markets
shall expire on March 31, 1996. The obligations of TCI Parent and
Sprint Parent under this Section 3 with respect to a particular market
shall terminate upon expiration of the exclusive negotiation period
provided in this Section 3 with respect to such market. The contractual
arrangements between TCI Parent and Sprint Parent or their respective
Controlled Affiliates regarding the provision of such services in a
particular market may take the form of a local joint venture agreement
or another form as the applicable parties may negotiate and upon such
terms (including economic terms, scope, etc.) as they may agree (such
joint venture or other entity formed by, or other agreement or
arrangement between, Sprint Parent and TCI Parent or their respective
Controlled Affiliates for the purposes contemplated by this Section 3, a
"Local JV"). If Sprint Parent or any of its Controlled Affiliates are
providing Local Telephony Services on a resale basis in a market at the
time the terms of a Local JV are agreed upon with respect to such market
then Sprint Parent shall or shall cause its applicable Controlled
Affiliates to offer to transfer to the Local JV its business of
providing Local Telephony Services in such market and, at TCI Parent's
option, the assets used in such business, at a price determined on the
same basis as would then be applicable to a transfer of a business under
Section 6.3(p) of the Partnership Agreement. If Sprint Parent and TCI
Parent have not reached agreement upon the terms of a Local JV for a
particular market (an "Unresolved Market") by the expiration of the
90-day period of exclusive negotiation and, at that date or at any time
thereafter prior to Sprint Parent and TCI Parent or their respective
Controlled Affiliates having entered a Local JV with respect to the
Unresolved Market, Sprint Parent or one of its Controlled Affiliates has
entered a Local JV with any Cable Parent or a Controlled Affiliate
thereof with respect to a market the characteristics of which that are
relevant to the business of Local Telephony Services are similar to
those of the Unresolved Market, then Sprint Parent shall offer to enter
into or cause one of its Controlled Affiliates to enter into a Local JV
with a Controlled Affiliate of TCI Parent for the Unresolved Market on
terms and conditions no less favorable to TCI Parent and its Controlled
Affiliates than those Sprint Parent (or its Controlled Affiliate) has
agreed to with respect to such other similar market. Sprint Parent
agrees to disclose to TCI Parent promptly the terms of any agreements it
may reach with Cox Parent or Comcast Parent or their respective
Controlled Affiliates regarding the provision of Local Telephony
Services in any market, and TCI Parent hereby consents to the disclosure
by Sprint Parent to Cox Parent and Comcast Parent of any agreement that
TCI Parent and Sprint Parent may reach as contemplated by this Section
3. Nothing contained in this Section 3 or in Section 2(b)(ii) shall be
construed to restrict any Controlled Affiliate of TCI Parent from
rolling out Local Telephony Services in any market or delay such
rollout, subject to compliance with Section 2 above.
(b) It is the present goal and intention of the parties to continue to
attempt to integrate the businesses and activities of Teleport with the
business and activities of MajorCo as promptly as practicable, provided
that the parties can achieve mutually satisfactory agreements for such
integration and for the provision of Local Telephony Service in the
Specified Markets. The foregoing is intended to set forth the parties'
present intentions concerning their future efforts with respect to the
achievement of their mutual goal of integrating MajorCo and Teleport,
but is not intended to and does not create a legally binding obligation,
it being understood that the Cable Parents and their respective
Controlled Affiliates remain free to pursue activities that they, in
their sole discretion, consider to be in the best interests of Teleport
and its owners, and each party remains free to determine, in its sole
discretion, to proceed, or agree that MajorCo would proceed, with any
proposed transaction involving Teleport.
Without limiting any party's ability to exercise its sole discretion
with respect to matters covered in this Section 3(b), Sprint Parent has
advised the Cable Parents that the failure of a proposed agreement
regarding Teleport to include the following may result in Sprint
Parent's refusal to enter into an agreement with respect to Teleport,
were any such agreement to be proposed: (i) the contribution to MajorCo
of at least a 62.5% ownership interest in Teleport under the same
economic terms as would have applied if the Teleport Contribution
Agreement had not been terminated (which, in Sprint Parent's opinion,
would require adjustments for the loss of tax benefits arising from the
reorganization of Teleport into corporate form, if such were to occur);
(ii) governance of the Teleport interests held by MajorCo in accordance
with the current MajorCo governance provisions; (iii) modification of
the Teleport governance provisions to provide that all matters will be
resolved by simple majority vote, both at the governing board and
stockholder/partner level, and to eliminate all special rights of
partners to elect governing board members or to approve or disapprove
transactions involving stockholders/partners and their respective
affiliates (provided that such transactions are on arms' length terms);
(iv) modification of the scope and exclusivities of Teleport in a manner
that rationalizes the operations of Teleport, MajorCo and the individual
wireline efforts of the Partners, which would include the exclusion of
Teleport from the wireless business, the limitation of Teleport's
residential switched activities to the New York market, and a
reconciliation of the respective activities of Teleport and the Local
JVs relating to the small business market; (v) the marketing of all of
Teleport's retail products under the Sprint Brand; and (vi) receipt of
satisfactory consents and waivers from Continental Cablevision,
Inc. ("Continental") and its Subsidiaries or removal of Continental or
the applicable Subsidiary as a Teleport stockholder/partner.
SECTION 4. Certain Exceptions to Undertakings.
(a) The covenants of TCI Parent in Sections 2 and 3 shall not apply with
respect to a Bulk Purchaser in circumstances where, in the reasonable
judgment of TCI Parent, a Cable Subsidiary or other Controlled Affiliate
of TCI Parent needs to offer to a Bulk Purchaser of cable television
services a package of services which include one or more Local Telephony
Services and/or Long Distance Telephony Services in order to compete
with an actual or anticipated offer to such Bulk Purchaser by a provider
unaffiliated with TCI Parent (whether facilities-based, as a reseller or
agent or otherwise) of television/telephony services and the needed
service is not then available to TCI Parent for inclusion in such a
package from Sprint Parent or its Affiliates on competitive economic
terms. The covenants of TCI Parent in Sections 2(b)(i) and 3, and the
rights of Sprint Parent under such Sections, shall not become applicable
solely as a result of the provision of such services to the Bulk
Purchaser.
(b) If Sprint Parent and TCI Parent have not reached an agreement on
mutually satisfactory terms for the provision of Local Telephony
Services in a particular market through a Local JV within the exclusive
negotiation period with respect to such markets contemplated by Section
3, then the provisions of Section 2(a)(i) will cease to apply with
respect to Long Distance Telephony Services in such market, unless
Sprint Parent makes available or causes to be made available to TCI
Parent or its applicable Controlled Affiliate on competitive economic
terms Sprint-Branded Long Distance Telephony Services to offer and
promote, and package with other products and services to offer and
promote, to its customers, and for which it would be authorized to act
as non-exclusive sales agent, in that market.
(c) If Sprint Parent and TCI Parent have not reached an agreement on
mutually satisfactory terms for the provision of Local Telephony
Services in a particular market through a Local JV within the exclusive
negotiation period with respect to such market contemplated by Section 3
and Sprint Parent or any of its Controlled Affiliates is providing
(through resale or otherwise) Local Telephony Services in such market,
then the provisions of Section 2(a)(i) will cease to apply in such
market, unless Sprint Parent makes available or causes to be made
available to TCI Parent or its applicable Controlled Affiliate on
competitive economic terms Sprint-Branded Long Distance Telephony
Services to offer and promote, and package with other products and
services to offer and promote, to its customers, and for which it would
be authorized to act as non-exclusive sales agent, in that market.
(d) TCI Parent's obligations under this Agreement with respect to any
Person that becomes a Cable Subsidiary or Controlled Affiliate of TCI
Parent after the date hereof and any cable television system or
facilities acquired by TCI Parent or a Cable Subsidiary after the date
hereof shall be subject to any contrary provisions of any agreements
with Persons (other than TCI Parent or a Controlled Affiliate of TCI
Parent) to which such Cable Subsidiary, Controlled Affiliate or cable
television system or facilities are subject prior to the time such
Person became a Cable Subsidiary or Controlled Affiliate or such system
or facilities were acquired.
(e) Sprint Parent's obligations under this Agreement with respect to any
Person that becomes a Controlled Affiliate of Sprint Parent after the
date hereof shall be subject to any contrary provisions of any
agreements with Persons (other than Sprint Parent or a Controlled
Affiliate of Sprint Parent) to which such Controlled Affiliate is
subject prior to the time such Person became a Controlled Affiliate.
SECTION 5. Consent to Jurisdiction.
(a) Each of Sprint Parent and TCI Parent hereby irrevocably and
unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of any New York State court sitting in the
County of New York or any Federal court of the United States of America
sitting in the State of New York, and any appellate court from any such
court, in any suit, action or proceeding arising out of or relating to
this Agreement, or for recognition or enforcement of any judgment, and
hereby irrevocably and unconditionally agrees that all claims in respect
of any such suit, action or proceeding may be heard and determined in
such New York State court or, to the extent permitted by law, in such
Federal court.
(b) Each of Sprint Parent and TCI Parent hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and
effectively do so, any objections which it may now or hereafter have to
the laying of venue of any suit, action or proceeding arising out of or
relating to this Agreement in any New York State court sitting in the
County of New York or any Federal court sitting in New York. Each of
Sprint Parent and TCI Parent hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the
maintenance of such suit, action or proceeding in any such court and
further waives the right to object, with respect to such suit, action or
proceeding, that such court does not have personal jurisdiction over it.
(c) Each of Sprint Parent and TCI Parent irrevocably consents to service
of process in the manner provided for the giving of notices pursuant to
this Agreement, provided that such service shall be deemed to have been
given only when actually received by it. Nothing in this Agreement
shall affect the right of a party to serve process in any other manner
permitted by law.
SECTION 6. Waiver; Remedies.
The observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively) by the party entitled to enforce such term, but any such
waiver shall be effective only if in a writing signed by the party
against which such waiver is to be asserted. Except as otherwise
provided herein, no failure or delay of any party in exercising any
power or right under this Agreement shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such right or
power, preclude any other or further exercise thereof or the exercise of
any other right or power.
SECTION 7. Assignment.
Except with respect to an assignment in connection with a transfer (in a
single transaction or series of related transactions) of all or a
Substantial Portion of the cable television system assets (in the case
of TCI Parent) or long distance telecommunications business assets (in
the case of Sprint Parent) owned by TCI Parent or Sprint Parent,
respectively, directly or through Controlled Affiliates immediately
prior to the transfer (or the first transfer of the series) (a
"Permitted Transaction") to (i) the transferee of such assets or (ii)
the Parent of such transferee, this Agreement shall not be assignable
without the prior written consent of the other party. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns, and shall be binding
upon the transferee of such party in a Permitted Transaction (which
transferee the applicable transferor shall cause to agree in writing to
be so bound in connection with such Permitted Transaction). Nothing in
this Agreement, whether express or implied, shall be construed to give
any Person other than the parties hereto and their respective successors
and permitted assigns any legal or equitable right, remedy or claim
under or in respect of this Agreement.
SECTION 8. Severability.
Every provision of this Agreement is intended to be severable. If any
term or provision hereof is illegal, invalid or unenforceable for any
reason whatsoever, that term or provision will be enforced to the
maximum extent permissible and such illegality, invalidity or
unenforceability shall not affect the validity or legality of the
remainder of this Agreement.
SECTION 9. Governing Law.
The internal laws of the State of Delaware (without regard to principles
of conflict of law) shall govern the validity of this Agreement, the
construction of its terms, and the interpretation of the rights and
duties of the parties.
SECTION 10. Waiver of Jury Trial.
Sprint Parent and TCI Parent each irrevocably waives to the extent
permitted by law all rights to trial by jury in any action, proceeding
or counterclaim arising out of or relating to this Agreement.
SECTION 11. Notices.
Any notice, payment, demand or communication required or permitted to be
given by any party by any provision of this Agreement shall be in
writing and mailed (certified or registered mail, postage prepaid,
return receipt requested) or sent by hand or overnight courier, or by
facsimile (with acknowledgment received), charges prepaid and addressed
as follows, or to such other address or number as such party may from
time to time specify by notice to the other party:
(a) If to TCI Parent, to:
Tele-Communications, Inc.
5619 DTC Parkway
Englewood, CO 80111
Telecopy No.: (303) 488-3200
Attn: Executive Vice President
and Chief Operating Officer
with copies to:
TCI Network Services
5619 DTC Parkway
Englewood, CO 80111
Telecopy No.: (303) 488-3200
Attn: President
Baker & Botts, L.L.P.
885 Third Avenue
New York, New York 10022-4834
Telecopy No.: (212) 705-5125
Attn: Elizabeth Markowski, Esq.
(b) If to Sprint Parent, to:
Sprint Corporation
2330 Shawnee Mission Parkway
Westwood, KS 66205
Telecopy No.: (913) 624-8426
Attn: Chief Financial Officer
with copies to:
Sprint Spectrum, L.P.
2330 Shawnee Mission Parkway
Westwood, KS 66205
Telecopy No.: (913) 624-2256
Attn: Corporate Secretary
King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303-1763
Telecopy No.: (404) 572-5146
Attn: Bruce N. Hawthorne, Esq.
Any party may from time to time specify a different address by notice to
the other parties. All notices and other communications given to a
Person in accordance with the provisions of this Agreement shall be
deemed to have been given and received (i) four (4) Business Days after
the same are sent by certified or registered mail, postage prepaid,
return receipt requested, (ii) when delivered by hand or transmitted by
facsimile (with acknowledgment received and, in the case of a facsimile
only, a copy of such notice is sent no later than the next Business Day
by a reliable overnight courier service, with acknowledgment of
receipt), or (iii) one (1) Business Day after the same are sent by a
reliable overnight courier service, with acknowledgment of receipt.
SECTION 12. Entire Agreement.
The provisions of this Agreement set forth the entire agreement and
understanding between the parties as to the subject matter hereof and
supersede all prior agreements, oral or written, and other
communications between the parties relating to the subject matter
hereof.
SECTION 13. Term.
This Agreement and the rights and obligations of the parties hereunder
will terminate on January 31, 2001, provided that this Agreement and the
rights and obligations of the parties shall earlier terminate on the
first to occur of (i) January 31, 1999 if at that date Local Telephony
Services are being offered under the Sprint Brand by TCI Parent and its
Controlled Affiliates (or Local JVs) through facilities of its Cable
Subsidiaries passing fewer than 25% of the aggregate number of
Households Passed by facilities of TCI Parent and its Cable Subsidiaries
that have been upgraded for, and through which TCI Parent and its
Controlled Affiliates (or Local JVs) are providing, Local Telephony
Services, (ii) such date as of which neither TCI Parent nor any of its
Controlled Affiliates is a partner in MajorCo and (iii) such date as of
which neither Sprint Parent nor any of its Controlled Affiliates is a
partner in MajorCo.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the date first above written.
TELE-COMMUNICATIONS, INC.
By: /s/ Brendan R. Clouston
Name: Brendan R. Clouston
Title: Executive Vice President
SPRINT CORPORATION
By: /s/ J. Richard Devlin
Name: J. Richard Devlin
Title: Executive Vice President
SCHEDULE 1
Certain Defined Terms
II. Local Telephony Services
"Local Telephony Services" shall mean wireline "local exchange, access,
and transport services" offered or provided to residences in the
Territory that are functionally equivalent (from the customer's
perspective) to circuit-based offerings (e.g., a POTS access line that
provides to the user a circuit of equal and fixed bi-directional
transmission capacity). Local Telephony Services may utilize an
underlying network technology that is not circuit-based as long as the
offering to the residence is (from the customer's perspective)
functionally equivalent to one of the "local exchange, access and
transport" services listed below. Local Telephony Services shall not
include Advanced Data Services, the Non-Exclusive Services and the
Excluded Businesses.
Local Telephony Services shall include the provision and transport of
intra-LATA wireline calls, except for 75 Mile Plus Calls.
Local Telephony Services are not restricted by form (e.g., analog or
digital), method of origination (e.g., voice, data, telemetry, etc.), or
the content transmitted by the customer.
The "local exchange, access, and transport" services are:
1. Local dial tone service for residential customers (i.e., basic
service, additional lines, EAS, ISDN, etc.);
2. Ancillary basic service features such as tone dialing, custom
calling, CLASS, Centrex, and functionality for number portability;
3. Access for switched and dedicated intra-LATA and inter-LATA service;
4. Private line services not interconnected with an inter-LATA private
line network (including back haul for wireless services); and
5. "Video telephony", which shall mean circuit switched two-way
communications services that are not Excluded Businesses providing:
a. point-to-point two-way audio/video connectivity;
b. point-to-point one-way video connectivity and two way audio
connectivity;
c. multi-point to multi-point audio/video connectivity; or
d. access for intra-LATA and inter-LATA video telephony.
III. Long Distance Telephony Services
"Long Distance Telephony Services" shall mean (other than as provided in
Sections I and V of this Schedule 1) (a) wireline inter-LATA service to
residences in the Territory, except for that subject to local exchange
carrier inter-LATA waivers or (b) 75 Mile Plus Calls to residences in
the Territory, but in each case excluding any of such services that are
also Advanced Data Services or services described in clauses (2) or (3)
of the definition of Excluded Business in Section VI below.
IV. Advanced Data Services
"Advanced Data Services" shall mean wireline services offered or
provided to residences in the Territory that are functionally equivalent
to asynchronous offerings (e.g., an internet access service with
instantaneously varying data rates and equal or unequal bi-directional
transmission capacity). Advanced Data Services shall not include the
Local Telephony Services, the Non-Exclusive Services, and those
Excluded Businesses referred to in clauses (1), (2) and (3) of the
definition of Excluded Businesses in Section VI of this Schedule 1.
V. Entertainment Services
"Entertainment Services" means the delivery via a distribution system
(whether wired or wireless, and whether terrestrial or satellite-based)
of entertainment and, except to the extent contemplated under
Non-Exclusive Services, other content-based services, which services in
either such case are competitive with services typically provided by
cable television companies to their customers at the date of this
Agreement. The provision of Internet access services, incidental
audio/video content related to the provision of Internet access services
(e.g. browsers, navigators, logos, customer service, sales) and on-line
hosting services shall not be deemed to be Entertainment Services.
VI. Non-Exclusive Services
"Non-Exclusive Services" means each of the following:
1. Incidental services to other Local Telephony Services, including
billing services and the installation, maintenance, repair, sale or
lease of customer premises equipment or customer controlled
equipment.
2. 500 Services.
3. Meeting services, such as video or other teleconferencing in which
the provider does not create nor resell the content of such service.
4. Server-based content services customarily provided by local exchange
telephone companies, consisting of directory assistance, operator
service, time, temperature and similar information services that are
voice only and TDD relay.
5. Incidental data services to support signaling, billing and system
diagnostics and management for audio/video connectivity.
6. Incidental audio/video content (e.g., logos, customer service,
sales), that are directly related to the provision of video
telephony.
7. Enhanced services such as voice mail, e-mail, facsimile store and
forward.
8. Video telephony enhanced services, such as video mail, store and
forward, and customer service, but excluding any such enhanced
service that is an Excluded Business.
VII. Excluded Business
"Excluded Business" means each of the following:
1. Long Distance Telephony Services.
2. The provision of entertainment and, except to the limited extent
contemplated under Non-Exclusive Services, other content-based
services.
3. The provision or transport of wireline services using unidirectional
transmission capacity.
4. The provision or transport of wireline services using unequal
bi-directional transmission capacity.
VIII. Definitions.
As used in this Schedule:
1. The term "LATA" means a Local Access and Transport Area established
pursuant to the criteria set forth in Section 4(g) of the MFJ, as
approved in United States v. Western Electric Company, Inc., et. al.,
569 F. Supp. 990 (D.D.C. 1983), and as amended by subsequent orders,
regardless of whether the LATA boundaries continue to be applied in
future governmental regulation of the wireline telecommunications
industry. In the event of the cessation of use of LATA boundaries by
a telecommunications governmental regulation or court order, then the
LATA boundaries in effect at the time of cessation of such use shall
be deemed to be the LATA boundaries for purposes of this Agreement.
2. The term "Rate Center" means a point within a geographic area
designated by agreement of TCI Parent and Sprint Parent as the Rate
Center and shall be used for measuring distances to and from such
geographic area. Each geographic area shall have one Rate Center.
The Rate Center shall be near the geographic center of the geographic
area.
3. The term "75 Mile Plus Calls" means wireline calls between end users
whose Rate Centers are greater than 75 miles apart.
4. The term "residences" will have its customary meaning unless and
until the scope of Teleport's business is confined by agreement of
its owners so as to exclude (or make non-exclusive) serving "small
business customers", in which event the term "residences" will also
include "small business customers". The term "small business
customer" for this purpose means a non-residential customer having
five or fewer Access Lines. The term "Access Line" means a
voice-grade message telephone line (DS-0 equivalent) that can
originate or terminate telecommunications services, which need not
have a separate telephone number, and is interconnected with the
public switched telephone network; provided, that an ISDN BRI shall
count as one Access Line.
Exhibit 99E
PARENTS AGREEMENT
This PARENTS AGREEMENT (the "Agreement") is entered into as of the 31st
day of January, 1996, by COMCAST CORPORATION, a Pennsylvania corporation
("Comcast Parent") and SPRINT CORPORATION, a Kansas corporation ("Sprint
Parent").
WHEREAS, subsidiaries of each of Comcast Parent, Sprint Parent, Cox
Communications, Inc., a Delaware corporation ("Cox Parent"), and
Tele-Communications, Inc., a Delaware corporation ("TCI Parent", and
together with Cox Parent and Comcast Parent, the "Cable Parents") (such
subsidiaries, the "Partners") have entered into that certain Agreement
of Limited Partnership of MajorCo, L.P., dated as of March 28, 1995, as
amended by that certain First Amendment to Agreement of Limited
Partnership, dated as of August 31, 1995 (the "Prior Partnership
Agreement"), pursuant to which MajorCo, L.P., a Delaware limited
partnership ("MajorCo") was formed;
WHEREAS, as of the date hereof, the Partners are further amending the
Prior Partnership Agreement and restating it in its entirety (as so
amended and restated, the "Partnership Agreement") and, in connection
therewith, each Cable Parent has agreed to make certain undertakings to
Sprint Parent, and Sprint Parent has agreed to make certain undertakings
to each Cable Parent.
NOW, THEREFORE, in consideration of the mutual promises and agreements
of the parties, and other good and valuable consideration the receipt of
which is hereby acknowledged, Sprint Parent and Comcast Parent do hereby
agree as follows:
SECTION 1. Definitions.
(a) The following capitalized words and phrases as used in this
Agreement have the meanings indicated below:
"Advanced Data Services" has the meaning set forth in Schedule 1.
"Brand" of any Person means a trademark, tradename, service mark and/or
logo of such Person.
"Bulk Purchaser" means a purchaser of cable television service that
provides such service to multiple dwelling units (whether in one or more
buildings or whether in one or more complexes or locations) of which it
is the owner or for which it acts as manager or agent or with which it
otherwise has a relationship, by contract or otherwise.
"Cable Subsidiary" means (i) any Controlled Affiliate of Comcast Parent
that owns a cable television system and (ii) any Person that Comcast
Parent or its Controlled Affiliates has a unilateral right to cause to
comply with Section 2 hereof with respect to cable television systems
owned by such Person.
"Controlled Affiliate" means (i) when used with respect to Comcast
Parent, each Subsidiary of Comcast Parent, (ii) when used with respect
to Sprint Parent, each Subsidiary of Sprint Parent, and (iii) when used
with respect to any Person in Section 2 hereof, including Comcast Parent
and Sprint Parent, any Affiliate of such Person that such Person can
directly or indirectly unilaterally cause to take or refrain from taking
any of the actions required, prohibited or otherwise restricted by such
Section, whether through ownership of voting securities, contractually
or otherwise.
"Entertainment Services" has the meaning set forth in Schedule 1.
"Excluded Businesses" has the meaning set forth in Schedule 1.
"Households Passed" means, as of any relevant date, the aggregate number
of residential dwelling units to which the facilities of Comcast
Parent's Cable Subsidiaries either (i) are capable, as of such date, of
providing Local Telephony Service by means of an existing customer drop
or other similar connection or (ii) could legally provide Local
Telephony Service using a customer drop or other similar connection no
more than two hundred (200) feet in length (exclusive of any wiring
within the applicable structure and assuming that the applicable owner
or occupant consented to receipt of Local Telephony Service). For
purposes of this definition, each residential dwelling unit in a
multiple dwelling unit that is otherwise within the foregoing definition
will be counted as one Household Passed.
"IXC" means each of the following Persons, each successor to the long
distance telephony business of any such Person and each of the
respective Affiliates of each such Person or successor: AT&T Corp., MCI
Communications Corporation, British Tele-Communications plc, Worldcom,
Inc., Cable & Wireless plc, LCI International Inc. and Frontier
Corporation.
"Local JV" has the meaning set forth in Section 3.
"Local Telephony Services" has the meaning set forth in Schedule 1.
"Long Distance Telephony Services" has the meaning set forth in Schedule
1.
"Non-Exclusive Services" has the meaning set forth in Schedule 1.
"RBOC" means each of the following Persons, each successor to the local
exchange carrier business of any such Person and each of the respective
Affiliates of each such Person or successor: each BOC, GTE Corporation
and Frontier Corporation.
"Rights of Use" means rights to use the distribution facilities of a
Cable Subsidiary's cable system to provide Local Telephony Services or
Advanced Data Services, as applicable, to end users connected to such
distribution facilities.
"Satellite Carrier" means each of the following Persons, each successor
to the direct broadcast satellite business of any such Person and each
of the respective Affiliates of each such Person or successor: DIRECTV,
Inc., U.S. Satellite Broadcasting, Inc. and EchoStar Communications
Corporation.
"Sprint LECs" means, as of any relevant date, those local exchange
carriers that are Subsidiaries of Sprint Parent.
"Teleport Contribution Agreement" means that certain Contribution
Agreement among the Cable Partners, MajorCo and NewTelco, L.P., dated as
of March 28, 1995.
"Term" means the period commencing on the date hereof and ending on the
date this Agreement terminates in accordance with Section 13.
"Territory" shall mean the United States, including all territories and
possessions thereof, except for Puerto Rico, but excluding as of any
date those geographic areas in which a Sprint LEC is providing Local
Telephony Services primarily through its owned facilities at such date.
(b) The following capitalized words and phrases as used in this
Agreement have the meanings ascribed thereto in the Partnership
Agreement: "Affiliate", "BOC", "Business Day", "Cable Partner", "Comcast
Area", "MFJ", "Parent", "Person", "Sprint Brand", "Subsidiary",
"Substantial Portion", "Teleport".
(c) The definitions in this Section 1 and elsewhere in this Agreement
shall apply equally to both the singular and plural forms of the terms
defined. Whenever the context may require, any pronoun shall include
the corresponding masculine, feminine and neuter forms. The words
"include", "includes" and "including" shall be deemed to be followed by
the phrase "without limitation". The words "herein", "hereof" and
"hereunder" and words of similar import refer to this Agreement
(including the Schedules) in its entirety and not to any part hereof
unless the context shall otherwise require. All references herein to
Sections and Schedules shall be deemed references to Sections of, and
Schedules to, this Agreement unless the context shall otherwise require.
Unless the context shall otherwise require, any references to any
agreement or other instrument or statute or regulation are to it as
amended and supplemented from time to time (and, in the case of a
statute or regulation, to any corresponding provisions of successor
statutes or regulations). Any reference in this Agreement to a "day" or
number of "days" (without the explicit qualification of "Business")
shall be interpreted as a reference to a calendar day or number of
calendar days. If any action or notice is to be taken or given on or by
a particular calendar day, and such calendar day is not a Business Day,
then such action or notice shall be deferred until, or may be taken or
given on, the next Business Day.
SECTION 2. Undertakings.
(a) Exclusive Packaging/Marketing.
(i) Comcast Parent agrees that, during the Term, it will not directly or
through any Subsidiary formed for such purpose, and it will cause its
Cable Subsidiaries (and each other Controlled Affiliate of Comcast
Parent that is authorized to offer or promote, or package, any of the
products or services of its Cable Subsidiaries) not to, (A) offer or
promote, or package any of the products or services of such Cable
Subsidiary with, or act as sales agent for, any Long Distance Telephony
Services or Local Telephony Services in the Territory under the Brand of
an RBOC or an IXC, other than the Sprint Brand, or (B) package any of
the Non-Exclusive Services referred to in clause (2), (3), (4), (5),
(6), (7) or (8) of the definition of such term in Section V of Schedule
1 under the Brand of an RBOC or an IXC, other than the Sprint Brand,
with Local Telephony Services being offered by Comcast Parent or its
Controlled Affiliates in the Territory under the Brand of Comcast
Parent, an Affiliate of Comcast Parent or Teleport, in each case except
as permitted by Section 2(a)(ii) and Section 4 and except as may
otherwise be required by applicable law, and provided that Comcast
Parent shall not be deemed to be in violation of this covenant solely
because advertising relating to RBOC- or IXC-Branded Local Telephony
Services, Long Distance Telephony Services or Non-Exclusive Services
being offered or promoted, or packaged, by Comcast Parent or any of such
Cable Subsidiaries or other such Controlled Affiliates solely in one or
more geographic areas outside of the scope of this Section 2(a)(i)
appears in or is broadcast to one or more geographic areas within the
scope of this Section 2(a)(i) so long as such advertising is designed to
reach primarily potential customers in such geographic areas outside the
scope of this Section 2(a)(i). The inclusion, whether alone or in a
package, of offers or promotions of Long Distance Telephony Services or
Local Telephony Services under the brand of an RBOC or an IXC (including
advertising on advertising availabilities sold by a Cable Subsidiary) in
programming or other content contained in products or services of a
Cable Subsidiary shall not be deemed to be a violation of this Section
2(a)(i) unless such offers or promotions (other than offers or
promotions included in the content of a shopping channel or similar
service) would otherwise involve a violation of this Section. The
foregoing shall not be construed to in any way limit the right of
Comcast Parent and any of its Controlled Affiliates that are providing
Local Telephony Service in a market to provide any of its customers in
that market with any Long Distance Telephony Service, including an
IXC-branded Long Distance Telephony Service, that such customer may
request and to receive payment therefor from the provider of such Long
Distance Telephony Service in the form of an access fee or such other
form, including commission, as may be customary in the particular market
in the absence of a pre-existing sales agency agreement with a provider.
Comcast Parent and Sprint Parent further agree to negotiate in good
faith for Comcast Parent and its Cable Subsidiaries to act, and Sprint
Parent agrees that Comcast Parent and its Cable Subsidiaries will be
authorized to act, as non-exclusive sales agents for the Long Distance
Telephony Services of Sprint Parent and its Controlled Affiliates during
the Term on a most favored nation commission basis and on such other
terms as the parties may agree. The immediately preceding sentence sets
forth the intention of the parties with respect to such sales agency but
is not intended to create any legally binding obligation or give rise to
any legal or equitable right or remedy.
(ii) Except as otherwise required by law, Sprint Parent agrees that,
during the Term, Sprint Parent will not, and will cause its Controlled
Affiliates not to, offer or promote, or package any of the products or
services of Sprint Parent or its Controlled Affiliates with, any
Entertainment Services under the Brand of an RBOC or a Satellite Carrier
in any geographic area in the Territory in which a Cable Subsidiary of
Comcast Parent is providing cable television service as of the date
hereof or as of any relevant date hereafter; provided that Sprint Parent
shall not be deemed to be in violation of this covenant solely because
advertising relating to RBOC- or Satellite Carrier-Branded Entertainment
Services being offered or promoted, or packaged, by Sprint Parent or its
Controlled Affiliates solely in one or more geographic areas outside of
the scope of this Section 2(a)(ii) appears in or is broadcast to one or
more geographic areas within the scope of this Section 2(a)(ii) so long
as such advertising is designed to reach primarily potential customers
in such geographic areas outside the scope of this Section 2(a)(ii); and
provided, further, that Sprint Parent shall not be deemed in violation
of this covenant as a result of its offering, promoting or packaging any
of its products or services with Entertainment Services under an RBOC-
or Satellite Carrier-Brand in a particular geographic area if each of
the following conditions is met: (x) at the time Sprint Parent or its
Controlled Affiliates entered into the agreement with such RBOC or
Satellite Carrier, no Cable Subsidiary was providing cable television
services in the geographic area covered by such agreement and (y)
subject to the following sentence, such agreement is terminated by
Sprint Parent or its applicable Controlled Affiliate as soon as
practicable after notice (specifically referring to this Section of this
Agreement) is given to it by Comcast Parent of the applicability of this
covenant to such geographic area, but in any event not later than (A)
one year following the giving of such notice or (B) such later date as
the agreement may be terminated by Sprint Parent or the applicable
Controlled Affiliate without penalty, but this clause (B) shall only
apply if Sprint Parent was unable to negotiate on commercially
reasonable terms an earlier right of termination that would have
complied with clause (A), notwithstanding its good faith efforts.
Notwithstanding the preceding sentence, Sprint Parent or its Controlled
Affiliate, as applicable, may elect, by notice (specifically referring
to this Section of this Agreement) given to Comcast Parent within 60
days after its receipt of notice from Comcast Parent pursuant to clause
(y) above, not to terminate its agreement with an RBOC or Satellite
Carrier in the applicable market unless Comcast Parent provides or
causes to be provided to Sprint Parent or its applicable Controlled
Affiliate on competitive economic terms the same or substantially
similar kinds of Entertainment Services under a Comcast Parent Brand to
offer and promote, and package with other products and services to offer
and promote, to its customers in such market. If Sprint Parent makes
the foregoing election and Comcast Parent does not make such
Entertainment Services so available within 30 days of its receipt of
such notice from Sprint Parent, then (x) Sprint Parent and its
applicable Controlled Affiliate shall not be deemed to be in breach of
this Section 2(a)(ii) solely as a result of its failure to terminate its
agreement with the RBOC or Satellite Carrier with respect to the
applicable market and (y) Comcast Parent and its Controlled Affiliates
shall be released from their obligations under Section 2(a)(i) with
respect to such market, and Sprint Parent and its Controlled Affiliates
shall be released from their obligations under Section 2(a)(ii) with
respect to such market.
(b) Right of Use.
(i) Comcast Parent agrees that, during the Term: (x) if a Cable
Subsidiary of Comcast Parent makes Rights of Use for Local Telephony
Services available on its distribution facilities in a particular market
to any Person other than (A) an Affiliate of such Cable Subsidiary, (B)
Teleport, (C) MajorCo or (D) a Local JV, Comcast Parent will cause that
Cable Subsidiary to make Rights of Use available to Sprint Parent and
its Controlled Affiliates (or, if Comcast Parent or a Controlled
Affiliate of Comcast Parent and Sprint Parent or a Controlled Affiliate
of Sprint Parent have entered a Local JV with regard to such market, the
Local JV in such market) on the same facilities in such market for the
same or similar kinds (including, subject to the following paragraph,
specifications and standards, capacity and quality metrics) of Local
Telephony Services and, if applicable, the same or similar kinds of
Non-Exclusive Services, on no less favorable terms; and (y) if a Cable
Subsidiary of Comcast Parent makes Rights of Use available on its
distribution facilities in a particular market to any IXC or RBOC for
the provision of Advanced Data Services, Comcast Parent will cause that
Cable Subsidiary to make Rights of Use available to Sprint Parent and
its Controlled Affiliates (or, if Comcast Parent or a Controlled
Affiliate of Comcast Parent and Sprint Parent or a Controlled Affiliate
of Sprint Parent have entered a Local JV with regard to such market, the
Local JV in such market) on the same facilities in such market for the
same or similar kinds (including, subject to the following paragraph,
specifications and standards, capacity and quality metrics) of Advanced
Data Services on no less favorable terms. Comcast Parent will notify
Sprint Parent immediately of any agreement that may be reached for
Rights of Use that would be subject to the preceding sentence.
The parties understand and agree that if, by virtue of physical
limitations of the applicable facilities, the Cable Subsidiary cannot
ensure identical specifications and standards or quality metrics for
Rights of Use to multiple parties, then the Cable Subsidiary may make
economic distinctions with respect to the Rights of Use it offers that
would be taken into account in determining whether the covenant of
Comcast Parent in this Section 2(b)(i) to offer the applicable services
on no less favorable terms has been satisfied. By way of example, if an
IXC were willing to pay a premium for Rights of Use that included a
guarantee of no blocking, Sprint Parent would be required to pay that
premium in order for it to exercise its rights under this Section
2(b)(i) to obtain that guarantee on no less favorable terms,
notwithstanding that it would then be paying more for its Rights of Use
than the other IXCs that did not have such guarantee or than any other
IXC if such guarantee could not be made available to more than one
Person.
(ii) Sprint Parent agrees that if, during the Term, it or any of its
Controlled Affiliates proposes to provide Local Telephony Services on a
resale basis in any market in the Territory in which a Cable Subsidiary
has facilities, it will promptly so notify Comcast Parent and (x) if the
facilities that are in place meet Sprint Parent's specifications and
standards (including time to market) for the provision of such Local
Telephony Services, then Sprint Parent will, and will cause its
Controlled Affiliates to, cooperate with Comcast Parent in good faith to
negotiate (and Comcast Parent will cooperate with Sprint Parent in good
faith to negotiate) mutually satisfactory terms for the provision of
Local Telephony Services under the Sprint Brand using the facilities of
such Cable Subsidiary and (y) if the facilities that are in place do not
meet Sprint Parent's specifications and standards (including time to
market) for the provision of Local Telephony Services or if the parties
have not reached agreement upon the terms of the provision of such
services as contemplated by clause (x) above, then Sprint Parent will or
will cause its applicable Controlled Affiliate to provide Comcast Parent
with a non-exclusive sales agency agreement for such Local Telephony
Services on terms and conditions no less favorable to Comcast Parent and
its Controlled Affiliates than are offered to any other non-exclusive
sales agent for such Local Telephony Services in such market, provided
such obligation shall terminate if Comcast Parent or any of its
Controlled Affiliates commence the offering of facilities-based Local
Telephony Services in the applicable geographic area. The parties
acknowledge that there will be a presumption of good faith in the
negotiations pursuant to clause (x) above and that a party will not be
deemed to have failed to act in good faith solely as a result of taking
non-negotiable positions or different or inconsistent positions with
respect to different markets or a position that is different from any
position that has been accepted by another Cable Parent. The
obligations of Sprint Parent and Comcast Parent to engage in such
negotiations under this Section 2(b)(ii) with respect to a particular
market will continue for a period of 90 days following the receipt by
Comcast Parent of the notice referred to in the first sentence of this
Section 2(b)(ii) and will terminate at the end of such 90-day period.
Nothing contained in this Section 2(b)(ii) shall be construed to
restrict Sprint Parent or its Controlled Affiliates from rolling out
Local Telephony Services in any market or delay such rollout, subject to
compliance with the applicable requirements of Section 2(a) above,
provided that neither Sprint Parent nor its Controlled Affiliates will
enter into any agreements that are not terminable by it on not less than
30 days' notice if the parties reach agreement within the 90-day period.
SECTION 3. Local Joint Agreement; Teleport
(a) During the Term, Comcast Parent will notify Sprint Parent whenever a
Cable Subsidiary of Comcast Parent intends to upgrade its distribution
facilities for Local Telephony Services (or through some other means
offer Local Telephony Services) in a particular market (other than in
the context contemplated by Section 4(a)) but in no event earlier than
one year prior to the date it intends to commence offering Local
Telephony Services in such market. There will be a presumption that if
Comcast Parent notifies Sprint Parent that a Cable Subsidiary of Comcast
Parent intends to upgrade its distribution facilities in a particular
market (or through some other means offer Local Telephony Services) that
it intends to commence offering Local Telephony Services in such market
within one year. Comcast Parent and Sprint Parent will cooperate with
each other in good faith to negotiate mutually satisfactory terms for
the provision of Local Telephony Services under the Sprint Brand in such
market using the local distribution facilities of the applicable Cable
Subsidiary (or such other means). The parties acknowledge that there
will be a presumption of good faith in such negotiations and that a
party will not be deemed to have failed to act in good faith solely as a
result of taking non-negotiable positions or different or inconsistent
positions with respect to different markets or a position that is
different from any position that has been accepted by another Cable
Parent. For a period of 90 days following Sprint Parent's receipt of
the notice required pursuant to the first sentence of this Section 3
with respect to a particular market, Comcast Parent, Sprint Parent and
their respective Controlled Affiliates shall not negotiate with any
other Person regarding the provision of Local Telephony Services in such
market; provided, however, that Comcast Parent and Sprint Parent will
commence immediately such negotiation with respect to those markets
listed on Schedule 2 attached hereto (the "Specified Markets") and the
period of exclusive negotiation with respect to the Specified Markets
shall expire on April 30, 1996. The obligations of Comcast Parent and
Sprint Parent under this Section 3 with respect to a particular market
shall terminate upon expiration of the exclusive negotiation period
provided in this Section 3 with respect to such market. The contractual
arrangements between Comcast Parent and Sprint Parent or their
respective Controlled Affiliates regarding the provision of such
services in a particular market may take the form of a local joint
venture agreement or another form as the applicable parties may
negotiate and upon such terms (including economic terms, scope, etc.) as
they may agree (such joint venture or other entity formed by, or other
agreement or arrangement between, Sprint Parent and Comcast Parent or
their respective Controlled Affiliates for the purposes contemplated by
this Section 3, a "Local JV"). If Sprint Parent or any of its
Controlled Affiliates are providing Local Telephony Services on a resale
basis in a market at the time the terms of a Local JV are agreed upon
with respect to such market then Sprint Parent shall or shall cause its
applicable Controlled Affiliates to offer to transfer to the Local JV
its business of providing Local Telephony Services in such market and,
at Comcast Parent's option, the assets used in such business, at a price
determined on the same basis as would then be applicable to a transfer
of a business under Section 6.3(p) of the Partnership Agreement. If
Sprint Parent and Comcast Parent have not reached agreement upon the
terms of a Local JV for a particular market (an "Unresolved Market") by
the expiration of the 90-day period of exclusive negotiation and, at
that date or at any time thereafter prior to Sprint Parent and Comcast
Parent or their respective Controlled Affiliates having entered a Local
JV with respect to the Unresolved Market, Sprint Parent or one of its
Controlled Affiliates has entered a Local JV with any Cable Parent or a
Controlled Affiliate thereof with respect to a market the
characteristics of which that are relevant to the business of Local
Telephony Services are similar to those of the Unresolved Market, then
Sprint Parent shall offer to enter into or cause one of its Controlled
Affiliates to enter into a Local JV with a Controlled Affiliate of
Comcast Parent for the Unresolved Market on terms and conditions no less
favorable to Comcast Parent and its Controlled Affiliates than those
Sprint Parent (or its Controlled Affiliate) has agreed to with respect
to such other similar market. Sprint Parent agrees to disclose to
Comcast Parent promptly the terms of any agreements it may reach with
Cox Parent or TCI Parent or their respective Controlled Affiliates
regarding the provision of Local Telephony Services in any market, and
Comcast Parent hereby consents to the disclosure by Sprint Parent to Cox
Parent and TCI Parent of any agreement that Comcast Parent and Sprint
Parent may reach as contemplated by this Section 3. Nothing contained
in this Section 3 or in Section 2(b)(ii) shall be construed to restrict
any Controlled Affiliate of Comcast Parent from rolling out Local
Telephony Services in any market or delay such rollout, subject to
compliance with Section 2 above.
(b) It is the present goal and intention of the parties to continue to
attempt to integrate the businesses and activities of Teleport with the
business and activities of MajorCo as promptly as practicable, provided
that the parties can achieve mutually satisfactory agreements for such
integration and for the provision of Local Telephony Service in the
Specified Markets. The foregoing is intended to set forth the parties'
present intentions concerning their future efforts with respect to the
achievement of their mutual goal of integrating MajorCo and Teleport,
but is not intended to and does not create a legally binding obligation,
it being understood that the Cable Parents and their respective
Controlled Affiliates remain free to pursue activities that they, in
their sole discretion, consider to be in the best interests of Teleport
and its owners, and each party remains free to determine, in its sole
discretion, to proceed, or agree that MajorCo would proceed, with any
proposed transaction involving Teleport.
Without limiting any party's ability to exercise its sole discretion
with respect to matters covered in this Section 3(b), Sprint Parent has
advised the Cable Parents that the failure of a proposed agreement
regarding Teleport to include the following may result in Sprint
Parent's refusal to enter into an agreement with respect to Teleport,
were any such agreement to be proposed: (i) the contribution to MajorCo
of at least a 62.5% ownership interest in Teleport under the same
economic terms as would have applied if the Teleport Contribution
Agreement had not been terminated (which, in Sprint Parent's opinion,
would require adjustments for the loss of tax benefits arising from the
reorganization of Teleport into corporate form, if such were to occur);
(ii) governance of the Teleport interests held by MajorCo in accordance
with the current MajorCo governance provisions; (iii) modification of
the Teleport governance provisions to provide that all matters will be
resolved by simple majority vote, both at the governing board and
stockholder/partner level, and to eliminate all special rights of
partners to elect governing board members or to approve or disapprove
transactions involving stockholders/partners and their respective
affiliates (provided that such transactions are on arms' length terms);
(iv) modification of the scope and exclusivities of Teleport in a manner
that rationalizes the operations of Teleport, MajorCo and the individual
wireline efforts of the Partners, which would include the exclusion of
Teleport from the wireless business, the limitation of Teleport's
residential switched activities to the New York market, and a
reconciliation of the respective activities of Teleport and the Local
JVs relating to the small business market; (v) the marketing of all of
Teleport's retail products under the Sprint Brand; and (vi) receipt of
satisfactory consents and waivers from Continental Cablevision,
Inc. ("Continental") and its Subsidiaries or removal of Continental or
the applicable Subsidiary as a Teleport stockholder/partner.
SECTION 4. Certain Exceptions to Undertakings.
(a) The covenants of Comcast Parent in Sections 2 and 3 shall not apply
with respect to a Bulk Purchaser in circumstances where, in the
reasonable judgment of Comcast Parent, a Cable Subsidiary or other
Controlled Affiliate of Comcast Parent needs to offer to a Bulk
Purchaser of cable television services a package of services which
include one or more Local Telephony Services and/or Long Distance
Telephony Services in order to compete with an actual or anticipated
offer to such Bulk Purchaser by a provider unaffiliated with Comcast
Parent (whether facilities-based, as a reseller or agent or otherwise)
of television/telephony services and the needed service is not then
available to Comcast Parent for inclusion in such a package from Sprint
Parent or its Affiliates on competitive economic terms. The covenants
of Comcast Parent in Sections 2(b)(i) and 3, and the rights of Sprint
Parent under such Sections, shall not become applicable solely as a
result of the provision of such services to the Bulk Purchaser.
(b) If Sprint Parent and Comcast Parent have not reached an agreement on
mutually satisfactory terms for the provision of Local Telephony
Services in a particular market through a Local JV within the exclusive
negotiation period with respect to such markets contemplated by Section
3, then the provisions of Section 2(a)(i) will cease to apply with
respect to Long Distance Telephony Services in such market, unless
Sprint Parent makes available or causes to be made available to Comcast
Parent or its applicable Controlled Affiliate on competitive economic
terms Sprint-Branded Long Distance Telephony Services to offer and
promote, and package with other products and services to offer and
promote, to its customers, and for which it would be authorized to act
as non-exclusive sales agent, in that market.
(c) If Sprint Parent and Comcast Parent have not reached an agreement on
mutually satisfactory terms for the provision of Local Telephony
Services in a particular market through a Local JV within the exclusive
negotiation period with respect to such market contemplated by Section 3
and Sprint Parent or any of its Controlled Affiliates is providing
(through resale or otherwise) Local Telephony Services in such market,
then the provisions of Section 2(a)(i) will cease to apply in such
market, unless Sprint Parent makes available or causes to be made
available to Comcast Parent or its applicable Controlled Affiliate on
competitive economic terms Sprint-Branded Long Distance Telephony
Services to offer and promote, and package with other products and
services to offer and promote, to its customers, and for which it would
be authorized to act as non-exclusive sales agent, in that market.
(d) Comcast Parent's obligations under this Agreement with respect to
any Person that becomes a Cable Subsidiary or Controlled Affiliate of
Comcast Parent after the date hereof and any cable television system or
facilities acquired by Comcast Parent or a Cable Subsidiary after the
date hereof shall be subject to any contrary provisions of any
agreements with Persons (other than Comcast Parent or a Controlled
Affiliate of Comcast Parent) to which such Cable Subsidiary, Controlled
Affiliate or cable television system or facilities are subject prior to
the time such Person became a Cable Subsidiary or Controlled Affiliate
or such system or facilities were acquired.
(e) Sprint Parent's obligations under this Agreement with respect to any
Person that becomes a Controlled Affiliate of Sprint Parent after the
date hereof shall be subject to any contrary provisions of any
agreements with Persons (other than Sprint Parent or a Controlled
Affiliate of Sprint Parent) to which such Controlled Affiliate is
subject prior to the time such Person became a Controlled Affiliate.
(f) Notwithstanding anything to the contrary in this Agreement, the
provisions of Section 2(a) will not apply with respect to the Comcast
Area.
SECTION 5. Consent to Jurisdiction.
(a) Each of Sprint Parent and Comcast Parent hereby irrevocably and
unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of any New York State court sitting in the
County of New York or any Federal court of the United States of America
sitting in the State of New York, and any appellate court from any such
court, in any suit, action or proceeding arising out of or relating to
this Agreement, or for recognition or enforcement of any judgment, and
hereby irrevocably and unconditionally agrees that all claims in respect
of any such suit, action or proceeding may be heard and determined in
such New York State court or, to the extent permitted by law, in such
Federal court.
(b) Each of Sprint Parent and Comcast Parent hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and
effectively do so, any objections which it may now or hereafter have to
the laying of venue of any suit, action or proceeding arising out of or
relating to this Agreement in any New York State court sitting in the
County of New York or any Federal court sitting in New York. Each of
Sprint Parent and Comcast Parent hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to
the maintenance of such suit, action or proceeding in any such court and
further waives the right to object, with respect to such suit, action or
proceeding, that such court does not have personal jurisdiction over it.
(c) Each of Sprint Parent and Comcast Parent irrevocably consents to
service of process in the manner provided for the giving of notices
pursuant to this Agreement, provided that such service shall be deemed
to have been given only when actually received by it. Nothing in this
Agreement shall affect the right of a party to serve process in any
other manner permitted by law.
SECTION 6. Waiver; Remedies.
The observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively) by the party entitled to enforce such term, but any such
waiver shall be effective only if in a writing signed by the party
against which such waiver is to be asserted. Except as otherwise
provided herein, no failure or delay of any party in exercising any
power or right under this Agreement shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such right or
power, preclude any other or further exercise thereof or the exercise of
any other right or power.
SECTION 7. Assignment.
Except with respect to an assignment in connection with a transfer (in a
single transaction or series of related transactions) of all or a
Substantial Portion of the cable television system assets (in the case
of Comcast Parent) or long distance telecommunications business assets
(in the case of Sprint Parent) owned by Comcast Parent or Sprint Parent,
respectively, directly or through Controlled Affiliates immediately
prior to the transfer (or the first transfer of the series) (a
"Permitted Transaction") to (i) the transferee of such assets or (ii)
the Parent of such transferee, this Agreement shall not be assignable
without the prior written consent of the other party. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns, and shall be binding
upon the transferee of such party in a Permitted Transaction (which
transferee the applicable transferor shall cause to agree in writing to
be so bound in connection with such Permitted Transaction). Nothing in
this Agreement, whether express or implied, shall be construed to give
any Person other than the parties hereto and their respective successors
and permitted assigns any legal or equitable right, remedy or claim
under or in respect of this Agreement.
SECTION 8. Severability.
Every provision of this Agreement is intended to be severable. If any
term or provision hereof is illegal, invalid or unenforceable for any
reason whatsoever, that term or provision will be enforced to the
maximum extent permissible and such illegality, invalidity or
unenforceability shall not affect the validity or legality of the
remainder of this Agreement.
SECTION 9. Governing Law.
The internal laws of the State of Delaware (without regard to principles
of conflict of law) shall govern the validity of this Agreement, the
construction of its terms, and the interpretation of the rights and
duties of the parties.
SECTION 10. Waiver of Jury Trial.
Sprint Parent and Comcast Parent each irrevocably waives to the extent
permitted by law all rights to trial by jury in any action, proceeding
or counterclaim arising out of or relating to this Agreement.
SECTION 11. Notices.
Any notice, payment, demand or communication required or permitted to be
given by any party by any provision of this Agreement shall be in
writing and mailed (certified or registered mail, postage prepaid,
return receipt requested) or sent by hand or overnight courier, or by
facsimile (with acknowledgment received), charges prepaid and addressed
as follows, or to such other address or number as such party may from
time to time specify by notice to the other party:
(a) If to Comcast Parent, to:
Comcast Corporation
1500 Market Street
Philadelphia, PA 19102-2148
Telecopy No.: (215) 981-7794
Attn: General Counsel
with copies to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, NY 10017
Telecopy No.: (212) 450-4800
Attn: Dennis S. Hersch, Esq.
(b) If to Sprint Parent, to:
Sprint Corporation
2330 Shawnee Mission Parkway
Westwood, KS 66205
Telecopy No.: (913) 624-8426
Attn: Chief Financial Officer
with copies to:
Sprint Spectrum, L.P.
2330 Shawnee Mission Parkway
Westwood, KS 66205
Telecopy No.: (913) 624-2256
Attn: Corporate Secretary
King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303-1763
Telecopy No.: (404) 572-5146
Attn: Bruce N. Hawthorne, Esq.
Any party may from time to time specify a different address by notice to
the other parties. All notices and other communications given to a
Person in accordance with the provisions of this Agreement shall be
deemed to have been given and received (i) four (4) Business Days after
the same are sent by certified or registered mail, postage prepaid,
return receipt requested, (ii) when delivered by hand or transmitted by
facsimile (with acknowledgment received and, in the case of a facsimile
only, a copy of such notice is sent no later than the next Business Day
by a reliable overnight courier service, with acknowledgment of
receipt), or (iii) one (1) Business Day after the same are sent by a
reliable overnight courier service, with acknowledgment of receipt.
SECTION 12. Entire Agreement.
The provisions of this Agreement set forth the entire agreement and
understanding between the parties as to the subject matter hereof and
supersede all prior agreements, oral or written, and other
communications between the parties relating to the subject matter
hereof.
SECTION 13. Term.
This Agreement and the rights and obligations of the parties hereunder
will terminate on January 31, 2001, provided that this Agreement and the
rights and obligations of the parties shall earlier terminate on the
first to occur of (i) January 31, 1999 if at that date Local Telephony
Services are being offered under the Sprint Brand by Comcast Parent and
its Controlled Affiliates (or Local JVs) through facilities of its Cable
Subsidiaries passing fewer than 25% of the aggregate number of
Households Passed by facilities of Comcast Parent and its Cable
Subsidiaries that have been upgraded for, and through which Comcast
Parent and its Controlled Affiliates (or Local JVs) are providing, Local
Telephony Services, (ii) such date as of which neither Comcast Parent
nor any of its Controlled Affiliates is a partner in MajorCo and (iii)
such date as of which neither Sprint Parent nor any of its Controlled
Affiliates is a partner in MajorCo.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered as of the date first above written.
COMCAST CORPORATION
By: /s/ Arthur R. Block
Name: Arthur R. Block
Title: Vice President
SPRINT CORPORATION
By: /s/ J. Richard Devlin
Name: J. Richard Devlin
Title: Executive Vice President
SCHEDULE 1
Certain Defined Terms
II. Local Telephony Services
"Local Telephony Services" shall mean wireline "local exchange, access,
and transport services" offered or provided to residences in the
Territory that are functionally equivalent (from the customer's
perspective) to circuit-based offerings (e.g., a POTS access line that
provides to the user a circuit of equal and fixed bi-directional
transmission capacity). Local Telephony Services may utilize an
underlying network technology that is not circuit-based as long as the
offering to the residence is (from the customer's perspective)
functionally equivalent to one of the "local exchange, access and
transport" services listed below. Local Telephony Services shall not
include Advanced Data Services, the Non-Exclusive Services and the
Excluded Businesses.
Local Telephony Services shall include the provision and transport of
intra-LATA wireline calls, except for 75 Mile Plus Calls.
Local Telephony Services are not restricted by form (e.g., analog or
digital), method of origination (e.g., voice, data, telemetry, etc.), or
the content transmitted by the customer.
The "local exchange, access, and transport" services are:
1. Local dial tone service for residential customers (i.e., basic
service, additional lines, EAS, ISDN, etc.);
2. Ancillary basic service features such as tone dialing, custom
calling, CLASS, Centrex, and functionality for number portability;
3. Access for switched and dedicated intra-LATA and inter-LATA service;
4. Private line services not interconnected with an inter-LATA private
line network (including back haul for wireless services); and
5. "Video telephony", which shall mean circuit switched two-way
communications services that are not Excluded Businesses providing:
a. point-to-point two-way audio/video connectivity;
b. point-to-point one-way video connectivity and two way audio
connectivity;
c. multi-point to multi-point audio/video connectivity; or
d. access for intra-LATA and inter-LATA video telephony.
III. Long Distance Telephony Services
"Long Distance Telephony Services" shall mean (other than as provided in
Sections I and V of this Schedule 1) (a) wireline inter-LATA service to
residences in the Territory, except for that subject to local exchange
carrier inter-LATA waivers or (b) 75 Mile Plus Calls to residences in
the Territory, but in each case excluding any of such services that are
also Advanced Data Services or services described in clauses (2) or (3)
of the definition of Excluded Business in Section VI below.
IV. Advanced Data Services
"Advanced Data Services" shall mean wireline services offered or
provided to residences in the Territory that are functionally equivalent
to asynchronous offerings (e.g., an internet access service with
instantaneously varying data rates and equal or unequal bi-directional
transmission capacity). Advanced Data Services shall not include the
Local Telephony Services, the Non-Exclusive Services, and those
Excluded Businesses referred to in clauses (1), (2) and (3) of the
definition of Excluded Businesses in Section VI of this Schedule 1.
V. Entertainment Services
"Entertainment Services" means the delivery via a distribution system
(whether wired or wireless, and whether terrestrial or satellite-based)
of entertainment and, except to the extent contemplated under
Non-Exclusive Services, other content-based services, which services in
either such case are competitive with services typically provided by
cable television companies to their customers at the date of this
Agreement. The provision of Internet access services, incidental
audio/video content related to the provision of Internet access services
(e.g. browsers, navigators, logos, customer service, sales) and on-line
hosting services shall not be deemed to be Entertainment Services.
VI. Non-Exclusive Services
"Non-Exclusive Services" means each of the following:
1. Incidental services to other Local Telephony Services, including
billing services and the installation, maintenance, repair, sale or
lease of customer premises equipment or customer controlled
equipment.
2. 500 Services.
3. Meeting services, such as video or other teleconferencing in which
the provider does not create nor resell the content of such service.
4. Server-based content services customarily provided by local exchange
telephone companies, consisting of directory assistance, operator
service, time, temperature and similar information services that are
voice only and TDD relay.
5. Incidental data services to support signaling, billing and system
diagnostics and management for audio/video connectivity.
6. Incidental audio/video content (e.g., logos, customer service,
sales), that are directly related to the provision of video
telephony.
7. Enhanced services such as voice mail, e-mail, facsimile store and
forward.
8. Video telephony enhanced services, such as video mail, store and
forward, and customer service, but excluding any such enhanced
service that is an Excluded Business.
VII. Excluded Business
"Excluded Business" means each of the following:
1. Long Distance Telephony Services.
2. The provision of entertainment and, except to the limited extent
contemplated under Non-Exclusive Services, other content-based services.
3. The provision or transport of wireline services using unidirectional
transmission capacity.
4. The provision or transport of wireline services using unequal
bi-directional transmission capacity.
VIII. Definitions.
As used in this Schedule:
1. The term "LATA" means a Local Access and Transport Area established
pursuant to the criteria set forth in Section 4(g) of the MFJ, as
approved in United States v. Western Electric Company, Inc., et. al.,
569 F. Supp. 990 (D.D.C. 1983), and as amended by subsequent orders,
regardless of whether the LATA boundaries continue to be applied in
future governmental regulation of the wireline telecommunications
industry. In the event of the cessation of use of LATA boundaries by
a telecommunications governmental regulation or court order, then the
LATA boundaries in effect at the time of cessation of such use shall
be deemed to be the LATA boundaries for purposes of this Agreement.
2. The term "Rate Center" means a point within a geographic area
designated by agreement of Comcast Parent and Sprint Parent as the
Rate Center and shall be used for measuring distances to and from
such geographic area. Each geographic area shall have one Rate
Center. The Rate Center shall be near the geographic center of the
geographic area.
3. The term "75 Mile Plus Calls" means wireline calls between end users
whose Rate Centers are greater than 75 miles apart.
4. The term "residences" will have its customary meaning unless and
until the scope of Teleport's business is confined by agreement of
its owners so as to exclude (or make non-exclusive) serving "small
business customers", in which event the term "residences" will also
include "small business customers". The term "small business
customer" for this purpose means a non-residential customer having
five or fewer Access Lines. The term "Access Line" means a
voice-grade message telephone line (DS-0 equivalent) that can
originate or terminate telecommunications services, which need not
have a separate telephone number, and is interconnected with the
public switched telephone network; provided, that an ISDN BRI shall
count as one Access Line.
Exhibit 99F
PARENTS AGREEMENT
This PARENTS AGREEMENT (the "Agreement") is entered into as of the 31st
day of January, 1996, by COX COMMUNICATIONS, INC., a Delaware
corporation ("Cox Parent") and SPRINT CORPORATION, a Kansas corporation
("Sprint Parent").
WHEREAS, subsidiaries of each of Cox Parent, Sprint Parent,
Tele-Communications, Inc., a Delaware corporation ("TCI Parent"), and
Comcast Corporation, a Pennsylvania corporation ("Comcast Parent", and
together with Cox Parent and TCI Parent, the "Cable Parents") (such
subsidiaries, the "Partners") have entered into that certain Agreement
of Limited Partnership of MajorCo, L.P., dated as of March 28, 1995, as
amended by that certain First Amendment to Agreement of Limited
Partnership, dated as of August 31, 1995 (the "Prior Partnership
Agreement"), pursuant to which MajorCo, L.P., a Delaware limited
partnership ("MajorCo") was formed;
WHEREAS, as of the date hereof, the Partners are further amending the
Prior Partnership Agreement and restating it in its entirety (as so
amended and restated, the "Partnership Agreement") and, in connection
therewith, each Cable Parent has agreed to make certain undertakings to
Sprint Parent, and Sprint Parent has agreed to make certain undertakings
to each Cable Parent.
NOW, THEREFORE, in consideration of the mutual promises and agreements
of the parties, and other good and valuable consideration the receipt of
which is hereby acknowledged, Sprint Parent and Cox Parent do hereby
agree as follows:
SECTION 1. Definitions.
(a) The following capitalized words and phrases as used in this
Agreement have the meanings indicated below:
"Advanced Data Services" has the meaning set forth in Schedule 1.
"Brand" of any Person means a trademark, tradename, service mark and/or
logo of such Person.
"Bulk Purchaser" means a purchaser of cable television service that
provides such service to multiple dwelling units (whether in one or more
buildings or whether in one or more complexes or locations) of which it
is the owner or for which it acts as manager or agent or with which it
otherwise has a relationship, by contract or otherwise.
"Cable Subsidiary" means (i) any Controlled Affiliate of Cox Parent that
owns a cable television system and (ii) any Person that Cox Parent or
its Controlled Affiliates has a unilateral right to cause to comply with
Section 2 hereof with respect to cable television systems owned by such
Person.
"Controlled Affiliate" means (i) when used with respect to Cox Parent,
each Subsidiary of Cox Parent, (ii) when used with respect to Sprint
Parent, each Subsidiary of Sprint Parent, and (iii) when used with
respect to any Person in Section 2 hereof, including Cox Parent and
Sprint Parent, any Affiliate of such Person that such Person can
directly or indirectly unilaterally cause to take or refrain from taking
any of the actions required, prohibited or otherwise restricted by such
Section, whether through ownership of voting securities, contractually
or otherwise.
"Entertainment Services" has the meaning set forth in Schedule 1.
"Excluded Businesses" has the meaning set forth in Schedule 1.
"Households Passed" means, as of any relevant date, the aggregate number
of residential dwelling units to which the facilities of Cox Parent's
Cable Subsidiaries either (i) are capable, as of such date, of providing
Local Telephony Service by means of an existing customer drop or other
similar connection or (ii) could legally provide Local Telephony Service
using a customer drop or other similar connection no more than two
hundred (200) feet in length (exclusive of any wiring within the
applicable structure and assuming that the applicable owner or occupant
consented to receipt of Local Telephony Service). For purposes of this
definition, each residential dwelling unit in a multiple dwelling unit
that is otherwise within the foregoing definition will be counted as one
Household Passed.
"IXC" means each of the following Persons, each successor to the long
distance telephony business of any such Person and each of the
respective Affiliates of each such Person or successor: AT&T Corp., MCI
Communications Corporation, British Tele-Communications plc, Worldcom,
Inc., Cable & Wireless plc, LCI International Inc. and Frontier
Corporation.
"Local JV" has the meaning set forth in Section 3.
"Local Telephony Services" has the meaning set forth in Schedule 1.
"Long Distance Telephony Services" has the meaning set forth in Schedule
1.
"Non-Exclusive Services" has the meaning set forth in Schedule 1.
"RBOC" means each of the following Persons, each successor to the local
exchange carrier business of any such Person and each of the respective
Affiliates of each such Person or successor: each BOC, GTE Corporation
and Frontier Corporation.
"Rights of Use" means rights to use the distribution facilities of a
Cable Subsidiary's cable system to provide Local Telephony Services or
Advanced Data Services, as applicable, to end users connected to such
distribution facilities.
"Satellite Carrier" means each of the following Persons, each successor
to the direct broadcast satellite business of any such Person and each
of the respective Affiliates of each such Person or successor: DIRECTV,
Inc., U.S. Satellite Broadcasting, Inc. and EchoStar Communications
Corporation.
"Sprint LECs" means, as of any relevant date, those local exchange
carriers that are Subsidiaries of Sprint Parent.
"Teleport Contribution Agreement" means that certain Contribution
Agreement among the Cable Partners, MajorCo and NewTelco, L.P., dated as
of March 28, 1995.
"Term" means the period commencing on the date hereof and ending on the
date this Agreement terminates in accordance with Section 13.
"Territory" shall mean the United States, including all territories and
possessions thereof, except for Puerto Rico, but excluding as of any
date those geographic areas in which a Sprint LEC is providing Local
Telephony Services primarily through its owned facilities at such date.
(b) The following capitalized words and phrases as used in this
Agreement have the meanings ascribed thereto in the Partnership
Agreement: "Affiliate", "BOC", "Business Day", "Cable Partner", "MFJ",
"Parent", "Person", "Sprint Brand", "Subsidiary", "Substantial Portion",
"Teleport".
(c) The definitions in this Section 1 and elsewhere in this Agreement
shall apply equally to both the singular and plural forms of the terms
defined. Whenever the context may require, any pronoun shall include
the corresponding masculine, feminine and neuter forms. The words
"include", "includes" and "including" shall be deemed to be followed by
the phrase "without limitation". The words "herein", "hereof" and
"hereunder" and words of similar import refer to this Agreement
(including the Schedules) in its entirety and not to any part hereof
unless the context shall otherwise require. All references herein to
Sections and Schedules shall be deemed references to Sections of, and
Schedules to, this Agreement unless the context shall otherwise require.
Unless the context shall otherwise require, any references to any
agreement or other instrument or statute or regulation are to it as
amended and supplemented from time to time (and, in the case of a
statute or regulation, to any corresponding provisions of successor
statutes or regulations). Any reference in this Agreement to a "day" or
number of "days" (without the explicit qualification of "Business")
shall be interpreted as a reference to a calendar day or number of
calendar days. If any action or notice is to be taken or given on or by
a particular calendar day, and such calendar day is not a Business Day,
then such action or notice shall be deferred until, or may be taken or
given on, the next Business Day.
SECTION 2. Undertakings.
(a) Exclusive Packaging/Marketing.
(i) Cox Parent agrees that, during the Term, it will not directly or
through any Subsidiary formed for such purpose, and it will cause
its Cable Subsidiaries (and each other Controlled Affiliate of Cox
Parent that is authorized to offer or promote, or package, any of
the products or services of its Cable Subsidiaries) not to, (A)
offer or promote, or package any of the products or services of such
Cable Subsidiary with, or act as sales agent for, any Long Distance
Telephony Services or Local Telephony Services in the Territory
under the Brand of an RBOC or an IXC, other than the Sprint Brand,
or (B) package any of the Non-Exclusive Services referred to in
clause (2), (3), (4), (5), (6), (7) or (8) of the definition of such
term in Section V of Schedule 1 under the Brand of an RBOC or an
IXC, other than the Sprint Brand, with Local Telephony Services
being offered by Cox Parent or its Controlled Affiliates in the
Territory under the Brand of Cox Parent, an Affiliate of Cox Parent
or Teleport, in each case except as permitted by Section 2(a)(ii)
and Section 4 and except as may otherwise be required by applicable
law, and provided that Cox Parent shall not be deemed to be in
violation of this covenant solely because advertising relating to
RBOC- or IXC-Branded Local Telephony Services, Long Distance
Telephony Services or Non-Exclusive Services being offered or
promoted, or packaged, by Cox Parent or any of such Cable
Subsidiaries or other such Controlled Affiliates solely in one or
more geographic areas outside of the scope of this Section 2(a)(i)
appears in or is broadcast to one or more geographic areas within
the scope of this Section 2(a)(i) so long as such advertising is
designed to reach primarily potential customers in such geographic
areas outside the scope of this Section 2(a)(i). The inclusion,
whether alone or in a package, of offers or promotions of Long
Distance Telephony Services or Local Telephony Services under the
brand of an RBOC or an IXC (including advertising on advertising
availabilities sold by a Cable Subsidiary) in programming or other
content contained in products or services of a Cable Subsidiary
shall not be deemed to be a violation of this Section 2(a)(i) unless
such offers or promotions (other than offers or promotions included
in the content of a shopping channel or similar service) would
otherwise involve a violation of this Section. The foregoing shall
not be construed to in any way limit the right of Cox Parent and any
of its Controlled Affiliates that are providing Local Telephony
Service in a market to provide any of its customers in that market
with any Long Distance Telephony Service, including an IXC- branded
Long Distance Telephony Service, that such customer may request and
to receive payment therefor from the provider of such Long Distance
Telephony Service in the form of an access fee or such other form,
including commission, as may be customary in the particular market
in the absence of a pre-existing sales agency agreement with a
provider. Cox Parent and Sprint Parent further agree to negotiate
in good faith for Cox Parent and its Cable Subsidiaries to act, and
Sprint Parent agrees that Cox Parent and its Cable Subsidiaries will
be authorized to act, as non-exclusive sales agents for the Long
Distance Telephony Services of Sprint Parent and its Controlled
Affiliates during the Term on a most favored nation commission basis
and on such other terms as the parties may agree. The immediately
preceding sentence sets forth the intention of the parties with
respect to such sales agency but is not intended to create any
legally binding obligation or give rise to any legal or equitable
right or remedy.
(ii) Except as otherwise required by law, Sprint Parent agrees that,
during the Term, Sprint Parent will not, and will cause its
Controlled Affiliates not to, offer or promote, or package any of
the products or services of Sprint Parent or its Controlled
Affiliates with, any Entertainment Services under the Brand of an
RBOC or a Satellite Carrier in any geographic area in the Territory
in which a Cable Subsidiary of Cox Parent is providing cable
television service as of the date hereof or as of any relevant date
hereafter; provided that Sprint Parent shall not be deemed to be in
violation of this covenant solely because advertising relating to
RBOC- or Satellite Carrier-Branded Entertainment Services being
offered or promoted, or packaged, by Sprint Parent or its
Controlled Affiliates solely in one or more geographic areas
outside of the scope of this Section 2(a)(ii) appears in or is
broadcast to one or more geographic areas within the scope of this
Section 2(a)(ii) so long as such advertising is designed to reach
primarily potential customers in such geographic areas outside the
scope of this Section 2(a)(ii); and provided, further, that Sprint
Parent shall not be deemed in violation of this covenant as a
result of its offering, promoting or packaging any of its products
or services with Entertainment Services under an RBOC- or Satellite
Carrier-Brand in a particular geographic area if each of the
following conditions is met: (x) at the time Sprint Parent or its
Controlled Affiliates entered into the agreement with such RBOC or
Satellite Carrier, no Cable Subsidiary was providing cable
television services in the geographic area covered by such
agreement and (y) subject to the following sentence, such agreement
is terminated by Sprint Parent or its applicable Controlled
Affiliate as soon as practicable after notice (specifically
referring to this Section of this Agreement) is given to it by Cox
Parent of the applicability of this covenant to such geographic
area, but in any event not later than (A) one year following the
giving of such notice or (B) such later date as the agreement may
be terminated by Sprint Parent or the applicable Controlled
Affiliate without penalty, but this clause (B) shall only apply if
Sprint Parent was unable to negotiate on commercially reasonable
terms an earlier right of termination that would have complied with
clause (A), notwithstanding its good faith efforts.
Notwithstanding the preceding sentence, Sprint Parent or its
Controlled Affiliate, as applicable, may elect, by notice
(specifically referring to this Section of this Agreement) given to
Cox Parent within 60 days after its receipt of notice from Cox
Parent pursuant to clause (y) above, not to terminate its agreement
with an RBOC or Satellite Carrier in the applicable market unless
Cox Parent provides or causes to be provided to Sprint Parent or
its applicable Controlled Affiliate on competitive economic terms
the same or substantially similar kinds of Entertainment Services
under a Cox Parent Brand to offer and promote, and package with
other products and services to offer and promote, to its customers
in such market. If Sprint Parent makes the foregoing election and
Cox Parent does not make such Entertainment Services so available
within 30 days of its receipt of such notice from Sprint Parent,
then (x) Sprint Parent and its applicable Controlled Affiliate
shall not be deemed to be in breach of this Section 2(a)(ii) solely
as a result of its failure to terminate its agreement with the RBOC
or Satellite Carrier with respect to the applicable market and (y)
Cox Parent and its Controlled Affiliates shall be released from
their obligations under Section 2(a)(i) with respect to such
market, and Sprint Parent and its Controlled Affiliates shall be
released from their obligations under Section 2(a)(ii) with respect
to such market.
(b) Right of Use.
(i) Cox Parent agrees that, during the Term: (x) if a Cable Subsidiary
of Cox Parent makes Rights of Use for Local Telephony Services
available on its distribution facilities in a particular market to
any Person other than (A) an Affiliate of such Cable Subsidiary, (B)
Teleport, (C) MajorCo or (D) a Local JV, Cox Parent will cause that
Cable Subsidiary to make Rights of Use available to Sprint Parent
and its Controlled Affiliates (or, if Cox Parent or a Controlled
Affiliate of Cox Parent and Sprint Parent or a Controlled Affiliate
of Sprint Parent have entered a Local JV with regard to such market,
the Local JV in such market) on the same facilities in such market
for the same or similar kinds (including, subject to the following
paragraph, specifications and standards, capacity and quality
metrics) of Local Telephony Services and, if applicable, the same or
similar kinds of Non-Exclusive Services, on no less favorable terms;
and (y) if a Cable Subsidiary of Cox Parent makes Rights of Use
available on its distribution facilities in a particular market to
any IXC or RBOC for the provision of Advanced Data Services, Cox
Parent will cause that Cable Subsidiary to make Rights of Use
available to Sprint Parent and its Controlled Affiliates (or, if Cox
Parent or a Controlled Affiliate of Cox Parent and Sprint Parent or
a Controlled Affiliate of Sprint Parent have entered a Local JV with
regard to such market, the Local JV in such market) on the same
facilities in such market for the same or similar kinds (including,
subject to the following paragraph, specifications and standards,
capacity and quality metrics) of Advanced Data Services on no less
favorable terms. Cox Parent will notify Sprint Parent immediately
of any agreement that may be reached for Rights of Use that would be
subject to the preceding sentence.
The parties understand and agree that if, by virtue of physical
limitations of the applicable facilities, the Cable Subsidiary
cannot ensure identical specifications and standards or quality
metrics for Rights of Use to multiple parties, then the Cable
Subsidiary may make economic distinctions with respect to the Rights
of Use it offers that would be taken into account in determining
whether the covenant of Cox Parent in this Section 2(b)(i) to offer
the applicable services on no less favorable terms has been
satisfied. By way of example, if an IXC were willing to pay a
premium for Rights of Use that included a guarantee of no blocking,
Sprint Parent would be required to pay that premium in order for it
to exercise its rights under this Section 2(b)(i) to obtain that
guarantee on no less favorable terms, notwithstanding that it would
then be paying more for its Rights of Use than the other IXCs that
did not have such guarantee or than any other IXC if such guarantee
could not be made available to more than one Person.
(ii) Sprint Parent agrees that if, during the Term, it or any of its
Controlled Affiliates proposes to provide Local Telephony Services
on a resale basis in any market in the Territory in which a Cable
Subsidiary has facilities, it will promptly so notify Cox Parent
and (x) if the facilities that are in place meet Sprint Parent's
specifications and standards (including time to market) for the
provision of such Local Telephony Services, then Sprint Parent
will, and will cause its Controlled Affiliates to, cooperate with
Cox Parent in good faith to negotiate (and Cox Parent will
cooperate with Sprint Parent in good faith to negotiate) mutually
satisfactory terms for the provision of Local Telephony Services
under the Sprint Brand using the facilities of such Cable
Subsidiary and (y) if the facilities that are in place do not meet
Sprint Parent's specifications and standards (including time to
market) for the provision of Local Telephony Services or if the
parties have not reached agreement upon the terms of the provision
of such services as contemplated by clause (x) above, then Sprint
Parent will or will cause its applicable Controlled Affiliate to
provide Cox Parent with a non-exclusive sales agency agreement for
such Local Telephony Services on terms and conditions no less
favorable to Cox Parent and its Controlled Affiliates than are
offered to any other non-exclusive sales agent for such Local
Telephony Services in such market, provided such obligation shall
terminate if Cox Parent or any of its Controlled Affiliates
commence the offering of facilities-based Local Telephony Services
in the applicable geographic area. The parties acknowledge that
there will be a presumption of good faith in the negotiations
pursuant to clause (x) above and that a party will not be deemed to
have failed to act in good faith solely as a result of taking
non-negotiable positions or different or inconsistent positions
with respect to different markets or a position that is different
from any position that has been accepted by another Cable Parent.
The obligations of Sprint Parent and Cox Parent to engage in such
negotiations under this Section 2(b)(ii) with respect to a
particular market will continue for a period of 90 days following
the receipt by Cox Parent of the notice referred to in the first
sentence of this Section 2(b)(ii) and will terminate at the end of
such 90-day period. Nothing contained in this Section 2(b)(ii)
shall be construed to restrict Sprint Parent or its Controlled
Affiliates from rolling out Local Telephony Services in any market
or delay such rollout, subject to compliance with the applicable
requirements of Section 2(a) above, provided that neither Sprint
Parent nor its Controlled Affiliates will enter into any agreements
that are not terminable by it on not less than 30 days' notice if
the parties reach agreement within the 90-day period.
SECTION 3. Local Joint Agreement; Teleport
(a) During the Term, Cox Parent will notify Sprint Parent whenever a
Cable Subsidiary of Cox Parent intends to upgrade its distribution
facilities for Local Telephony Services (or through some other means
offer Local Telephony Services) in a particular market (other than in
the context contemplated by Section 4(a)) but in no event earlier than
one year prior to the date it intends to commence offering Local
Telephony Services in such market. There will be a presumption that if
Cox Parent notifies Sprint Parent that a Cable Subsidiary of Cox Parent
intends to upgrade its distribution facilities in a particular market
(or through some other means offer Local Telephony Services) that it
intends to commence offering Local Telephony Services in such market
within one year. Cox Parent and Sprint Parent will cooperate with each
other in good faith to negotiate mutually satisfactory terms for the
provision of Local Telephony Services under the Sprint Brand in such
market using the local distribution facilities of the applicable Cable
Subsidiary (or such other means). The parties acknowledge that there
will be a presumption of good faith in such negotiations and that a
party will not be deemed to have failed to act in good faith solely as a
result of taking non-negotiable positions or different or inconsistent
positions with respect to different markets or a position that is
different from any position that has been accepted by another Cable
Parent. For a period of 90 days following Sprint Parent's receipt of
the notice required pursuant to the first sentence of this Section 3
with respect to a particular market, Cox Parent, Sprint Parent and their
respective Controlled Affiliates shall not negotiate with any other
Person regarding the provision of Local Telephony Services in such
market; provided, however, that Cox Parent and Sprint Parent will
commence immediately such negotiation with respect to those markets
listed on Schedule 2 attached hereto (the "Specified Markets") and the
period of exclusive negotiation with respect to the Specified Markets
shall expire on May 31, 1996. The obligations of Cox Parent and Sprint
Parent under this Section 3 with respect to a particular market shall
terminate upon expiration of the exclusive negotiation period provided
in this Section 3 with respect to such market. The contractual
arrangements between Cox Parent and Sprint Parent or their respective
Controlled Affiliates regarding the provision of such services in a
particular market may take the form of a local joint venture agreement
or another form as the applicable parties may negotiate and upon such
terms (including economic terms, scope, etc.) as they may agree (such
joint venture or other entity formed by, or other agreement or
arrangement between, Sprint Parent and Cox Parent or their respective
Controlled Affiliates for the purposes contemplated by this Section 3, a
"Local JV"). If Sprint Parent or any of its Controlled Affiliates are
providing Local Telephony Services on a resale basis in a market at the
time the terms of a Local JV are agreed upon with respect to such market
then Sprint Parent shall or shall cause its applicable Controlled
Affiliates to offer to transfer to the Local JV its business of
providing Local Telephony Services in such market and, at Cox Parent's
option, the assets used in such business, at a price determined on the
same basis as would then be applicable to a transfer of a business under
Section 6.3(p) of the Partnership Agreement. If Sprint Parent and Cox
Parent have not reached agreement upon the terms of a Local JV for a
particular market (an "Unresolved Market") by the expiration of the
90-day period of exclusive negotiation and, at that date or at any time
thereafter prior to Sprint Parent and Cox Parent or their respective
Controlled Affiliates having entered a Local JV with respect to the
Unresolved Market, Sprint Parent or one of its Controlled Affiliates has
entered a Local JV with any Cable Parent or a Controlled Affiliate
thereof with respect to a market the characteristics of which that are
relevant to the business of Local Telephony Services are similar to
those of the Unresolved Market, then Sprint Parent shall offer to enter
into or cause one of its Controlled Affiliates to enter into a Local JV
with a Controlled Affiliate of Cox Parent for the Unresolved Market on
terms and conditions no less favorable to Cox Parent and its Controlled
Affiliates than those Sprint Parent (or its Controlled Affiliate) has
agreed to with respect to such other similar market. Sprint Parent
agrees to disclose to Cox Parent promptly the terms of any agreements it
may reach with TCI Parent or Comcast Parent or their respective
Controlled Affiliates regarding the provision of Local Telephony
Services in any market, and Cox Parent hereby consents to the disclosure
by Sprint Parent to TCI Parent and Comcast Parent of any agreement that
Cox Parent and Sprint Parent may reach as contemplated by this Section
3. Nothing contained in this Section 3 or in Section 2(b)(ii) shall be
construed to restrict any Controlled Affiliate of Cox Parent from
rolling out Local Telephony Services in any market or delay such
rollout, subject to compliance with Section 2 above.
(b) It is the present goal and intention of the parties to continue to
attempt to integrate the businesses and activities of Teleport with the
business and activities of MajorCo as promptly as practicable, provided
that the parties can achieve mutually satisfactory agreements for such
integration and for the provision of Local Telephony Service in the
Specified Markets. The foregoing is intended to set forth the parties'
present intentions concerning their future efforts with respect to the
achievement of their mutual goal of integrating MajorCo and Teleport,
but is not intended to and does not create a legally binding obligation,
it being understood that the Cable Parents and their respective
Controlled Affiliates remain free to pursue activities that they, in
their sole discretion, consider to be in the best interests of Teleport
and its owners, and each party remains free to determine, in its sole
discretion, to proceed, or agree that MajorCo would proceed, with any
proposed transaction involving Teleport.
Without limiting any party's ability to exercise its sole discretion
with respect to matters covered in this Section 3(b), Sprint Parent has
advised the Cable Parents that the failure of a proposed agreement
regarding Teleport to include the following may result in Sprint
Parent's refusal to enter into an agreement with respect to Teleport,
were any such agreement to be proposed: (i) the contribution to MajorCo
of at least a 62.5% ownership interest in Teleport under the same
economic terms as would have applied if the Teleport Contribution
Agreement had not been terminated (which, in Sprint Parent's opinion,
would require adjustments for the loss of tax benefits arising from the
reorganization of Teleport into corporate form, if such were to occur);
(ii) governance of the Teleport interests held by MajorCo in accordance
with the current MajorCo governance provisions; (iii) modification of
the Teleport governance provisions to provide that all matters will be
resolved by simple majority vote, both at the governing board and
stockholder/partner level, and to eliminate all special rights of
partners to elect governing board members or to approve or disapprove
transactions involving stockholders/partners and their respective
affiliates (provided that such transactions are on arms' length terms);
(iv) modification of the scope and exclusivities of Teleport in a manner
that rationalizes the operations of Teleport, MajorCo and the individual
wireline efforts of the Partners, which would include the exclusion of
Teleport from the wireless business, the limitation of Teleport's
residential switched activities to the New York market, and a
reconciliation of the respective activities of Teleport and the Local
JVs relating to the small business market; (v) the marketing of all of
Teleport's retail products under the Sprint Brand; and (vi) receipt of
satisfactory consents and waivers from Continental Cablevision,
Inc. ("Continental") and its Subsidiaries or removal of Continental or
the applicable Subsidiary as a Teleport stockholder/partner.
SECTION 4. Certain Exceptions to Undertakings.
(a) The covenants of Cox Parent in Sections 2 and 3 shall not apply with
respect to a Bulk Purchaser in circumstances where, in the reasonable
judgment of Cox Parent, a Cable Subsidiary or other Controlled Affiliate
of Cox Parent needs to offer to a Bulk Purchaser of cable television
services a package of services which include one or more Local Telephony
Services and/or Long Distance Telephony Services in order to compete
with an actual or anticipated offer to such Bulk Purchaser by a provider
unaffiliated with Cox Parent (whether facilities-based, as a reseller or
agent or otherwise) of television/telephony services and the needed
service is not then available to Cox Parent for inclusion in such a
package from Sprint Parent or its Affiliates on competitive economic
terms. The covenants of Cox Parent in Sections 2(b)(i) and 3, and the
rights of Sprint Parent under such Sections, shall not become applicable
solely as a result of the provision of such services to the Bulk
Purchaser.
(b) If Sprint Parent and Cox Parent have not reached an agreement on
mutually satisfactory terms for the provision of Local Telephony
Services in a particular market through a Local JV within the exclusive
negotiation period with respect to such markets contemplated by Section
3, then the provisions of Section 2(a)(i) will cease to apply with
respect to Long Distance Telephony Services in such market, unless
Sprint Parent makes available or causes to be made available to Cox
Parent or its applicable Controlled Affiliate on competitive economic
terms Sprint-Branded Long Distance Telephony Services to offer and
promote, and package with other products and services to offer and
promote, to its customers, and for which it would be authorized to act
as non-exclusive sales agent, in that market.
(c) If Sprint Parent and Cox Parent have not reached an agreement on
mutually satisfactory terms for the provision of Local Telephony
Services in a particular market through a Local JV within the exclusive
negotiation period with respect to such market contemplated by Section 3
and Sprint Parent or any of its Controlled Affiliates is providing
(through resale or otherwise) Local Telephony Services in such market,
then the provisions of Section 2(a)(i) will cease to apply in such
market, unless Sprint Parent makes available or causes to be made
available to Cox Parent or its applicable Controlled Affiliate on
competitive economic terms Sprint-Branded Long Distance Telephony
Services to offer and promote, and package with other products and
services to offer and promote, to its customers, and for which it would
be authorized to act as non-exclusive sales agent, in that market.
(d) Cox Parent's obligations under this Agreement with respect to any
Person that becomes a Cable Subsidiary or Controlled Affiliate of Cox
Parent after the date hereof and any cable television system or
facilities acquired by Cox Parent or a Cable Subsidiary after the date
hereof shall be subject to any contrary provisions of any agreements
with Persons (other than Cox Parent or a Controlled Affiliate of Cox
Parent) to which such Cable Subsidiary, Controlled Affiliate or cable
television system or facilities are subject prior to the time such
Person became a Cable Subsidiary or Controlled Affiliate or such system
or facilities were acquired.
(e) Sprint Parent's obligations under this Agreement with respect to any
Person that becomes a Controlled Affiliate of Sprint Parent after the
date hereof shall be subject to any contrary provisions of any
agreements with Persons (other than Sprint Parent or a Controlled
Affiliate of Sprint Parent) to which such Controlled Affiliate is
subject prior to the time such Person became a Controlled Affiliate.
SECTION 5. Consent to Jurisdiction.
(a) Each of Sprint Parent and Cox Parent hereby irrevocably and
unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of any New York State court sitting in the
County of New York or any Federal court of the United States of America
sitting in the State of New York, and any appellate court from any such
court, in any suit, action or proceeding arising out of or relating to
this Agreement, or for recognition or enforcement of any judgment, and
hereby irrevocably and unconditionally agrees that all claims in respect
of any such suit, action or proceeding may be heard and determined in
such New York State court or, to the extent permitted by law, in such
Federal court.
(b) Each of Sprint Parent and Cox Parent hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and
effectively do so, any objections which it may now or hereafter have to
the laying of venue of any suit, action or proceeding arising out of or
relating to this Agreement in any New York State court sitting in the
County of New York or any Federal court sitting in New York. Each of
Sprint Parent and Cox Parent hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the
maintenance of such suit, action or proceeding in any such court and
further waives the right to object, with respect to such suit, action or
proceeding, that such court does not have personal jurisdiction over it.
(c) Each of Sprint Parent and Cox Parent irrevocably consents to service
of process in the manner provided for the giving of notices pursuant to
this Agreement, provided that such service shall be deemed to have been
given only when actually received by it. Nothing in this Agreement
shall affect the right of a party to serve process in any other manner
permitted by law.
SECTION 6. Waiver; Remedies.
The observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively) by the party entitled to enforce such term, but any such
waiver shall be effective only if in a writing signed by the party
against which such waiver is to be asserted. Except as otherwise
provided herein, no failure or delay of any party in exercising any
power or right under this Agreement shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such right or
power, preclude any other or further exercise thereof or the exercise of
any other right or power.
SECTION 7. Assignment.
Except with respect to an assignment in connection with a transfer (in a
single transaction or series of related transactions) of all or a
Substantial Portion of the cable television system assets (in the case
of Cox Parent) or long distance telecommunications business assets (in
the case of Sprint Parent) owned by Cox Parent or Sprint Parent,
respectively, directly or through Controlled Affiliates immediately
prior to the transfer (or the first transfer of the series) (a
"Permitted Transaction") to (i) the transferee of such assets or (ii)
the Parent of such transferee, this Agreement shall not be assignable
without the prior written consent of the other party. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns, and shall be binding
upon the transferee of such party in a Permitted Transaction (which
transferee the applicable transferor shall cause to agree in writing to
be so bound in connection with such Permitted Transaction). Nothing in
this Agreement, whether express or implied, shall be construed to give
any Person other than the parties hereto and their respective successors
and permitted assigns any legal or equitable right, remedy or claim
under or in respect of this Agreement.
SECTION 8. Severability.
Every provision of this Agreement is intended to be severable. If any
term or provision hereof is illegal, invalid or unenforceable for any
reason whatsoever, that term or provision will be enforced to the
maximum extent permissible and such illegality, invalidity or
unenforceability shall not affect the validity or legality of the
remainder of this Agreement.
SECTION 9. Governing Law.
The internal laws of the State of Delaware (without regard to principles
of conflict of law) shall govern the validity of this Agreement, the
construction of its terms, and the interpretation of the rights and
duties of the parties.
SECTION 10. Waiver of Jury Trial.
Sprint Parent and Cox Parent each irrevocably waives to the extent
permitted by law all rights to trial by jury in any action, proceeding
or counterclaim arising out of or relating to this Agreement.
SECTION 11. Notices.
Any notice, payment, demand or communication required or permitted to be
given by any party by any provision of this Agreement shall be in
writing and mailed (certified or registered mail, postage prepaid,
return receipt requested) or sent by hand or overnight courier, or by
facsimile (with acknowledgment received), charges prepaid and addressed
as follows, or to such other address or number as such party may from
time to time specify by notice to the other party:
(a) If to Cox Parent, to:
Cox Communications, Inc.
1400 Lake Hearn Drive
Atlanta, GA 30319-1464
Telecopy No.: (404) 843-5804
Attn: President
with copies to:
Dow Lohnes & Albertson
Attn: Leonard J. Baxt
Prior to February 16, 1996:
1255 23rd Street, N.W.
Washington, D.C. 20037
Telecopy No.: (202) 857-2900
Attn: David D. Wild, Esq.
After February 16, 1996:
1200 New Hampshire Avenue, N.W.
Suite 800
Washington, D.C. 20036
Telecopy No.: (202) 776-2222
Attn: David D. Wild, Esq.
(b) If to Sprint Parent, to:
Sprint Corporation
2330 Shawnee Mission Parkway
Westwood, KS 66205
Telecopy No.: (913) 624-8426
Attn: Chief Financial Officer
with copies to:
Sprint Spectrum, L.P.
2330 Shawnee Mission Parkway
Westwood, KS 66205
Telecopy No.: (913) 624-2256
Attn: Corporate Secretary
King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303-1763
Telecopy No.: (404) 572-5146
Attn: Bruce N. Hawthorne, Esq.
Any party may from time to time specify a different address by notice to
the other parties. All notices and other communications given to a
Person in accordance with the provisions of this Agreement shall be
deemed to have been given and received (i) four (4) Business Days after
the same are sent by certified or registered mail, postage prepaid,
return receipt requested, (ii) when delivered by hand or transmitted by
facsimile (with acknowledgment received and, in the case of a facsimile
only, a copy of such notice is sent no later than the next Business Day
by a reliable overnight courier service, with acknowledgment of
receipt), or (iii) one (1) Business Day after the same are sent by a
reliable overnight courier service, with acknowledgment of receipt.
SECTION 12. Entire Agreement.
The provisions of this Agreement set forth the entire agreement and
understanding between the parties as to the subject matter hereof and
supersede all prior agreements, oral or written, and other
communications between the parties relating to the subject matter
hereof.
SECTION 13. Term.
This Agreement and the rights and obligations of the parties hereunder
will terminate on January 31, 2001, provided that this Agreement and the
rights and obligations of the parties shall earlier terminate on the
first to occur of (i) January 31, 1999 if at that date Local Telephony
Services are being offered under the Sprint Brand by Cox Parent and its
Controlled Affiliates (or Local JVs) through facilities of its Cable
Subsidiaries passing fewer than 25% of the aggregate number of
Households Passed by facilities of Cox Parent and its Cable Subsidiaries
that have been upgraded for, and through which Cox Parent and its
Controlled Affiliates (or Local JVs) are providing, Local Telephony
Services, (ii) such date as of which neither Cox Parent nor any of its
Controlled Affiliates is a partner in MajorCo and (iii) such date as of
which neither Sprint Parent nor any of its Controlled Affiliates is a
partner in MajorCo.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the date first above written.
COX COMMUNICATIONS, INC.
By: /s/ David M. Woodrow
Name: David M. Woodrow
Title: Vice President
SPRINT CORPORATION
By: /s/ J. Richard Devlin
Name: J. Richard Devlin
Title: Executive Vice President
SCHEDULE 1
Certain Defined Terms
II. Local Telephony Services
"Local Telephony Services" shall mean wireline "local exchange, access,
and transport services" offered or provided to residences in the
Territory that are functionally equivalent (from the customer's
perspective) to circuit-based offerings (e.g., a POTS access line
that provides to the user a circuit of equal and fixed
bi-directional transmission capacity). Local Telephony Services
may utilize an underlying network technology that is not
circuit-based as long as the offering to the residence is (from the
customer's perspective) functionally equivalent to one of the
"local exchange, access and transport" services listed below.
Local Telephony Services shall not include Advanced Data Services,
the Non-Exclusive Services and the Excluded Businesses.
Local Telephony Services shall include the provision and transport
of intra-LATA wireline calls, except for 75 Mile Plus Calls.
Local Telephony Services are not restricted by form (e.g., analog
or digital), method of origination (e.g., voice, data, telemetry,
etc.), or the content transmitted by the customer.
The "local exchange, access, and transport" services are:
1. Local dial tone service for residential customers (i.e., basic
service, additional lines, EAS, ISDN, etc.);
2. Ancillary basic service features such as tone dialing, custom
calling, CLASS, Centrex, and functionality for number
portability;
3. Access for switched and dedicated intra-LATA and inter-LATA
service;
4. Private line services not interconnected with an inter-LATA
private line network (including back haul for wireless
services); and
5. "Video telephony", which shall mean circuit switched two-way
communications services that are not Excluded Businesses
providing:
a. point-to-point two-way audio/video connectivity;
b. point-to-point one-way video connectivity and two way audio
connectivity;
c. multi-point to multi-point audio/video connectivity; or
d. access for intra-LATA and inter-LATA video telephony.
III. Long Distance Telephony Services
"Long Distance Telephony Services" shall mean (other than as provided in
Sections I and V of this Schedule 1) (a) wireline inter-LATA service to
residences in the Territory, except for that subject to local exchange
carrier inter-LATA waivers or (b) 75 Mile Plus Calls to residences in
the Territory, but in each case excluding any of such services that are
also Advanced Data Services or services described in clauses (2) or (3)
of the definition of Excluded Business in Section VI below.
IV. Advanced Data Services
"Advanced Data Services" shall mean wireline services offered or
provided to residences in the Territory that are functionally equivalent
to asynchronous offerings (e.g., an internet access service with
instantaneously varying data rates and equal or unequal bi-directional
transmission capacity). Advanced Data Services shall not include the
Local Telephony Services, the Non-Exclusive Services, and those
Excluded Businesses referred to in clauses (1), (2) and (3) of the
definition of Excluded Businesses in Section VI of this Schedule 1.
V. Entertainment Services
"Entertainment Services" means the delivery via a distribution system
(whether wired or wireless, and whether terrestrial or satellite-based)
of entertainment and, except to the extent contemplated under
Non-Exclusive Services, other content-based services, which services in
either such case are competitive with services typically provided by
cable television companies to their customers at the date of this
Agreement. The provision of Internet access services, incidental
audio/video content related to the provision of Internet access services
(e.g. browsers, navigators, logos, customer service, sales) and on-line
hosting services shall not be deemed to be Entertainment Services.
VI. Non-Exclusive Services
"Non-Exclusive Services" means each of the following:
1. Incidental services to other Local Telephony Services, including
billing services and the installation, maintenance, repair, sale or
lease of customer premises equipment or customer controlled
equipment.
2. 500 Services.
3. Meeting services, such as video or other teleconferencing in which
the provider does not create nor resell the content of such service.
4. Server-based content services customarily provided by local exchange
telephone companies, consisting of directory assistance, operator
service, time, temperature and similar information services that are
voice only and TDD relay.
5. Incidental data services to support signaling, billing and system
diagnostics and management for audio/video connectivity.
6. Incidental audio/video content (e.g., logos, customer service,
sales), that are directly related to the provision of video
telephony.
7. Enhanced services such as voice mail, e-mail, facsimile store and
forward.
8. Video telephony enhanced services, such as video mail, store and
forward, and customer service, but excluding any such enhanced
service that is an Excluded Business.
VII. Excluded Business
"Excluded Business" means each of the following:
1. Long Distance Telephony Services.
2. The provision of entertainment and, except to the limited extent
contemplated under Non-Exclusive Services, other content-based
services.
3. The provision or transport of wireline services using unidirectional
transmission capacity.
4. The provision or transport of wireline services using unequal
bi-directional transmission capacity.
VIII. Definitions.
As used in this Schedule:
1. The term "LATA" means a Local Access and Transport Area established
pursuant to the criteria set forth in Section 4(g) of the MFJ, as
approved in United States v. Western Electric Company, Inc., et. al.,
569 F. Supp. 990 (D.D.C. 1983), and as amended by subsequent orders,
regardless of whether the LATA boundaries continue to be applied in
future governmental regulation of the wireline telecommunications
industry. In the event of the cessation of use of LATA boundaries by
a telecommunications governmental regulation or court order, then the
LATA boundaries in effect at the time of cessation of such use shall
be deemed to be the LATA boundaries for purposes of this Agreement.
2. The term "Rate Center" means a point within a geographic area
designated by agreement of Cox Parent and Sprint Parent as the Rate
Center and shall be used for measuring distances to and from such
geographic area. Each geographic area shall have one Rate Center.
The Rate Center shall be near the geographic center of the geographic
area.
3. The term "75 Mile Plus Calls" means wireline calls between end users
whose Rate Centers are greater than 75 miles apart.
4. The term "residences" will have its customary meaning unless and
until the scope of Teleport's business is confined by agreement of
its owners so as to exclude (or make non-exclusive) serving "small
business customers", in which event the term "residences" will also
include "small business customers". The term "small business
customer" for this purpose means a non-residential customer having
five or fewer Access Lines. The term "Access Line" means a
voice-grade message telephone line (DS-0 equivalent) that can
originate or terminate telecommunications services, which need not
have a separate telephone number, and is interconnected with the
public switched telephone network; provided, that an ISDN BRI shall
count as one Access Line.
