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: June 30, 1994
Exact name of registrant
as specified in its charter: BELL ATLANTIC CORPORATION
Commission File No.: 1-8606
State of Incorporation: Delaware
IRS Employer Identification No.: 23-2259884
Address of principal
executive offices: 1717 Arch Street
Philadelphia, Pennsylvania
Zip Code 19103
Registrant's telephone number,
including area code: (215) 963-6000
Former name or former address,
if changed since last report: N/A
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 hereunto duly authorized.
BELL ATLANTIC CORPORATION
By: /s/ P. Alan Bulliner
Vice President-Corporate
Secretary and Counsel
Date: June 30, 1994
Item 5. Other Events.
On June 30, 1994, Bell Atlantic Corporation ("Bell Atlantic")
and NYNEX Corporation ("NYNEX") announced that they had entered
into a Joint Venture Formation Agreement dated as of June 29, 1994
which sets forth the terms and conditions upon which the parties
intend to combine the domestic cellular properties of Bell
Atlantic and NYNEX and bid jointly in the upcoming FCC auctions
for PCS licences. Initially, Bell Atlantic will own 62.35% of the
new venture and NYNEX will own 37.65%. Nynex may increase its
share to 40% when the combination closes by contributing an
additional $500 million to the joint venture. Copies of a press
release dated June 30, 1994, the Joint Venture Formation Agreement
and a Form of Partnership Agreement are attached as exhibits
hereto and are incorporated herein by reference.
Item 7. Financial Statements and Exhibits.
Exhibit 10(a):
Joint Venture Formation Agreement dated as of June 29, 1994
between Bell Atlantic and NYNEX
Exhibit 10(b):
Form of Partnership Agreement to be executed by Bell Atlantic
and NYNEX
Exhibit 20:
Press Release dated June 30, 1994
File No. 1-8606
INDEX TO EXHIBITS
Exhibit 10(a):
Joint Venture Formation Agreement dated as of June 29, 1994
between Bell Atlantic and NYNEX
Exhibit 10(b):
Form of Partnership Agreement to be executed by Bell Atlantic
and NYNEX
Exhibit 20:
Press Release dated June 30, 1994
CONFORMED COPY
______________________________________________
JOINT VENTURE FORMATION AGREEMENT
by and between
BELL ATLANTIC CORPORATION
and
NYNEX CORPORATION
Dated as of June 29, 1994
________________________________________________
TABLE OF CONTENTS
ARTICLE I
CERTAIN DEFINITIONS. . . . . . . . . . . 1
1.1 Definitions . . . . . . . . . . . . . . . . . . 1
ARTICLE II
THE TRANSACTIONS. . . . . . . . . . . . 6
2.1 Formation of the Partnerships . . . . . . . . . 6
2.2 Liabilities Assumed by Cellco . . . . . . . . . 8
2.3 NYNEX Buy-up Option . . . . . . . . . . . . . . 8
2.4 The Closings. . . . . . . . . . . . . . . . . . 8
2.5 Reasonable Efforts to Proceed Promptly. . . . . 9
2.6 Effect of Closing . . . . . . . . . . . . . . . 9
2.7 Instruments of Transfer, Etc. . . . . . . . . . 9
2.8 After-Acquired Entities . . . . . . . . . . . . 9
2.9 Capital Expenditures. . . . . . . . . . . . . . 10
2.10 Systems Licensed in the Same Markets. . . . . . 10
2.11 Failure to Contribute Systems . . . . . . . . . 11
2.12 True-Up.. . . . . . . . . . . . . . . . . . . . 12
2.13 Balance Sheet Adjustment and Accounts Receivable
Guarantee . . . . . . . . . . . . . . . . . . 13
2.14 Interim Management. . . . . . . . . . . . . . . 13
2.15 Restructuring . . . . . . . . . . . . . . . . . 13
2.16 The Corporate General Partner.. . . . . . . . . 14
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF NYNEX AND BELL ATLANTIC . 14
3.1 Organization. . . . . . . . . . . . . . . . . . 14
3.2 Interests in Systems. . . . . . . . . . . . . . 14
3.3 Authority . . . . . . . . . . . . . . . . . . . 15
3.4 Consents. . . . . . . . . . . . . . . . . . . . 15
3.5 Financial Information . . . . . . . . . . . . . 15
3.6 Compliance with Laws. . . . . . . . . . . . . . 16
3.7 Licenses. . . . . . . . . . . . . . . . . . . . 16
3.8 Assets. . . . . . . . . . . . . . . . . . . . 17
ARTICLE IV
ADDITIONAL INDEMNITY REPRESENTATIONS. . . . . . . 17
4.1 Organization. . . . . . . . . . . . . . . . . . 17
4.2 Ownership . . . . . . . . . . . . . . . . . . . 18
4.3 Consents; No Violation. . . . . . . . . . . . . 20
4.4 Financial Information; Undisclosed Liabilities. 21
4.5 Authority . . . . . . . . . . . . . . . . . . . 21
4.6 Absence of Certain Changes. . . . . . . . . . . 21
4.7 Compliance with Laws. . . . . . . . . . . . . . 21
4.8 Legal Proceedings . . . . . . . . . . . . . . . 22
4.9 Licenses. . . . . . . . . . . . . . . . . . . . 22
4.10 Finders; Investment Bankers . . . . . . . . . . 22
4.11 INTENTIONALLY OMITTED.. . . . . . . . . . . . . 23
4.12 Material Contracts. . . . . . . . . . . . . . . 23
4.13 Employee Benefit Plans. . . . . . . . . . . . . 23
4.14 Taxes . . . . . . . . . . . . . . . . . . . . . 26
4.15 MFJ Activities. . . . . . . . . . . . . . . . . 27
4.16 Environmental Matters . . . . . . . . . . . . . 27
4.17 Employees . . . . . . . . . . . . . . . . . . . 27
4.18 Insurance . . . . . . . . . . . . . . . . . . . 28
4.19 Acquired Entities . . . . . . . . . . . . . . . 28
4.20 INTENTIONALLY OMITTED . . . . . . . . . . . . . 28
4.21 Assets. . . . . . . . . . . . . . . . . . . . . 28
4.22 Restrictions. . . . . . . . . . . . . . . . . . 29
ARTICLE V
PRE-CELLULAR CLOSING COVENANTS . . . . . . . . 29
5.1 Interim Operations. . . . . . . . . . . . . . . 29
5.2 MFJ Activities. . . . . . . . . . . . . . . . . 32
5.3 Expenses. . . . . . . . . . . . . . . . . . . . 33
5.4 Business Relationships with Affiliates. . . . . 33
5.5 Creation of Employee Body and Benefits Plans. . 34
5.6 NYSMSA. . . . . . . . . . . . . . . . . . . . . 34
5.7 Non-Managed Systems . . . . . . . . . . . . . . 35
ARTICLE VI
ADDITIONAL COVENANTS. . . . . . . . . . . 35
6.1 Further Assurances; Cooperation . . . . . . . . 35
6.2 Access to Properties and Records. . . . . . . . 36
ARTICLE VII
CONDITIONS . . . . . . . . . . . . . 37
7.1 Conditions to the Obligations of NYNEX and Bell
Atlantic. . . . . . . . . . . . . . . . . . . 37
7.2 Conditions to the Obligations of NYNEX. . . . . 37
7.3 Conditions to the Obligations of Bell Atlantic. 38
ARTICLE VIII
INDEMNIFICATION. . . . . . . . . . . . 38
8.1 Indemnification by Bell Atlantic. . . . . . . . 38
8.2 Indemnification by NYNEX. . . . . . . . . . . . 39
8.3 Notice and Defense of Third Party Claims. . . . 40
8.4 Tax Indemnification . . . . . . . . . . . . . . 41
ARTICLE IX
TERMINATION. . . . . . . . . . . . . 42
9.1 Termination . . . . . . . . . . . . . . . . . . 42
9.2 Effect of Termination . . . . . . . . . . . . . 43
ARTICLE X
MISCELLANEOUS . . . . . . . . . . . . 43
10.1 Survival of Representations, Warranties and Agreements 43
10.2 Waiver and Amendment. . . . . . . . . . . . . . 43
10.3 APPLICABLE LAW. . . . . . . . . . . . . . . . . 43
10.4 Interpretation. . . . . . . . . . . . . . . . . 43
10.5 Notices . . . . . . . . . . . . . . . . . . . . 44
10.6 Counterparts. . . . . . . . . . . . . . . . . . 45
10.7 Severability. . . . . . . . . . . . . . . . . . 45
10.8 Parties in Interest; Assignment . . . . . . . . 45
10.9 Publicity . . . . . . . . . . . . . . . . . . . 45
10.10 No Third Party Beneficiaries. . . . . . . . . . 45
10.11 Confidentiality . . . . . . . . . . . . . . . . 46
EXHIBITS
Exhibit A - Form of Partnership Agreement
SCHEDULES
2.8 Planned Acquisitions
2.9 Capital Expenditures
2.10 Saleable Systems
2.11 POP Values
2.13 Accounting Principles, Procedures and Methods
2.14 Management Organization Committee; Affiliation
Standards
3.2 Systems and Contributions
3.4 Regulatory Approvals
3.7 Licenses
4.17 Employees
JOINT VENTURE FORMATION AGREEMENT
This Joint Venture Formation Agreement ("Agreement") is
dated as of June 29, 1994 by and between BELL ATLANTIC
CORPORATION, a Delaware corporation, on behalf of itself and its
Affiliates (as defined herein) which, from time to time, from the
date of this Agreement to the Cellular Closing Date (as
hereinafter defined) hold interests, directly or indirectly, in
Contributions (as defined herein) ("Bell Atlantic"), and NYNEX
CORPORATION, a Delaware corporation, on behalf of itself and its
Affiliates (as defined herein) which, from time to time, from the
date of this Agreement to the Cellular Closing Date hold
interests, directly or indirectly, in Contributions ("NYNEX").
NYNEX and Bell Atlantic are sometimes herein collectively referred
to as the "Parties" and individually as a "Party."
W I T N E S S E T H:
WHEREAS, Bell Atlantic and NYNEX are the direct and/or
indirect owners of interests in certain wireless
telecommunications systems in the United States set forth on
Schedule 3.2 to this Agreement (the "Systems"); and
WHEREAS, the Parties have concluded that it will be in
their best interests, and the best interests of the public, to
enter into a general partnership ("Cellco") for the purposes set
forth in the form of partnership agreement attached hereto as
Exhibit A; and
WHEREAS, the Parties have concluded that it will be in
their best interests, and the best interests of the public, to
enter into a general partnership ("PCSCO") for the purposes set
forth in the form of partnership agreement attached hereto as
Exhibit A.
NOW, THEREFORE, in consideration of the mutual covenants
and agreements set forth herein, the sufficiency of which is
hereby acknowledged, each of the parties hereby agrees as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.1 Definitions. As used in this Agreement, the
following terms shall have the respective meanings set forth
below:
(a) "Acquired Entity" shall have the meaning set forth
in Section 2.8 hereof.
(b) "Adverse Proceedings" shall have the meaning set
forth in Section 6.1(b) hereof.
(c) "Affiliate" of a person shall mean any person
directly or indirectly controlling, controlled by, or under common
control with, such other person; "person" shall mean an
individual, a corporation, a limited liability company, a
partnership, an association, a trust or any other entity or
organization, including a government or political subdivision or
an agency or instrumentality thereof; and "control" shall mean
(i) the ownership of more than 50% of the voting securities or
other voting interests of another person, or (ii) the possession,
directly or indirectly, of the power to direct or cause the
direction of the management and policies of such person, whether
through the ownership of voting shares, by contract or otherwise;
provided, however, that neither of the Partnerships are affiliates
of NYNEX.
(d) "BOC" shall have the meaning set forth in Section
5.2(b) hereof.
(e) "Business Condition" shall have the meaning set
forth in Section 4.6 hereof.
(f) "Cellco" shall have the meaning set forth in the
second recital clause hereof.
(g) "Cellco Assumed Liabilities" shall mean Permitted
Liabilities which relate to Cellular Assets.
(h) "Cellco Partnership Agreement" shall mean a
partnership agreement substantially in the form of Exhibit A
hereto utilizing the variations indicated therein for Cellco.
(i) "Cellco Partner Subsidiary" shall have the meaning
set forth in Section 2.1(b) hereof.
(j) "Cellular Assets" shall have the meaning set forth
in Section 2.1(d) hereof.
(k) "Cellular Business" shall mean the business of
acquiring, developing, owning and operating businesses engaged in
the provision of public cellular radio telecommunications service
pursuant to a license or licenses issued under Subparts G and K of
Part 22 of the FCC's rules.
(l) "Cellular Closing" and "Cellular Closing Date"
shall have the respective meanings set forth in Section 2.4(b)
hereof.
(m) "Cellular Transactions" shall mean the formation of
Cellco and the contributions to Cellco by NYNEX and its
Affiliates, on the one hand, and by Bell Atlantic and its
Affiliates on the other hand, of the Contributed Partnerships,
Contributed Subsidiaries and Cellular Assets described in Section
2.1(d).
(n) "Code" shall mean the Internal Revenue Code of
1986, as amended from time to time (or any corresponding
provisions of succeeding law).
(o) "Contributed Partnerships" shall mean those
partnerships, or partnership interests in partnerships, which hold
interests in Systems listed on Schedule 3.2 hereto which are
actually included in the Cellular Contributions.
(p) "Contributed Subsidiaries" shall mean those
corporations holding interests in Systems or Cellular Assets
listed on Schedule 3.2 hereto, the capital stock of which is
actually included in the Cellular Contributions.
(q) "Contributions" shall mean, collectively, the
Cellular Contributions and the PCS Contributions of a Party;
"Cellular Contributions" shall have the meaning set forth in
Section 2.1(d) hereof and "PCS Contributions" shall have the
meaning set forth in Section 2.1(a) hereof.
(r) "Corporate General Partner" shall mean a
corporation organized jointly by the Parties to hold a general
partnership interest in Cellco.
(s) "Employees" shall have the meaning set forth in
Section 4.17 hereof.
(t) "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended, and "Plans", "Employment
Agreements", "ERISA Plans", and "Controlled Group" shall have the
respective meanings set forth in Section 4.13 hereof.
(u) "FCC" shall mean the United States Federal
Communications Commission.
(v) "Financial Statements" shall have the meaning set
forth in Section 3.5(a) hereof.
(w) "Governmental Approvals" shall have the meaning set
forth in Section 7.1(b) hereof.
(x) "Governmental Entity" shall have the meaning set
forth in Section 3.4 hereof.
(y) "HSR Act" shall mean the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended.
(z) "Intangible Property" shall have the meaning set
forth in Section 4.2(d) hereof.
(aa) "Interest Rate" shall mean that rate of interest
described under the caption "Interest Rate" on Schedule 1(av).
(ab) "Letter Agreement" means the letter of the Parties
of even date herewith referring to this Agreement.
(ac) "Licenses" shall mean permits, licenses, waivers
and authorizations (including, without limitation, licenses from
the FCC and licenses, authorizations and certificates of public
convenience and necessity from the state regulatory commissions
listed on Schedule 3.4 hereto).
(ad) "Lien" shall mean, with respect to any asset, any
mortgage, lien, pledge, charge, security interest, claim, equity,
encumbrance, exception, restriction, reservation, condition,
limitation or interest of any kind, or any similar right of any
third party in respect of such asset. For purposes of this
Agreement, an asset shall also be deemed to be subject to a Lien
if such asset is subject to the interest of a vendor or lessor
under any conditional sale agreement, capital lease or other like
title retention agreement relating to such asset.
(ae) "Managed Cellular Business" shall mean that
portion of a Party's Cellular Contributions as to which the Party
has management authority for the conduct of its business
operations.
(af) "Managed System" shall mean any System for which a
Party has management authority over the conduct of its business
operations either as a result of a management agreement or similar
provisions, or because of its position as a controlling
shareholder or general partner when the System has no general
management arrangements with a third party.
(ag) "Me Too Waiver" shall have the meaning set forth
in Section 5.2(b) hereof.
(ah) "MFJ" shall have the meaning ascribed thereto in
the Partnership Agreements; "Decree Court" shall mean the court
having original jurisdiction over the MFJ; and "MFJ Approvals" and
"MFJ Transactions" shall have the meanings set forth in
Sections 3.4 and 5.2(a) hereof, respectively.
(ai) "MSA" shall mean Metropolitan Statistical Area,
"NECMA" shall mean New England County Metropolitan Statistical
Area "RSA" shall mean Rural Service Area, "BTA" shall mean Basic
Trading Area and "MTA" shall mean Major Trading Area, in each case
as such term is defined and modified by the FCC for licensing
purposes.
(aj) "MOC" shall have the meaning set forth in Section
2.14 hereof.
(ak) "NYSMSA" shall mean New York SMSA Limited
Partnership.
(al) "Owned POPs" with respect to a System shall mean
POPs multiplied by the percentage interest held, directly or
indirectly, by a Party as specified on Schedule 3.2.
(am) "Partner" shall mean individually any partner in
either of the Partnerships and collectively all of such Partners.
(an) "Partnership Agreements" shall mean the Cellco
Partnership Agreement and the PCSCO Partnership Agreement.
(ao) "Partnerships" shall mean Cellco and PCSCO.
(ap) "Partner Subsidiary" shall mean any direct or
indirect wholly owned subsidiary or partnership of a Party which
directly holds a partnership interest in a Partnership.
(aq) "Party" and "Parties" shall have the meaning set
forth in the Preamble to the Agreement.
(ar) "PCS Closing" and "PCS Closing Date" shall have the
respective meanings set forth in Section 2.4 hereof.
(as) "PCS Partner Subsidiary" shall have the meaning set
forth in Section 2.1(a) hereof.
(at) "PCS Transactions" shall mean the formation of
PCSCO and the contributions to PCSCO by NYNEX and its Affiliates
on the one hand, and by Bell Atlantic and its Affiliates, on the
other hand, as described in Section 2.1(a).
(au) "PCSCO Partnership Agreement" shall mean a
partnership agreement substantially in the form of Exhibit A
hereto utilizing the variations indicated therein for PCSCO.
(av) "Permitted Liabilities" shall mean (i) accounts
payable by a Party's Cellular Business invoiced within 30 days
prior to the Cellular Closing Date, (ii) liabilities under
contracts of the Cellular Business incurred in the ordinary course
of business which either arise on or after the Cellular Closing
Date or are contemplated to be transferred to Cellco pursuant to
Section 2.13, (iii) $87,000,000 of debt used to refinance debt
originally incurred in connection with the acquisition of a
portion of Bell Atlantic's Cellular Business, which shall be on
terms described in Schedule 1(av) (iv) debt, which shall be on the
terms described in Schedule 1(av), incurred or assumed by Cellco
pursuant to paragraph 2(e) of the Letter Agreement or Section 2.12
hereof and (v) liabilities assumed by Cellco pursuant to Section
2.8 hereof.
(aw) "POPs" with respect to a System shall mean the
population of the service area as set forth on Schedule 3.2.
(ax) "Regulatory Approvals" shall have the meaning set
forth in Section 3.4 hereof.
(ay) "Saleable Systems" shall have the meaning set forth
in Section 2.10.
(az) "System Assets" shall have the meaning set forth in
Section 2.1(d) hereof.
(ba) "Systems" shall have the meaning set forth in the
first recital hereof and each of the Systems is specifically named
on Schedule 3.2 hereto.
(bb) "Tax Returns" shall have the meaning set forth in
Section 4.14 hereof.
(bc) "Taxes" shall have the meaning set forth in Section
4.14 hereof.
(bd) "Transactions" shall mean the Cellular Transactions
and the PCS Transactions, collectively.
In addition to the defined terms set forth above in this
Article I, certain other capitalized terms used herein are defined
in the Exhibit and Schedules attached hereto and such definitions
are incorporated herein by reference to the extent not
inconsistent with the definitions included herein. All accounting
terms not otherwise defined herein shall have the meanings
assigned under generally accepted accounting principles from time
to time in effect.
ARTICLE II
THE TRANSACTIONS
2.1 Formation of the Partnerships. (a) At the PCS
Closing (as hereinafter defined), each of the Parties shall cause
one or more of its direct or indirect wholly owned subsidiaries or
partnerships (collectively, its "PCS Partner Subsidiary") to
execute and deliver the PCSCO Partnership Agreement and shall
contribute or cause to be contributed to PCSCO nominal amounts of
cash in proportion to their respective Percentage Interests in
PCSCO (collectively, the "PCS Contributions").
(b) At the Cellular Closing (as hereinafter defined),
each of the Parties shall cause one or more of its direct or
indirect wholly owned subsidiaries or partnerships (collectively,
its "Cellco Partner Subsidiary") and the Corporate General Partner
to execute and deliver the Cellco Partnership Agreement and shall
contribute or cause to be contributed to Cellco such Party's
Cellular Contribution (as described in Section 2.1(d)) and shall
cause the Corporate General Partner to contribute to Cellco
$10,000,000 and its note for the balance of the amount necessary
to cause its contributions to the capital of Cellco to equal 1% of
the aggregate contributions of all Partners to the capital of
Cellco.
(c) It is the agreement and intention of the Parties
that, subject to adjustment pursuant to the provisions of this
Agreement, the initial Percentage Interests and the initial ratio
of the Specified Account Values of Bell Atlantic and NYNEX, held
through their respective PCS Partner Subsidiary, Cellco Partner
Subsidiary or indirectly through the Corporate General Partner, in
each of PCSCO on the PCS Closing Date and Cellco on the Cellular
Closing Date shall be in the ratio of 62.35:37.65.
(d) With respect to each Party, "Cellular
Contributions" shall consist of all of such Party's right, title
and interest in (A) the Systems listed under such Party's name on
Schedule 3.2 and the FCC Licenses with respect thereto, whether
held directly ("System Assets") or indirectly through such Party's
Contributed Subsidiaries and Contributed Partnerships, and (B) all
other assets, rights, properties and business of such Party or its
Affiliates constituting part of, or used primarily in connection
with, such Party's Cellular Business and any and all claims which
such Party or its Affiliates may have against any person, firm,
corporation or other entity arising out of the conduct of the
Cellular Business, all of the foregoing assets described in this
clause (B), together with the System Assets, collectively the
"Cellular Assets."
Anything herein to the contrary notwithstanding, the
following assets of the Parties shall not be included in the
Contributions: (i) the stock of, or partnership interest in, the
PCS Partner Subsidiary and the Cellco Partner Subsidiary of each
of the Parties and such Party's ownership interest in the
Corporate General Partner and the corporate seals, minute books,
charter documents, corporate stock record books, and such other
books and records as pertain to the organization, existence or
share capitalization of each of the aforementioned corporations or
partnerships, (ii) any cash accounts which would otherwise be
included in the Cellular Assets, (iii) interests in Saleable
Systems (iv) the Springwich Interests (as defined in Section 2.10
hereof) or (v) any FCC paging licenses held by Bell Atlantic or
any of its Affiliates.
(e) The transfer by a Party of interests in the Systems
listed on Schedule 3.2 pursuant to this Agreement is conditioned
upon the inapplicability of such rights of first refusal as may
exist with respect to such Systems. In the event that, absent
this condition, this Agreement would constitute or be held or
deemed to constitute a sale, offer, transfer, or expression of
intent triggering such rights of first refusal, the Parties agree
that the interests in the Systems that would be the subject of
such rights of first refusal shall not be transferred or affected
in any way by this Agreement and the provisions of Sections 2.11
and 9.1(c) shall be applicable.
(f) Except in the case of rights of first refusal
governed by Section 2.1(e), to the extent that the rights of a
Party or its Affiliates under any agreement, contract, commitment,
lease, authorization or other Cellular Asset to be assigned to
Cellco hereunder may not be assigned without the consent of
another person which has not been obtained, this Agreement shall
not constitute an agreement to assign the same if an attempted
assignment would constitute a breach thereof or be unlawful. If
any such required consent shall not be obtained or if any
attempted assignment would be ineffective or would impair such
Party's, its Affiliates' or Cellco's rights under the Cellular
Asset in question so that Cellco would not in effect acquire the
benefit of all such rights, Cellco, to the maximum extent
permitted by law and the terms of the Cellular Asset, shall act
after the Cellular Closing as the agent of such Party or its
Affiliate in order to obtain for Cellco the benefits thereunder
and such Party or its Affiliate, at its expense, shall cooperate
with Cellco, to the maximum extent permitted by law and the terms
of the Cellular Asset, in any other reasonable arrangement
designed to provide such benefits to Cellco.
2.2 Liabilities Assumed by Cellco. At the Cellular
Closing, Cellco shall assume, by execution and delivery of
appropriate instruments of assumption, the Cellco Assumed
Liabilities.
2.3 NYNEX Buy-up Option. NYNEX shall have the right to
increase its Percentage Interest in both Cellco and PCSCO to up to
40.00% (taking into account the Percentage Interest held
indirectly by NYNEX through the Corporate General Partner) in
accordance with the procedures set forth in the Letter Agreement.
2.4 The Closings. (a) The closing of the PCS
Transactions (the "PCS Closing") shall take place at a time and
place to be agreed upon by the Parties on the later of the date
the PCSCO business plan is agreed to as contemplated by Section
2.14(b) hereof, or the fifth business day prior to the first date
on which persons intending to bid in an FCC auction for a
Designated MTA/BTA (as defined in the Partnership Agreement) must
file and qualify under rules promulgated by the FCC from time to
time, or on such other date as NYNEX and Bell Atlantic shall agree
upon in writing (the actual date of the PCS Closing being herein
referred to as the "PCS Closing Date").
(b) The closing of the Cellular Transactions (the
"Cellular Closing") shall take place at 10:00 A.M., local time, at
a time and place to be agreed upon by the Parties on the fifth
business day after all of the conditions set forth in Article VII
hereof have been fulfilled or waived or on such other date as
NYNEX and Bell Atlantic shall agree upon in writing (the actual
date of the Cellular Closing being herein referred to as the
"Cellular Closing Date").
2.5 Reasonable Efforts to Proceed Promptly. Each of
NYNEX and Bell Atlantic agree to use their respective reasonable
efforts to take all such action as may be necessary or appropriate
in order to effectuate the Transactions as promptly as possible.
2.6 Effect of Closing. All transactions entered into
on the PCS Closing Date and the Cellular Closing Date,
respectively, pursuant hereto, and all documents delivered at each
of such respective Closings, shall be deemed to have occurred and
to have been delivered simultaneously as of the close of business
on such applicable Closing Date.
2.7 Instruments of Transfer, Etc. At or prior to the
Cellular Closing, the Parties shall deliver, or cause to be
delivered, to Cellco, all such general warranty deeds, bills of
sale, assignments and other instruments of transfer and conveyance
as shall be necessary or appropriate to transfer to and vest in
Cellco all of such transferor's right, title and interest in and
to the assets transferred at such Closing. At or promptly after
such Closing, each Party shall put Cellco in possession of all
contracts, commitments, books, records, files and other data to be
transferred to Cellco hereunder at such Closing and shall take
such steps as may be necessary to put Cellco in actual possession
and operating control of the respective Cellular Contributions.
2.8 After-Acquired Entities. In the event that either
Party or any of its Affiliates acquires an interest in a Cellular
Business after the date of this Agreement (other than the
interests of the Party or its Affiliates listed on Schedule 3.2)
which acquisition is either (i) listed on Schedule 2.8 or (ii) is
approved by the other Party in writing prior to the Cellular
Closing, provided in each case that such acquisition is
consummated substantially in accordance with such Schedule or
approval (an "Acquired Entity"), such Acquired Entity shall be
contributed to Cellco as part of the acquiring Party's Cellular
Contribution and Cellco shall assume all liabilities of the Party
and its Affiliates with respect to such Acquired Entity (including
without limitation all liabilities related to, and are a part of,
the purchase price for such entity). The Party contributing an
Acquired Entity shall also assign to Cellco all rights of
indemnification under the acquisition agreement relating to such
Acquired Entity. For each Party, the aggregate amount of cash and
the fair value of any other property (excluding obligations
assumed by Cellco) paid or delivered by such Party or its
Affiliates in respect of the purchase price of Acquired Entities
and out-of-pocket expenses directly related to such acquisitions
shall be called its "Section 2.8 Amount."
2.9 Capital Expenditures. During the period from the
date hereof until the Cellular Closing either Party or any of its
Affiliates may make capital expenditures in respect of the Systems
or Acquired Entities being contributed to Cellco by such Party to
the extent such capital expenditures are included in the
Contributions and (i) are included in the amounts set forth on
Schedule 2.9, (ii) are approved by the other Party or (iii) amount
to less than $2,000,000 in any one instance or $10,000,000 in the
case of NYNEX, and $15,000,000 in the case of Bell Atlantic in the
aggregate. For each Party, the aggregate net book value as of the
Cellular Closing Date of all capital assets included in the
Cellular Contribution of such Party and its Affiliates which
represent capital expenditures permitted by this Section 2.9 shall
be called its "Section 2.9 Amount."
2.10 Systems Licensed in the Same Markets. Immediately
after the execution of this Agreement, the MOC (as hereinafter
defined) will determine which of the Systems listed in Schedule
2.10 will be disposed of in order to comply with FCC rules
("Saleable Systems"). In addition, the Parties agree that NYNEX
will dispose of its direct and indirect interests in Springwich
Cellular Limited Partnership (the "Springwich Interests") prior to
the Cellular Closing Date. The Parties will use their reasonable
efforts to cause such Saleable Systems and the Springwich
Interests to be marketed as a single transaction or in such other
manner as the Parties determine will be in the best interests of
Cellco and will be most tax-efficient. With respect to each of
the Saleable Systems, the Party which is the current licensee of
such Saleable System (i) shall, in conjunction with the other
Party, take all reasonable and necessary steps to conclude a
binding agreement to sell such Saleable System as promptly as
practicable at a reasonable price, (ii) shall file the necessary
applications for all Governmental Approvals required to consummate
such sale, and (iii) shall prosecute those applications diligently
and in good faith. Closing on the sale of each of the Saleable
Systems shall take place no later than the Cellular Closing Date.
Upon consummation of the sale of each Saleable System, the selling
Party shall determine in good faith the Net Proceeds from such
sale. The "Net Proceeds" means the sale price, less the directly
related out-of-pocket expenses of selling the Saleable System,
less any federal, state or local income taxes that the selling
Party (or any of its Affiliates) would be required to pay as a
result of such sale if it were subject to an effective tax rate of
40%. For each Party, the aggregate Net Proceeds from all sales of
Saleable Systems by such Party and its Affiliates shall be called
its "Section 2.10 Amount." The amount to be contributed by NYNEX
pursuant to paragraph 1 of the Letter Agreement shall be included
in NYNEX's Section 2.10 Amount. In the event the Parties
determine that an exchange of a Saleable System is in their mutual
best interest, the Parties will negotiate the terms of the
exchange and the treatment of the property received in such
exchange with a view to preserving the intended after tax
economics that apply in respect of Saleable Systems.
2.11 Failure to Contribute Systems. To the extent that
either or both of the Parties is unable to contribute any of its
interests in Systems listed on Schedule 3.2 (or, in the case of
interests in Systems that are so listed on Schedule 3.2 as under
contract but not owned, substantially equivalent POPs) on or
before the Cellular Closing Date due to regulatory or contractual
prohibitions or failure to consummate the acquisition of such
interests (a "Shortfall Party"), the Shortfall Party shall
determine the amount of cash equal to the number of its Owned POPs
in the Systems it is unable to contribute times the POP Value set
forth on Schedule 2.11 opposite the name of such Shortfall Party
(a "Failed Contribution Amount"). The Shortfall party at its
option shall then either (x) treat the Failed Contribution Amount
as part of its Section 2.11 Amount (as defined below) or (y)
suffer a reduction in its Percentage Interest and Specified
Account Value in Cellco to reflect its failure to contribute such
POPs (and suffer a corresponding reduction in its Percentage
Interest and Specified Account Value in PCSCO effected through a
distribution of cash by PCSCO to the PCSCO Partner Subsidiary of
the Shortfall Party). If the Shortfall Party elects to suffer a
reduction, its Percentage Interest and the ratio of its Cellco
Partner Subsidiary's Specified Account Value to the Specified
Account Value of all of the Cellco Partners shall be reduced to an
amount equal to (A) the total of such Party's Owned POPs as set
forth on Schedule 3.2 (whether or not such Owned POPs are included
in the Cellular Contributions) times the "Other POP Value" set
forth for such Party on Schedule 2.11 or, as to such Party's Owned
POPs in NYSMSA, the NYSMSA POP Value set forth on Schedule 2.11
less its Failed Contribution Amount over (B) the total of (i) all
Parties' Owned POPs as set forth on Schedule 3.2 (whether or not
such Owned POPs are included in the Cellular Contributions) times
the "Other POP Value" set forth for each Party on Schedule 2.11
or, as to such Party's Owned POPs in NYSMSA, the NYSMSA POP Value
set forth on Schedule 2.11 less (ii) the Failed Contribution
Amounts of all Partners not included in any Partner's Section 2.11
Amount. This Section 2.11 shall not apply in the case of any
failure to contribute interests in one or more of the Saleable
Systems or the Springwich Interests and shall be inoperative in
the event that either Party exercises any right to terminate
pursuant to Section 9.1 hereof. To the extent that any of the
Systems in which NYNEX's interest is indicated on Schedule 3.2 as
held or to be held at the Cellular Closing Date through Upstate
Cellular Network, a general partnership in which NYNEX is a 50%
partner, is included in such Party's Cellular Contributions but is
not the subject of an affiliation agreement meeting all of the
Affiliation Standards listed on Schedule 2.14 hereto, such Party
shall be deemed to be a Shortfall Party having an additional
Failed Contribution Amount with respect to such interest, provided
that (i) the Failed Contribution Amount with respect to such
interest shall be calculated by multiplying the number of Owned
POPs in such System by the percentage discount applicable to such
System calculated pursuant to Schedule 2.14, and (ii) the
aggregate of all such discounts with respect to any System shall
be limited to 30%. For each Party, the aggregate Failed
Contribution Amounts of such Party or its Affiliates shall be
called its "Section 2.11 Amount."
2.12 True-Up. Immediately prior to the Cellular
Closing, the Parties shall determine their respective Section 2.12
Amounts. The Section 2.12 Amount for each Party shall be the sum
of its Section 2.8 Amounts and Section 2.9 Amounts less the sum of
its Section 2.10 Amounts and Section 2.11 Amounts. If either of
the Section 2.12 Amount is positive, the Party whose percentage of
the total positive Section 2.12 Amount is less than its Percentage
Interest in Cellco shall cause its Cellco Partner Subsidiary to
make a contribution, in the form of a note in an amount which will
eliminate (i) the negative Section 2.12 Amount of such Party, if
any, and (ii) the percentage shortfall of such Party with respect
to the total positive Section 2.12 Amounts. If both Section 2.12
Amounts are negative, the Party whose percentage of the aggregate
negative Section 2.12 Amount is greater than its Percentage
Interest in Cellco shall cause its Cellco Partner Subsidiary to
contribute to Cellco, in the form of a note, the amount necessary
to eliminate such percentage excess.
In lieu of the Partner Subsidiary of any Party being
required to contribute a note pursuant to this Section 2.12, the
other Party may, in its sole discretion, cause its Partner
Subsidiary to transfer additional liabilities to Cellco that
relate to its Cellular Contributions such that the ratio of each
Partner Subsidiary's Specified Account Value to the Specified
Account Values of all of the Cellco Partners shall equal their
respective Percentage Interests.
Any note issued pursuant to this Section 2.12 shall bear
interest at the Interest Rate and be on such other terms and
conditions as the Parties shall agree.
2.13 Balance Sheet Adjustment and Accounts Receivable
Guarantee. (a) Prior to the Cellular Closing, the Parties will
adjust the balance sheets of the Cellular Business of NYNEX and
its Affiliates and the Cellular Business of Bell Atlantic and its
Affiliates in accordance with the accounting principles, practices
and methods set forth on Schedule 2.13 hereto.
(b) Within 200 days following the Cellular Closing
Date, Cellco shall advise each Party in writing of the collection
experience of accounts receivable included as part of such Party's
Cellular Contributions and of the extent to which such accounts
receivable that remained uncollected as of the 180th day after the
Cellular Closing Date exceeded, or were exceeded by, the sum of
(i) reserves for uncollectible accounts receivable and (ii)
reserves for fraud, in each case included on the books of such
Party's Cellular Contributions on the Cellular Closing Date, as
adjusted pursuant to Section 2.13(a). Within ten days following
receipt of such notice, (x) to the extent that a Party's
uncollected accounts receivable exceeded such reserves, such Party
shall pay to Cellco the amount of such excess and (y) to the
extent that the aforementioned reserves exceeded such uncollected
accounts receivable, the amount of any excess reserves shall be
returned in cash to such Party.
2.14 Interim Management. (a) The Parties hereby
constitute and appoint a Management Organization Committee (the
"MOC") which shall have the responsibilities and membership set
forth on Schedule 2.14 hereto.
(b) The Parties agree that they shall cooperate in the
preparation of initial business plans and budgets for PCSCO and
Cellco and to use their reasonable efforts to cause such business
plans and budgets to be submitted to the MOC by August 1, 1994 in
the case of the PCSCO business plan and budget and by September 1,
1994, in the case of the Cellco business plan and budget.
(c) The terms of any affiliation agreement to be
entered into by Cellco or PCSCO and any System or Acquired Entity
shall be substantially in accordance with the provisions of
Schedule 2.14 or as otherwise determined by the MOC.
(d) For the period from the date hereof until the
Cellular Closing, any expenses which are both (i) incurred by the
Parties in connection with the formation of Cellco and (ii)
specifically approved by the MOC, shall be borne ratably by the
Parties in accordance with their Percentage Interests in Cellco on
the Cellular Closing Date.
2.15 Restructuring. Prior to the Cellular Closing,
each of the Parties shall use their reasonable efforts to effect a
restructuring to make available to Cellco its Cellular
Contributions in the form of direct ownership of assets or
partnership interests rather than shares of capital stock of
corporations.
2.16 The Corporate General Partner. (a) It is the
intention of the Parties that they will own interests in Cellco
and PCSCO through direct or indirect wholly-owned subsidiary
entities or, in the case of Cellco, as above and indirectly
through the Corporate General Partner, a corporation to be
incorporated in Delaware, the outstanding common equity of which
will be held by all of the Partners.
(b) The Corporate General Partner will hold 1% of the
equity interests in Cellco. The equity interests of the Corporate
General Partner will initially be held by the Parties in the same
proportion as their initial Percentage Interests set forth in
Section 2.1(c), as such initial Percentage Interests may be
adjusted as a result of the NYNEX Election (as defined in the
Letter Agreement). The Corporate General Partner will have an
initial capitalization of $10 million, which amount will be paid
by the Parties ratably in accordance with their respective
percentage equity interests in the Corporate General Partner.
(c) The management and corporate governance principles
and procedures for the Corporate General Partner shall be
substantially identical to those applicable to PCSCO, as set forth
in Section 5.1 of the PCSCO Partnership Agreement, and the
provisions of such Section 5.1 shall be set forth, as nearly as
practicable under applicable laws, in the Certificate of
Incorporation and By-Laws of the Corporate General Partner and in
an agreement among shareholders.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF NYNEX AND BELL ATLANTIC
Bell Atlantic represents and warrants to NYNEX, and
NYNEX represents and warrants to Bell Atlantic, that with respect
to itself, the following statements are true and correct as of the
date hereof and will be true and correct as of the date of the
Cellular Closing as if made on and as of such date.
3.1 Organization. Such Party is a corporation duly
organized, validly existing and in good standing under the laws of
its jurisdiction of incorporation, and has the requisite corporate
power and authority to own, lease and operate its properties and
to carry on its business as it is now being conducted.
3.2 Interests in Systems. Schedule 3.2 accurately sets
forth for each System in which such Party or its Affiliates have
an interest (i) the name of the market, (ii) the name of the
entity holding the FCC License covering the provision of cellular
service in such market, (iii) the number of POPs in such market,
(iv) the direct or indirect percentage interest of the Party or
its Affiliates in the entity holding such FCC License, indicating
which interests are not currently owned but are subject to a
binding agreement giving the Party or its Affiliates the right to
acquire such interest, and (v) the Owned POPs in such market.
3.3 Authority. Such Party has the requisite power and
authority to execute and deliver this Agreement and to consummate
the Transactions, and such execution, delivery and consummation
have been duly authorized by all necessary corporate action. This
Agreement has been duly executed and delivered by such Party and
constitutes the valid and binding obligation thereof, enforceable
against such Party in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy,
reorganization, insolvency and similar federal and state laws
generally affecting the rights and remedies of creditors and
general principles of equity, whether considered in a proceeding
at law or in equity.
3.4 Consents. Neither the execution and delivery of
this Agreement by such Party nor the consummation of the
Transactions will require any consent, approval, or authorization
of, waiver by, notification to, or filing with, any court,
governmental agency or regulatory or administrative authority
(each, a "Governmental Entity") on the part of such Party or any
of its Affiliates (including, without limitation, any of its
Contributed Subsidiaries, or any of its Contributed Partnerships)
other than (i) the filing of certificates and other documents with
respect to the Transactions in accordance with the partnership
laws of the states in which the such Contributed Partnerships are
organized; (ii) approvals required by the FCC and the state
regulatory commissions listed on Schedule 3.4 hereto necessary to
effectuate the Transactions (the foregoing being hereinafter
referred to as the "Regulatory Approvals"); (iii) approvals
required by the Decree Court with respect to the MFJ necessary to
effectuate the Transactions (the foregoing being hereinafter
referred to as the "MFJ Approvals"); and (iv) filings with respect
to the Transactions under the HSR Act.
3.5 Financial Information. (a) Such Party has
delivered to the other Party complete and correct copies of the
following financial statements of such Party's Cellular Business:
(x) unaudited balance sheets as of December 31, 1992 and 1993 and
related statements of income and cash flows for each of the fiscal
years then ended, (y) interim statements of income and cash flows
for the three month periods ended March 31, 1993 and 1994 and the
interim balance sheets as of such dates. The year-end and interim
financial statements being delivered by NYNEX and Bell Atlantic
are collectively referred to herein as the "Financial Statements".
(b) All of such Party's Financial Statements are in
accordance with the books and records of such Party's Cellular
Business, present fairly the financial position, results of
operations and cash flows of such Party's Cellular Business as of
the dates and for the periods indicated, subject in the case of
the Financial Statements at and for the periods ended March 31,
1993 and 1994, to normal year-end adjustments. The Financial
Statements of such Party have been prepared in conformity with
generally accepted accounting principles applied on a consistent
basis throughout the periods specified, except for the lack of
explanatory footnote disclosures required by generally accepted
accounting principles. Such Party and its Cellular Business have
in place a system of financial controls designed and adequate for
the purpose of giving substantial protection against fraud,
misstatement of financial position or results of operations or
loss of cash or assets.
3.6 Compliance with Laws. Neither such Party nor any
of its Affiliates is in violation of any decree, order, judgment,
statute, rule or regulation so as to materially adversely affect,
individually or in the aggregate, the Business Condition (as
defined in Section 4.6 below) of such Party's Cellular Business,
or the ability of such Party to consummate the Transactions or the
ability to conduct its Cellular Business as it is currently being
conducted.
3.7 Licenses. Except as set forth on Schedule 3.7,
such Party's Cellular Business has Licenses which are necessary
for it to conduct its respective wireless operations in the manner
in which they are presently being conducted, other than any
Licenses, the failure of which to hold would not, singly or in the
aggregate, have an adverse effect on the Business Condition of
such Party's Cellular Business. Except as set forth on Schedule
3.7, all of the FCC and state Licenses held by such Party's
Cellular Business are valid and in full force and effect. Except
as set forth on Schedule 3.7, no event has occurred with respect
to the Licenses which is likely to result in, or after notice or
lapse of time or both would be likely to result in, revocation,
termination or non-renewal thereof or would result in any other
material impairment of the rights of the holder of any of the
Licenses, which would result in a material adverse effect on the
Business Condition of such Party's Cellular Business. Except as
set forth on Schedule 3.7, there are no facts which would prevent
the Licenses from being renewed in accordance with FCC rules and
regulations or constructed and put into commercial service within
the applicable time period. As used in this Section 3.7, the term
Licenses does not include waivers of the MFJ. Following the
Cellular Closing, Cellco will have the right and ability to
conduct the business of such Party's Cellular Business in the same
manner in all material respects in which it is operated prior to
the Cellular Closing. The provisions of this Section are
qualified in their entirety by the understanding of the Parties
that the Saleable Systems and the Springwich Interests will not be
included in the Cellular Contributions of the Parties and that the
Licenses in respect thereof would not be assignable to Cellco
because of the overlaps that exist between the Saleable Systems
and the Springwich Interests, on the one hand, and other
properties of the Partners to be included in the Cellular
Contributions on the other.
3.8 Assets. Other than Saleable Systems and the
Springwich Interests and assets whose non-contribution is
addressed pursuant to Section 2.11 hereof, such Party's
Contributions include all rights and property necessary to the
conduct of such Party's Cellular Business by Cellco in the manner
in which it is presently conducted by such Party and no property
excluded from such Party's Contribution under the last paragraph
of Section 2.1(d) hereof constitutes property or rights material
to such Party's Cellular Business.
ARTICLE IV
ADDITIONAL INDEMNITY REPRESENTATIONS
If the Cellular Closing is consummated, Bell Atlantic
agrees to indemnify NYNEX and Cellco, and NYNEX agrees to
indemnify Bell Atlantic and Cellco, pursuant to Article VIII
hereof to the extent that the following statements are not true
and correct as of the Cellular Closing Date with respect to itself
and its Cellular Contributions as if made on and as of the
Cellular Closing Date.
4.1 Organization. (a) Each of such Party, its Partner
Subsidiary (if a corporation) and its Contributed Subsidiaries is
a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation, and
has the requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as it is now
being conducted. Each of such Party, its Partner Subsidiary (if a
corporation) and its Contributed Subsidiaries is duly qualified or
licensed to do business and is in good standing as a foreign
corporation in the jurisdictions in which such corporations own or
lease any real property or conduct any business, so as to require
such qualification or licensing. Each of such Party's Partner
Subsidiary and Contributed Subsidiaries is a wholly-owned, direct
or indirect subsidiary of such Party. All of the issued shares of
capital stock of each of such Party's Contributed Subsidiaries are
outstanding and are validly issued, fully paid, nonassessable and
free of pre-emptive rights.
(b) Each of such Party's Cellco Partner Subsidiary (if
a partnership) and Contributed Partnerships is duly organized,
validly existing and in good standing under the jurisdiction of
its organization, and has the requisite power and authority to
own, lease and operate its properties and to carry on its business
as it is now being conducted. The partnership agreements and each
of the other agreements among the partners in such Cellco Partner
Subsidiary (if a partnership) and Contributed Partnership
(including but not limited to loan agreements, pledge agreements,
management agreements and reseller agreements, as amended to
date), are in full force and effect.
(c) The minute books of each of such Party's Cellco
Partner Subsidiary, Contributed Subsidiaries and Contributed
Partnerships contain accurate records of all meetings and consents
in lieu of meetings of the Board of Directors or similar body and
any committee of the Board of Directors or similar body purporting
to take formal corporate or partnership action in lieu of action
by the Board of Directors, and of the stockholders or partners
thereof, through the Cellular Closing Date and accurately reflect
all transactions and other matters which are required to be passed
upon by the Board of Directors or similar body, any committees
thereof or the stockholders or partners thereof.
(d) There are no outstanding options, warrants, rights,
calls, subscriptions, commitments or agreements of any character
whatsoever relating to, or calling for the issuance, transfer,
sale or other disposition of, or the repurchase or other
acquisition of, any shares, issued or unissued, of capital stock
or other voting interests of any of such Party's Cellco Partner
Subsidiary or Contributed Subsidiaries or of such Party's direct
or indirect interest in any of the Contributed Partnerships or
any securities convertible or exchangeable into or for any of the
foregoing, to which such Party or any Affiliate thereof or any of
the Contributed Partnerships is a party or by which any of them is
bound.
(e) None of such Party's Cellco Partner Subsidiary or
any of its Contributed Subsidiaries or Contributed Partnerships
has any subsidiaries or owns any interests in any other person
except as expressly set forth in this Agreement and the Schedules
hereto and none of such entities engages in any business other
than the ownership of interests in, and the operation of, the
Systems listed under the name of such Party on Schedule 3.2
hereto.
4.2 Ownership. (a) Such Party directly or indirectly
owns all of the interests in Systems listed under its name on
Schedule 3.2 hereto, subject to the provisions of Section 2.11.
(b) Each piece of real property (i) owned by each of
the Contributed Subsidiaries and each of the Contributed
Partnerships of such Party, or by such Party or an Affiliate in
the case of real property which is a Cellular Asset or
(ii) occupied by or leased to any of such Contributed Subsidiaries
or Contributed Partnerships or to such Party or an Affiliate in
the case of leased real property which is a Cellular Asset under
any lease, sublease or other arrangement, and all buildings and
other structures located on such real property (for purposes of
this Section 4.2(b), collectively "Real Property") has all
material permits necessary to conduct the activity conducted at
such Real Property on the date hereof. Each of such Party, its
Affiliates, its Contributed Subsidiaries and Contributed
Partnerships has title as represented in current title insurance
policies for all Real Property owned by it, which policies do not
contain any exceptions the effect of which would materially
detract from the value of such Real Property to Cellco or the
System to which it relates. Such Party or one of its Affiliates,
Contributed Subsidiaries or Contributed Partnerships holds the
rights in and to all easements or other rights reasonably
necessary for access to all Real Property unless otherwise
indicated in such title policies. There is no unrecorded defect
in title which would materially adversely affect the use or value
of any of the Real Property for the maintenance and operation of a
cellular system or a communications facility related thereto. All
leases, subleases and other arrangements relating to Real Property
are in full force and effect. Neither such Party, its Affiliates
nor any of its Contributed Subsidiaries or Contributed
Partnerships has given or received notice to the effect that there
exists (i) any default or event of default by such Party or any of
its Affiliates, Contributed Subsidiaries or Contributed
Partnerships under any of such instruments, or (ii) any event or
condition which with notice or lapse of time or both would
constitute an event of default thereunder by such Party or any of
its Affiliates, Contributed Subsidiaries or Contributed
Partnership.
(c) Good and marketable title to all tangible personal
property used in connection with the Systems included in such
Party's Cellular Contribution is being transferred to Cellco, or
such tangible personal property is used or held subject to leases,
conditional sale contracts, franchises or licenses which are in
good standing and are valid and in full force and effect and there
are no facts which would interfere with Cellco's ability to use
such tangible personal property in connection with such Party's
Cellular Contribution. During the past three years there has not
been any significant interruption of the operations of any System
in which such Party is contributing an interest due to breakdown
or inadequate maintenance of its tangible personal property.
(d) All trade names, registered and unregistered
trademarks and service marks and all patents and copyrights
("Intangible Property") will be transferred or licensed to Cellco
and will be usable by Cellco in the conduct of its business on the
same terms as such Intangible Property is currently being used by
such Party and its Affiliates in the conduct of its Cellular
Business. Neither such Party nor any of its Affiliates,
Contributed Subsidiaries or Contributed Partnerships has, during
the period commencing three years prior to the Cellular Closing
Date, been charged with any infringement with respect to any of
the Intangible Property or been notified or advised of any claim
of any other person relating to any of the Intangible Property or
any confidential information of any of such Party, its Affiliates,
its Contributed Subsidiaries or its Contributed Partnerships
relating to its Cellular Business, and there are not any facts
that are likely to give rise to any charge or claim that would
adversely affect the right of Cellco to use any Intangible
Property. Such Party's Cellular Business is the licensee or the
sole and exclusive owner of such Intangible Property of all
patents and registered trade names, trademarks and service marks
included in Intangible Property and does not use any Intangible
Property by consent of any other person (other than licensors
pursuant to valid written license agreements).
4.3 Consents; No Violation. Neither the execution and
delivery of this Agreement by such Party nor the consummation of
the Transactions will (a) conflict with, or result in any breach
or violation of, any provision of the certificate of incorporation
or bylaws of such Party or any of its Contributed Subsidiaries or
of any partnership agreement of any of its Contributed
Partnerships; (b) except as set forth on Schedule 3.4 and assuming
the expiration of all applicable waiting periods under the HSR
Act, constitute, with or without notice or the passage of time or
both, a breach, violation or default, create a Lien, or give rise
to any right of termination, modification, cancellation,
prepayment or acceleration, under any order, writ, injunction,
decree, law, statute, rule or regulation, governmental permit or
license, or any mortgage, indenture, lease, agreement or other
instrument of such Party or of any of its Contributed Subsidiaries
or Contributed Partnerships or to which such Party, any of its
Contributed Subsidiaries or any of its Contributed Partnerships or
any of their respective properties is subject; (c) require any
consent, approval, or authorization of, waiver by, notification
to, or filing with, any Governmental Entity on the part of such
Party, any of its Contributed Subsidiaries, or any of its
Contributed Partnerships other than (i) the filing of certificates
and other documents with respect to the Transactions in accordance
with the partnership laws of the states in which the such
Contributed Partnerships are organized; (ii) Regulatory Approvals;
(iii) MFJ Approvals; and (iv) filings with respect to the
Transactions under the HSR Act. The representation and warranty
set forth in this Section 4.3 will not be violated by the
existence of any inhibition to the contribution of an interest in
Systems which failure to contribute is resolved pursuant to
Section 2.11.
4.4 Financial Information; Undisclosed Liabilities.
(a) Such Party's Cellular Business does not have any liabilities
or obligations of any nature (due or to become due, absolute,
accrued, contingent or otherwise), except for Permitted
Liabilities.
(b) There is no roaming subsidy of such Party's
Cellular Business that has not been expensed prior to the Cellular
Closing Date.
4.5 Authority. Such Party has the requisite power and
authority to execute and deliver this Agreement and to consummate
the Transactions, and such execution, delivery and consummation
have been duly authorized by all necessary corporate action. This
Agreement has been duly executed and delivered by such Party and
constitutes the valid and binding obligation thereof, enforceable
against such Party in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy,
reorganization, insolvency and similar federal and state laws
generally affecting the rights and remedies of creditors and
general principles of equity, whether considered in a proceeding
at law or in equity.
4.6 Absence of Certain Changes. Since March 31, 1994,
except as expressly contemplated by this Agreement or the
Transactions, and except for changes resulting from general
cellular industry conditions or as a result of a regulatory
development affecting the cellular industry generally, (a) such
Party's Cellular Business, Contributed Subsidiaries and
Contributed Partnerships and the Systems in which such entities
have an interest have conducted business only in the ordinary and
usual course and consistent with past practices, strategies and
programs; and (b) none of such Cellular Business, Contributed
Subsidiaries, Partnerships or Systems have undergone or suffered
any change in their business, financial condition, assets,
liabilities or results of operations ("Business Condition") which
has been, individually or in the aggregate, materially adverse to
any of such Cellular Business, Contributed Subsidiaries,
Contributed Partnerships and Systems, or the ability of such Party
to consummate the Transactions or the ability of each of such
Cellular Business, Contributed Subsidiaries, Contributed
Partnerships and Systems to conduct its respective business as it
is currently being conducted.
4.7 Compliance with Laws. Neither such Party nor any
of its Affiliates is in violation of any decree, order, judgment,
statute, rule or regulation so as to materially adversely affect,
individually or in the aggregate, the Business Condition of any of
such Party's Cellular Business or the ability of such Party to
consummate the Transactions or the ability to conduct such Party's
Cellular Business as it is currently being conducted.
4.8 Legal Proceedings. There is no litigation,
proceeding or governmental investigation pending or, to the best
of such Party's knowledge, threatened, against such Party, any of
its Contributed Subsidiaries or Contributed Partnerships or any of
their respective properties or businesses or any of their
respective assets which, if decided adversely, would have a
material adverse effect on the Business Condition of any of such
Party's Cellular Business, Contributed Subsidiaries or Contributed
Partnerships or any of the Systems in which such Party is
contributing an interest or on the ability of any of such Cellular
Business, Contributed Subsidiaries, Contributed Partnerships and
Systems to conduct their businesses in the same manner in all
material respects in which they are operated prior to the Cellular
Closing or on the ability of such Party to consummate the
Transactions.
4.9 Licenses. Except as set forth on Schedule 3.7,
such Party's Cellular Business has Licenses which are necessary
for it to conduct its respective wireless operations in the manner
in which they are presently being conducted, other than any
Licenses, the failure of which to hold would not, singly or in the
aggregate, have an adverse effect on the Business Condition of
such Party's Cellular Business. Except as set forth on Schedule
3.7, all of the FCC and state Licenses held by such Party's
Cellular Business are valid and in full force and effect. Except
as set forth on Schedule 3.7, no event has occurred with respect
to the Licenses which is likely to result in, or after notice or
lapse of time or both would be likely to result in, revocation,
termination or non-renewal thereof or would result in any other
material impairment of the rights of the holder of any of the
Licenses, which would result in a material adverse effect on the
Business Condition of such Party's Cellular Business. Except as
set forth on Schedule 3.7, there are no facts which would prevent
the Licenses from being renewed in accordance with FCC rules and
regulations or constructed and put into commercial service within
the applicable time period. As used in this Section 4.9, the term
Licenses does not include waivers of the MFJ. Following the
Cellular Closing, Cellco will have the right and ability to
conduct the business of such Party's Cellular Business in the same
manner in all material respects in which it is operated prior to
the Cellular Closing. The provisions of this Section are
qualified in their entirety by the understanding of the Parties
that the Saleable Systems and the Springwich Interests will not be
included in the Cellular Contributions of the Parties and that the
Licenses in respect thereof would not be assignable to Cellco
because of the overlaps that exist between the Saleable Systems
and the Springwich Interests, on the one hand, and other
properties of the Partners to be included in the Cellular
Contributions on the other.
4.10 Finders; Investment Bankers. None of such Party
or any of its Affiliates, or any of their respective officers or
directors, has employed any broker, finder or investment banker or
incurred any liability for any brokerage fees, commissions or
finder's fees in connection with the Transactions which would be a
liability of any of PCSCO, Cellco, the Contributed Subsidiaries or
the Contributed Partnerships.
4.11 INTENTIONALLY OMITTED.
4.12 Material Contracts. All contracts to which any of
such Party's Contributed Subsidiaries or any of its Contributed
Partnerships is a party or which constitute Cellular Assets which
are material to any of such Contributed Subsidiaries or
Contributed Partnerships or the Cellular Business or any of the
Systems in which an interest is being contributed by such Party,
including all agency agreements, roaming agreements, agreements
with other cellular carriers with respect to national accounts and
price and billing agreements to which any of such entities are a
party are valid and binding in accordance with their terms.
Neither such Party nor any of its Affiliates, Contributed
Subsidiaries or Contributed Partnerships has given or received
notice that there exists (i) any default or event of default by
any of such entities under any of such contracts or (ii) any event
or condition which with notice or lapse of time or both would
constitute an event of default under any of such contracts, and,
none of such contracts will be materially adversely affected by
the execution and delivery of this Agreement or the consummation
of the Transactions.
4.13 Employee Benefit Plans. (a) Each material
"employee pension benefit plan," as that term is defined in
Section 3(2) of ERISA and each material "employee welfare benefit
plan," as that term is defined in Section 3(1) of ERISA is
hereinafter referred to as an "ERISA Plan" and collectively as
"ERISA Plans", and all other material retirement, pension, profit-
sharing, money purchase, deferred compensation, incentive
compensation, bonus, stock option, stock purchase, severance pay,
unemployment benefit, vacation pay, savings, medical, dental,
post-retirement medical, accident, disability, weekly income,
salary continuation, health, life or other insurance, fringe
benefit, or other material employee benefit plans, programs,
agreements, or arrangements, whether or not subject to ERISA,
whether oral or written, under which any Employee (as defined in
Section 4.17) has any present or future right to benefits or under
which any of the Contributed Subsidiaries or any of the
Partnerships has any present or future liability together with the
ERISA Plans, are referred to hereinafter as the "Plans". Material
employment, severance, termination or similar-type agreements
covering any Employee are referred to as the "Employment
Agreements" and also as "Plans".
(b) The execution and delivery of this Agreement by
each Party and the performance of this Agreement by such Party and
its Affiliates, including the Transactions, will not, by itself,
result now or at any time in the future in the payment by PCSCO or
Cellco to any Employee of any severance, termination or similar
type payments or benefits (other than benefits under Code
Section 4980B).
(c) Each Plan may be terminated without material
liability to PCSCO or Cellco (other than those liabilities (i) for
which specific assets have been set aside in a trust or other
funding vehicle or (ii) disclosed on the Financial Statements to
the extent required by Section 4.4 hereof).
(d) (i) No Party or any of its Affiliates, any of the
ERISA Plans, any trust created thereunder, or any trustee or
administrator thereof, or any other party, has engaged in any
transaction as a result of which any of the Contributed
Subsidiaries, any of the Partnerships or either Party could
reasonably be expected to be subject to any liability pursuant to
Section 409 of ERISA or either to a civil penalty assessed
pursuant to Section 502(i) of ERISA or to a tax imposed pursuant
to Code Section 4975.
(ii) Since the effective date of ERISA, no liability
under Title IV of ERISA has been incurred or is reasonably
expected to be incurred by any Contributed Subsidiary or any
Partnership (other than liability for premiums due to the PBGC),
either directly or by reason of its affiliation with any member of
its controlled group (defined as any organization which is a
member of a controlled group of organizations within the meaning
of Code Section 414) ("Controlled Group"), unless, where permitted
by law, such liability is reserved for or otherwise reflected on
the Financial Statements or unless such liability has been
satisfied in full.
(iii) All contributions required to be made to the
Plans prior to the Cellular Closing Date under the terms of any
Plan, the Code, ERISA or other applicable law have been or will be
timely made.
(e) Except with respect to those ERISA Plans which are
"multiemployer plans":
(i) no member of such Party's Controlled Group has
engaged in a transaction which could subject it to liability under
ERISA Section 4069;
(ii) as of the Cellular Closing Date, each member of
such Party's Controlled Group has made or will have made all
required premium payments when due to the PBGC;
(iii) no member of such Party's Controlled Group has
incurred an "accumulated funding deficiency" (as defined in ERISA
Section 302 and Code Section 412), whether or not waived;
(iv) no event or condition exists (other than the
transactions contemplated by this Agreement) which could
reasonably be deemed a reportable event within the meaning of
ERISA Section 4043 which could reasonably be expected to result in
a liability to any member of such Party's Controlled Group and no
condition exists which could reasonably be expected to subject any
such member of such Party's Controlled Group to a fine under ERISA
Section 4071;
(v) each Plan has been established and administered in
all material respects in accordance with its provisions, and with
all applicable laws; and
(vi) each Plan (to the extent such Plan or the assets
and liabilities thereof will be transferred to PCSCO or Cellco)
that is intended to be "qualified" within the meaning of Code
Section 401(a), and to the extent applicable, Code Section 401(k),
is so qualified, has been determined by the Internal Revenue
Service to be so qualified, and nothing has occurred, whether by
action or failure to act, that would adversely affect the
qualified status of any such Plans.
(f) With respect to any ERISA Plans which are
multiemployer plans (as that term is defined in ERISA
Section 4001(a)(3)) to which any member of such Party's Controlled
Group has any liability or contributes (or has at any time
contributed or had an obligation to contribute):
(i) each member of such Party's Controlled Group has or
will have, as of the Cellular Closing Date, made all required
contributions to each such multiemployer plan,
(ii) no member of such Party's Controlled Group has
incurred a "complete withdrawal" or a "partial withdrawal," as
such terms are respectively defined in ERISA Sections 4203 and
4205, nor would any member of such Party's Controlled Group be
subject to any liability under Title IV of ERISA, if, as of the
Cellular Closing Date, any of such Party's Controlled Group were
to engage in such a complete or partial withdrawal from any such
multiemployer plan;
(iii) no such multiemployer plan is in reorganization
or insolvent (as those terms are defined in ERISA Sections 4241
and 4245, respectively); and
(iv) no member of such Party's Controlled Group has
engaged in a transaction which could subject it to liability under
ERISA Section 4212(c).
4.14 Taxes. Each of the Parties and the Partners (and
their respective Affiliates) has duly filed, or has obtained a
filing extension from the appropriate federal, state, local and
foreign governments or governmental agencies with respect to, all
returns and reports required to be filed by such person on or
prior to the Cellular Closing Date ("Tax Returns") for all Taxes
which if unpaid might result in a lien (or similar encumbrance)
upon any of the Contributions or upon Cellco. For purposes of
this Agreement, the term "Tax" or "Taxes" shall mean federal,
state, local or foreign income, capital gains, profits, gross
receipts, payroll, capital stock, franchise, employment,
withholding, social security, unemployment, disability, real
property, personal property, stamp, excise, occupation, sales,
use, transfer, mining, value added, investment credit recapture,
alternative or add-on minimum, severance, environmental, estimated
or other taxes, duties or assessments of any kind, including any
interest, penalty and additions imposed with respect to such
amounts. Payment in full for the payment of all Taxes shown to be
due on such Tax Returns, which if unpaid might result in a lien or
similar encumbrance upon any of the Contributions or upon Cellco,
has been made. All written assessments of Taxes due and payable
by, on behalf of or with respect to any of the Parties and the
Partners (or any of their respective Affiliates) or their
respective Contributions, which if unpaid might result in a lien
or similar encumbrance upon any of the Contributions or upon
Cellco, have been paid by such Party, or are being contested in
good faith by appropriate proceedings, in which case all amounts
owing after such contest shall be promptly paid by such person.
There are no tax liens on any Contributions of any Partner that
arose in connection with any failure (or alleged failure) to pay
any Tax, except for liens for current taxes not yet due and
payable. All amounts required to be withheld by each of the
Parties or the Partners (or any of their respective Affiliates)
from their respective employees for income taxes, social security
and other payroll taxes have been collected and withheld, and have
either been paid to the respective governmental agencies, set
aside in accounts for such purpose, or accrued, reserved against
and entered upon the books and records of the employer by such
person. Each Party shall cause all tax sharing agreements between
Contributed Subsidiaries and the Partners or their Affiliates to
terminate upon the Cellular Closing Date and no further payments
shall be made under or in respect of such agreements; provided,
however, that if the tax sharing agreement between a Party (or any
Affiliate) and a Contributed Subsidiary did not provide for
payments made on a quarterly basis with respect to estimated
income taxes (or if there is no such agreement), then such
Contributed Subsidiary shall make a payment to or receive payment
from its related Party equal to the amount with respect to the
taxable period ending on the Cellular Closing Date which would
have been paid by or to such Contributed Subsidiary had there been
a tax sharing agreement that provided for such quarterly estimated
payments.
4.15 MFJ Activities. Neither Party has any activities
which any of such Party's Contributed Subsidiaries or Contributed
Partnerships, or any of the Systems in which an interest is being
contributed by such Party, directly or indirectly engages or
participates in, alone or with any individual or entity, whether
as a principal, agent, reseller, representative, consultant or
independent contractor, activities which are prohibited by the
MFJ.
4.16 Environmental Matters. Each of such Party's
Cellular Business, Contributed Subsidiaries and Contributed
Partnerships and each of the Systems operated by any of them is in
material compliance with all applicable laws and regulations
related to the environment, health and safety, all required
permits from Governmental Entities have been obtained and are in
effect, and no on-site storage, treatment or disposal of hazardous
waste or material has been made (except in compliance with
applicable laws and regulations) in connection with any of such
Systems. There are no pending actions, proceedings, or notices of
potential action and there are no facts that would reasonably be
expected to lead to actions, proceedings, or notices of potential
action from any governmental agency regarding the condition of any
of such Systems under environmental, health or safety laws. Such
Party's Cellular Business has lawfully disposed of the waste
generated by the businesses associated with its Systems and no
pending or threatened proceedings exist concerning disposal of
waste generated by the businesses associated with any of such
Systems. There are no underground storage tanks, PCBs, asbestos,
radon gas, harmful nuclear radiation, or hazardous wastes present
on the properties of such Party's Cellular Business.
4.17 Employees. (a) Employees employed with respect
to the Cellular Businesses shall be hereinafter referred to as the
"Employees". For purposes of the preceding sentence, Employees
shall include employees on worker's compensation, military leave,
other approved leaves of absence, short-term and long-term
disability, non-occupational disability and employees on layoff
with recall rights. Except as set forth in Schedule 4.17, none of
the Contributed Subsidiaries or Contributed Partnerships of such
Party has any outstanding commitment or agreement to effect any
general wage or salary increase which covers all of the Employees
for, or to modify in any material respect the conditions or terms
of employment of, any grade, class or group of its employees,
consultants or agents. There are no controversies pending or, to
the knowledge of such Party or any of the Contributed Subsidiaries
or Contributed Partnerships of such Party, threatened, between any
of the Contributed Subsidiaries or the Contributed Partnerships of
such Party and any of the Employees which individually or in the
aggregate may have a material adverse effect on such entity.
Except as set forth on Schedule 4.17 hereto, none of the
Contributed Subsidiaries or the Contributed Partnerships of such
Party is a party to any collective bargaining agreement or other
labor union contract applicable to any of the Employees, nor does
any such entity know of any activities or proceedings of any labor
union to organize any of the Employees.
(b) There exists no employment, consulting, severance
or indemnification agreement between any of such Contributed
Subsidiaries or Contributed Partnerships and any current or past
director, officer or Employee thereof.
4.18 Insurance. The properties and the conduct of the
respective businesses of such Party's Cellular Business are
adequately insured (in the manner and to the extent customary for
businesses engaged in the same or similar business) by financially
sound and reputable insurers, all of which are unaffiliated with
such Party or are self-insured by such Party.
4.19 Acquired Entities. To the extent that either
Party includes Acquired Entities as part of its Cellular
Contribution, such Party agrees that the statements made by such
Party in this Article IV with respect to such Party's Contributed
Subsidiaries and Contributed Partnerships are made by such Party
with respect to its Acquired Entities, as appropriate, subject to
the following provisions:
(i) the statements shall be deemed made
as of the Cellular Closing Date and shall not
be deemed untrue as a result of events
occurring before or states of fact existing
on, the date such Party acquired such Acquired
Entity; and
(ii) any schedules or other information
relating to such Acquired Entity recited in
this Agreement as having been delivered on or
before the date of this Agreement shall be
delivered by such Party on the earlier of (x)
the 30th day following the acquisition of the
Acquired Entity or (y) the Cellular Closing
Date.
4.20 INTENTIONALLY OMITTED.
4.21 Assets. Other than Saleable Systems, the
Springwich Interests and assets whose non-contribution is
addressed pursuant to Section 2.11 hereof, such Party's
Contributions include all rights and property necessary to the
conduct of such Party's Cellular Business by Cellco in the manner
in which it is presently conducted by such Party and no property
excluded from such Party's Contribution under the last paragraph
of Section 2.1(d) hereof constitutes property or rights material
to such Party's Cellular Business.
4.22 Restrictions. Neither such Party nor its
Contributed Partnerships and Contributed Subsidiaries is a party
to any indenture, agreement, contract, commitment, lease, plan,
license, permit, authorization or other instrument, document or
understanding, oral or written, or subject to any charter or other
corporate restriction or any judgment, order, writ, injunction,
decree or award (other than the MFJ and any partnership agreement
of a non-wholly-owned partnership) which materially adversely
affects or materially restricts or, so far as such Party can now
reasonably foresee, may in the future materially adversely affect
or materially restrict, the business, operations, assets,
properties, prospects or condition (financial or otherwise) of
such Party's Cellular Business after consummation of the
transactions contemplated hereby.
ARTICLE V
PRE-CELLULAR CLOSING COVENANTS
5.1 Interim Operations. During the period from the
date hereof to the Cellular Closing, except as specifically
contemplated by this Agreement including, without limitation,
Sections 2.8, 2.9, 2.10, 2.11, 2.13 and 2.15 or as may be required
to comply with applicable fiduciary obligations to holders of
interests in Contributed Partnerships or obligations under
partnership agreements or law or as otherwise approved in writing
by the other Party hereto, which approval shall not be
unreasonably withheld, each Party hereby covenants as follows:
(a) Conduct of Business. Such Party will cause the
business of its Managed Cellular Business to be conducted in all
material respects only in the ordinary course and consistent with
past practice and the parties' current business plans.
(b) Capital Structure. Except as may be necessary for
either Party to effect its Cellular Contribution, such Party will
cause its Cellco Partnership Subsidiary, and its Managed Cellular
Business not to (i) issue, pledge or sell any of their capital
stock or partnership interests, as the case may be, (ii) enter
into any contract, understanding or arrangement with respect to
the issuance of capital stock, debt or partnership interests, as
the case may be, (iii) enter into any arrangement or contract with
respect to the purchase or voting of its capital stock or
partnership interests, as the case may be, or (iv) make any other
changes in its capital structure; provided, however, that any such
transactions which are solely among Affiliates may be entered into
unless such transactions would have a material adverse effect on
Cellco or the other Party or its Affiliates.
(c) Relationships. Such Party will use reasonable
efforts to preserve intact the business organization and clientele
of its Managed Cellular Business, and to preserve the goodwill of
those having business relationships with its Managed Cellular
Business.
(d) Assets. Such Party will cause its Affiliates and
itself not to encumber, sell, lease or otherwise dispose of any
interest which they own in such Party's Managed Cellular Business
other than in the ordinary course of business.
(e) Reports. Such Party will furnish to the other
Party the following reports: (i) as soon as available and in any
event within ninety (90) days after the last day of each fiscal
year the following financial statements (audited to the extent
that such Party's prior practice has been to prepare audited
financial statements of an entity) of such Party's Contributed
Subsidiaries, Contributed Partnerships and that portion of such
Party's Cellular Business as is not conducted through Contributed
Subsidiaries and Contributed Partnerships: (a) balance sheets as
of the end of the fiscal year then ended and related statements of
income and cash flows for the fiscal years then ended, in the case
of audited financial statements, with reports thereon of certified
public accountants and (ii) as soon as available but in no event
later than sixty (60) days after the end of each quarterly period
of each fiscal year of each of the above-referenced entities,
interim statements of income and cash flows for the interim period
then ended and the interim balance sheets as of the last day of
such interim period. Notwithstanding the foregoing, a Party need
only deliver unaudited and interim financial statements of
Contributed Subsidiaries in which such Party owns a minority
interest as and when such financial statements are made available
to Party. All the financial statements delivered pursuant to this
Section 5.1(e) shall be in accordance with the books and records
of the above-referenced entities, present fairly the financial
position, results of operations and cash flows of such entities as
of the dates and for the periods indicated, subject in the case of
the interim financial statements to normal year-end adjustments.
The financial statements shall be prepared in conformity with
generally accepted accounting principles applied on a consistent
basis throughout the periods specified, except for the lack of
explanatory footnote disclosures required by generally accepted
accounting principles.
(f) Employee Plans, Compensation, etc. Except for
normal changes (or, with respect to (iii) below, grants) in the
ordinary course of business that are consistent with past practice
and that, in the aggregate, do not result in a material increase
in benefits or compensation expense to such Party's Cellular
Contributions relative to the level in effect prior to such
changes and except as required by law or agreement existing on the
date hereof, such Party will not, and will cause its Managed
Cellular Business not to (without the consent of the other party
hereto) take any of the following actions with respect to
employees who are to become Cellco Employees (as defined below) if
such arrangement would continue after the Cellular Closing and
would become an obligation of Cellco:
(i adopt, enter into, amend or terminate any bonus,
profit sharing, compensation, severance, termination,
pension, retirement, deferred compensation, employment or
other employee benefit plan, agreement, trust, fund or other
arrangement for the benefit or welfare of any individual, to
the extent that any such action would affect those employees
who are to become Cellco Employees;
(ii increase in any manner the compensation or fringe
benefits of those employees who are to become Cellco
Employees or pay any benefit to those employees who are to
become Cellco Employees other than pursuant to an existing
plan or arrangement; or
(iii grant any awards to those employees who are to
become Cellco Employees under any bonus, incentive,
performance or other compensation plan or arrangement
(including, without limitation, the granting of stock
options, stock appreciation rights, stock-based or stock-
related awards, performance units or restricted stock, or the
removal of existing restrictions in any benefit plans or
agreements or awards made thereunder).
Except as required by law, such Party will not, and will
cause the members of its Controlled Group not to, take any
action to segregate assets for, or in any other way secure,
the payment of compensation or benefits to those employees
who are to become Cellco Employees under any employee plan,
agreement, contract or arrangement or adopt, enter into or
amend any contract, agreement, commitment or arrangement to
do any of the acts described in this Section 5.1(f).
(g) Such Party agrees to use reasonable efforts (except
that such efforts need not include monetary expense) to keep
available the services of those employees who are to become Cellco
Employees in order that such employees' services shall become
available at the Cellular Closing to Cellco. During the one-year
period following the Cellular Closing, neither such Party nor any
of its Affiliates shall solicit for hire or hire any of the Cellco
Employees without the prior written consent of the other Party and
Cellco, which consent shall not be unreasonably withheld.
5.2 MFJ Activities. (a) Within sixty (60) days after
the date hereof, NYNEX and Bell Atlantic shall agree on the
changes that are required to be made or the waivers that must be
obtained in order to cause the businesses and operations of Cellco
at the Cellular Closing Date to be in compliance with the rules
and regulations of the MFJ (the "MFJ Transactions"). Such
Agreement shall not be deemed a waiver by either Party of any non-
compliance with Section 4.15 hereof which is not addressed by, or
would not be cured by, completion by the other Party of its MFJ
Transactions. Each of the Parties shall promptly take all actions
requested by the other Party in such other Party's good faith
judgment in order to implement such changes. The direct labor
costs and reasonable out-of-pocket expenses incurred in connection
with any MFJ Transactions shall be borne by the Party effecting
such MFJ Transactions, except for Me Too Waivers which are
provided for below.
(b) NYNEX and Bell Atlantic agree that each shall be
obliged to request a waiver for the benefit of Cellco or such
Party, as appropriate, if the waiver (a "Me Too Waiver") is: (i)
to permit Cellco or such Party, as appropriate, to offer the same
services as those set forth in any waiver request which such Party
or an Affiliate has pending or which such Party, any of its
Affiliates, or any Bell Operating Company ("BOC") within the
meaning of the MFJ has obtained for its cellular or paging
businesses, including businesses incidental thereto; (ii) based on
relevant facts which are comparable to those set forth in any such
waiver which such Party, an Affiliate thereof or a BOC has pending
or has obtained, as the case may be; and (iii) with respect to
Cellco, within the scope of the Cellco Business (as defined in the
Cellco Partnership Agreement). Except for a Me Too Waiver,
neither Party shall be obligated to request any waiver for the
benefit of Cellco or such Party, as appropriate, if such Party
believes in good faith that the business practice or transaction
is in compliance with the MFJ or that requesting such a waiver
would prejudice the consideration of MFJ waivers which such Party
or any of its Affiliates is seeking or then intends to seek at a
future date. If either Party declines to request a waiver on its
good faith belief that its interests would be prejudiced, Cellco
or the other Party shall have the right to seek such an MFJ waiver
on its own behalf; provided, however, that Cellco or such other
Party shall not, if waiver requests of the kind contemplated to be
filed are customarily filed by the other Party or any of its
Affiliates with the Department of Justice prior to their
submission to the Decree Court, file any motion for a waiver of
the MFJ with the Decree Court until the Department of Justice has
indicated that the Department of Justice will not oppose the
waiver. If any such request for a waiver filed by Cellco with the
Decree Court is not opposed on the merits by the Department of
Justice but is rejected by the Decree Court on the grounds that
Cellco is an inappropriate party to have requested such waiver,
then each of the Parties agrees that it or one of its Affiliates
will file such waiver request with the Decree Court for the
benefit of Cellco. If any such request is rejected by the
Department of Justice on the grounds that Cellco is an
inappropriate party to have requested such waiver, and, as a
result, is not filed with the Decree Court, then each of the
Parties agrees that it or one of its Affiliates will submit such
request to the Department of Justice for the benefit of the
Partnership and, if the Department of Justice indicates it will
not oppose such request, then file the waiver request with the
Decree Court. In the event Cellco does seek a waiver of the MFJ
on its own behalf, each of the Parties shall have the right to
express its own view on the requested waiver to the Department of
Justice and to the Decree Court. Neither Party nor any of its
Affiliates shall oppose any waiver request by Cellco or the other
Party that is the same as, or that is based on facts which are
comparable to those set forth in, any waiver that either Party has
pending or which either Party or a BOC has obtained. The direct
labor costs and reasonable out-of-pocket expenses incurred in
connection with any Me Too Waivers shall be borne by Cellco.
NYNEX and Bell Atlantic shall cooperate with each other
in the preparation, filing and prosecution of requests for such
waiver and each Party shall bear its own expenses in connection
therewith. An initial listing of the waiver requests to be made
by the Parties will be delivered by the Parties within 30 days of
the execution of this Agreement.
5.3 Expenses. Other than as provided in Sections 2.8,
2.10, 2.14(d) and 5.2, each Party shall bear its own legal,
accounting and other costs, charges and expenses in connection
with the negotiation and preparation of this Agreement, the
Partnership Agreements and any related instruments or agreements
and the performance of its obligations hereunder. Each Party and
its Affiliates shall bear all costs and expenses, including,
without limitation, any sales taxes, transfer taxes, recording
fees and attorneys' or accountants' fees incurred in transferring,
or causing its Affiliates to transfer, its Cellular Contribution
to Cellco and its PCS Contribution to PCSCO, and any expenses,
fees and costs necessary for any Regulatory Approvals shall be
paid by the Party seeking such Regulatory Approval.
5.4 Business Relationships with Affiliates. No later
than thirty (30) days prior to the Cellular Closing Date, NYNEX
and Bell Atlantic shall provide each other with written schedules
describing all contracts and other business dealings (including
the material terms thereof) between each of them and their
Affiliates, on the one hand, and the businesses of each of their
respective Cellular Contributions on the other. At any time prior
to the Cellular Closing Date, each Party shall have the option,
upon written notice to the other, to cancel any contract or other
business dealing described on the other Party's schedule, which
contract is cancelable without penalty or the parties to which
contract are wholly-owned by such Party, such cancellation to
became effective no later than six months after the Cellular
Closing Date.
5.5 Creation of Employee Body and Benefits Plans.
(a) Within one hundred eighty (180) days after the
execution of this Agreement, the MOC, shall develop and propose a
compensation program, and benefit plans and personnel policies,
including a form of retirement plan, to be offered by Cellco to
its employees (the "Cellco Employees"). To assist in the creation
of such compensation program, benefits plans and personnel
policies, NYNEX and Bell Atlantic shall provide the MOC with
comprehensive written summaries of the compensation and benefits
provided by each of them to their respective employees employed in
connection with their respective Cellular Contributions. For
those employees seeking employment with Cellco, NYNEX and Bell
Atlantic shall supply the name, title, date of most recent
commencement of service and with the consent of the employee,
aggregate compensation (including salary or wages, commissions and
bonuses) paid during the 1992, 1993 and 1994 calendar years,
accrued holiday, vacation, sick leave, long-service entitlement
(if any) and permitted time off due as compensation for additional
time worked and performance evaluation for the 1992, 1993 and 1994
calendar years for each such employee.
(b) In order that Cellco may become the employer of
those employees employed by NYNEX, Bell Atlantic or any of their
respective Affiliates in connection with their respective Cellular
Contributions in sales, marketing, engineering, customer service,
administrative, maintenance, accounting, installation and
operations needed for the operation of the Systems as contemplated
herein, the MOC shall, prior to the Cellular Closing, use its
reasonable efforts to agree on those employees of both Parties who
shall become employees of Cellco. Employee costs incurred after
the Cellular Closing, including, without limitation, severance
costs, shall be borne by Cellco unless the Parties agree
otherwise.
(c) All proposals and determinations by the MOC with
respect to labor and employee policies shall be rendered as advice
to Cellco. Cellco shall itself make all determinations with
respect to its labor and employment policies.
5.6 NYSMSA. The Parties will use their reasonable
efforts to arrive at a mutually satisfactory agreement for
including NYNEX's current interest in NYSMSA (as listed in
Schedule 3.2) in the NYNEX Contributions or otherwise providing
the Parties with substantially equivalent benefits as would result
from the inclusion of such interest in Cellco. If the Parties are
unable to agree on such a method by December 31, 1995, the
provisions of Section 9.1(f) will become operative.
5.7 Non-Managed Systems. Each Party will use its
reasonable efforts, including voting its equity interest, to cause
Systems other than Managed Systems to perform the covenants set
forth in this Article V.
ARTICLE VI
ADDITIONAL COVENANTS
6.1 Further Assurances; Cooperation. Each of the
Parties hereto shall perform its obligations under this Agreement
and shall take or cause to be taken and do or cause to be done all
reasonable things necessary, proper or advisable under applicable
law to obtain all necessary Regulatory Approvals and waivers and
all other necessary consents and satisfy all conditions to the
obligations of the Parties under this Agreement and to cause the
Transactions to be carried out promptly in accordance with the
terms hereof and shall cooperate fully with one another and their
respective officers, directors, employees, agents, counsel,
accountants and other representatives in connection with any steps
required to be taken as a part of their respective obligations
under this Agreement, provided that neither Party shall be
required to agree to the imposition of material conditions or
limitations that are materially adverse to such Party (including,
without limitation, material limitations on a party's right to
hold or manage its interests in Cellco). Subject to the
foregoing, upon the execution of this Agreement and thereafter,
each Party shall do such things as may be reasonably requested by
the other Party in order more effectively to consummate the
Transactions (including, but not limited to, promptly delivering
to the other information necessary to prepare and pursue all
necessary regulatory filings, approvals and waivers), in each case
including, without limitation:
(a) Subject to the terms and conditions herein
provided, NYNEX and Bell Atlantic shall promptly make such filings
and submissions and shall take, or cause to be taken, all
reasonable actions and do, or cause to be done, all reasonable
things necessary, proper or advisable under applicable laws and
regulations to (i) obtain the consents, approvals, authorizations
and waivers described in Schedule 3.4, (ii) comply with the
provisions of the MFJ, and (iii) obtain any other required
approval of any Governmental Entity with jurisdiction over the
Transactions and obtain any other necessary consents, and, in the
event any change in the Transactions is required in order to
accomplish the foregoing, except as provided elsewhere in this
Agreement, take all reasonable steps necessary to accommodate such
change to the extent it would not materially adversely affect the
Parties' rights or obligations hereunder; provided that in any
such event, Bell Atlantic and NYNEX shall negotiate in good faith
to appropriately compensate the other to the extent adversely
affected by such change. Each of the Parties hereto agrees to
cooperate in the preparation of, and to provide all information
required for the prompt filing of, all applications, approvals and
waivers required for the approval and consummation of the
Transactions.
(b) In the event any claim, action, suit, investigation
or other proceeding by any Governmental Entity or other person is
commenced which questions the validity or legality of the
Transactions or seeks damages in connection therewith
(collectively, "Adverse Proceedings"), and, if an injunction or
other order is issued in any such Adverse Proceeding, to use
reasonable efforts to have such injunction or other order
dissolved, and to cooperate reasonably regarding the removal of
any other impediment to the consummation of the Transactions.
(c) Bell Atlantic shall give prompt written notice to
NYNEX and NYNEX shall give prompt written notice to Bell Atlantic,
to the extent known by the chief executive officer or the chief
financial officer of the Cellular Business of the Party giving
notice, of (i) the occurrence, or failure to occur, of any event
which occurrence or failure would be likely to cause any
representation or warranty of the notifying party contained in
this Agreement to be untrue or inaccurate in any material respect
individually or in the aggregate with other such events at any
time from the date hereof to the Cellular Closing or which will or
may result in the failure to satisfy any of the conditions
specified in Article VII hereof, or (ii) any failure of the
notifying party to comply with or satisfy any covenant, condition
or agreement to be complied with or satisfied by it hereunder.
6.2 Access to Properties and Records. Each Party
shall afford to the other Party and the other Party's accountants,
counsel and representatives full access during normal business
hours throughout the period prior to the Cellular Closing Date to
all of the properties, books, contracts, commitments and records
(including but not limited to financial and accounting records and
tax returns) of its Cellular Business and, during such period,
shall make available promptly to the other Party all information
concerning the business, properties and personnel of its Cellular
Business as the other Party may reasonably request, provided that
no investigation pursuant to this Section 6.2 shall affect any
representations or warranties or the conditions to the obligations
of the parties hereto to consummate the Transactions. In the case
of Systems which are not Managed Systems, such Party will use its
reasonable efforts to provide such information and access.
ARTICLE VII
CONDITIONS
7.1 Conditions to the Obligations of NYNEX and Bell
Atlantic. The obligations of NYNEX and Bell Atlantic to
consummate the Transactions at the Cellular Closing are subject to
the satisfaction or waiver, at or before the Cellular Closing, of
each of the following conditions:
(a) The Department of Justice shall have approved and
the Decree Court shall have granted the parties' requests for the
waivers contemplated by Section 5.2 hereof and any other waivers
they subsequently deem necessary for the operation of Cellco as
contemplated in this Agreement and in the Cellco Partnership
Agreement and no Governmental Entity or other person shall have
enjoined the consummation of the Transactions, or appealed the
Decree Court's order granting such requests, or the time to appeal
shall have expired, or such order shall have become final.
(b) All Regulatory Approvals, and the expiration of
waiting periods under the HSR Act ("Governmental Approvals") other
than those authorizations, orders, grants, consents, permissions
and approvals the failure of which to receive would not, singly or
in the aggregate, have a material adverse effect on the Business
Condition of Cellco or of Bell Atlantic or of NYNEX, shall have
been received and shall remain in effect, provided that none of
such Governmental Approvals (i) impose material limitations on the
ability of Cellco effectively to acquire or hold, or requiring
Cellco or either of the Parties or such Party's respective Cellco
Partner Subsidiary to dispose of or hold separate, any material
portion in the aggregate of its Cellular Contributions, other than
Saleable Systems treated in accordance with Section 2.11 hereof
and the Springwich Interests, or (ii) impose material limitations
on the ability or right either of Bell Atlantic or NYNEX or their
respective Affiliates effectively to acquire or hold, or requiring
either of Bell Atlantic or NYNEX or any of their respective
Affiliates to dispose of or hold separate, any material interest
in Cellco.
(c) The initial budgets and business plans of Cellco as
contemplated by Section 2.14(b) of this Agreement shall have been
developed and agreed upon by the Parties and the MOC.
7.2 Conditions to the Obligations of NYNEX. The
obligations of NYNEX to consummate the Transactions at the
Cellular Closing are subject to the satisfaction or waiver, at or
before the Cellular Closing, of the following conditions:
(a) The representations and warranties of Bell Atlantic
set forth in Article III shall have been true and correct in all
material respects when made and unless made as of a specified date
shall be true and correct in all material respects as if made as
of the Cellular Closing Date.
(b) On terms reasonably satisfactory to NYNEX, Bell
Atlantic has made the changes determined by NYNEX to be required
to cause the businesses and operations of the Bell Atlantic
Cellular Contribution to be in compliance with the MFJ as set
forth in Section 4.15 hereof.
(c) There shall not exist a state of facts which
creates a right of NYNEX to terminate this Agreement pursuant to
Section 9.1(c), (d)(ii), (e) or (f).
7.3 Conditions to the Obligations of Bell Atlantic. The
obligations of Bell Atlantic to consummate the Transactions at the
Cellular Closing are subject to the satisfaction or waiver, at or
before the Cellular Closing, of each of the following conditions:
(a) The representations and warranties of NYNEX set
forth in Article III shall have been true and correct in all
material respects when made and (unless made as of a specified
date) shall be true and correct in all material respects as if
made as of the Cellular Closing Date.
(b) On terms reasonably satisfactory to Bell Atlantic,
NYNEX has made the changes determined by Bell Atlantic to be
required to cause the businesses and operations of the NYNEX
Cellular Contribution to be in compliance with the MFJ as set
forth in Section 4.15 hereof.
(c) There shall not exist a state of facts which
creates a right of Bell Atlantic to terminate this Agreement
pursuant to Section 9.1(c), (d)(i), (e) or (f).
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification by Bell Atlantic. Except as
otherwise expressly provided in this Article VIII, Bell Atlantic
shall defend, indemnify and hold harmless Cellco, PCSCO and each
of Cellco's and PCSCO's officers, directors, employees, agents,
successors and assigns (Cellco and such persons hereinafter,
collectively the "Indemnified Persons"), and shall reimburse the
Indemnified Persons for, from and against each and every demand,
claim, loss, liability, judgment, damage, cost and expense
(including, without limitation, interest, penalties, costs of
preparation and investigation, and the reasonable fees,
disbursements and expenses of attorneys, accountants and other
professional advisors) (collectively, "Losses") imposed on or
incurred by the Indemnified Persons, directly or indirectly
(including without limitation diminution in value of an equity
interest), relating to, resulting from or arising out of
(a) subject to the limitations period set forth in Section 10.1,
any inaccuracy in any respect in any representation or warranty of
Bell Atlantic herein (other than the representations and
warranties contained in Section 4.14) or in any certificate or
other document delivered or to be delivered pursuant hereto,
whether or not the Indemnified Person relied thereon, except to
the extent that the Loss arises out of the failure to contribute a
Saleable System or the Springwich Interests in accordance with
Section 2.10 or a non-Contributed System in accordance with
Section 2.11; or (b) any liability or obligation of any nature
(known or unknown, absolute, accrued, contingent or otherwise)
related to Bell Atlantic's Cellular Contributions and PCS
Contributions and attributable to periods prior to the Cellular
Closing and the PCS Closing, respectively (excluding Cellco
Assumed Liabilities and contractual obligations of Bell Atlantic's
Cellular Contributions under all contracts entered into in the
ordinary course of business but related to periods subsequent to
the Cellular Closing Date), including without limitation
(i) claims such as business torts, breach of contract claims,
product liability claims and personal injury or fraud; provided,
however, that Bell Atlantic shall have no liability under this
Section 8.1 (other than liability for Bell Atlantic's breach of
any representation and warranty herein as to title to Bell
Atlantic's Cellular Contributions and PCSCO Contributions) unless
and until the aggregate of all Losses recoverable by the
Indemnified Persons exceeds $15,000,000 ("Bell Atlantic's Minimum
Amount"), in which event Bell Atlantic shall be liable for all
such Losses in excess of Bell Atlantic's Minimum Amount.
8.2 Indemnification by NYNEX. Except as otherwise
expressly provided in this Article VIII, NYNEX shall defend,
indemnify and hold harmless the Indemnified Persons, and shall
reimburse the Indemnified Persons for, from and against all Losses
imposed on or incurred by the Indemnified Persons, directly or
indirectly (including without limitation diminution in value of an
equity interest), relating to, resulting from or arising out of
(a) Subject to the limitations period set forth in Section 10.1,
any inaccuracy in any respect in any representation or warranty of
NYNEX herein (other than the representations and warranties
contained in Section 4.14) or in any certificate or other document
delivered or to be delivered pursuant hereto, whether or not the
Indemnified Persons relied thereon; or (b) any liability or
obligation of any nature (known or unknown, absolute, accrued,
contingent or otherwise) related to NYNEX's Cellular Contributions
and PCS Contributions and attributable to periods prior to the
Cellular Closing and the PCS Closing, respectively (excluding
Cellco Assumed Liabilities and contractual obligations of NYNEX's
Cellular Contributions under all contracts entered into in the
ordinary course of business but related to periods subsequent to
the Cellular Closing Date), including without limitation
(i) claims such as business torts, breach of contract claims,
product liability claims and personal injury or fraud; provided,
however, that NYNEX shall have no liability under this Section 8.2
(other than liability for NYNEX's breach of any representation and
warranty herein as to title to NYNEX's Cellular Contributions or
PCS Contributions) unless and until the aggregate of all Losses
recoverable by the Indemnified Persons exceeds $10,000,000
("NYNEX's Minimum Amount"), in which event NYNEX shall be liable
for all such Losses in excess of NYNEX's Minimum Amount.
8.3 Notice and Defense of Third Party Claims. If any
action, claim or proceeding shall be brought or asserted under
this Article VIII against any Indemnified Person in respect of
which from an indemnifying person or any successor thereto (the
"Indemnifying Person") is liable under this Article VIII, the
Indemnified Person shall give prompt written notice of such action
or claim to the Indemnifying Person who shall assume the defense
thereof, and the payment of all expenses; except that any delay or
failure to so notify the Indemnifying Person shall relieve the
Indemnifying Person of its obligations hereunder only to the
extent, if at all, that it is prejudiced by reason of such delay
or failure. The Indemnified Person shall have the right to employ
one separate counsel per jurisdiction in any of the foregoing
actions, claims or proceedings and to participate in, but not
control, the defense thereof, but the fees and expenses of such
counsel shall be at the expense of the Indemnified Person unless
both the Indemnified Person and the Indemnifying Person are named
as parties and the Indemnified Person shall in good faith
determine that representation by the same counsel is
inappropriate. In the event that the Indemnifying Person, within
ten (10) days after notice of any such action or claim, fails to
assume the defense thereof, the Indemnified Person shall have the
right to undertake the defense, compromise or settlement of such
action, claim or proceeding for the account of the Indemnifying
Person, subject to the right of the Indemnifying Person, if the
Indemnifying Party has acknowledged its liability or has been
determined to be liable hereunder, to assume the defense of such
action, claim or proceeding with counsel reasonably satisfactory
to the Indemnified Person at any time prior to the settlement,
compromise or final determination thereof. Anything in this
Article VIII to the contrary notwithstanding, the Indemnifying
Person shall not, without the Indemnified Person's prior written
consent, settle or compromise any action or claim or consent to
the entry of any judgment with respect to any action, claim or
proceeding for anything other than money damages paid by the
Indemnifying Person. If the Indemnifying Party has acknowledged
its liability or has been determined to be liable hereunder, the
Indemnifying Person may, without the Indemnified Person's prior
written consent, settle or compromise any such action, claim or
proceeding or consent to entry of any judgment with respect to any
such action or claim that requires solely the payment of money
damages by the Indemnifying Person and that includes as an
unconditional term thereof the release by the claimant or the
plaintiff of the Indemnified Person from all liability in respect
of such action, claim or proceeding. As a condition to asserting
any rights under this Article VIII, each of Indemnified Persons
must appoint NYNEX as its sole agent for all matters relating to
any claim for indemnity from NYNEX and Bell Atlantic as its sole
agent for all matters relating to any claim for indemnity from
Bell Atlantic.
8.4 Tax Indemnification (a) Each of the Parties and
the Partners shall be individually responsible for, will pay or
cause to be paid, and will individually indemnify and hold
harmless Cellco, PCSCO and/or the other Party and the other
Partners from and against any and all Taxes arising from each of
the following:
(i any and all Taxes with respect to any taxable
period of any Contributed Subsidiary or Contributed
Partnership (or any predecessor) ending on or before the
Cellular Closing Date;
(ii any and all Taxes with respect to any taxable
period ending on or before the Cellular Closing Date
resulting from any Contributed Subsidiary having been (or
ceasing to be) included in any consolidated, combined or
unitary Tax Return that included such Contributed Subsidiary
(or any predecessor) for any such period (including any
liability for taxes resulting from a "deferred intercompany
transaction," within the meaning of Treasury Regulation
Section 1.1502-13(a)(2) (or any analogous or similar
provision under state, local or foreign law or regulation);
(iii any and all Taxes arising from any member of a
consolidated, combined or unitary group of which the
Contributed Subsidiary (or any predecessor) is or was a
member on or prior to the Cellular Closing Date for which the
Controlled Subsidiary is liable pursuant to Treasury
Regulation Section 1.1502-6(a) or any analogous or similar
provision under state, local or foreign law or regulation;
(iv any breach by such Party of any representation or
warranty of matters in Section 4.14.
(b) There shall be no limitations period with respect
to any indemnity in this Section 8.4.
ARTICLE IX
TERMINATION
9.1 Termination. This Agreement may be terminated and
the Transactions may be abandoned at any time prior to the
Cellular Closing without liability on the part of either Party,
other than as provided in Section 9.1(d):
(a) By the mutual written consent of each of the
Parties;
(b) By either NYNEX or Bell Atlantic if the Cellular
Closing has not occurred prior to December 31, 1995, provided that
the right to terminate this Agreement under this Section 9.1(b)
shall not be available to a Party whose failure to fulfill any
obligation under this Agreement has been the cause of, or results
in, the failure of the Cellular Closing to have occurred within
such period;
(c) By either NYNEX or Bell Atlantic if the other Party
is (i) unable to contribute interests in Systems (or in the case
of Systems that are under contract but not owned, substantially
equivalent POPs) at the Cellular Closing having a number of POPs
equal to or greater than 90% of the POPs represented by all
Systems (other than Saleable Systems and the Springwich Interests)
listed under such Party's name on Schedule 3.2 or (ii) prohibited
by an order or injunction (other than an order or injunction on a
temporary or preliminary basis) of a court of competent
jurisdiction from making such contribution (including orders of
the FCC denying the renewal of licenses for operation) and all
means of appeal and all appeals from such order or injunction have
been finally exhausted;
(d) By either of NYNEX or Bell Atlantic if on the
Cellular Closing Date or at any time prior thereto, (i) the
aggregate amount which NYNEX would reasonably be expected to be
required to pay pursuant to Sections 8.2 and/or 8.4 would exceed
$400,000,000 or (ii) the aggregate amount which Bell Atlantic
would reasonably be expected to be required to pay pursuant to
Sections 8.1 and/or 8.4 would exceed $600,000,000; provided,
however, that if this Agreement is terminated pursuant to this
Section 9.1(d) by the Party whose liability exceeds the specified
amount, such Party shall pay the other Party the sum of
$20,000,000.
(e) By either NYNEX or Bell Atlantic if at the Cellular
Closing the other Party's Contribution includes interests in
Systems held by Contributed Subsidiaries, which Systems represent
more than 20% of the Owned POPs of such Party and its Affiliates
set forth on Schedule 3.2.
(f) By either NYNEX or Bell Atlantic if, at December
31, 1995, the agreement described in Section 5.6 shall not have
been reached.
9.2 Effect of Termination. If termination of this
Agreement pursuant to Section 9.1(b) results from the failure to
satisfy the condition set forth in either Section 7.2(a) or
7.3(a), the Party whose representations and warranties were untrue
shall not be relieved of any liability. Each Party's right to
terminate this Agreement and its obligation to perform hereunder
is limited to the specific circumstances described in Section 9.1.
In addition to the above, if this Agreement is terminated under
any of the circumstances described in Section 9.1 at any time
after the PCS Closing Date, PCSCO shall distribute the PCS
licenses in accordance with the PCS Partnership Agreement.
ARTICLE X
MISCELLANEOUS
10.1 Survival of Representations, Warranties and
Agreements. The representations and warranties and agreements
contained herein shall survive for two (2) years after the
Cellular Closing Date; provided, however, that the representations
and warranties set forth in Section 4.1, 4.2(a), 4.5, 4.9, 4.14
and 4.16 shall survive beyond such period.
10.2 Waiver and Amendment. This Agreement may be
amended or supplemented, and any provision of this Agreement may
be waived by the Party which is entitled to the benefits hereof,
at any time. No waiver, amendment or supplement shall be
effective unless in writing and signed by the Party or Parties
sought to be bound thereby. The Parties expressly agree and
acknowledge that they shall not rely on any purported oral change,
waiver, discharge, modification or termination and they hereby
request that any court disregard (to the fullest extent permitted
by law) any evidence sought to be introduced by either Party as to
the terms of any such oral change, waiver, discharge, modification
or termination.
10.3 APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK.
10.4 Interpretation. The descriptive headings
contained in this Agreement are for convenience and reference only
and shall not affect in any way the meaning or interpretation of
this Agreement.
10.5 Notices. Each Party shall promptly give written
notice to the other Party upon becoming aware of the occurrence
or, to its knowledge, a pending or threatened occurrence, of any
event which would cause or constitute a breach of any of its
representations, warranties or covenants contained or referenced
in this Agreement and will use its reasonable efforts to prevent
or promptly remedy the same. All notices and other communications
hereunder shall be sufficiently given for all purposes hereunder
if in writing and delivered personally, sent by documented
overnight delivery service or, to the extent receipt is confirmed,
telecopy, telex or other electronic transmission service to the
appropriate address or number as set forth below, addressed as
follows:
If to NYNEX:
NYNEX Mobile Communications Company
2000 Corporate Drive
Orangeburg, New York 10962
Attn.: Alfred F. Boschulte, President
Telecopy No.: (914) 365-9046
with a copy to:
NYNEX Network Systems Company
4 West Red Oak Lane
White Plains, New York 10604
Attn.: Senior Vice President and General Counsel
Telecopy No.: (914) 644-7966
If to Bell Atlantic:
Bell Atlantic Corporation
1717 Arch Street
Philadelphia, Pennsylvania 19103
Attn.: Lawrence T. Babbio, Jr.
Executive Vice President and Chief Operating
Officer
Telecopy No.: (215) 557-7214
with a copy to:
Bell Atlantic Corporation
1717 Arch Street
Philadelphia, Pennsylvania 19103
Attn.: Stephen B. Heimann
Telecopy No.: (215) 561-9568
or to such other address as any party may have furnished to the
other parties in writing in accordance with this Section 10.5.
10.6 Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be an
original but all of which together shall constitute one agreement.
10.7 Severability. Any term or provision of this
Agreement which is invalid or unenforceable in any jurisdiction
shall, as to that jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this Agreement
or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any
provision of this Agreement is so broad as to be unenforceable,
the provision shall be interpreted to be only so broad as is
enforceable.
10.8 Parties in Interest; Assignment. Except as
otherwise specifically set forth in this Agreement, this Agreement
is binding upon and is solely for the benefit of the Parties and
their respective successors, legal representatives and permitted
assigns. Bell Atlantic and NYNEX shall have the right to assign
any of their respective rights or delegate any of their respective
obligations to a wholly-owned Affiliate thereof; provided,
however, that the assigning party shall remain liable for the
performance thereof by such Affiliate. Any purported assignment
not permitted by this Section 10.8 shall be null, void and of no
effect.
10.9 Publicity. So long as this Agreement is in
effect, each of NYNEX and Bell Atlantic agree to consult with the
other in issuing any press release or otherwise making any public
statement with respect to the Transactions or the other Party; and
neither Bell Atlantic nor NYNEX will issue any press release or
make any such public statement prior to such consultation and
giving the other a reasonable opportunity to review and comment on
any such proposed press release or public statement, except as may
be required by law.
10.10 No Third Party Beneficiaries. Nothing contained
in this Agreement is intended to or shall confer upon any person
other than the Parties, PCSCO, Cellco and any Indemnified Person
any rights or remedies hereunder.
10.11 Confidentiality. The Parties acknowledge that
information supplied to one another in connection with the
consummation of the transactions contemplated hereby is subject to
the terms and provisions of the Confidentiality Agreement dated
May 11, 1994 between the Parties.
IN WITNESS WHEREOF, the parties hereto have duly
executed this Agreement as of the date first above written.
BELL ATLANTIC CORPORATION
By: /s/ Lawrence T. Babbio, Jr.
_______________________________
Name: Lawrence T. Babbio, Jr.
_______________________________
Title: Executive Vice President
& Chief Operating Officer
_______________________________
NYNEX CORPORATION
By: /s/ Frederic V. Salerno
___________________________________
Name: Frederic V. Salerno
___________________________________
Title: Vice Chairman,
Finance & Business Development
___________________________________
SCHEDULES TO
JOINT VENTURE FORMATION AGREEMENT
EXHIBIT A
to Joint Venture
Formation Agreement
Language in { . . .} in PCS Agreement only
Language in < . . .> in Cellco Agreement only
________________________________________________
PARTNERSHIP AGREEMENT
OF
{PCSCO PARTNERSHIP}
<CELLCO PARTNERSHIP>
Dated as of , 1994
________________________________________________
TABLE OF CONTENTS
Page
ARTICLE 1.
DEFINITIONS. . . . . . . . . . . . . 1
1.1. Act . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. Adjusted Capital Account. . . . . . . . . . . . . . 1
1.3. Adjusted Capital Account Deficit. . . . . . . . . . 1
1.4. Adjustment Amount . . . . . . . . . . . . . . . . . 1
1.5. Affiliate . . . . . . . . . . . . . . . . . . . . . 1
1.6. Affiliated Entity . . . . . . . . . . . . . . . . . 2
1.7. Agreed Value. . . . . . . . . . . . . . . . . . . . 2
1.8. Agreement . . . . . . . . . . . . . . . . . . . . . 4
{1.9. Bid Price. . . . . . . . . . . . . . . . . . . . . 4
1.10. Bell Atlantic. . . . . . . . . . . . . . . . . . . 4
1.11. Business Plan. . . . . . . . . . . . . . . . . . . 4
1.12. Capital Accounts . . . . . . . . . . . . . . . . . 4
1.13. Capital Call . . . . . . . . . . . . . . . . . . . 4
1.14. Cellular Business. . . . . . . . . . . . . . . . . 4
1.15. Change of Control. . . . . . . . . . . . . . . . . 4
1.16. Code . . . . . . . . . . . . . . . . . . . . . . . 4
1.17. Delinquent Partner . . . . . . . . . . . . . . . . 4
1.18. Depreciation . . . . . . . . . . . . . . . . . . . 4
1.19. Designated MTAs/BTAs . . . . . . . . . . . . . . . 5
1.20. Dissolution Event. . . . . . . . . . . . . . . . . 5
1.21. Event of Bankruptcy. . . . . . . . . . . . . . . . 5
1.22. Executive Committee. . . . . . . . . . . . . . . . 5
1.23. FCC. . . . . . . . . . . . . . . . . . . . . . . . 5
1.24. Formation Agreement. . . . . . . . . . . . . . . . 5
1.25. GAAP . . . . . . . . . . . . . . . . . . . . . . . 5
1.26. Default Interest Rate. . . . . . . . . . . . . . . 5
1.27. Liquidating Partner. . . . . . . . . . . . . . . . 5
1.28. Majority Vote. . . . . . . . . . . . . . . . . . . 6
<1.29. Management Co . . . . . . . . . . . . . . . . . . 6
1.30. MFJ. . . . . . . . . . . . . . . . . . . . . . . . 6
{1.31. MTA . . . . . . . . . . . . . . . . . . . . . . . 6
1.32. Nondeductible Expenditure. . . . . . . . . . . . . 6
1.33. Nondelinquent Partner. . . . . . . . . . . . . . . 6
1.34. Nonrecourse Deductions . . . . . . . . . . . . . . 6
1.35. NYNEX. . . . . . . . . . . . . . . . . . . . . . . 6
1.36. Other Partnership. . . . . . . . . . . . . . . . . 6
1.37. Paging Business. . . . . . . . . . . . . . . . . . 6
1.38. Partner. . . . . . . . . . . . . . . . . . . . . . 6
1.39. Partner Candidate. . . . . . . . . . . . . . . . . 6
1.40. Partner Nonrecourse Debt Minimum Gain. . . . . . . 6
1.41. Partner Nonrecourse Debt . . . . . . . . . . . . . 6
1.42. Partner Nonrecourse Deductions . . . . . . . . . . 7
1.43. Partner Note . . . . . . . . . . . . . . . . . . . 7
1.44. Partnership. . . . . . . . . . . . . . . . . . . . 7
1.45. Partnership Interest . . . . . . . . . . . . . . . 7
1.46. Partnership Minimum Gain . . . . . . . . . . . . . 7
1.47. PCS Business . . . . . . . . . . . . . . . . . . . 7
1.48. PCS License. . . . . . . . . . . . . . . . . . . . 7
1.49. Percentage Interest. . . . . . . . . . . . . . . . 7
1.50. Profits and Losses . . . . . . . . . . . . . . . . 7
1.51. Regulations. . . . . . . . . . . . . . . . . . . . 9
1.52. Specified Account Value. . . . . . . . . . . . . . 9
1.53. Supermajority Vote . . . . . . . . . . . . . . . . 9
1.54. Tax Matters Partner. . . . . . . . . . . . . . . . 9
1.55. Taxes. . . . . . . . . . . . . . . . . . . . . . . 9
1.56. Transfer . . . . . . . . . . . . . . . . . . . . . 9
1.57. Wireless Business. . . . . . . . . . . . . . . . . 9
ARTICLE 2.
ORGANIZATION. . . . . . . . . . . . . 9
2.1. Formation.. . . . . . . . . . . . . . . . . . . . . 9
2.2. Name. . . . . . . . . . . . . . . . . . . . . . . . 9
2.3. Purpose.. . . . . . . . . . . . . . . . . . . . . . 10
2.4. Place of Business.. . . . . . . . . . . . . . . . . 10
2.5. Term. . . . . . . . . . . . . . . . . . . . . . . . 10
2.6. Nature of Partners' Interests.. . . . . . . . . . . 11
2.7. Partition.. . . . . . . . . . . . . . . . . . . . . 11
2.8. Capacity of the Partners. . . . . . . . . . . . . . 11
ARTICLE 3.
PARTNERSHIP OPPORTUNITIES;
NON-COMPETITION{; ACQUISITION OF LICENSES} . . . . . 11
3.1. Acquisition of Wireless Properties by Partners. . . 11
3.1.1. Non-10 MHz PCS Licenses. . . . . . . . . . . 11
3.1.2. 10 MHz PCS Licenses. . . . . . . . . . . . . 13
3.2. Agreement Not to Compete. . . . . . . . . . . . . . 13
3.3. Enforceability and Enforcement. . . . . . . . . . . 13
3.4. Exceptions to Sections 3.1 and 3.2. . . . . . . . . 14
3.5. Activities of the Partners. . . . . . . . . . . . . 17
3.6. Provision of Services to Telephone Companies. . . . 17
3.7. Termination of Formation Agreement. . . . . . . . . 17
3.8. Determination of Designated MTAs/BTAs. . . . . . . 17
ARTICLE 4.
CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS. . . . . . 17
4.1. Initial Capital Contributions.. . . . . . . . . . . 17
4.2. Additional Capital Calls. . . . . . . . . . . . . . 17
4.3. Failure to Pay a Capital Call.. . . . . . . . . . . 18
4.4. Capital Accounts. . . . . . . . . . . . . . . . . . 19
ARTICLE 5.
MANAGEMENT OF THE PARTNERSHIP . . . . . . . . 21
5.1. Executive Committee.. . . . . . . . . . . . . . . . 21
5.1.1. Powers. . . . . . . . . . . . . . . . . 21
5.1.2. Number and Term of Office.. . . . . . . 21
5.1.3. Resignations. . . . . . . . . . . . . . 21
5.1.4. Place of Meeting. . . . . . . . . . . . 22
5.1.5. Regular Meetings. . . . . . . . . . . . 22
5.1.6. Special Meetings. . . . . . . . . . . . 22
5.1.7. Voting. . . . . . . . . . . . . . . . . 22
5.1.8. Manner of Acting and Adjournment. . . . 23
5.1.9. Actions Requiring Supermajority Vote. . 23
5.1.10. Affiliated Transactions. . . . . . . . 24
5.1.11. Other Actions Requiring Executive
Committee Approval.. . . . . . . . . . . . . . . . . 24
5.1.12. Business Plan. . . . . . . . . . . . . 25
5.1.13. Deadlocks. . . . . . . . . . . . . . . 26
5.1.14. Action Without Meeting.. . . . . . . . 27
5.2. Effect of Section 1509 of the Act . . . . . . . . . 27
5.3. Indemnification of Partners, Executive Committee,
Officers and Others.. . . . . . . . . . . . . . . . . . . 27
5.3.1. In General. . . . . . . . . . . . . . . 27
5.3.2. Reliance on Provisions. . . . . . . . . 28
5.3.3. Insurance.. . . . . . . . . . . . . . . 28
5.4. Partner Compensation; Reimbursement. . . . . . . . . 29
5.5. Taxes and Charges; Governmental Rules. . . . . . . . 29
5.6. Further Assurances.. . . . . . . . . . . . . . . . . 29
5.7. Partnership Services to Partners. . . . . . . . . . 29
5.7.1. Support for International Operations. . . . . . . 29
5.7.2. Costs. . . . . . . . . . . . . . . . . . . . 30
5.7.3. Confidentiality. . . . . . . . . . . . . . . 30
5.7.4. Conflicts. . . . . . . . . . . . . . . . . . 31
ARTICLE 6.
ALLOCATIONS OF PROFITS AND LOSSES; DISTRIBUTIONS. . . . 31
6.1. General Allocation Rule . . . . . . . . . . . . . . 31
6.2. Special Allocations . . . . . . . . . . . . . . . . 31
6.2.1. Minimum Gain Chargeback . . . . . . . . 31
6.2.2. Partner Minimum Gain Chargeback . . . . 32
6.2.3. Qualified Income Offset.. . . . . . . . 32
6.2.4. Nonrecourse Deductions. . . . . . . . . 32
6.2.5. Partner Nonrecourse Deductions. . . . . 32
6.2.6. Certain Section 754 Adjustments . . . . 33
6.2.7. Indemnity Payments. . . . . . . . . . . 33
6.3. Curative Allocations. . . . . . . . . . . . . . . . 34
6.4. Other Allocation Rules . . . . . . . . . . . . . . . 34
6.4.1. Allocations When Percentage Interests
Change. . . . . . . . . . . . . . . . . . . . . . . 34
6.4.2. Allocation of Particular Items. . . . . 34
6.4.3. Tax Reporting . . . . . . . . . . . . . 35
6.4.4. Profit Shares . . . . . . . . . . . . . 35
6.4.5. Book Items Used in Special
Allocations. . . . . . . . . . . . . . . . . . . . . 35
6.5. Tax Allocations; Code Section 704(c) . . . . . . . . 36
6.5.1. Generally.. . . . . . . . . . . . . . . 36
6.5.2. Contributed Property. . . . . . . . . . 36
6.5.3. Adjustments to Agreed Value . . . . . . 36
6.5.4. Elections . . . . . . . . . . . . . . . 36
6.6. Distributions . . . . . . . . . . . . . . . . . . . 37
6.6.1. In General. . . . . . . . . . . . . . . 37
6.6.2. Partner Loans.. . . . . . . . . . . . . 37
6.6.3. Liquidating Distributions.. . . . . . . 37
6.6.4. Amounts Withheld. . . . . . . . . . . . 37
ARTICLE 7.
BOOKS AND RECORDS . . . . . . . . . . . 37
7.1. Accounting. . . . . . . . . . . . . . . . . . . . . 37
7.2. Fiscal Year.. . . . . . . . . . . . . . . . . . . . 38
7.3. Statements and Reports. . . . . . . . . . . . . . . 38
7.4. Inspection. . . . . . . . . . . . . . . . . . . . . 38
7.5. Certain Tax Matters.. . . . . . . . . . . . . . . . 39
7.5.1. Preparation of Tax Returns. . . . . . . 39
7.5.2. Tax Elections.. . . . . . . . . . . . . 39
7.5.3. Tax Controversies.. . . . . . . . . . . 39
7.6. Bank Accounts.. . . . . . . . . . . . . . . . . . . 40
ARTICLE 8.
TRANSFER OF PARTNERSHIP INTERESTS; CHANGE OF
CONTROL; ADDITIONAL PARTNERS; CONVERSION TO CORPORATE FORM . 40
8.1. Restrictions on Transfer of Interests.. . . . . . . 40
8.2. Permitted Transfers.. . . . . . . . . . . . . . . . 40
8.3. Right of First Refusal. . . . . . . . . . . . . . . 40
8.4. Effective Transfer. . . . . . . . . . . . . . . . . 42
8.5. Changes of Control. . . . . . . . . . . . . . . . . 43
8.6. Additional Partners.. . . . . . . . . . . . . . . . 46
8.7. Conversion to Corporate Form. . . . . . . . . . . . 47
8.8. Covenant Not to Withdraw or Dissolve. . . . . . . . 49
8.9. Consequences of Breaches of Covenant. . . . . . . . 49
8.9.1. Breach Payments. . . . . . . . . . . . . . . 50
8.9.2. No Bonding.. . . . . . . . . . . . . . . . . 51
ARTICLE 9.
CONFIDENTIALITY. . . . . . . . . . . . 51
9.1. Maintenance of Confidentiality. . . . . . . . . . . 51
9.2. Permitted Disclosures.. . . . . . . . . . . . . . . 51
ARTICLE 10.
DISSOLUTION AND LIQUIDATION. . . . . . . . . 52
10.1. Dissolution Generally. . . . . . . . . . . . . . . 52
10.2. Liquidation. . . . . . . . . . . . . . . . . . . . 52
10.3. Distribution in Trust. . . . . . . . . . . . . . . 54
10.4. Rights of Partners.. . . . . . . . . . . . . . . . 55
10.5. Compliance with Timing Requirements of
Regulations. . . . . . . . . . . . . . . . . . . . . . . 55
10.6. Non-Dissolving Code Section 708(b) Terminations.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
10.7. Allocations during the Period of Liquidation . . . 56
ARTICLE 11.
MISCELLANEOUS PROVISIONS. . . . . . . . . . 56
11.1. Further Assurances.. . . . . . . . . . . . . . . . 56
11.2. Assignment.. . . . . . . . . . . . . . . . . . . . 56
11.3. Breach; Equitable Relief.. . . . . . . . . . . . . 56
11.4. Amendment. . . . . . . . . . . . . . . . . . . . . 56
11.5. Waiver.. . . . . . . . . . . . . . . . . . . . . . 57
11.6. Severability.. . . . . . . . . . . . . . . . . . . 57
11.7. Construction.. . . . . . . . . . . . . . . . . . . 57
11.8. Governing Law. . . . . . . . . . . . . . . . . . . 57
11.9. Attorneys' Fees. . . . . . . . . . . . . . . . . . 57
11.10. Modification of Final Judgment. . . . . . . . . . 58
11.11. Availability of Documents . . . . . . . . . . . . 59
11.12. Notices.. . . . . . . . . . . . . . . . . . . . . 59
11.13. Headings and Section References.. . . . . . . . . 60
11.14. Entire Agreement. . . . . . . . . . . . . . . . . 60
11.15. Disclaimer of Agency, etc.. . . . . . . . . . . . 60
11.16. Publicity.. . . . . . . . . . . . . . . . . . . . 61
11.17. Tax Matters Partner . . . . . . . . . . . . . . . 61
11.18. Counterparts. . . . . . . . . . . . . . . . . . . 61
Language in { . . .} in PCS Agreement only
Language in < . . .> in Cellco Agreement only
PARTNERSHIP AGREEMENT
OF
{PCSCO PARTNERSHIP}
CELLCO PARTNERSHIP
This Partnership Agreement dated as of ___________, 1994, is
made between [a direct or indirect wholly-owned subsidiary or
partnership of Bell Atlantic Corporation] (Bell Atlantic), {and}
[a direct or indirect wholly-owned subsidiary or partnership of
NYNEX Corporation] (NYNEX), <and CELLCO MANAGEMENT CORPORATION, a
Delaware corporation (Management Co.),> pursuant to the provisions
of the Delaware Uniform Partnership Law.
In consideration of the mutual agreements hereinafter set
forth, the parties agree as follows:
ARTICLE 1.
DEFINITIONS
The following terms when used in this Agreement will have the
respective meanings set forth below:
1.1. Act means the Delaware Uniform Partnership Law, 6 Del.
Code 1501 et seq.
1.2. Adjusted Capital Account means, with respect to a
Partner, an account with a balance (which may be a deficit
balance) equal to the balance in such Partner's Capital Account as
of the end of the relevant fiscal year, after giving effect to the
following adjustments: (i) credit to such Capital Account any
amounts which such Partner is obligated to restore pursuant to any
provision of this Agreement or is deemed to be obligated to
restore to the Partnership pursuant to Regulations Sections 1.704-
2(g)(1) and 1.704-2(i)(5); and (ii) debit to such Capital Account
such Partner's share of items described in Regulations Section
1.704-1(b)(2)(ii)(d)(4), (5) and (6). The foregoing definition of
Adjusted Capital Account is intended to comply with the provisions
of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.
1.3. Adjusted Capital Account Deficit means, with respect to a
Partner, the deficit balance, if any, in such Partner's Adjusted
Capital Account.
1.4. Adjustment Amount has the meaning specified in the
definition of Specified Account Value below.
1.5. Affiliate of a person shall mean any person directly or
indirectly controlling, controlled by, or under common control
with, such other person; person shall mean an individual, a
corporation, a limited or an unlimited liability company, a
partnership, an association, a trust or any other entity or
organization, including a government or political subdivision or
an agency or instrumentality thereof; and control shall mean (i)
the ownership of 50% or more, or in the case of references to
Affiliates in Article 8 hereof more than 50%, of the voting
securities or other voting interests of another person, or (ii)
the possession, directly or indirectly, of the power to direct, or
cause the direction of the management and policies of such person,
whether through the ownership of voting shares, by contract or
otherwise. The foregoing notwithstanding, the Partnership is not
an Affiliate of NYNEX.
1.6. Affiliated Entity means with respect to a Partner, the
person in the Other Partnership which is an Affiliate of such
Partner and which has the same Percentage Interest.
1.7. Agreed Value means, with respect to any asset, the
asset's adjusted basis for federal income tax purposes, except as
follows:
(a) The initial Agreed Value of any asset contributed by a
Partner to the Partnership shall be the gross fair market
value of such asset;
(b) The Agreed Values of all Partnership assets shall be
adjusted to equal their respective gross fair market
values (taking Code Section 7701(g) into account) as of
the following times: (i) the acquisition of an additional
interest in the Partnership by any new or existing Partner
in exchange for more than a de minimis capital
contribution; (ii) the distribution by the Partnership to
a Partner of more than a de minimis amount of Partnership
property as consideration for an interest in the
Partnership; (iii) the liquidation of the Partnership
within the meaning of Regulations Section 1.704-
1(b)(2)(ii)(g); and (iv) at such other times as the Tax
Matters Partner shall reasonably determine necessary or
advisable in order to comply with Regulations Sections
1.704-1(b) and 1.704-2; provided that the adjustments
described in clauses (i) and (ii) of this paragraph shall
be made only if the Tax Matters Partner reasonably
determines that such adjustment is necessary or
appropriate to reflect the relative economic interests of
the Partners in the Partnership;
(c) The Agreed Value of any Partnership asset distributed to
any Partner shall be the gross fair market value (taking
Code Section 7701(g) into account) of such asset on the
date of distribution; and
(d) The Agreed Values of Partnership assets shall be increased
(or decreased) to reflect any adjustments to the adjusted
basis of such assets pursuant to Code Section 732(d), 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 Regulations
Section 1.704-1(b)(2)(iv)(m); provided, however, that
Agreed Values shall not be adjusted pursuant to this
clause (d) to the extent that an adjustment pursuant to
clause (b) hereof is made in connection with a transaction
that would otherwise result in an adjustment pursuant to
this clause (d).
The Agreed Value of any interest in another partnership held by
the Partnership shall be determined as provided above, except that
(i) at any time at which such Agreed Value is determined pursuant
to clause (a), (b) or (c) above, it shall be increased by the
Partnership's share of the liabilities of such other partnership
under Code Section 752 at such time and (ii) Agreed Value shall be
increased or decreased to reflect subsequent increases or
decreases in the Partnership's share of such liabilities or
increases in the Partnership's individual liabilities by reason of
its assumption of liabilities of such other partnership or
decreases in the Partnership's individual liabilities by reason of
such other partnership's assumption thereof to the same extent and
at the same time that it would be so increased or decreased if it
were actually the federal income tax basis of the Partnership's
interest in such other partnership.
If the Agreed Value of an asset has been determined or adjusted
pursuant to this definition of Agreed Value, such Agreed Value
shall thereafter be adjusted by the Depreciation with respect to
such asset taken into account in computing Profits and Losses.
Determinations of gross fair market value for purposes of this
definition of Agreed Value shall be made as follows: (i) in
situations described in paragraphs (a), (b)(i), (b)(ii) and (c)
above by agreement between the Tax Matters Partner and the Partner
making the contribution or receiving the distribution as the case
may be, provided, however that if the Tax Matters Partner (or any
Affiliate of the Tax Matters Partner) is the contributor or the
distributee, such determination shall require agreement between
the contributor or the distributor and the Executive Committee;
and (ii) in other situations by the Executive Committee.
<Notwithstanding the foregoing, the sum of each Partner's
Adjustment Amount and the initial Agreed Value of the assets
contributed by such Partner pursuant to Section 4.1 hereof shall
be in the ratios (after taking into account the amount of any
liabilities assumed by the Partnership or which are secured by any
property contributed by such Partner to the Partnership) of their
initial Percentage Interests as set forth in Section 4.1.>
1.8. Agreement means this Partnership Agreement, as it may be
amended or restated from time to time.
{1.9. Bid Price means the amount of any payment made, or
offered to be made, to the FCC or other governmental agency as a
condition to or in connection with the application for or award of
a PCS License.}
1.10. Bell Atlantic has the meaning set forth in the
introductory section of this Agreement.
1.11. Business Plan has the meaning set forth in Section
5.1.12.
1.12. Capital Accounts mean the capital accounts maintained
with respect to Partnership Interests pursuant to Section 4.4
1.13. Capital Call means a request for additional
contributions of capital to the Partnership.
1.14. Cellular Business means the provision of any commercial
mobile radio services permitted pursuant to a license or licenses
issued under Subpart K of Part 22 of the FCC's rules, including
without limitation, public cellular radio telecommunications
service.
1.15. Change of Control has the meaning set forth in Section
8.5.
1.16. Code means the Internal Revenue Code of 1986, as
amended from time to time (or any corresponding provisions of
succeeding law).
1.17. Delinquent Partner with respect to a Capital Call means
a Partner who fails to pay its portion of such Capital Call at the
time and in the amount required under this Agreement.
1.18. Depreciation means, for each fiscal year or other
relevant period, an amount equal to the depreciation, amortization
or other cost recovery deduction allowable with respect to an
asset for such year or other relevant period, except that if the
Agreed Value of an asset differs from its adjusted basis for
federal income tax purposes at the beginning of such year,
Depreciation shall be an amount which bears the same ratio to such
beginning Agreed Value as the federal income tax depreciation,
amortization or other cost recovery deduction for such year bears
to such beginning adjusted tax basis; provided, however, that if
the federal income tax depreciation, amortization or other cost
recovery deduction for such year is zero, Depreciation shall be
determined with reference to such beginning Agreed Value using any
reasonable method selected by the Tax Matters Partner.
1.19. Designated MTAs/BTAs means the MTAs and BTAs designated
by the Executive Committee for development of the PCS Business.
1.20. Dissolution Event has the meaning set forth in Section
10.1.
1.21. Event of Bankruptcy means, with respect to any Partner
or the Partnership, any of the following:
(a) filing a voluntary petition in bankruptcy or for
reorganization or for the adoption of an arrangement under
the Bankruptcy Code as now or in the future amended) or an
admission seeking the relief therein provided;
(b) making a general assignment for the benefit of creditors;
(c) consenting to the appointment of a receiver for all or a
substantial part of such person's property;
(d) in the case of the filing of an involuntary petition in
bankruptcy, an entry of an order for relief;
(e) the entry of a court order appointing a receiver or
trustee for all or a substantial part of such Person's
property without his consent; or
(f) the assumption of custody or sequestration by a court of
competent jurisdiction of all or substantially all of such
Person's property.
1.22. Executive Committee means the Executive Committee of the
Partnership formed and acting pursuant to Section 5.1.
1.23. FCC means the United States Federal Communications
Commission.
1.24. Formation Agreement means the Joint Venture Formation
Agreement, dated as of June 29, 1994, between Bell Atlantic
Corporation and NYNEX Corporation.
1.25. GAAP means the generally accepted accounting principles
in the United States of America in effect from time to time.
1.26. Default Interest Rate means a rate of interest
comparable to that which is, at the time of issuance of the debt
security, charged on debt of comparable term to maturity to
issuers of comparable creditworthiness to the Partnership, plus
3%.
1.27. Liquidating Partner has the meaning set forth in Section
10.2.
1.28. Majority Vote has the meaning set forth in Section
5.1.8.
1.29. Management Co. has the meaning set forth in the
introductory section of this Agreement.>
1.30. MFJ has the meaning set forth in Section 11.10.
1.31. MTA means a Major Trading Area and BTA means a Basic
Trading Area, each as defined in FCC rules to be codified at 47
C.F.R. 24.13.}
1.32. Nondeductible Expenditure has the meaning specified
under the definition of Profits below.
1.33. Nondelinquent Partner means any Partner who is not a
Delinquent Partner.
1.34. Nonrecourse Deductions has the meaning set forth in
Regulations Section 1.704-2(b)(1). The amount and items of
Nonrecourse Deductions shall be determined in accordance with
Regulations Sections 1.704-2(c) and 1.704-2(j)(1).
1.35. NYNEX has the meaning set forth in the introductory
section of this Agreement.
1.36. Other Partnership means the general partnership (and its
successor entities) formed pursuant to the Partnership Agreement
entered into or to be entered into to form <PCSCO> {CELLCO} as
defined in the Formation Agreement.
1.37. Paging Business means the provision of any commercial
mobile radio services permitted pursuant to a license or licenses
issued under subpart G of Part 22 of the FCC's rules, including
without limitation public land mobile services and improved mobile
telephone services.
1.38. Partner means each of Bell Atlantic and NYNEX <and
Management Co.> and any other Person admitted as a Partner
pursuant to the terms of this Agreement.
1.39. Partner Candidate means any of the companies listed in
the initial Business Plan, and any wholly-owned person of any such
company. Any reference to Cellular Businesses of a Partner
Candidate shall mean Cellular Businesses (or interests therein)
owned, directly or indirectly, by the ultimate parent entity of
such Partner Candidate.
1.40. Partner Nonrecourse Debt Minimum Gain has the meaning
set forth in Regulations Section 1.704-2(i).
1.41. Partner Nonrecourse Debt has the meaning set forth in
Regulations Section 1.704-2(b)(4).
1.42. Partner Nonrecourse Deductions has the meaning set forth
in Regulations Section 1.704-2(i).
1.43. Partner Note has the meaning set forth in Section 4.4
hereof.
1.44. Partnership means the partnership established pursuant
to this Agreement.
1.45. Partnership Interest means the entire ownership interest
of a Partner in the Partnership.
1.46. Partnership Minimum Gain has the meaning set forth in
Regulations Sections 1.704-2(b)(2) and 1.704-2(d).
1.47. PCS Business means the provision of commercial mobile
radio service as contemplated by 47 CFR 20.9 pursuant to one or
more PCS Licenses.
1.48. PCS License means any license issued by the FCC pursuant
to Subparts D and E of Part 24 of the FCC's rules. A 10 MHz PCS
License shall mean a PCS License with respect to no more than 10
MHz.
1.49. Percentage Interest means initially, with respect to any
Partner, the Percentage Interest ascribed to such Partner in
Section 4.1 hereof. If an event described in clause (b)(i) or
(ii) of the definition of Agreed Value occurs, the Percentage
Interests shall be recalculated such that the Percentage Interest
of each Partner shall be equal to the ratio of such Partner's
Specified Account Value to the aggregate Specified Account Value
of all of the Partners, such Specified Account Values to be
determined after giving effect to the event or circumstance giving
rise to the recalculation and all contributions, distributions,
and allocations for all periods ending on or prior to the date of
recalculation; provided that if any Partner's Specified Account
Value is zero or less, the Percentage Interests shall be
recalculated by the Executive Committee based upon the relative
economic interests of the Partners immediately after such event.
In the event of any transfer of an interest by a Partner in
accordance with the provisions of this Agreement, the transferee
of such interest shall succeed to the Percentage Interest of his
transferor to the extent it relates to the transferred interest.
1.50. Profits and Losses means, for each fiscal year or other
relevant period, an amount equal to the Partnership's taxable
income or loss for such year or other relevant period, 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:
(a) 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
shall be added to such taxable income or loss;
(b) 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) (Nondeductible Expenditures), and not
otherwise taken into account in computing Profits or
Losses pursuant to this definition shall be subtracted
from such taxable income or loss;
(c) If the Agreed Value of any Partnership asset is adjusted
pursuant to clause (b) or clause (c) of the definition of
Agreed Value hereunder, 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;
(d) Gain or loss resulting from any disposition of Partnership
property with respect to which gain or loss is recognized
for federal income tax purposes shall be computed by
reference to the Agreed Value of the property disposed of,
notwithstanding that the adjusted tax basis of such
property differs from its Agreed Value;
(e) 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 fiscal year or other relevant
period;
(f) 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 in the
Partnership, 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 such basis) from the disposition of such asset
and shall be taken into account for purposes of computing
Profits or Losses; and
(g) Notwithstanding any other provision of this definition,
any items which are specially allocated pursuant to
Section 6.2 or Section 6.3 hereof shall not be taken into
account in computing Profits or Losses.
1.51. Regulations means the Income Tax Regulations promulgated
under the Code, as such regulations may be amended from time to
time (including corresponding provisions of succeeding
regulations).
1.52. Specified Account Value means with respect to any
Partner at any given time, its Capital Account balance at such
time, as such Account would be increased if all Partner Notes were
paid in full immediately prior to such determination and further
increased by an amount (the Adjustment Amount) for Saleable
Systems (as defined in the Formation Agreement) of such Partner
equal to the difference between (x) the number of Owned POPs (as
defined in the Formation Agreement) in such Saleable System
multiplied by the "Other POP Values" set forth for such Party on
Schedule 2.11 to the Formation Agreement and (y) the Net Proceeds
(as defined in the Formation Agreement) in respect of such
Saleable Systems. The Adjustment Amount for the Springwich
Systems (as defined in the Formation Agreement) shall be as set
forth in the Letter Agreement (as defined in the Formation
Agreement).
1.53. Supermajority Vote has the meaning set forth in Section
5.1.9.
1.54. Tax Matters Partner has the meaning set forth in Section
6231 of the Code.
1.55. Taxes has the meaning set forth in Section 4.14 of the
Formation Agreement.
1.56. Transfer has the meaning set forth in Section 8.1.
1.57. Wireless Business means the PCS Business, the Paging
Business and the Cellular Business, each conducted in the United
States of America, including without limitation all territories
and possessions thereof, but not including the delivery of video
or providing satellite or broadband microwave transmission
services.
1.58. As used in this Agreement, the terms listed on Annex A
shall have the respective meanings specified in the Sections
indicated therein.
ARTICLE 2.
ORGANIZATION
2.1. Formation. The Partners agree to, and hereby do, form a
general partnership pursuant to the provisions of the Act. The
Partnership Interests of the Partners in the Partnership, and the
rights and obligations of the Partners with respect thereto, are
subject to all of the terms and conditions of the Act except as
otherwise expressly set forth in this Agreement.
2.2. Name. The business of the Partnership shall be carried
on under the name of <Cellco Partnership> {PCSCO Partnership} or
under such other name as the Partners may from time to time
designate. Such name shall be the exclusive property of the
Partnership, and no Partner shall have any right to use, and each
Partner agrees not to use, such name other than on behalf of the
Partnership except as may be permitted from time to time by the
Executive Committee.
2.3. Purpose. The purpose of the Partnership is to undertake
the following activities:
{(a) To acquire PCS Licenses in Designated MTAs/BTAs, and
potentially in other areas, that are complementary to the
Cellular Business currently conducted by the Partners
through their cellular subsidiaries, in accordance with
the eligibility and other requirements of FCC rules;
(b) If the Partnership acquires one or more PCS Licenses, to
build, own and operate a PCS network in such manner as the
Partnership may deem appropriate from time to time, which
may include, without limitation, through management
contracts and other relationships, with a view toward
operating such PCS Business and the Other Partnership's
Cellular Business and Paging Business network in a unified
Wireless Business presenting to network users a seamless
system of wireless communications services; and}
<(a) To acquire certain assets from the Partners in accordance
with the Formation Agreement, and from then forward to
own, build and operate such assets as a Cellular Business
and Paging Business network in such manner as the
Partnership may deem appropriate from time to time, which
may include, without limitation, through management
contracts and other relationships, with a view toward
operating Cellular Business and Paging Business with the
other Partnership's PCS network in a unified Wireless
Business presenting to network users a seamless system of
wireless communications services; and>
<(b)> {(c)} To conduct its business activities and operation
and to develop and implement its strategies in cooperation
with the Other Partnership.
2.4. Place of Business. The Partnership's principal place of
business will be at such location as the Executive Committee may
from time to time designate. The Partnership may have such other
or additional places of business or headquarters within or outside
the State of Delaware as the Executive Committee may from time to
time designate.
2.5. Term. The term of the Partnership will commence as of
the date of this Agreement and will continue until the Partnership
is dissolved pursuant to Article 10.
2.6. Nature of Partners' Interests. The interests of the
Partners in the Partnership will be personal property for all
purposes. All property owned by the Partnership, whether real or
personal, tangible or intangible, will be owned by the Partnership
as an entity, and no Partner, individually, will have any
ownership of such property.
2.7. Partition. No Partner, nor any successor-in-interest to
such Partner, shall have the right, while this Agreement remains
in effect, to have the property of the Partnership partitioned, or
to file a complaint or institute any proceeding at law or in
equity to have the property of the Partnership partitioned, and
each Partner, on behalf of itself and its successors,
representatives and assigns, hereby waives any such right.
2.8. Capacity of the Partners. No Partner shall have any
authority to act for, or to assume any obligation or
responsibility on behalf of, any other Partner or the Partnership,
except as expressly provided in this Agreement or as authorized by
the Executive Committee.
ARTICLE 3.
PARTNERSHIP OPPORTUNITIES;
NON-COMPETITION{; ACQUISITION OF LICENSES}
3.1. Acquisition of Wireless Properties by Partners. No
Partner (or its Affiliate) shall bid on, acquire, or, directly or
indirectly, own, manage, operate, join, control, finance or
participate in the ownership, management, operation, control or
financing of, or be connected as a partner, principal, agent,
representative, consultant or otherwise with, or use or permit its
name to be used in connection with, any business or enterprise
which engages in the bidding for or acquisition of, any PCS
License or Wireless Business except (i) through the Partnership or
(ii) in accordance with the provisions of Section 3.1.1 or 3.1.2.
3.1.1. Non-10 MHz PCS Licenses.
(a) No Partner nor any of its Affiliates shall bid, in the FCC
auctions for PCS Licenses, on any PCS License to use more
than 10 MHz in any license area unless either (i) the
Partnership has not determined to bid on a PCS License for
such area, or (ii) the Partnership 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
the Partnership has determined to bid for such License.
In the circumstances described in clause (i), a Partner or
its Affiliate may bid on such License only if the
representatives of such Partner voted in favor of the
Partnership's bidding in such area, and in the
circumstances described in clause (ii), a Partner or its
Affiliate may enter a higher bid only if the
representatives of such Partner voted in favor of the
Partnership's bidding at a higher level than the
established maximum bid. If the Partner or Affiliate
acquires such License, it shall comply with Section
3.1.1(c).
(b) If any Partner or its Affiliate wishes to acquire any
interest in any Wireless Business (including, without
limitation, any license to operate a Wireless Business but
excluding a 10 MHz PCS License), other than the
acquisition of PCS Licenses in the FCC Auctions, then such
Partner shall first propose to the Partnership that the
Partnership make such acquisition, and shall present to
the Partnership any opportunity that may have been offered
to such Partner or its Affiliate to make such acquisition.
If the Executive Committee by Majority Vote does not
approve the making of such acquisition by the Partnership
not later than 30 days after the Partner has given notice
to the Partnership of the opportunity and the proposed
material terms of the acquisition, and if the
representatives of such Partner voted in favor of making
such acquisition by the Partnership, then such Partner or
its Affiliate shall be free to make such acquisition on
terms no more favorable to the Partner or its Affiliate
than those described in the notice to the Partnership,
provided (i) that the Partner or its Affiliate enters into
a definitive agreement (subject solely to obtaining the
requisite regulatory approvals) with respect thereto
within 150 days after the Partner gave notice to the
Partnership of the opportunity and (ii) that such Partner
complies with Section 3.1.1(c).
(c) It shall be a condition to any acquisition by a Partner or
its Affiliate of any PCS License (other than a 10 MHz PCS
License) or other interest in any Wireless Business that
such Wireless Business shall offer to enter into an
affiliation agreement with the Partnership on terms and
conditions comparable to those which the Partnership
offers to other affiliated Wireless Businesses in similar
situations (or if no such agreement then exists, such
terms and conditions as are approved by the Executive
Committee by Majority Vote which terms and conditions
shall include a "most-favored nation" provision), under
which such Wireless Business will provide its services to
the public as an affiliate of the Partnership's business
(an Affiliation Agreement). The Partnership may waive
compliance with all or any part of this Section 3.1.1(c)
with respect to any transaction by majority vote of the
Executive Committee (excluding the vote of the
representatives of the acquiring Partner) pursuant to
Section 5.1.10.
3.1.2. 10 MHz PCS Licenses. No Affiliate shall bid on or
acquire in the FCC auctions for PCS Licenses any PCS License to
use a 10 MHz PCS License unless the Affiliate is a landline
communications carrier (including without limitation a landline
cable company) and either (i) the Partnership has not determined
to bid on a 10 MHz PCS License for such area at least 30 days
before the date upon which prospective bidders are required to
register with the FCC to bid on such PCS License (the
Qualification Date), or (ii) the Partnership determined to bid on
a 10 MHz PCS License for an area at least 30 days before the
Qualification Date and has entered a bid or bids for such License
in such area, but a third-party bid has been entered which equals
or exceeds the maximum amount that the Partnership has determined
to bid for such License. Unless the Partnership has determined to
bid on a 10 MHz PCS License at least 30 days before the
Qualification Date therefor, the Partnership shall not bid on such
10 MHz PCS License in the FCC auctions. In the event that any
acquisition by the Partnership of a 10 MHz PCS License from third
parties after the FCC auction for such license is not approved by
the Executive Committee by Majority Vote not later than 30 days
after the Partner has given notice to the Partnership of the
opportunity and the material terms of the acquisition, then any
one or more Affiliates of the Partner which is a landline
communications carrier (including without limitation landline
cable companies), may acquire such 10 MHz PCS License on terms no
more favorable to the Partner or its Affiliate than those
described in the notice to the Partnership, provided that the
Affiliate enters into a definitive agreement (subject solely to
obtaining the requisite regulatory approvals) with respect thereto
within 150 days after the Partner gave notice to the Partnership
of the opportunity.
3.2. Agreement Not to Compete. Each Partner agrees that for
so long as it holds any Partnership Interest and until the second
anniversary of the first date on which such Partner no longer
holds any Partnership Interest, neither such Partner nor any of
its Affiliates shall, without the prior written consent of the
Executive Committee by Majority Vote (excluding the competing
Partner) pursuant to Section 5.1.10, directly or indirectly, own,
manage, operate, join, control, finance or participate in the
ownership, management, operation, control or financing of, or be
connected as a partner, principal, agent, representative,
consultant or otherwise with, or use or permit its name or the
name of any of its Affiliates to be used in connection with, any
business or enterprise engaged in any Wireless Business.
3.3. Enforceability and Enforcement.
(a) The Partners acknowledge and agree that the time, scope,
geographic area and other provisions of Sections 3.1 and
3.2 have been specifically negotiated by sophisticated
parties and specifically agree that such time, scope,
geographic area, and other provisions are reasonable under
the circumstances. The Partners agree that if, despite
this express agreement of the Partners, a court should
hold any portion of Section 3.1 or 3.2 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) Each Partner agrees that 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, as well as an equitable accounting
of all earnings, profits and other benefits arising from
any violation of Sections 3.1 and 3.2, which rights shall
be cumulative and in addition to any other rights or
remedies to which the Partnership may be entitled.
3.4. Exceptions to Sections 3.1 and 3.2. The restrictions set
forth in Sections 3.1 and 3.2 on the activities described therein
(Competitive Activity) shall not be construed to prohibit:
(a) the acquisition or ownership of not more than five percent
of the aggregate voting power of the outstanding capital
stock of any corporation having a class of securities
registered pursuant to the Securities Exchange Act of
1934;
(b) the acquisition (through merger, consolidation, purchase
of stock or assets, or otherwise) of a person or business,
or an interest in a person or business, which engages
(directly or indirectly through an Affiliate that is
controlled by such person) in any Competitive Activity so
long as the Competitive Activity accounts for less than
40% of both (1) the revenues of such person or business as
set forth in the most recent available audited financial
statements of such person or business as of the date of
execution of the definitive agreement providing for such
acquisition, and (2) the value of such person or business
(as determined in good faith by the acquiring Partner or
Affiliate). The Partner and its Affiliates acquiring such
person or business may conduct the acquired business;
provided, however, that (i) the business shall not engage
in Competitive Activity in any geographic area in which it
was not conducting such Competitive Activity immediately
prior to the date of execution of the definitive agreement
providing for such acquisition, and (ii) such person or
business shall offer to enter into an Affiliation
Agreement with the Partnership. If the Competitive
Activity accounts for more than 30% of the revenues or
value of such person or business as described in the first
sentence of this paragraph (b), and if the Partnership and
such person or business have not entered into or agreed to
enter into an affiliation agreement, the Partner and its
Affiliates shall enter into a definitive agreement to sell
the Competitive Activity to a third person not later than
the consummation of the acquisition by the Partner or its
Affiliates of the person or business and shall consummate
such sale of the Competitive Activity not later than 180
days after consummation of such acquisition;
(c) the obtaining of the right to nominate or cause the
election of less than 20% of the members of the Board of
Directors of a corporation and any committee thereof,
provided that no employee of the Partner or its Affiliates
serves as an officer of such corporation;
(d) any activity of an Affiliate that is a landline
communications carrier (including without limitation
landline cable companies) in its service territory
required in accordance with all applicable laws,
regulations or orders, or any agreement with a regulatory
authority which agreement is existing as of the date
hereof.
(e) the limited use of radio spectrum by a landline
communications carrier (including without limitation
landline cable companies) for provision of "wireless
tails" or other similar services ancillary to land line
communications;
(f) the conduct of a Paging Business by a landline
communications carrier (including without limitation a
landline cable company) in its service area pursuant to
licenses issued under subpart G of Part 22 of the FCC's
rules and held by such carrier on the date hereof or, in
the case of such carriers subsequently acquired by the
Partner or its Affiliates, held by such carrier on the
date the acquisition of such carrier by the Partner or its
Affiliates is consummated.
(g) the provision of services to a holder of a PCS License or
a person conducting a Wireless Business;
(h) the acquisition, retention and disposition, in the
ordinary course of business, of debt obligations or
engaging in equipment financing and sale-leaseback
arrangements, provided that such debt obligations or
financing arrangements entitle the holder or financier 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 entity;
(i) the provision of improved mobile telephone services by a
landline communications carrier (including without
limitation a landline cable company) pursuant to Subpart G
of Part 22 of the FCC's rules;
(j) the acquisition of a PCS License or other interest in a
Wireless Business and the conduct of a Wireless Business
in the territory in which such business was in operation
at the time of acquisition by the Partner or its Affiliate
if the procedures set forth in Sections 3.1.1 or 3.1.2, as
applicable, have been complied with;
(k) the purchase by a landline communications carrier
(including without limitation a landline cable company)
from any person of any services of the type provided by a
Wireless Business and the resale thereof in all or any
portion of the service territory of such carrier;
(l) the ownership of partnership interests in the Other
Partnership and all activities related thereto;
(m) the ownership and operation of the Systems and interests
in Wireless Businesses acquired after the date of
execution of the Formation Agreement but not treated as an
Acquired Entity subject to Section 2.8 of the Formation
Agreement which are not contributed to the {Other}
Partnership in accordance with the Formation Agreement,
provided that the non-contributing Partner or its
Affiliate shall comply with Section 3.1.1(c) as to each
such System and interest in a Wireless Business which is a
Managed System (as defined in the Formation Agreement);
(n) the holding of an equity interest in a person that engages
in a Competitive Activity if the Partner or its Affiliate
has no 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
reasonable efforts, including voting its equity interest,
to cause such person to cease such Competitive Activity;
(o) the holding by NYNEX or an Affiliate of an equity interest
of not more than 50% in Upstate Cellular Network provided
that NYNEX or such Affiliate had no greater management
authority with respect to such Network than it has on the
date of this Agreement;
(p) the provision by a Partner or any of its Affiliates of
limited two-way data communications ancillary to paging
services of the type widely available as of the date of
this Agreement;
{(q) the ownership and operation of the Systems and the
Acquired Entities prior to consummation of the Cellular
Closing under the Formation Agreement.}
3.5. Activities of the Partners. Except as expressly provided
in Section 3.1 and 3.2 hereof, each Partner and its Affiliates may
engage in or hold an interest in other business ventures and
activities of any nature, including, without limitation, ventures
and activities similar to those of the Partnership, and neither
the Partnership nor the other Partners shall, by virtue of this
Agreement, have any interest or rights in or to such other
ventures or business or any liability or obligation with respect
thereto.
3.6. Provision of Services to Telephone Companies. Subject to
existing partnership agreements and regulatory requirements, the
Partnership shall provide to any Affiliate of a Partner which is a
landline communications carrier (including landline cable
companies), such services provided by its Wireless Business
as such Affiliate (whether acting as a wholesaler or a retailer)
may request at the lowest rates made available from time to time
by the Partnership to other retailers of such services.
3.7. Termination of Formation Agreement. The provisions of
Article 3 shall cease to be of any effect if the Formation
Agreement is terminated without the Cellular Closing having
occurred.
{3.8. Determination of Designated MTAs/BTAs. The Partners
shall attempt to reach a consensus on designation of the
Designated MTAs/BTAs for which the Partnership will seek to
acquire PCS Licenses, and on the Bid Prices to be bid for, or
other acquisition prices to be paid for, such PCS Licenses. If
the Partners are unable to reach consensus, the Executive
Committee shall designate Designated MTAs/BTAs by Majority Vote.}
ARTICLE 4.
CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS
4.1. Initial Capital Contributions. Contemporaneously with
the execution hereof, the Partners have contributed to the capital
of the Partnership the cash and assets described in the Formation
Agreement, receipt of which is hereby acknowledged. The Partners
and the Partnership agree and acknowledge that immediately after
the foregoing contribution, the initial Percentage Interests of
the Partners and the initial ratio of the Specified Account Value
of a Partner to all Partners shall be {62.35%} <61.7265%> in the
case of Bell Atlantic, and {37.65%} <37.2735%> in the case of
NYNEX <, and 1% in the case of Management Co.>, in each case
subject to adjustment in accordance with the Formation Agreement
prior to the Cellular Closing thereunder.
4.2. Additional Capital Calls. The Partnership may, from
time to time, issue Capital Calls, requiring the Partners to make
additional contributions of capital to the Partnership in
proportion to their respective Percentage Interests. Capital
Calls specifically referred to in any annual budget included in
any Business Plan may be made by the chief executive officer of
the Partnership. Any Capital Call not so provided for must be
approved by the Executive Committee by Majority Vote.
4.3. Failure to Pay a Capital Call.
(a) If any Partner fails to make payment when due of all or
any portion of its share of a Capital Call, the secretary
of the Partnership shall give written notice of the
failure to such Partner, with a copy to all other
Partners. If the Partner fails to pay the amount due
within 10 days following receipt of notice, the secretary
shall promptly give notice of such failure to the other
Partners. At any time within 15 days following receipt of
such notice, then, unless the Nondelinquent Partners elect
to make capital contributions in accordance with Section
4.3(b) hereof, (i) the amount contributed by each
Nondelinquent Partner pursuant to the Capital Call shall
be treated as a loan to the Partnership for a term to be
specified by such Non-Delinquent Partner, bearing interest
payable quarterly at the Default Interest Rate and (ii)
each Nondelinquent Partner may make an additional loan to
the Partnership for a term to be specified by such Non-
Delinquent Partner, also bearing interest payable
quarterly at the Default Interest Rate, in an amount equal
to all or any portion of the unpaid contribution. If two
or more Partners desire to provide funds under clause (ii)
of the preceding sentence, the total amount of funds
provided shall be allocated among such Partners in
proportion to their then current relative Percentage
Interests or in such other manner as they may agree.
(b) If both (i) a majority in number of the Nondelinquent
Partners and (ii) Nondelinquent Partners whose Percentage
Interests represent more than 50% of the Percentage
Interests of all of the Nondelinquent Partners so elect
(for purposes of such calculations, any Partner that is an
Affiliate of a Delinquent Partner shall be treated as a
Delinquent Partner, and all Partners which are Affiliates
of each other shall be deemed to be a single Partner),
then in lieu of making loans to the Partnership in
accordance with Section 4.3(a) hereof, (A) the amount
contributed by each Nondelinquent Partner pursuant to the
Capital Call shall be treated as a contribution to the
capital of the Partnership in exchange for an additional
interest in the Partnership and (B) each Nondelinquent
Partner may make an additional contribution of capital to
the Partnership in exchange for an additional interest in
the Partnership in an amount equal to all or any portion
of the unpaid contribution. If two or more Partners
desire to make capital contributions under clause (B) of
the preceding sentence, the total amount of capital to be
contributed shall be allocated among such Partners in
proportion to their then current relative Percentage
Interests or in such other manner as they may agree.
(c) The amounts contributed pursuant to Section 4.3(b) hereof
shall increase the Capital Accounts of the contributing
Partners in accordance with the terms of this Agreement.
In addition, the Percentage Interests shall be
recalculated (and such recalculated Percentage Interests
shall thereafter apply for all purposes of this Agreement
and the Other Partnership) such that the Percentage
Interest of each Partner shall equal the ratio of the
aggregate of its and its Affiliated Entity's Specified
Account Values in both Partnerships over the aggregate
Specified Account Values of (x) the Partners in the
Partnership and (y) the partners in the Other Partnership,
calculated as if the amounts contributed pursuant to
Section 4.3(b) were 125% of the amounts actually
contributed. The Percentage Interests in the Other
Partnership shall be simultaneously adjusted such that the
Percentage Interest of each Partner's Affiliated Entity in
the Other Partnership shall be the same as the Partner's
Percentage Interest in the Partnership. Once an
adjustment is made pursuant to this Section 4.3(c), any
future calculations of Percentage Interests in the
Partnership or the Other Partnership shall be calculated
on an aggregate basis using the methodology (including the
125% weighting) specified above.
(d) Any Partner who becomes a Delinquent Partner hereby agrees
to cause each of its Affiliated Entities to agree to the
terms of this Section 4.3..
4.4. Capital Accounts. The Partnership shall maintain for
each Partner a single Capital Account with respect to the
Partner's Partnership Interest in accordance with the regulations
issued pursuant to Section 704 of the Code. The Capital Account
of each Partner shall be maintained for such Partner in accordance
with the following provisions:
(a) To each Partner's Capital Account there shall be credited
the amount of cash and the Agreed Value of any assets
contributed to the capital of the Partnership by such
Partner pursuant to any provision of this Agreement, such
Partner's distributive share of Profits and any items in
the nature of income or gain which are specially allocated
pursuant to Section 6.2 or Section 6.3 or Section 6.4.5,
and the amount of any Partnership liabilities which are
assumed by such Partner or which are secured by any
Partnership property distributed to such Partner.
(b) To each Partner's Capital Account there shall be debited
the amount of cash and the Agreed Value of any Partnership
property 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
6.2 or Section 6.3 or Section 6.4.5, and the amount of any
liabilities of such Partner which are assumed by the
Partnership or which are secured by any property
contributed by such Partner to the Partnership, and the
amount of any liabilities of any other partnership,
interests in which were contributed to the Partnership, to
the extent such liabilities are included in the Agreed
Value of such contributed partnership interests.
(c) In the event that all or a portion of a Partnership
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 that it
relates to the transferred interest.
(d) In determining the amount of any liability for purposes of
paragraphs (a) and (b) hereof, there shall be taken into
account Code Section 752(c) and any other applicable
provisions of the Code and Regulations.
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 by a
person related to the maker of the note within the meaning of
Regulation Sections 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) (any such note being
referred to as a Partner Note).
The foregoing provisions and the other provisions of this
Agreement relating to the maintenance of Capital Accounts are
intended to comply with Regulations Sections 1.704-1(b) and 1.704-
2, and shall be interpreted and applied in a manner consistent
with such Regulations. To the extent that such Regulations
require that adjustments other than those set out above or in
Section 6.2.6 be made to the Capital Accounts of the Partners,
such adjustments shall be made.
ARTICLE 5.
MANAGEMENT OF THE PARTNERSHIP
[IN THE CASE OF CELLCO, THE PROVISIONS CONTAINED IN
SECTION 5.1 HEREOF SHALL BE SET FORTH IN THE
CERTIFICATE OF INCORPORATION, BY-LAWS AND
STOCKHOLDERS AGREEMENT OF THE MANAGEMENT CO. AND THE
MANAGEMENT CO. WILL HAVE EXCLUSIVE RIGHTS TO MANAGE
CELLCO. APPROPRIATE MODIFICATIONS WILL BE
MADE IN THIS AGREEMENT TO REFLECT THAT ARRANGEMENT.]
5.1. Executive Committee.
5.1.1. Powers. The business and affairs of the
Partnership shall be managed under the direction of the
Executive Committee; and all powers of the Partnership, except
those specifically reserved or granted to the Partners by
statute or this Agreement, are hereby granted to and vested in
the Executive Committee. The Executive Committee 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 Executive Committee to directly approve such
action. No Partner shall take any action in the name of or on
behalf of the Partnership, including without limitation
assuming any obligation or responsibility on behalf of the
Partnership, unless such action, and the taking thereof by such
Partner, shall have been expressly authorized by the Executive
Committee or shall be expressly and specifically authorized by
this Agreement.
5.1.2. Number and Term of Office. Each of the Partners
shall have the right to designate two members of the Executive
Committee by written notice to the secretary of the Partnership
and to each other Partner. Members of the Executive Committee
shall hold office at the pleasure of the Partner that
designated them. Any Partner may at any time, and from time to
time, remove or replace any or all of the members designated by
such Partner, and shall give written notice to the secretary of
the Partnership and to each other Partner of any such removal
or replacement. Each Partner shall cause the same persons
serving as its representatives on the Executive Committee of
the Partnership to serve as its representatives on the
Executive Committee of the Other Partnership.
5.1.3. Resignations. Any member of the Executive
Committee may resign at any time by giving written notice to
the Partner that appointed such member and to the secretary of
the Partnership. Such resignation shall take effect on the
date shown on or specified in such notice or, if such notice is
not dated, at the date of the receipt of such notice by the
secretary of the Partnership. No acceptance of such
resignation shall be necessary to make it effective. The
Partner that appointed such resigning member shall be entitled
to appoint a member to fill the vacancy created by such
resignation by written notice to the secretary of the Company
and to each other Partner.
5.1.4. Place of Meeting. The Executive Committee may
hold its meetings at such place or places within or outside the
State of Delaware as the Executive Committee 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.
5.1.5. Regular Meetings. Regular meetings of the
Executive Committee may be held without notice at such time and
place as shall be designated from time to time by resolution of
the Executive Committee, but such meetings shall be held at
least once each calendar month unless otherwise specified by
the Executive Committee by Majority Vote. If the date fixed
for any such regular meeting is a Saturday, Sunday or legal
holiday under the laws of the state where such meeting is to be
held, then the meeting shall be held on the next succeeding
business day or at such other time as may be determined by
resolution of the Executive Committee. At such meetings the
members of the Executive Committee shall transact such business
as may properly be brought before the meeting.
5.1.6. Special Meetings. Special meetings of the
Executive Committee may be called by any member of the
Executive Committee or by the chief executive officer of the
Partnership. Notice of each such meeting shall be given to
each member of the Executive Committee by telephone, telecopy,
telegram or similar method (in which case notice shall be given
at least 48 hours before the time of the meeting) or sent by
first-class mail (in which case notice shall be given at least
five days before the meeting), unless otherwise specified by
the Executive Committee by Majority Vote. Each such notice
shall state the time, place and purpose of the meeting to be so
held.
5.1.7. Voting. The member or members of the Executive
Committee appointed by each Partner who are present (in person
or by written proxy) at any meeting of the Executive Committee
(or who are acting by written consent in lieu of a meeting)
shall together have voting power equal to such Partner's
Percentage Interest at the time of such meeting. If only one
member appointed by a given Partner is present at a meeting,
such member shall be entitled to vote the entire voting power
held by all members appointed by such Partner. If more than
one member appointed by a given Partner is present at a
meeting, such members shall vote such Partner's entire voting
power as a single unit. In the event of a disagreement at a
meeting among members appointed by a single Partner as to how
to vote on any matter, the vote of the member designated by
such Partner as its senior representative shall be controlling
and the vote of the other member or members representing such
Partner shall be disregarded with respect to such matter.
5.1.8. Manner of Acting and Adjournment. Any action of
the Executive Committee shall require the affirmative vote of
members of the Executive Committee representing both (a)
Partners then holding Percentage Interests aggregating more
than 50%, and (b) a majority in number of all Partners (a
Majority Vote), except for actions requiring a different vote
as provided in Section 5.1.9 or 5.1.10 or as may be otherwise
specifically provided by this Agreement. The presence at a
duly called meeting of the Executive Committee of members
representing both (a) Partners then holding Percentage
Interests aggregating more than 50%, and (b) a majority in
number of all Partners shall constitute a quorum. If a quorum
shall not be present at any meeting of the Executive Committee,
the members of the Executive Committee present thereat may
adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall be
present. For all purposes of this Section 5.1.8, all Partners
which are Affiliates of each other shall be deemed to be a
single Partner.
5.1.9. Actions Requiring Supermajority Vote. The
following actions shall require the affirmative vote of members
of the Executive Committee representing Partners then holding
Percentage Interests aggregating 90% or more (a Supermajority
Vote):
(a) Admission as a partner in the Partnership of any
person other than a Partner Candidate, or admission
of a Partner Candidate upon terms other than those
set forth in Section 8.6(a);
(b) Engaging, directly or indirectly, in any business
other than the Wireless Business;
(c) Any amendment of this Agreement; provided, however,
that any amendment that would affect the rights or
obligations of one or more Partners without affecting
the rights or obligations of other Partners in the
same manner shall require the affirmative vote of
such affected Partners' representatives on the
Executive Committee;
(d) Voluntary dissolution or winding-up of the
Partnership, or voluntary initiation by and with
respect to the Partnership of bankruptcy or similar
proceedings;
(e) Acquisitions or dispositions of assets or property
(in one or a series of related transactions) with a
fair market value (as determined in good faith by the
Executive Committee by Majority Vote) of twenty-five
percent (25%) or more of the total fair market value
of all the assets of the Partnership;
(f) A change in form of legal organization of the
Partnership, except for a change in form submitted in
connection with a plan for a public offering of
securities (including without limitation pursuant to
Section 8.7 hereof) on or after the third anniversary
of the date of this Agreement, which change in form
shall require approval only by Majority Vote of the
Executive Committee;
(g) A public offering of equity interests in the
Partnership (or its successor entity) at any time
prior to the third anniversary of the date of this
Agreement.
5.1.10. Affiliated Transactions. In addition to any
other approval by the Executive Committee hereunder, any
proposed transaction between the Partnership and any Partner or
its Affiliate (including a grant by the Partnership to the
Partner of a waiver of any provision hereof or consent
hereunder, but not including transactions described in Section
3.6 or 5.7) shall also require the affirmative vote of members
of the Executive Committee representing Partners who then hold
a majority of the then outstanding Percentage Interests of all
Partners excluding the Percentage Interest of such Partner. In
lieu of any other approval by the Executive Committee
hereunder, any claim or proceeding or similar action may be
brought or made in the name of the Partnership against a
Partner or any of its Affiliates (including without limitation
any claim for indemnity under the Formation Agreement or
hereunder), and elections to exercise rights under Section 8.5
hereof may be made, upon the affirmative vote of members of the
Executive Committee representing Partners who then hold a
majority of the then outstanding Percentage Interests of all
Partners excluding the Percentage Interest of the Partner
against whom or whose Affiliate the action is brought or who is
the Change of Control Partner.
5.1.11. Other Actions Requiring Executive Committee
Approval. The following actions shall require a Majority Vote
of the Executive Committee:
(a) Public issuance of equity interests in the
Partnership (or its successor entity) on or after the
third anniversary of the date of this Agreement;
(b) Approval of a Business Plan, or a material
modification to a Business Plan;
(c) Making of any Capital Call other than a Capital Call
provided for in any annual budget included in any
Business Plan;
(d) Entry into any material transaction outside the scope
or contemplation of the Business Plan, or any other
material deviation from the Business Plan;
(e) Admission of a Partner Candidate as a partner in the
Partnership upon the terms set forth in Section
8.6(a);
(f) Appointment, removal, and compensation of the Chief
Executive Officer, the Chief Operating Officer and
the Chief Financial Officer of the Partnership;
(g) Any determination to make no distribution, or less
than the full distribution contemplated by Section
6.6.1, of cash for any one or more fiscal quarters,
or to make cash distributions in addition to those
contemplated by Section 6.6.1;
(h) Approval of the terms of the standard Affiliation
Agreement to be entered into between the Partnership
and third-party owners of Wireless Businesses;
(i) Approval of the terms of any Affiliation Agreement
between the Partnership and a Partner or its
Affiliate with respect to an affiliated Wireless
Business permitted under Sections 3.1 or 3.4(b), or
the waiver of any such requirement;
(j) Appointment of and any change in the auditors of the
Partnership.
The enumeration of actions in this Section is not intended, and
shall not be construed, as limiting the matters which shall
require approval by the Executive Committee by Majority Vote.
5.1.12. Business Plan. The Partners have prepared and
delivered to each other and to the Partnership concurrently
with the execution of the Agreement the initial one-year and
five-year business plan for the Partnership <or, if such one-
year plan is not then agreed upon, the then-current business
plan for the businesses contributed to the Partnership pursuant
to Section 4.1 hereof>. Such business plan, and each
subsequent business plan prepared for the Partnership and
approved by the Executive Committee by Majority Vote, are
referred to herein as a Business Plan. Not less than one month
after completion of the initial PCS auctions for Designated
MTA/BTAs, and not less than three months prior to the start of
each subsequent fiscal year of the Partnership, the Chief
Executive Officer of the Partnership shall submit to the
Executive Committee a proposed Business Plan including an
operating budget for such fiscal year, a financial commitment
for the five-year period beginning with such fiscal year, and a
financial view for the ten-year period beginning with such
fiscal year. If the Executive Committee fails to approve a
Business Plan prior to the beginning of any fiscal year, then
the Partnership shall be operated on the basis of the Business
Plan in effect for the prior year until a new Business Plan is
approved, provided, however, that no Capital Calls or
borrowings provided for in the annual budget for such prior
year shall be repeated in such new year unless specifically
approved for such new year by Majority Vote.
5.1.13. Deadlocks. Upon the occurrence of a Deadlock
Event, the Partners shall first use their good faith efforts to
resolve such matter in a mutually satisfactory manner. If,
after such efforts have continued for 20 days (or, if shorter,
until ten days before the vote or action on such matter must be
taken, provided that the Partners shall have used their mutual
good faith efforts to secure all possible extensions of time
for such vote or action), no mutually satisfactory solution has
been reached, the parties shall resolve the Deadlock Event as
provided herein:
(a) Each Partner shall first refer the matter to the chief
executive officer of the corporate Affiliate of such
Partner having primary responsibility for the Partnership
for resolution.
(b) If such officers, after a good faith effort, are unable to
resolve the dispute, they shall (at the instance of either
of them, but in no event later than 20 days after the
matter has been referred to them) refer the matter to the
Chairmen of their respective ultimate parent corporations
for resolution.
(c) Should the Chairmen of the ultimate parent corporations of
the Partners necessary to cast the deciding vote on the
Deadlock Event fail to resolve the matter within ten (10)
business days, each Partner 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)
business days following the failure of the Chairmen to
resolve such dispute, such Briefs shall be submitted to
such reputable and experienced mediation service as is
selected by the Executive Committee by Majority Vote or,
failing such selection, by the Chief Executive Officer of
the Partnership (the Mediator). During a period of 20
business days, the Mediator and the Partners shall attempt
to reach a resolution of the Deadlock Event.
(d) In the event that after such 20 business day period the
Partners are still unable to reach resolution of the
Deadlock Event, the Mediator shall select within the
following 10 business days a proposed resolution contained
in one of the Briefs and such resolution shall be
implemented promptly by the Partnership.
(e) Deadlock Event shall be deemed to have occurred if
(i) after failing to approve a Business Plan for one
fiscal year, the Executive Committee fails to approve a
one-year Business Plan not less than 90 days prior to the
commencement of the next succeeding fiscal year, (ii) the
position of Chief Executive Officer of the Partnership is
vacant for a period of more than 30 days after one of the
Partners have proposed a candidate to fill such vacancy,
(iii) either the Chief Executive Officer or the Executive
Committee by Majority Vote has determined in good faith
that the Executive Committee has considered but has failed
to approve a proposal and the inaction created by such
failure to approve such proposal or an alternate proposal
poses an imminent and material threat to the Partnership's
ability to profitably pursue the Wireless Business.
5.1.14. Action Without Meeting. Any action required or
permitted to be taken at any meeting of the Executive Committee
may be taken without a meeting upon the unanimous written
consent of all members of the Executive Committee then in
office.
5.2. Effect of Section 1509 of the Act. Notwithstanding
Section 1509 of the Act, the Partners hereby agree that this
Agreement shall govern the manner by which any actions (including
those described in such Section) may be taken by the Partnership,
even though this Agreement does not require the authorization of
all of the Partners.
5.3. Indemnification of Partners, Executive Committee,
Officers and Others.
5.3.1. In General. The Partnership, to the maximum
extent permitted by law, shall indemnify and hold harmless each
Partner, its Affiliates and each of its and their respective
officers, directors or management committee members, as the
case may be, and each of the members of the Executive Committee
(Mandatory Indemnitees) and may indemnify and hold harmless
each of the officers, employees or agents of the Partnership
(Permitted Indemnitees), from and against any and all
judgments, interest on such judgments, fines, penalties,
charges, costs, amounts paid in settlement, expenses and
reasonable attorneys' fees incurred in connection with any
action, claim, suit, inquiry, proceeding, investigation or
appeal taken from the foregoing by or before any court or
governmental, administrative or other regulatory agency, body
or commission, whether pending or threatened, and whether or
not an Indemnitee is or may be a party thereto, which arise out
of the business or affairs of the Partnership or their
activities with respect thereto (Indemnified Damages), except
for any such Indemnified Damages that are Taxes imposed on or
against any Partner or that have resulted primarily from gross
negligence, fraud, bad faith or willful misconduct of or
knowing violation of law by the person (or any of its
Affiliates) seeking indemnification. The Partnership shall pay
for or reimburse the reasonable expenses incurred by any
Mandatory Indemnitee, and may pay for and reimburse the
reasonable expenses incurred by any Permitted Indemnitee, in
any such proceeding in advance of the final disposition of the
proceeding if the person sets forth in writing (a) the person's
good faith belief that the person is entitled to
indemnification under this provision and (b) the person's
agreement to repay all advances if it is ultimately determined
that the person is not entitled to indemnification under this
Section 5.3.1. Any repeal or modification of any portion of
the foregoing provisions of this Section 5.3.1 or the adoption
of any provision of this Agreement inconsistent with any
portion of the foregoing provisions of this Section 5.3.1 shall
not adversely affect any right or protection of any person
indemnified under this Section 5.3.1 for any act or omission
occurring, or any cause of action, suit, claim or other matter
arising or accruing, prior to the later of (y) the effective
date of such repeal, modification or adoption or (z) the date
notice of the amendment is given to the person. This Section
5.3.1 shall not be deemed exclusive of any other provisions for
indemnification or advancement of expenses of directors,
officers, employees, agents and fiduciaries that may be
included in any statute, any agreement, any general or specific
action of the Executive Committee, any vote of Partners or
other document or arrangement.
5.3.2. Reliance on Provisions. Each person who shall act
as a member of the Executive Committee of the Partnership shall
be deemed to be doing so in reliance upon the rights of
indemnification and advancement of expenses provided by this
Article.
5.3.3. Insurance. The Partnership may purchase and
maintain insurance on behalf of any person who is or was a
member of the Executive Committee or an officer of the
Partnership 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
Partnership would have the power to indemnify such person
against such liability under the provisions of this Section
5.3.3 or otherwise.
5.4. Partner Compensation; Reimbursement.
(a) The Partners shall receive no compensation for performing
their duties under this Agreement; provided that this
provision shall not affect (i) any Partner's right to
receive its allocation of Profits and Losses or
distributions as set forth in Article 6, (ii) the right of
any Partner or its Affiliates to receive such compensation
as may be expressly approved by the Executive Committee,
(iii) any Partner's right to be reimbursed for payment of
Partnership obligations as provided in subsection (b) of
this Section 5.4 or (iv) the right of a Partner to be
repaid the amount of any loans to the Partnership by a
Partner.
(b) Each of the Partners shall be entitled to receive, out of
Partnership funds available therefor, reimbursement of all
amounts expended by such Partner in payment of properly
incurred Partnership obligations paid by such Partner out
of its own funds.
5.5. Taxes and Charges; Governmental Rules. Each Partner shall
(i) promptly pay all applicable Taxes and other governmental
charge imposed on or against such Partner, except to the extent
(x) the failure to promptly pay such Taxes or other governmental
charges will not have a material adverse effect on the Partnership
or its assets or (y) any such Taxes or other governmental charges
are being contested in good faith by appropriate proceedings, and
(ii) comply with all applicable governmental rules, except to the
extent that such noncompliance will not have a material adverse
effect on the Partnership.
5.6. Further Assurances. Following execution and delivery of
this Agreement by all of the Partners, each Partner shall, at its
own cost, do, execute and perform all such other acts, deeds and
documents as the other Partner or the Partnership may from time to
time reasonably require in order to carry out fully the intents
and purposes of this Agreement or to comply with any applicable
governmental rules.
5.7. Partnership Services to Partners.
5.7.1. Support for International Operations. In the
event that any Affiliate of a Partner which is engaged, in
whole or in part, in the business of offering any type of
mobile radio services outside the United States and its
territories and possessions (an "International Affiliate"),
requests support for its international wireless business, the
Partnership shall provide the International Affiliate with any
and all support and assistance that it reasonably requests,
provided that the Partnership shall not be required to provide
any support if the provision of such support, in the opinion of
the Chief Executive Officer of the Partnership, would cause a
significant hardship for the Partnership. Without limiting the
generality of the foregoing, the Partnership shall provide the
International Affiliate with:
(a) access to all of the Partnership's facilities during
normal business hours, provided that such access does
not cause undue disruption to the conduct of the
Partnership's business activities, for the purpose,
among other things, of providing facility tours and
product demonstrations for employees of the
International Affiliate and for third parties who are
actual or potential customers or business partners of
the International Affiliate;
(b) personnel resources that are required by the
International Affiliate for such matters as bid
preparation, site surveys, consultations (for both
the International Affiliate and for third parties
that have contracts or other agreements with the
International Affiliate), contract negotiations and
operations support, unless the provision of such
resources causes undue disruption of the conduct of
the Partnership's business activities;
(c) personnel to be seconded to the International
Affiliate or to a third party or joint venture, for
which the International Affiliate has by agreement
committed to second personnel, unless the provision
of such personnel by the Partnership causes undue
disruption of the conduct of the Partnership's
business activities;
(d) software which the International Affiliate has by
agreement committed to provide to a third Party or
joint venture and which the Partnership possesses and
has the right to license, pursuant to a license
agreement in form reasonably satisfactory to the
Partnership which provides for the payment of
royalties on a "most-favored nation" basis.
5.7.2. Costs. The Partnership shall provide the services
requested by the International Affiliate, including personnel and
seconded personnel, at 105% of fully loaded cost.
5.7.3. Confidentiality. The Partnership shall require those
of its employees who provide any type of support for an
International Affiliate to sign an appropriate non-disclosure
agreement regarding disclosure to third parties, including without
limitation the other Partners or their International Affiliates,
of information concerning the nature and type of work performed by
an International Affiliate and any information about the
International Affiliate and its requirements.
5.7.4. Conflicts. In the event that two or more of the
Partners' International Affiliates request support from the
Partnership at the same time, the Chief Executive Officer of the
Partnership shall attempt to allocate the Partnership resources to
ensure substantial equality of support for each Partner's
International Affiliate. The Chief Executive Officer of the
Partnership shall also organize the personnel resources who are
providing support to International Affiliates in such a manner to
seek to ensure the confidentiality of the work efforts for each
International Affiliate.
ARTICLE 6.
ALLOCATIONS OF PROFITS AND LOSSES; DISTRIBUTIONS
6.1. General Allocation Rule. After giving effect to the
special allocations set forth in Sections 6.2 and 6.3 hereof:
(A) subject to clause (B), Profits and Losses for any fiscal
year (or any shorter period if during any fiscal year there is
a change in Percentage Interests) shall be allocated among the
Partners in proportion to their respective Percentage Interests
and
(B) (x) in the year of liquidation of the Partnership (other
than a liquidation described in Section 10.6), Profits (whether
from operations or dispositions of assets) equal to the
aggregate Adjustment Amounts of the Partners shall be allocated
to the Partners in proportion to their Adjustment Amounts and
(y) Losses (whether from operations or dispositions of assets)
in the year of liquidation of the Partnership shall be first
allocated to cause the Partners' Capital Account balances to be
in the proportion of their Percentage Interests immediately
prior to such allocation.
6.2. Special Allocations. The following special allocations
shall be made in the following order:
6.2.1. Minimum Gain Chargeback. Except as otherwise
provided in Section 1.704-2(f) of the Regulations,
notwithstanding any other provision of this Article 6, if there
is a net decrease in Partnership Minimum Gain during any
Partnership fiscal year, each Partner shall be specially
allocated items of Partnership income and gain for such fiscal
year (and, if necessary, subsequent 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 6.2.1 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.
6.2.2. Partner Minimum Gain Chargeback. Except as
otherwise provided in Section 1.704-2(i)(4) of the Regulations,
notwithstanding any other provision of this Article 6, if there
is a net decrease in Partner Nonrecourse Debt Minimum Gain
attributable to a Partner Nonrecourse Debt during any fiscal
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 fiscal year (and, if
necessary, subsequent 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 6.2.2 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.
6.2.3. Qualified Income Offset. If any Partner
unexpectedly receives any adjustment, allocation or
distribution described in Regulations Section 1.704-
1(b)(2)(ii)(d)(4), (5) or (6), items of Partnership income and
gain shall be specially allocated to such Partner in an amount
and manner sufficient to eliminate, to the extent required by
the Regulations, any resulting Adjusted Capital Account Deficit
of such Partner as quickly as possible; provided, however,that
an allocation pursuant to this Section 6.2.3 shall be made if
and only to the extent that such Partner would have an Adjusted
Capital Account Deficit after all other allocations provided
for in this Article 6 have been tentatively made as if this
Section 6.2.3 were not in this Agreement.
6.2.4. Nonrecourse Deductions. Nonrecourse Deductions
for any fiscal year shall be allocated among the Partners in
proportion to their respective Percentage Interests.
6.2.5. Partner Nonrecourse Deductions. Partner
Nonrecourse Deductions for any fiscal year shall be 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).
6.2.6. Certain Section 754 Adjustments. To the extent an
adjustment to the adjusted tax basis of any Partnership asset
pursuant to Code Section 743(b), Code Section 732(d) or Code
Section 734(b) is required, pursuant to Regulations Section
1.704-1(b)(2)(iv)(m), to be taken into account in determining
Capital Accounts as the result of a distribution to a Partner
in complete liquidation of its interest in the Partnership, 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 as
determined under Regulations Section 1.704-1(b)(3) 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.
6.2.7. Indemnity Payments. If any Partner makes a
payment to the Partnership under Article VIII of the Formation
Agreement that is properly characterizable as a capital
contribution for purposes of determining the Capital Account of
such Partner, then there shall be specially allocated to such
Partner (A) any deduction or Nondeductible Expenditure
resulting from the Partnership's payment of the item to which
the indemnity relates and (B) any depreciation, amortization,
or other cost recovery allowances in respect of any increase in
the basis of the Partnership's property resulting from the
payment of the item to which the indemnity relates. It is the
intention of the Partners that any payments made by a Partner
pursuant to Article VIII of the Formation Agreement shall
constitute a capital contribution for purposes of determining
Capital Accounts of the Partners, and tax returns and books of
the Partnership shall be prepared on that basis. If, however,
any Partner makes a payment to the Partnership under Article
VIII of the Formation Agreement that is determined by the
Internal Revenue Service to be not properly characterizable as
a capital contribution for purposes of determining the Capital
Account of such Partner and such payment is either an indemnity
for the payment by the Partnership of any item that is
deductible for income tax purposes or results in the increase
in the basis of any of the Partnership's property that is
depreciable, amortizable, or subject to cost recovery
allowance, any such deduction, depreciation, amortization or
cost recovery allowance shall not be taken into account in
determining Profits, Losses or other items of deduction or
losses allocable pursuant to this Article 6, but shall be
specially allocated to such Partner for income tax purposes,
and such special allocation shall not affect the Capital
Account of any Partner. Notwithstanding anything to the
contrary in this Agreement, any amounts paid to the Partnership
under Article VIII of the Formation Agreement and any
deduction, Nondeductible Expenditure, depreciation,
amortization or other cost recovery allowance resulting from
such payment shall not be taken into account in determining
Percentage Interests.
6.3. Curative Allocations. The allocations set forth in
Sections 6.2.1 through 6.2.6 hereof (Regulatory Allocations) are
intended to comply with certain requirements of the Regulations
and Internal Revenue Service advance ruling requirements. It is
the intent of the parties to this Agreement that, to the extent
possible, all Regulatory Allocations shall be offset either with
other Regulatory Allocations or with special allocations of other
items of income, gain, loss or deduction pursuant to this Section
6.3. Therefore, notwithstanding any other provision of this
Article 6 (other than the Regulatory Allocations and the following
sentence), the Tax Matters Partner shall make such offsetting
special allocations of Partnership income, gain, loss or deduction
in whatever manner it determines in reasonable good faith is
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 which such Partner would have
had if the Regulatory Allocations were not part of this Agreement
and all Partnership items were allocated pursuant to Section 6.1
hereof. In exercising its discretion under this Section 6.3, the
Tax Matters Partner shall take into account Regulatory Allocations
under Sections 6.2.1 and 6.2.2 that, although not yet made, are
likely to offset other Regulatory Allocations previously made
under Sections 6.2.4 and 6.2.5.
6.4. Other Allocation Rules.
6.4.1. Allocations When Percentage Interests Change. 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 the Tax Matters Partner using any permissible
method under Code Section 706 and the Regulations thereunder;
provided, however, that any adjustments to the Agreed Value of
a Partnership asset treated as gain or loss under paragraph (c)
of the definition of "Profits" and "Losses" or under paragraph
(c) of Section 6.4.5 hereof, shall be allocated only to those
persons who were Partners immediately before the event giving
rise to such adjustment.
6.4.2. Allocation of Particular Items. Except as
otherwise provided in this Agreement, all items of Partnership
income, gain, loss, deduction and any other allocations not
otherwise provided for shall be divided among the Partners in
the same proportions as they share Profits or Losses, as the
case may be, for the fiscal year or other relevant period.
6.4.3. Tax Reporting. The Partners are aware of the
income tax consequences of the allocations made by this Article
6 and hereby agree to be bound by the provisions of this
Article 6 in reporting their shares of Partnership income and
loss for income tax purposes.
6.4.4. Profit Shares. Solely for purposes of determining
a Partner's proportionate share of the Partnership's "excess
nonrecourse liabilities," as defined in Regulations Section
1.752-3(a), the Partners' interests in Partnership profits
shall be deemed to be in proportion to their respective shares
of Profits set forth in Section 6.1.
6.4.5. Book Items Used in Special Allocations. For
purposes of determining the Partnership's items of income,
gain, loss or deduction for any fiscal year or other relevant
period available to be allocated pursuant to Sections 6.2 and
6.3 hereof, the following rules shall be applied:
(a) Exempt Items. Any income of the Partnership that is
exempt from federal income tax shall be taken into
account as an item of income;
(b) Nondeductible Expenditures. Any Nondeductible
Expenditure of the Partnership shall be taken into
account as an item of deduction;
(c) Adjustments to Agreed Values. In the event the
Agreed Value of any Partnership asset is adjusted
pursuant to paragraph (b) or paragraph (c) under the
definition herein of "Agreed Value," the amount of
such adjustment shall be taken into account as gain
or loss from the disposition of such asset;
(d) Certain Dispositions. Gain or loss resulting from
any disposition of Partnership property with respect
to which gain or loss is recognized for federal
income tax purposes shall be computed by reference to
the Agreed Value of the property disposed of,
notwithstanding that the adjusted tax basis of such
property differs from its Agreed Value;
(e) Depreciation. In lieu of the depreciation,
amortization and other cost recovery deductions taken
into account in computing the Partnership's taxable
income or loss there shall be taken into account
Depreciation for such fiscal year or relevant period;
and
(f) Certain Section 734(b) Adjustments. 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-(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 in the Partnership, 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 such basis) from
the disposition of such asset.
6.5. Tax Allocations; Code Section 704(c).
6.5.1. Generally. A Partner's allocable share of the
Partnership's items of income (including income exempt from
tax), gain, deduction, loss and Nondeductible Expenditure for
tax purposes shall be determined under the foregoing provisions
of this Article 6 except as provided in this Section 6.5.
6.5.2. Contributed Property. 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
Agreed Value, determined in accordance with the definition of
Agreed Value hereunder.
6.5.3. Adjustments to Agreed Value. If the Agreed Value
of any Partnership asset is adjusted pursuant to the definition
of Agreed Value hereunder, subsequent allocations of income,
gain, loss and deduction with respect to such asset for tax
purposes shall take account of any variation between the
adjusted basis of such asset for federal income tax purposes
and its Agreed Value in the same manner as under Code Section
704(c) and the Regulations thereunder.
6.5.4. Elections. Any elections or other decisions
relating to allocations pursuant to this Section 6.5 shall be
made by the Tax Matters Partner in any manner that reasonably
reflects the purpose and intention of this Agreement.
Allocations pursuant to this Section 6.5 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.
6.6. Distributions.
6.6.1. In General. Unless otherwise determined by
Majority Vote of the Executive Committee, the Partnership shall
distribute to the Partners in proportion to their respective
Percentage Interests, on a fiscal quarterly basis as promptly
as practicable after the end of each quarter, all gross cash
receipts of the Partnership reduced by cash disbursements and
such reserves as may be established in the Business Plan or
otherwise by the Executive Committee, including without
limitation reserves for contingencies, working capital
requirements, repairs, improvements, expenses and the payment
of Partnership obligations.
6.6.2. Partner Loans. For so long as any loans made
pursuant to Section 4.3(b) remain outstanding, any amounts that
would otherwise be distributed pursuant to Section 6.6.1 shall
instead be used to repay such loans. Amounts paid pursuant to
this Section 6.6.2 shall be apportioned among the holders of
such loans in proportion to the relevant amounts owing under
each loan.
6.6.3. Liquidating Distributions. Notwithstanding
Section 6.6.1 to the contrary, following the dissolution of the
Partnership, distributions to the Partners shall be made in
accordance with the provisions of Article 10.
6.6.4. Amounts Withheld. All amounts withheld pursuant
to the Code or any provision of any state or local tax law with
respect to any payment or distribution to the Partnership or
the Partners shall be treated as amounts distributed to the
Partners pursuant to this Section 6.6 for all purposes under
this Agreement. The Tax Matters Partner is authorized to
withhold from distributions, or with respect to allocations, to
the Partners and to pay over to any federal, state or local
government any amounts required to be so withheld pursuant to
the Code or any other provision of federal, state or local law
and shall allocate any such amounts to the Partners with
respect to which such amounts were withheld.
ARTICLE 7.
BOOKS AND RECORDS
7.1. Accounting. Except as may be otherwise agreed to by
Supermajority Vote, the Partnership will maintain books and
records for tax purposes in accordance with federal income tax
accounting principles utilizing the accrual method of accounting,
and for accounting purposes in accordance with GAAP. In addition,
the Partnership shall cause to be prepared with respect to each
fiscal year of the Partnership financial statements based on GAAP.
Appropriate records will be kept so that upon each closing of the
Partnership books it is possible to determine, among other items
defined in this Agreement, (i) the amount of capital actually
contributed by each Partner; (ii) the amount of cash or other
property distributed to each Partner; (iii) the effect of all
Partnership items of Profit, Loss, income, gain, loss, deduction
or credit on each Partner's Capital Account; and (iv) all
pertinent expenses and cash disbursement accounts.
7.2. Fiscal Year. Except as may be otherwise determined by
Majority Vote, the fiscal year of the Partnership shall be the
twelve months ending December 31 of each year. Notwithstanding
the foregoing, the taxable year of the Partnership shall be
determined in accordance with Code Section 706(b).
7.3. Statements and Reports. Except as may be otherwise
determined by Supermajority Vote, as soon as practicable, but in
no event later than 60 days after the close of each fiscal year of
the Partnership, the Partnership will cause to be prepared and
will have furnished to each of the Partners, with respect to such
period, (i) a profit and loss statement, (ii) a statement of cash
flows, (iii) a Partnership balance sheet as of the close of such
period, and (iv) such other statements showing in reasonable
detail each Partner's interest in each of the items described in
Section 7.1. The foregoing statements will be prepared in
accordance with GAAP, consistently applied, and audited by an
independent certified public accounting firm of national
reputation which shall be designated by the Executive Committee,
and the cost of preparing the statements and of each such audit
will be paid for by the Partnership. In addition, unaudited
quarterly financial reports and updates with respect to the
Partnership's business shall be prepared and furnished to each
Partner as soon as practicable after the end of each fiscal
quarter, but in no event later than 30 days following the close of
each fiscal quarter.
7.4. Inspection. The Partnership shall maintain or cause to
be maintained complete and accurate books and records with respect
to its business. All books of account and all other records of
the Partnership (including an executed counterpart of this
Agreement and all amendments hereto) will at all times be kept at
the Partnership's principal place of business. Any Partner and
its representatives or designees may, during regular business
hours, inspect the books and records of the Partnership, and each
Partner and its auditors may, during regular business hours,
conduct an audit of such books and records at its own expense.
The Partnership shall provide access to the facilities, systems
and books and records of the Partnership to the extent reasonably
considered necessary by the auditors and internal audit
departments of the inspecting Partner in the performance of the
audits of the inspecting Partner. Whenever any such audit is
conducted by any Partner and its auditors, such Partner shall
advise the other Partners and permit the other Partners and their
auditors to be present during such audit.
7.5. Certain Tax Matters.
7.5.1. Preparation of Tax Returns. The Tax Matters
Partner shall arrange for the preparation and timely filing of
all returns of Partnership income, gains, losses, deductions,
credits, and other items necessary for federal and state income
tax purposes, shall provide copies of draft tax returns to all
of the Partners at least fifteen days prior to filing the
returns and shall use reasonable good faith efforts to furnish
to the Partners within ninety days after the close of each
taxable year of the Partnership the tax information reasonably
required for federal, state and local income tax reporting
purposes. The Tax Matters Partner shall use good faith efforts
to supply each Partner with the information necessary to
determine estimated tax payments or any other information
related to taxes reasonably requested by each Partner. The
classification, realization, and recognition of income, gains,
losses, deductions, credits, and other items shall be on the
accrual method of accounting for federal income tax purposes.
The Tax Matters Partner shall not change from the accrual
method of accounting initially elected by the Partnership
(except if required to do so by law) without the prior written
consent of the Executive Committee.
7.5.2. Tax Elections. Except as provided in Sections
7.5.1, and 11.17 the Tax Matters Partner shall, in its sole
discretion, determine whether to make any election available
under the Code or any other applicable taxing statute.
7.5.3. Tax Controversies. The Partner with the largest
initial Percentage Interest is designated to act as the Tax
Matters Partner and in any other similar capacity under state
or local law and is authorized and required to represent the
Partnership (at the Partnership's expense) in connection with
all examinations of the Partnership's affairs by tax
authorities, including resulting administrative and judicial
proceedings, and to expend Partnership funds for professional
services and costs associated therewith. Each of the Partners
agrees to cooperate with the Tax Matters Partner and to do or
refrain from doing any and all things reasonably required by
the Tax Matters Partner to conduct such proceedings. The
Partner designated as the Tax Matters Partner shall serve in
such role until the earlier of (i) its resignation or (ii) a
determination by the Executive Committee that a different
Partner should serve as the Tax Matters Partner, and in either
such case, unless a different Partner is designated by the
Executive Committee, the Partner with the then largest
Percentage Interest shall become the new Tax Matters Partner.
7.6. Bank Accounts. The Partnership shall maintain
appropriate accounts at one or more financial institutions for all
funds of the Partnership. Such accounts shall be used solely for
the business of the Partnership. Withdrawal from such accounts
shall be made only upon the signature of those persons authorized
by the Executive Committee.
ARTICLE 8.
TRANSFER OF PARTNERSHIP INTERESTS; CHANGE OF
CONTROL; ADDITIONAL PARTNERS; CONVERSION TO CORPORATE FORM
8.1. Restrictions on Transfer of Interests. Except as
otherwise expressly permitted by this Agreement, no Partner or its
Affiliates shall, directly or indirectly, voluntarily,
involuntarily or by operation of law, Transfer all or any part of
its Partnership Interest or all or any part of its equity interest
in a Holding Company (hereinafter defined) ("Equity Interest"),
unless the Partner has both (i) obtained the prior approval of the
Executive Committee pursuant to Section 5.1.10 hereof if such
Transfer occurs prior to the third anniversary of the Cellular
Closing Date, and (ii) complied with the right of first refusal
set forth in Section 8.3 hereof. The term Transfer, when used in
this Article 8 with respect to a Partnership Interest or an Equity
Interest, includes a sale, assignment, gift, pledge, encumbrance,
hypothecation, mortgage, exchange, merger or any other
disposition. A Holding Company shall mean any person of which the
Partnership Interest or the direct or indirect ownership thereof
comprises all or substantially all of its value in the reasonable
judgment of the Executive Committee. Any Transfer or purported
Transfer of any Equity Interest or Partnership Interest not made
in accordance with this Article 8 shall be null and void.
8.2. Permitted Transfers. Subject to the conditions and
restrictions set forth in Section 8.4 hereof, (a) upon compliance
with the right of first refusal contained in Section 8.3 hereof,
but without the consent of the Executive Committee, a Partner or
its Affiliates may at any time Transfer all but not less than all
of its Partnership Interest or Equity Interest to any other
Partner or any Affiliate of another Partner, (b) a Partner or its
Affiliates may at any time Transfer all or any portion of its
Partnership Interest or Equity Interest to any Affiliate of the
transferor without either the consent of the Executive Committee
or the compliance with the right of first refusal contained in
Section 8.3 hereof if such Affiliate agrees in writing to be bound
by the terms and conditions of this Agreement applicable to the
transferor as if it had been a signatory hereto, and (c) after the
third anniversary of the Cellular Closing Date, without either the
consent of the Executive Committee or the compliance with the
right of first refusal contained in Section 8.3 hereof, a Partner
or its Affiliates may effect a spin-off, distribution or dividend
of Equity Interests to the shareholders of the ultimate parent
entity of the Partner or Affiliate.
8.3. Right of First Refusal. If any Partner or its Affiliates
(the Selling Partner) wishes to Transfer all but not less than all
of its Partnership Interest or Equity Interest (the Offered
Interest) to any person which is not an Affiliate of the Selling
Partner, such Partner or its Affiliate shall first obtain a Bona
Fide Offer (as defined in subsection (g) below) for the Offered
Interest, and shall then give notice in writing to the secretary
of the Partnership and to each other Partner of its intention to
transfer the Offered Interest pursuant to such Bona Fide Offer,
which notice shall be accompanied by a copy of such Bona Fide
Offer.
(a) Within 15 days of the date of such notice from the Selling
Partner, the Partnership, by vote of the Executive
Committee pursuant to Section 5.1.10, may elect to
purchase all or any part of the Offered Interest at the
price and upon the terms contained in the Bona Fide Offer.
(b) If the Partnership does not elect to purchase all of the
Offered Interest in accordance with subsection (a) above,
the Partners other than the Selling Partner (the Non-
Selling Partners) shall have the right to purchase any
remaining Offered Interest (the Remaining Offered
Interest) at the price and upon the terms contained in the
Bona Fide Offer. In such event, the secretary of the
Partnership shall give each Non-Selling Partner notice of
the Selling Partner's notice, the terms of the Bona Fide
Offer, and the amount of the Remaining Offered Interest.
(c) Within 15 days of the date of such notice from the
secretary, any Non-Selling Partner shall have the right to
acquire that part of the Remaining Offered Interest which
is equal to such Non-Selling Partner's pro rata share of
the Remaining Offered Interest (its Pro Rata Fraction).
Each Non-Selling Partner's Pro Rata Fraction shall be
equal to the proportion that each Partner's Percentage
Interest bears to the aggregate Percentage Interests of
all Non-Selling Partners. In the event that a Non-Selling
Partner shall elect to purchase all or part of the
Remaining Offered Interest (an Electing Partner) it shall
deliver to the secretary of the Partnership a written
election to purchase a specified amount of the Remaining
Offered Interest.
(d) Within five days after the end of such 15-day period, the
secretary of the Partnership shall notify each Electing
Partner of the amount of the Offered Interest as to which
its election was effective and the amount of the Offered
Interest, if any, remaining available for purchase.
(e) In the event that a portion of the Offered Interest
remains available for purchase, each Non-Selling Partner
shall have the right to purchase, on a pro rata basis with
any other Electing Partners who so elect, any Remaining
Offered Interest which remains available for purchase
after the elections delivered under paragraph (c), by
delivering to the secretary of the Partnership, within
seven days of such notice from the secretary, its written
election to purchase a specified amount of such Remaining
Offered Interest.
(f) If, upon the expiration of the seven-day notice period
provided for in subsection (e) above, the Partnership and
the Non-Selling Partners shall not have made elections to
purchase the entire Offered Interest, the right of first
refusal shall expire as to that particular Bona Fide
Offer, but shall remain in full force and effect with
respect to all material modifications of that Bona Fide
Offer and all future offers. In such event, the Selling
Partner shall have the right to sell all (but not part) of
the Offered Interest pursuant to the terms of the Bona
Fide Offer and in accordance with the terms of a
definitive agreement (subject solely to requisite
regulatory approvals) entered into not later than 90 days
after the expiration of the seven-day period provided for
in subsection (e) above.
(g) For the purposes of this Agreement, a Bona Fide Offer
shall mean a written offer not subject to a material
financing contingency made by an individual or entity not
affiliated with the Selling Partner to purchase the shares
specified in the offer on the terms stated therein, which
offer sets forth (i) the name and address of the offeror,
(ii) a description of the Offered Interest subject to the
offer, and (iii) the price and other material terms of the
offers and (iv) a description of any financing
arrangements related to the transaction.
8.4. Effective Transfer.
(a) Prior to the date of any Transfer of a Partnership
Interest, the transferor and transferee shall furnish the
Partnership with the transferee's taxpayer identification
number, sufficient information to determine the
transferee's initial tax basis in the Partnership Interest
transferred, and any other information reasonably
necessary to permit the Partnership to file all required
federal, state and local 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 Partnership Interest until it has received
such information.
(b) In addition to all other requirements contained herein, no
Transfer of a Partnership Interest and no transfer of a
Partnership Interest to an Affiliate of the transferor
shall be effective until and unless the transferee
provides the following:
(i) Execution by the transferee of an amendment of this
Agreement or a counterpart to the signature page of
this Agreement which shall provide, "The undersigned
hereby accepts and agrees to be bound by all of the
terms and provisions of this Agreement and shall
become a substitute Partner under this Agreement.";
(ii) If the transferee is a corporation, it shall have
provided the Partnership with evidence satisfactory
to the Partnership of its authority to become a
Partner and to be bound by the terms of this
Agreement;
(iii) An opinion of counsel to the Partnership that the
admission of the transferee does not (a) violate the
then applicable federal or state securities laws or
rules and regulations of the Securities and Exchange
Commission or any successor thereto, any state
securities commission and any other government
agencies with jurisdiction over such Transfer; (b)
subject the Partnership to any federal, state or
local rule, regulation or law that materially
adversely affects the business or financial condition
of the Partnership; or (c) materially adversely
affects the Partnership's existence or qualification
under the Act; and
(iv) Any necessary prior consents have been obtained from
any regulatory authorities.
(c) It is the intention of the Partners that they will own
interests, direct or, in the case of the {Other}
Partnership, indirect through Management Co. (the
outstanding common equity of which is held by all
Partners), in the Partnership and the Other Partnership in
the same proportions. Consequently, no Partner may effect
a Transfer without transferring a Partnership Interest
(and common equity, in the case of an indirect interest in
the Partnership through Management Co.), representing the
same Percentage Interest in the Other Partnership, and any
such attempted transfer shall be null and void and of no
effect.
8.5. Changes of Control. In the event of a Change of Control
of any Partner (such Partner, the Change of Control Partner), the
Partnership and the other Partners shall have the right to
purchase the Partnership Interest of such Partner on the terms set
forth in this Section 8.5. As used herein, Change of Control
means the acquisition by any person or group of persons acting in
concert which does not, as of the date such Partner first became a
Partner, have such control, of the power to direct or to cause the
direction of the management and policies of any Partner or of any
company which, directly or indirectly, controls such Partner,
whether such transaction is voluntary, involuntary or the result
of any merger, amalgamation or consolidation or similar
transaction, but shall not include any such acquisition of control
of a Partner by another Partner or its Affiliate or by a person or
group of persons controlled by such Partner or its Affiliate.
(a) Any Change of Control Partner shall notify the Partnership
promptly upon learning of such Change of Control. Upon
the occurrence of any Change of Control, the Partnership
shall have the right to purchase all or any part of the
Change of Control Partner's Partnership Interest for an
amount equal to the Fair Market Value (as defined in
subsection (iv) below) thereof as determined in accordance
with the following procedures:
(i) Not later than 10 days after the Change of Control
Partner notifies the Partnership of the Change of
Control, the Change of Control Partner and the
Partnership shall attempt to reach agreement on the
Fair Market Value of the Change of Control Partner's
Partnership Interest.
(ii) If the Change of Control Partner and the Partnership
are unable to reach agreement on such Fair Market
Value within such 10 day period, within 5 days they
shall each select an appraiser (which may or may not
be a Qualified Investment Banking Firm) and shall
give the other notice of such selection. Each of
such appraisers (the Original Appraisers) shall
determine the Fair Market Value of the Change of
Control Partner's Partnership Interest at the time it
renders its written appraisal. Each Original
Appraiser shall deliver its written appraisal to the
party retaining such Original Appraiser within 60
days following the date of the selection of the
Original Appraisers. Such written appraisals shall
be exchanged with the other parties hereto at the
offices of the Partnership at 10:00 a.m. local time
on the 61st day following the date of the selection
of the Original Appraisers. In the event that the
Original Appraisers agree on the Fair Market Value,
the purchase price for the subject Partnership
Interest shall be such agreed-upon Fair Market Value.
In the event that the Original Appraisers do not
agree on such Fair Market Value, (i) if the higher of
the two valuations is not more than 110% of the lower
valuation of the Original Appraisers, the purchase
price for the Partnership Interest shall be the mean
of the two valuations, and (ii) if the higher of the
two valuations is greater than 110% of the lower
valuation, the Original Appraisers shall select a
Qualified Investment Banking Firm who will calculate
the Fair Market Value independently within 60 days of
such election. If the Original Appraisers cannot
agree upon a third appraiser within 30 days following
the end of the 60-day period referred to above, then
the third appraiser shall be a Qualified Investment
Banking Firm appointed by the American Arbitration
Association. Neither the Change of Control Partner,
the Partnership nor any other Partner or Party nor
either of the Original Appraisers shall provide the
third appraiser, directly or indirectly, with a copy
of the written appraisal of either of the Original
Appraisers, an oral or written summary thereof, or
the valuation determined by either of the Original
Appraisers, orally or in writing. The valuation of
the third appraiser will be arithmetically averaged
with the two valuations of the Original Appraisers,
and the valuation farthest from the average of the
three valuations will be disregarded. The Fair
Market Value shall be the mean of the two remaining
valuations.
(iii) The Partnership shall give to the Original Appraisers
and the third appraiser free and full access to and
the right to inspect, during normal business hours,
all of the premises, properties, assets, records,
contracts and other documents relating to the
Partnership and shall permit them to consult with the
officers, employees, accountants, counsel and agents
of the Partnership for the purpose of making such
investigation of the Partnership as they shall desire
to make. Furthermore, the Partnership shall furnish
to the Original Appraisers and the third appraiser
all such documents and copies of documents and
records and information with respect to the affairs
of the Partnership and copies of any working papers
relating thereto as they shall from time to time
reasonably request.
(iv) Fair Market Value shall mean the fair market value of
the Change of Control Partner's Partnership Interest
determined as of the date of which the written
appraisal is delivered.
(v) Qualified Investment Banking Firm means any firm
engaged in providing corporate finance, merger and
acquisition, and business valuation services and
deriving revenues therefrom of at least $100 million
during its last completed fiscal year, but excluding,
however, any firms which received more than $250,000
in fees during the preceding 24 calendar months from
the Partnership or any of the Partners or their
respective Affiliates (excluding fees derived from
underwriting discounts or placement agent fees from
offerings of debt securities registered under the
Securities Act of 1933).
(vi) The costs of the Fair Market Value appraisal shall be
borne by the Change of Control Partner.
(b) If the Partnership does not elect to exercise such
purchase right within 120 days of the determination of the
Fair Market Value of the Change of Control Partner's
Partnership Interest, or declines to exercise such
purchase right as to all or any part of such Partnership
Interest, then the remaining Partners for an additional
period of 30 days shall have the right to purchase all or
any part of the remaining amount of such Partnership
Interest for such same price (or the applicable proportion
of such price), in the same manner as set forth in Section
8.3(c), (d) and (e).
(c) If neither the Partnership nor the Partners elect to
purchase such Partnership Interest within the periods
described in (b), the right to purchase contained in this
Section 8.5 shall terminate as to such Change of Control.
8.6. Additional Partners. Additional partners may be admitted
to the Partnership as follows:
(a) Any Partner Candidate may be admitted if approved by a
Majority Vote, provided that such admission involves the
contribution to the {Other} Partnership of all or
substantially all of such Partner Candidate's United
States Cellular Business and a contribution of cash to the
[OTHER] Partnership in exchange for Partnership Interests
in the Partnership and the Other Partnership that is
within the range (relative to the combined Partnership
Interests of Bell Atlantic and NYNEX) set forth next to
such Partner Candidate's name on the then current Business
Plan for the Partnership.
(b) Admission of any person other than a Partner Candidate, or
admission of a Partner Candidate upon terms other than
those set forth in Section 8.6(a), shall require approval
by Supermajority Vote of the Executive Committee.
(c) The additional partner (admitted to the Partnership
pursuant to Section 8.6(a) or Section 8.6(b)) (the
Additional Partner) shall become a Partner in the
Partnership and shall be bound by this Agreement upon the
completion of the following:
(i) Execution by the Additional Partner of an amendment
of this Agreement or a counterpart to the signature
page of this Agreement which shall provide, "The
undersigned hereby accepts and agrees to be bound by
all of the terms and provisions of this Agreement.";
(ii) If the Additional Partner is a corporation, it shall
have provided the Partnership with evidence
satisfactory to the Partnership of its authority to
become a Partner and to be bound by the terms of this
Agreement;
(iii) An opinion of counsel to the Partnership that the
admission of the Additional Partner does not (a)
violate the then applicable federal or state
securities laws or rules and regulations of the
Securities and Exchange Commission or any successor
thereto, any state securities commissions and any
other government agencies with jurisdiction over such
Transfer; (b) subject the Partnership to greater
regulation or restriction under the MFJ than existed
immediately prior to such Transfer; (c) subject the
Partnership to any federal, state or local rule,
regulation or law that materially adversely affects
the business or financial condition of the
Partnership; or (d) materially adversely affects the
Partnership's existence or qualification under the
Act; and
(iv) Any necessary prior consents have been obtained from
any regulatory authorities.
8.7. Conversion to Corporate Form.
(a) In the event that the Executive Committee shall determine
that it is desirable or helpful for the business of the
Partnership to be conducted in a corporate rather than in
a partnership form, the Executive Committee shall have the
power to incorporate the Partnership or take such other
action as it may deem advisable in light of such changed
conditions, including, without limitation, dissolving the
Partnership, creating one or more subsidiaries of the
newly formed corporation and transferring to such
subsidiaries any or all of the assets of the Partnership.
In connection with any such incorporation of the
Partnership, the Partners shall receive, in exchange for
their Partnership Interests, shares of capital stock of
such corporation or its subsidiaries having the same
relative economic interest in the Partnership as is set
forth in this Agreement or the Formation Agreement, as
among the holder of interests in the Partnership, subject
in each case to (i) any modifications required solely as a
result of the conversion to corporate form and (ii) to
modifications to the provisions of Section 5.1 to conform
to the provisions relating to actions of shareholders and
a board of directors set forth in the Delaware General
Corporation Law. At the time of such conversion, the
Partners shall enter into a shareholders agreement
providing for (i) rights of first refusal and other
restrictions on transfer set forth in Sections 8.1 through
8.3 hereof; provided that such restrictions shall not
apply to sales in broadly disseminated public offerings
pursuant to paragraph (c) or sales in accordance with Rule
144 under the Securities Act of 1933, as amended (the 1933
Act), and (ii) agreeing to vote all shares of capital
stock held by them to elect to the Board of Directors of
the new corporation one representative of each of the
Partners who own more than 10% of the outstanding capital
stock of the Company.
(b) Prior to taking such action to incorporate the
Partnership, the Executive Committee shall submit to the
Partners the proposed forms of a certificate or articles
of incorporation, by-laws, stockholders' agreement and any
other governing documents proposed to be established for
such corporation and its subsidiaries, if any.
(c) Upon conversion to corporate form, the corporate successor
to the Partnership shall grant to each of the Partners the
following rights to require such successor to register
under the 1933 Act the shares of capital stock received by
the Partners in exchange for their Partnership Interests
(the Registrable Securities): (i) one right to require
the Company to register under the 1933 Act the Registrable
Securities which will be exercisable commencing on the
90th day following the consummation of the Company's
initial public offering of equity securities registered
under the 1933 Act or, if later, the end of any "lock-up"
period required by the underwriters with respect to such
initial public offering (the Demand Right), and (ii) one
right to include the Registrable Securities in a
Registration Statement filed by the successor with respect
to an offering (other than the initial public offering of
equity securities by such successor) by the successor of
equity securities (the Piggy-back Right). Such
registration rights shall be subject to customary
requirements and limitations, including without limitation
(i) the right of the Company to delay the exercise of a
Demand Right for a period of up to 90 days, provided that
such right to delay may not be exercised more than once in
any 12 month period; (ii) the right of the Company, in
accordance with the advice of the managing underwriter, to
limit the number of shares requested to be sold by the
Partner upon the exercise of a Piggy-back Right; and (iii)
the right to require the Partner to join in an
underwriting agreement in the public offering with respect
to which the Partner has exercised its Piggy-back Right.
The Partner shall bear and reimburse the Company for all
reasonable costs incurred in connection with the
registration required by the exercise of the Demand Right.
8.8. Covenant Not to Withdraw or Dissolve. Notwithstanding
any provision of the Act, each Partner hereby covenants and agrees
that the Partners have entered into this Agreement based on their
mutual expectation that, except as otherwise expressly required or
permitted hereby, no Partner shall withdraw or retire from the
Partnership, be entitled to demand or receive a return of such
Partner's contributions or profits (or a bond or other security
for the return of such contributions or profits), or exercise any
power under the Act to dissolve the Partnership without the
approval of the Executive Committee by Supermajority Vote.
8.9. Consequences of Breaches of Covenant. Notwithstanding
anything to the contrary in the Act, if a Partner (Breaching
Partner) (i) attempts to Transfer his Partnership Interest or
Equity Interest in breach of Section 8.1, (ii) attempts to cause a
partition in breach of Section 2.7, (iii) attempts to withdraw
from the Partnership or dissolve the Partnership in breach of
Section 8.8, or (iv) suffers an Event of Bankruptcy, the
Partnership shall continue and such Breaching Partner shall be
subject to this Section 8.9 and in such event, the following shall
occur:
(a) the Breaching Partner shall immediately cease to be a
Partner and shall have no further power to act for or bind
the Partnership;
(b) the other Partners shall continue to have the right to
possess the Partnership's property and goodwill and to
conduct its business and affairs;
(c) the Breaching Partner shall be liable in damages, without
requirement of a prior accounting, to the Partnership for
all costs and liabilities that the Partnership or any
Partner may incur as the result of such breach;
(d) the Partnership shall have no obligation to pay to the
Breaching Partner his contributions, capital, or profits,
but may, by notice to the Breaching Partner within 30 days
of his withdrawal, elect to make Breach Payments (as
hereinafter defined) to the Breaching Partner in complete
satisfaction of the Breaching Partner's interest in the
Partnership;
(e) if the Partnership does not elect to make Breach Payments
pursuant to Section 8.9(d) hereof, the Partnership shall
treat the Breaching Partner as if he were an unadmitted
assignee of the interest of the Breaching Partner and
shall make distributions and allocations to the Breaching
Partner only of those amounts and items otherwise payable
or allocable with respect to such interest hereunder;
(f) the Partnership may apply any distributions otherwise
payable with respect to such interest (including Breach
Payments) to satisfy any claims it may have against the
Breaching Partner;
(g) the Breaching Partner shall have no right to inspect the
Partnership's books or records or obtain other information
concerning the Partnership's operations; and
(h) the Breaching Partner shall continue to be liable to the
Partnership for any unpaid capital contributions required
hereunder with respect to such interest and to be jointly
and severally liable with the other Partners for any debts
and liabilities (whether actual or contingent, known or
unknown) of the Partnership existing at the time the
Breaching Partner withdraws or dissolves.
8.9.1. Breach Payments. For purposes hereof, Breach Payments
shall be made in five installments, each equal to 20% of the
Breach Amount, payable on the next five consecutive anniversaries
of the breach by the Breaching Partner, with simple interest
accrued from the date of such breach through the date each such
installment is paid on the unpaid balance of such Breach Amount at
the lowest rate per annum necessary to avoid imputed interest on
such payments under the Code. The Breach Amount shall be an
amount equal to 90% of the greater of (i) 100 dollars or (ii) the
Capital Account balance (calculated on the assumption that Partner
Notes then outstanding are not repaid) of the Breaching Partner as
of the last day of the month preceding the month during which such
breach occurred, less any Partnership distributions to the
Breaching Partner after such day. In addition, any Partner Note
of the Breaching Partner shall be cancelled, but without the
necessity of making any payment in respect thereof. The Breach
Amount as so determined shall be final and binding on the
Partnership and the Breaching Partner. The Partnership may, at
its sole election, prepay all or any portion of the Breach
Payments or interest accrued thereon at any time without penalty.
8.9.2. No Bonding. Notwithstanding anything to the contrary
in the Act, if, under Section 8.9(e) hereof, the Partnership
treats a Breaching Partner as an unadmitted assignee of an
interest in the Partnership, the Partnership shall not be
obligated to secure the value of the Breaching Partner's interest
by bond or otherwise; provided, however, that if a court of
competent jurisdiction determines that, in order to continue the
business of the Partnership such value must be so secured, the
Partnership may provide such security. If the Partnership
provides such security, the Breaching Partner shall not have any
right to participate in Partnership profits or distributions
during the term of the Partnership, or to receive any interest on
the value of such interest. For this purpose, the value of the
interest of the Breaching Partner shall be an amount equal to 90%
of the greater of (i) 100 dollars or (ii) the Capital Account
balance (calculated on the assumption that Partner Notes then
outstanding are not repaid) of such interest as of the last day of
the month preceding the month during which the breach by the
Breaching Partner occurs.
ARTICLE 9.
CONFIDENTIALITY
9.1. Maintenance of Confidentiality. Each of the Partners
shall, during the term of this Agreement and at all times
thereafter, maintain in confidence all confidential and
proprietary information and data of the Partnership and the other
Partner or its Affiliates disclosed to it (the Confidential
Information). Each of the Partners further agrees that it shall
not use the Confidential Information during the term of this
Agreement or at any time thereafter for any purpose other than the
performance of its obligations or the exercise of 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
employees, agents or consultants.
9.2. Permitted Disclosures. Nothing herein shall prevent the
Partnership, any Partner, or any employee, agent or consultant of
the Partnership or any Partner (the receiving party) from using,
disclosing, or authorizing the disclosure of any information it
receives in the course of the business of the Partnership which:
(a) becomes publicly available without default hereunder by
the receiving party;
(b) is lawfully acquired by the receiving party from a source
not under any obligation to the disclosing party regarding
disclosure of such information;
(c) is in the possession of the receiving party in written or
other recorded form at the time of its disclosure
hereunder;
(d) is non-confidentially disclosed to any third party by or
with the permission of the disclosing party; or
(e) the receiving party believes in good faith to be required
by law or by the terms of any listing agreement with a
securities exchange, provided that the receiving party
consults with the other Partners prior to making such
disclosure.
ARTICLE 10.
DISSOLUTION AND LIQUIDATION
10.1. Dissolution Generally. The Partnership will be
dissolved on the earliest of (i) an affirmative Supermajority Vote
of the Executive Committee; {(ii) the date of termination of the
Formation Agreement if the Cellular Partnership has not then been
formed pursuant to the terms of the Formation Agreement (a Non-
Formation Event)} or (ii{i}) 12:00 midnight on December 31, 2099;
provided, however, that the Partnership shall not terminate until
its affairs have been wound up and its assets distributed as
provided herein (a Dissolution Event).
10.2. Liquidation.
{(a)} Upon dissolution of the Partnership, the Partner
selected by the Executive Committee, shall be the
liquidator of the Partnership (the Liquidating Partner).
The Liquidating Partner shall be entitled to receive such
compensation for its services as may be approved by the
Executive Committee. The Liquidating Partner shall not
resign at any time without fifteen days' prior written
notice and may be removed only by a decision of the
Executive Committee. Upon dissolution, resignation, or
removal of the Liquidating Partner, a successor and
substitute Liquidating Partner (who shall have and succeed
to all rights, powers, and obligations of the original
Liquidating Partner) shall, within thirty days thereafter,
be approved by the Executive Committee. Except as
expressly provided in this Article 10, the Liquidating
Partner approved in the manner provided herein shall have
and may exercise, without further authorization or
approval of the Executive Committee or any Partner, all of
the powers conferred upon the Tax Matters Partner under
the terms of this Agreement (but subject to all of the
applicable limitations, contractual and otherwise, upon
the exercise of such powers) to the extent appropriate or
necessary in the good faith judgment of the Liquidating
Partner to carry out the duties and functions of the
Liquidating Partner hereunder for and during such period
of time as shall be reasonably required in the good faith
judgment of the Liquidating Partner to complete the
winding-up and liquidation of the Partnership as provided
for herein. The Liquidating Partner shall, subject to
providing adequate reserves for the payment of amounts
payable under Section 10.2(a)(i) hereof, distribute any
assets among the Partners as may be agreed upon by
Majority Vote (with the Agreed Value being debited against
such Partner's Capital Account balance), provided that no
Partner may receive an amount in excess of its positive
Capital Account balance. If any assets still remain in
the Partnership, the Liquidating Partner shall liquidate
such assets and apply and distribute the proceeds of such
liquidation in the following order and priority, to the
maximum extent permitted by law:
(i) First, to creditors of the Partnership (including
Partners to the extent permitted by law) in
satisfaction of the Partnership's known debts and
liabilities (whether by payment or the making of
provision for the known amount thereof); and
(ii) Second, to the Partners, in proportion to and to the
extent of the positive balances in their respective
Capital Accounts adjusted pursuant to Article 6 to
reflect (i) their respective distributive shares of
the income, gain, loss, and deduction of the
Partnership for the taxable year of the Partnership
in which the distribution in liquidation occurs up
through and including the date of distribution and
(ii) all distributions (including distributions
pursuant to this Section 10.2(a) made to the Partners
during such taxable year up to and including such
date.
{(b) Upon the occurrence of a Non-Formation Event, the Partners
shall attempt to reach agreement on the Agreed Value and
distribution among the Partners of each of the PCS
Licenses and the assets and liabilities related thereto,
subject always to distributions being made in accordance
with Capital Accounts as provided in Section 10.2(a)(ii),
with such distributed assets being valued at their Agreed
Value. To the extent that the Partners are unable to
reach agreement on the Agreed Value and distribution among
the Partners of certain of such PCS Licenses, assets and
liabilities, each Partner shall be entitled to submit a
proposal specifying an Agreed Value for each such PCS
License and its related assets and liabilities. Such
proposal shall be in writing and shall be delivered to the
secretary of the Executive Committee not later than 20
days after the occurrence of the Non-Formation Event. The
secretary shall open such proposals simultaneously and the
highest value submitted by any Partner for each PCS
License, asset and liability shall constitute its Agreed
Value. The Partnership shall thereafter pay any amounts
referred to in Section 10.2(a)(i) (except to the extent
any such liabilities are to be assumed by any Partner),
and the PCS Licenses, assets and liabilities valued
pursuant to the previous sentence shall be distributed to
the Partner who specified the highest Agreed Value
therefor (and shall be debited against its Capital Account
balance), and the remaining PCS Licenses, assets and
liabilities shall be distributed in the manner agreed upon
by the Partners; provided that if the distributions
pursuant to this sentence would result in any Partner
receiving more than its positive Capital Account balance
(an "Excess Distribution"), assets with an Agreed Value
equal to the Excess Distribution shall instead be
distributed among the other Partners in accordance with
Capital Account balances (such assets as selected by such
other Partners) and immediately thereafter sold for cash
to the Partner who would have otherwise received the
Excess Distribution in the absence of this proviso, which
cash shall be paid simultaneously with the liquidating
distributions.
10.3. Distribution in Trust. Notwithstanding the provisions
of Section 10.2 requiring the liquidation of the assets of the
Partnership, but subject to the order of priorities set forth
therein, in the discretion of the Executive Committee, a pro rata
portion of the distributions that would otherwise be made to the
Partners pursuant to Section 10.2(a)(ii) hereof may be:
(a) 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 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
Executive Committee, in the same proportions as the amount
distributed to such trust by the Partnership would
otherwise have been distributed to the Partners pursuant
to this Agreement; or
(b) withheld to provide a reasonable reserve of 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.
In exercising its rights under this Section 10.3, the Executive
Committee must comply with the liquidating distribution timing
requirements of Section 10.5 hereof. By way of clarification, for
purposes of determining the Partners' respective shares of income,
gain, loss, and deduction of the Partnership for the taxable year
of the Partnership in which the distribution in liquidation occurs
and of adjusting the Capital Accounts of the Partners therefor in
accordance with Section 10.2 and Article 6, the definitions herein
of "Agreed Value" and "Profits" and "Losses" require that
Partnership assets to be distributed to the trust referred to in
clause (a) above or to the Partners in accordance with Section
10.2 hereof shall be considered to have been first sold at their
fair market values (taking Code Section 7701(g) into account) and
the Profits or Losses deemed realized therefrom shall be allocated
among the Partners as if an actual sale had occurred, and the
Capital Accounts of the Partners shall be adjusted to reflect such
allocation in accordance with Article 6. The fair market value of
any property distributed to such trust shall be the value
determined by the Executive Committee.
10.4. Rights of Partners. Except as otherwise provided in
this Agreement, 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. No Partner shall have priority
over any other Partner as to the return of his capital
contributions, distributions, or allocations except as provided in
this Agreement.
10.5. Compliance with Timing Requirements of Regulations. In
the event that the Partnership is liquidated within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g), then distributions shall
be made pursuant to Section 10.2 to the Partners who have positive
Capital Accounts in compliance with the timing requirements of
Regulations Section 1.704-1(b)(2)(ii)(b)(2). If any Partner has a
deficit balance in his Capital Account (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).
10.6. Non-Dissolving Code Section 708(b) Terminations.
Notwithstanding any other provision of this Article 10, in the
event that the Partnership is liquidated within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g) but no Dissolution Event
has occurred, the Partnership's assets 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, the
Partnership shall be deemed to have distributed the assets of the
Partnership in kind to the Partners, who shall be deemed to have
assumed and taken subject to all Partnership liabilities, all in
accordance with their Capital Accounts and if any Partner's
Capital Account has a deficit balance (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 Regulation Section 1.704-
1(b)(2(ii)(b)(3). Immediately thereafter the Partners shall be
deemed to have recontributed such assets in kind to the
Partnership, which shall be deemed to have assumed and taken
subject to all such liabilities.
10.7. Allocations during the Period of Liquidation. Until the
date on which all of the assets of the Partnership have been
distributed to the Partners pursuant to Section 10.2 hereof, the
Partners shall continue to share Profits, Losses and other items
of Partnership income, gain, deduction and loss as provided in
Article 6 hereof.
ARTICLE 11.
MISCELLANEOUS PROVISIONS
11.1. Further Assurances. From and after the date of
execution and delivery of this Agreement, the Partners shall
execute and deliver such further documents and instruments and
shall do such further acts and things as any Partner may
reasonably request in order to effectuate the transactions
contemplated by this Agreement. The Partners shall cooperate and
assist one another in the performance of the provisions of this
Agreement and shall take such steps as are reasonably necessary to
allow another party to this Agreement to discharge its obligations
under this Agreement.
11.2. Assignment. No Partner may assign or otherwise
transfer, including, without limitation, by operation of law, this
Agreement or any of its rights or obligations hereunder except in
accordance with the provisions of Articles 8 and 10. Subject to
the foregoing, this Agreement shall be binding upon the Partners,
their legal representatives, successors and assigns.
11.3. Breach; Equitable Relief. The Partners acknowledge that
the rights of the Partners described in this Agreement are unique
and that money damages alone for breach of this Agreement would
not constitute an adequate remedy. Any Partner aggrieved by a
breach of the provisions hereof may bring an action at law or suit
in equity to obtain redress, including without limitation specific
performance, injunctive relief or any other available equitable
remedy. Time and strict performance are of the essence in this
Agreement.
11.4. Amendment. No amendment to this Agreement shall be
valid unless such amendment is in writing and is signed by
authorized representatives of the parties approving such amendment
in accordance with Section 5.1.9 hereof.
11.5. Waiver. Any of the terms and conditions of this
Agreement may be waived at any time and from time to time in
writing by the party entitled to the benefit thereof, but a waiver
in one instance shall not be deemed to constitute a waiver in any
other instance. A failure to enforce any provision of this
Agreement shall not operate as a waiver of such provision or of
any other provision hereof.
11.6. Severability. In the event that any provision of this
Agreement shall be held invalid, illegal or unenforceable in any
circumstance, the remaining provisions shall nevertheless remain
in full force and effect and shall be construed as if the
unenforceable portion or portions were deleted.
11.7. Construction. None of the provisions of this Agreement
shall be for the benefit of or enforceable by any third party. No
third party, including without limitation any creditor or employee
of the Partnership, shall have any rights against the Partners or
any of their Affiliates, successors or assigns by reason of or
under this Agreement.
11.8. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE
WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAW PRINCIPLES THEREOF.
Each of the parties to this Agreement hereby irrevocably and
unconditionally (i) consents to submit to the exclusive
jurisdiction of the federal or state courts located in the State
of Delaware for any proceeding arising in connection with this
Agreement (and each such party agrees not to commence any such
proceeding, except in such courts), (ii) to the extent such party
is not a resident of the State of Delaware, agrees to appoint an
agent in the State of Delaware as such party's agent for
acceptance of legal process in any such proceeding against such
party with the same legal force and validity as if served upon
such party personally within the State of Delaware, and to notify
promptly each other party hereto of the name and address of such
agent, (iii) waives any objection to the laying of venue of any
such proceeding in the federal or state courts located in the
State of Delaware, and (iv) waives, and agrees not to plead or to
make, any claim that any such proceeding brought in any federal or
state court located in the State of Delaware has been brought in
an improper or otherwise inconvenient forum.
11.9. Attorneys' Fees. If suit or action is filed by any
Partner to enforce the provisions of this Agreement, or otherwise
with respect to the subject matter of this Agreement, the
prevailing party shall be entitled to recover reasonable
attorneys' fees as fixed by the trial court and, if any appeal is
taken from the decision of the trial court, reasonable attorneys'
fees as fixed by the appellate court. For purposes of this
Agreement, the term prevailing party shall be deemed to include a
Partner that successfully opposes a petition for review filed with
an appellate court.
11.10. Modification of Final Judgment.
(a) The Partners acknowledge that by virtue of Bell Atlantic's
and NYNEX's investment in the Partnership, the Partnership
will be subject to the Modification of Final Judgment
agreed to by the American Telephone and Telegraph Company
and the United States Department of Justice and approved
by the United States District Court for the District of
Columbia on August 24, 1982, and any subsequent orders or
amendments issued in connection therewith (the MFJ). The
MFJ may prohibit the Partnership from engaging in certain
lines of businesses and activities not currently conducted
by Bell Atlantic or NYNEX. The Partnership shall fully
inform Bell Atlantic and NYNEX on a quarterly basis as to
any business plans or activities which it undertakes, or
of any modifications in such existing plans or activities.
The Partners hereby covenant to cause the Partnership to
comply with the MFJ and not to engage in any line of
business or activity which, in the sole judgment of Bell
Atlantic or NYNEX communicated in writing to the
Partnership, might result in a violation of the MFJ.
(b) In the event of (i) an occurrence which in the sole
judgment of Bell Atlantic or NYNEX might result in a
violation of the MFJ, or (ii) a change in the MFJ, or
(iii) a planned or proposed activity of the Partnership
which in the sole judgment of Bell Atlantic or NYNEX might
cause the Partnership to be in violation thereof, the
Partners agree to eliminate the risk of violation and
bring the Partnership into conformance with the provisions
of the MFJ, in the judgment of both Bell Atlantic and
NYNEX, as expeditiously as possible. If the Partnership
takes any action which Bell Atlantic or NYNEX determines,
in its sole judgment, causes it, or which may cause it, to
be in violation of the MFJ, Bell Atlantic and NYNEX, or
either of them, may require the Partnership immediately to
purchase their respective Partnership Interests at a price
equal to the greater of Bell Atlantic's and NYNEX's
respective Capital Balances, the book value of such
Partnership Interest, or the fair market value of such
Partnership Interest as determined by an independent ap-
praiser mutually acceptable to Bell Atlantic and NYNEX, as
applicable, and the Partnership.
(c) The Partnership shall make the Partnership's management
aware of the terms of the MFJ and of what types or
categories of businesses or activities might constitute a
breach thereof. The Partnership shall cause all managers
having significant responsibility for matters addressed in
the MFJ to sign, on an annual basis, a certificate in such
form as Bell Atlantic or NYNEX may reasonably require from
time to time. Bell Atlantic and NYNEX shall provide, or
shall cause to be provided, such instruction on the MFJ
for the Partnership's Executive Committee members,
officers and employees as the Partnership shall reasonably
request and/or as Bell Atlantic and NYNEX or either of
them shall designate in order to satisfy its obligations
set forth in the preceding two sentences, and shall
respond promptly to Partnership inquiries in respect of
particular activities, lines of business or transactions.
Bell Atlantic and NYNEX, or either of them, may conduct an
MFJ audit of the Partnership's activities on an annual
basis.
11.11. Availability of Documents. The Partners and their
Parents will make available to the Partnership true and complete
copies of any and all documents necessary for the Partnership to
fulfill its responsibilities under this Agreement or applicable
law.
11.12. Notices. Any notice or notification required,
permitted or contemplated hereunder shall be in writing, shall be
addressed to the party to be notified at the address set forth
below, or at such other address as each party may designate for
itself from time to time by notice hereunder, and, unless
otherwise specifically stated herein, shall be deemed to have been
validly served, given or delivered (i) three days following
deposit in the United States mail, with proper first-class postage
prepaid, (ii) the next business day after such notice was
delivered to a regularly scheduled overnight delivery carrier with
delivery fees either prepaid or an arrangement, satisfactory to
such carrier, made for the payment of such fees, or (iii) upon
receipt of notice given by telecopy, mailgram, telegram, or
personal delivery if such receipt is during normal business hours,
or if not received during normal business hours, on the next
business day following receipt:
If to Bell Atlantic:
Bell Atlantic Corporation
1717 Arch Street, 29th Floor
Philadelphia, PA 19103
Attention: Lawrence T. Babbio, Jr.
With a copy to:
Bell Atlantic Corporation
1717 Arch Street, 32nd Floor
Philadelphia, PA 19103
Attention: Stephen B. Heimann
Telecopy No.: (215) 561-9568
If to NYNEX:
NYNEX Mobile Communications Company
2000 Corporate Drive
Orangeburg, New York 10962
Attn.: Alfred F. Boschulte, President
Telecopy No.: (914) 365-9046
with a copy to:
NYNEX Network Systems Company
4 West Red Oak Lane
White Plains, New York 10604
Attn.: Senior Vice President and General
Counsel
Telecopy No.: (914) 644-7966
If to the Partnership:
__________________________________
__________________________________
__________________________________
Attention:________________________
11.13. Headings and Section References. The headings of the
Articles and Sections herein are inserted for convenience of
reference only and are not intended to be a part of or to affect
the meaning or interpretation of this Agreement. All references
herein to articles, sections, schedules and exhibits, unless
otherwise specified, are references to articles and sections of,
and schedules and exhibits to, this Agreement.
11.14. Entire Agreement. This Agreement supersedes all prior
agreements and all contemporaneous agreements not required hereby
or expressly referred to herein and all representations,
warranties, undertakings and understandings of and among the
parties with respect to the same subject and, with the other
agreements required hereby or expressly referred to herein, is the
entire agreement of the parties as to such subject. All exhibits
and schedules referred to herein, and all attachments to such
exhibits or schedules, and any other attachments to this
Agreement, are hereby incorporated into this Agreement and are
hereby made a part hereof as if set out in full in this Agreement.
11.15. Disclaimer of Agency, etc. This Agreement does not
create any partnership beyond the scope set forth herein, and
except as otherwise expressly provided herein and under mandatory
provisions of applicable law, this Agreement shall not constitute
any Partner the legal representative or agent of any other, nor
shall either Partner have the right or authority to assume, create
or incur any liability or obligation, express or implied, against,
in the name of or on behalf of any other Partner.
11.16. Publicity. No press release or other public
announcement related to this Agreement or the Partnership or the
transactions contemplated hereby shall be issued by any Partner
without the prior approval of the Executive Committee, except that
any Partner may make such public disclosure which it believes in
good faith to be required by law or by the terms of any listing
agreement with a securities exchange (in which case such Partner
shall consult with the Executive Committee prior to making such
disclosure).
11.17. Tax Matters Partner. Notwithstanding any other
provision of this Agreement, in any case where responsibility is
granted to the Tax Matters Partner to make any election or
determination or to take any other action which in the reasonable
judgment of the Tax Matters Partner could have a material adverse
economic impact on any other Partner, the Tax Matters Partner
shall notify such other Partners within fifteen days preceding the
time such action is to be taken. If any of the other Partners
disagree with the proposed action, responsibility for the matter
shall be given to the Executive Committee.
11.18. Counterparts. This Agreement may be executed in two or
more counterparts, and all such counterparts shall constitute one
and the same instrument.
IN WITNESS WHEREOF, the Partners have executed this Agreement
the day and year first above written.
<BELL ATLANTIC CELLCO ENTITY>
ATTEST: {BELL ATLANTIC PCSCO ENTITY
_________________________ By:_______________________________
Title: Name:
Title:
[Corporate Seal]
ATTEST: NYNEX ENTITY PARTNERSHIP
_________________________ By:_______________________________
Title: Name:
Title:
[Corporate Seal]<PAGE>
ANNEX A
TABLE OF DEFINED TERMS
Term Page
10 MHz PCS License . . . . . . . . . . . . . . . . . . . . . . . 7
1933 Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Account Balance. . . . . . . . . . . . . . . . . . . . . . . . . .9
Additional Partner . . . . . . . . . . . . . . . . . . . . . . . 47
Adjusted Capital Account Deficit . . . . . . . . . . . . . . . . 1
Adjusted Capital Account . . . . . . . . . . . . . . . . . . . . 1
Adjustment Amount. . . . . . . . . . . . . . . . . . . . . . . . 1
Affiliate. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Affiliated Entity. . . . . . . . . . . . . . . . . . . . . . . . 2
Affiliation Agreement. . . . . . . . . . . . . . . . . . . . . . 12
Agreed Value . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Bell Atlantic. . . . . . . . . . . . . . . . . . . . . . . . . . 1
Bid Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Bona Fide Offer. . . . . . . . . . . . . . . . . . . . . . . . . 42
Breaching Partner. . . . . . . . . . . . . . . . . . . . . . . . 49
Brief. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
BTA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Business Plan. . . . . . . . . . . . . . . . . . . . . . . . . . 4
Capital Accounts . . . . . . . . . . . . . . . . . . . . . . . . 4
Capital Call . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Cellular Business. . . . . . . . . . . . . . . . . . . . . . . . 4
Change of Control. . . . . . . . . . . . . . . . . . . . . . . . 4
Change of Control Partner. . . . . . . . . . . . . . . . . . . . 43
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Competitive Activity . . . . . . . . . . . . . . . . . . . . . . 14
Confidential Information . . . . . . . . . . . . . . . . . . . . 51
control. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Deadlock Event . . . . . . . . . . . . . . . . . . . . . . . . . 27
Default Interest Rate. . . . . . . . . . . . . . . . . . . . . . 5
Delinquent Partner . . . . . . . . . . . . . . . . . . . . . . . 4
Demand Right . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Designated MTAs/BTAs . . . . . . . . . . . . . . . . . . . . . . 5
Dissolution Event. . . . . . . . . . . . . . . . . . . . . . . . 5
Electing Partner . . . . . . . . . . . . . . . . . . . . . . . . 41
Event of Bankruptcy. . . . . . . . . . . . . . . . . . . . . . . 5
Executive Committee. . . . . . . . . . . . . . . . . . . . . . . 5
Fair Market Value. . . . . . . . . . . . . . . . . . . . . . . . 45
FCC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Formation Agreement. . . . . . . . . . . . . . . . . . . . . . . 5
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Holding Company. . . . . . . . . . . . . . . . . . . . . . . . . 40
Indemnified Damages. . . . . . . . . . . . . . . . . . . . . . . 28
Liquidating Partner. . . . . . . . . . . . . . . . . . . . . . . 5
Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Majority Vote. . . . . . . . . . . . . . . . . . . . . . . . . . 6
Management Co. . . . . . . . . . . . . . . . . . . . . . . . . . 1
Mandatory Indemnitees. . . . . . . . . . . . . . . . . . . . . . 27
Mediator . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
MFJ. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
MTA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Non-Formation Event. . . . . . . . . . . . . . . . . . . . . . . 52
Non-Selling Partners . . . . . . . . . . . . . . . . . . . . . . 41
Nondeductible Expenditure. . . . . . . . . . . . . . . . . . . . 6
Nondeductible Expenditures . . . . . . . . . . . . . . . . . . . 8
Nondelinquent Partner. . . . . . . . . . . . . . . . . . . . . . 6
Nonrecourse Deductions . . . . . . . . . . . . . . . . . . . . . 6
NYNEX. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Offered Interest . . . . . . . . . . . . . . . . . . . . . . . . 41
Original Appraisers. . . . . . . . . . . . . . . . . . . . . . . 44
Other Partnership. . . . . . . . . . . . . . . . . . . . . . . . 6
Paging Business. . . . . . . . . . . . . . . . . . . . . . . . . 6
Partner Note . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Partner Nonrecourse Debt Minimum Gain. . . . . . . . . . . . . . 6
Partner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Partner Candidate. . . . . . . . . . . . . . . . . . . . . . . . 6
Partner Nonrecourse Debt . . . . . . . . . . . . . . . . . . . . 6
Partner Note . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Partner Nonrecourse Deductions . . . . . . . . . . . . . . . . . 7
Partnership Minimum Gain . . . . . . . . . . . . . . . . . . . . 7
Partnership Interest . . . . . . . . . . . . . . . . . . . . . . 7
Partnership. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
PCS License. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
PCS Business . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Percentage Interest. . . . . . . . . . . . . . . . . . . . . . . 7
Permitted Indemnitees. . . . . . . . . . . . . . . . . . . . . . 27
person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Piggy-back Right . . . . . . . . . . . . . . . . . . . . . . . . 48
Pro Rata Fraction. . . . . . . . . . . . . . . . . . . . . . . . 41
Profits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Qualification Date . . . . . . . . . . . . . . . . . . . . . . . 13
Qualified Investment Banking Firm. . . . . . . . . . . . . . . . 45
receiving party. . . . . . . . . . . . . . . . . . . . . . . . . 51
Registrable Securities . . . . . . . . . . . . . . . . . . . . . 48
Regulations. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Regulatory Allocations . . . . . . . . . . . . . . . . . . . . . 34
Remaining Offered Interest . . . . . . . . . . . . . . . . . . . 41
Selling Partner. . . . . . . . . . . . . . . . . . . . . . . . . 40
Specified Account Value. . . . . . . . . . . . . . . . . . . . . 9
Supermajority Vote . . . . . . . . . . . . . . . . . . . . . . . 23
Tax Matters Partner. . . . . . . . . . . . . . . . . . . . . . . 9
Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Wireless Business. . . . . . . . . . . . . . . . . . . . . . . . 9
Contact: NYNEX
800-871-2424
Bell Atlantic
703-974-1720
Media Conference Call Number, 10:00 A.M. EST
1-800-633-8413
For Release: Thursday, June 30, 1994
BELL ATLANTIC AND NYNEX TO COMBINE CELLULAR PROPERTIES
ALLIANCE WILL SPEED "ANYTIME/ANYWHERE" SERVICE TO CONSUMERS;
POSITIONS PARTNERS TO COMPETE IN NATIONAL WIRELESS MARKET
New York, NY -- Bell Atlantic Corporation (NYSE:BEL) and NYNEX
Corporation (NYSE: NYN) today announced they will combine their
cellular services properties to create a leading company to
compete in one of the great national growth markets of the next 10
to 20 years -- wireless communications.
"This new company will focus on the development and deployment of
'anytime-anywhere' capabilities across a broad market area, with
great R&D expertise and superior customer and network support
systems," Bell Atlantic Chairman and CEO Raymond W. Smith said.
"Our extensive financial, marketing and technological resources
make the new venture a capable competitor in the rapidly
developing wireless marketplace against the likes of AT&T-McCaw
and MCI-British Telecom-Nextel. In addition, we expect to add new
partners to our national PCS [personal communications services]
alliance."
NYNEX Chairman and CEO William C. Ferguson said, "Together, we are
well positioned to deliver the benefits of wireless technology to
customers. Our two companies share a common vision of wireless
services. By combining our efforts, our new venture will secure a
position of leadership in the wireless communications industry by
assuring that new applications are brought to customers in a
timely, cost-effective way.
"To a great degree, this joint venture is an extension of our
existing New York-northern New Jersey cellular partnership, and we
know from experience that we work well together to provide value
for our customers and our respective shareowners."
For 10 years, NYNEX and Bell Atlantic together have operated a
cellular system in the New York metropolitan area which, with a
population of some 15 million people -- or POPs in industry
parlance -- is the largest cellular market in the nation.
NYNEX and Bell Atlantic together serve seven of the top 20
cellular markets in the U.S. Their combined markets cover a
population of some 55 million POPs.
Initially, Bell Atlantic will own 62.35% of the company, and NYNEX
will own 37.65%.
"By extending the Bell Atlantic-NYNEX reach from Maine to South
Carolina -- including the densely populated, communications-
intensive Northeast corridor running from Boston to Washington,
D.C. -- our joint venture will be positioned to create a premier
national wireless service provider that will offer a new range of
choice to consumers," said Lawrence T. Babbio, Jr., Bell Atlantic
executive vice president and chief operating officer, and chairman
of the joint venture's management operations committee.
The new joint venture also includes Bell Atlantic's properties in
the Southwest.
"We have the foundation for building a national wireless presence
by obtaining PCS licenses and by bringing like-minded PCS
providers into our new alliance," he said.
Babbio also committed the new company to employing the best
business practices culled from the operations of Bell Atlantic's
and NYNEX's existing mobile subsidiaries. "We intend to provide
our customers with the best wireless service available anywhere,"
he said.
The new venture will develop an aggressive strategy for acquiring
and operating PCS licenses that are expected to be auctioned by
the Federal Communications Commission later this year. The
company will coordinate existing cellular operations with newly
acquired PCS licenses to quicken the introduction of coast-to-
coast personal communications services.
The parent companies have established a management operations
committee to determine how to best integrate their wireless
operations while maintaining excellent customer service and
effective marketing efforts. In addition to Babbio, the members
of this top-level group will be Frederic V. Salerno, NYNEX vice
chairman-finance and business development; James G. Cullen, Bell
Atlantic president; Ivan G. Seidenberg, NYNEX vice chairman,
president and chief operating officer; and William O. Albertini,
Bell Atlantic vice president and chief financial officer.
The companies expect to close the transaction in the second
quarter of 1995. The joint venture will be controlled equally by
both companies.
NYNEX is a leader in helping people communicate by providing
telecommunications, directory publishing and information network
and delivery services to 12 million customers in the northeastern
United States and selected markets around the world.
Bell Atlantic Corporation, based in Philadelphia, is the parent of
companies which provide a full array of local exchange
telecommunications services in New Jersey, Pennsylvania, Delaware,
Maryland, Virginia, West Virginia and Washington, D.C. The
corporation is at the forefront of developing a variety of new
products, including video, entertainment and information services.
In addition to being the corporate parent of one of the nation's
largest cellular carriers, Bell Atlantic has an ownership position
in cellular properties internationally. In addition, Bell
Atlantic owns an interest in Telecom Corporation of New Zealand
and is the parent of companies that provide business systems
services for customer-based information technology throughout the
U.S. and internationally.
###
Notes: The press conference will be recorded and replayed from 2
p.m. to 4 p.m. on June 30, 1994, on 800-633-8284, reservation
number 786691#.
* * *
A video news release will be available via Medialink between 1-
1:30 p.m. EDT and 2-2:30 EDT on Telstar 401, Transponder 17;
audio: 6.2 and 6.8 megahertz; downlink frequency 4040, channel 17.
###
