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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: October 20, 1994
AIRTOUCH COMMUNICATIONS
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Commission File
California No. 1-12342 94-2995122
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer No.)
Incorporation)
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425 Market Street, San Francisco, California 94105
(Address of Principal Executive Offices Zip Code)
(415) 658-2000
(Registrant's telephone number, including area code)
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Form 8-K AirTouch Communications
November 3, 1994
Item 5. Other Events
On October 20, 1994, AirTouch Communications (the "Company") issued
the press release attached hereto as Exhibit 99.
Item 7. Financial Statements and Exhibits
(c) Exhibit:
Exhibit
Number Description
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10.1 Agreement of Limited Partnership dated as of October 20,
1994 between CELLCO Partnership and WMC Partners, L.P.
10.2 Agreement of Limited Partnership dated as of October 20,
1994 of PCS Primeco, L.P.
10.3 Standstill Agreement dated as of October 20, 1994 between
AirTouch Communications and Bell Atlantic Corporation
10.4 Standstill Agreement dated as of October 20, 1994 between
AirTouch Communications and NYNEX Corporation
10.5 Standstill Agreement dated as of October 20, 1994 between
AirTouch Communications and CELLCO Partnership
99 Press Release dated October 20, 1994
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Form 8-K AirTouch Communications
November 3, 1994
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.
AIRTOUCH COMMUNICATIONS
By: /s/ Mohan S. Gyani
------------------
Mohan S. Gyani
Vice President, Finance and
Treasurer
November 3, 1994
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EXHIBIT INDEX
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Exhibit
Number Description
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10.1 Agreement of Limited Partnership dated as of October 20, 1994
between CELLCO Partnership and WMC Partners, L.P.
10.2 Agreement of Limited Partnership dated as of October 20, 1994 of
PCS Primeco, L.P.
10.3 Standstill Agreement dated as of October 20, 1994 between AirTouch
Communications and Bell Atlantic Corporation
10.4 Standstill Agreement dated as of October 20, 1994 between AirTouch
Communications and NYNEX Corporation
10.5 Standstill Agreement dated as of October 20, 1994 between AirTouch
Communications and CELLCO Partnership
99 Press Release dated October 20, 1994
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Exhibit 10.1
________________________________________
TOMCOM, L.P.
AGREEMENT OF
LIMITED PARTNERSHIP
DATED AS OF OCTOBER 20, 1994
BETWEEN
CELLCO PARTNERSHIP
AND
WMC PARTNERS, L.P.
________________________________________
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TABLE OF CONTENTS
(Not part of the Agreement)
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Section Page
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ARTICLE 1 GENERAL PROVISIONS.................................................................. 1
1.1. Formation of the Partnership........................................................ 1
1.2. Name................................................................................ 1
1.3. Principal Place of Business......................................................... 1
1.4. Registered Office; Agent for Service of
Process............................................................................. 2
1.5. Business of the Partnership......................................................... 2
1.6. Term of the Partnership............................................................. 4
1.7. Qualification in Other Jurisdictions................................................ 4
1.8. Definitions......................................................................... 4
ARTICLE 2 MANAGEMENT.......................................................................... 12
2.1. Partnership Committee............................................................... 12
2.2. Partnership Committee Meetings...................................................... 13
2.3. Voting.............................................................................. 15
2.4. No Compensation..................................................................... 17
2.5. Acts by Partners.................................................................... 17
2.6. Procedures in the Event of a Dispute................................................ 17
2.7. Management.......................................................................... 18
2.8. Business Plan....................................................................... 18
2.9. Access to Books of Account.......................................................... 19
2.10. Confidential Information............................................................ 19
2.11. Duty of Partners to Cooperate....................................................... 21
2.12. Insurance and Risk Management....................................................... 21
2.13. Agreements with Partnership......................................................... 21
2.14. Relationship with International Affiliates.......................................... 21
ARTICLE 3 JOINT VENTURE PROJECTS/DEVELOPMENT AND
EXECUTION........................................................................... 21
3.1. General............................................................................. 21
3.2. Project Development Teams........................................................... 22
3.3. Approval of Initial Project Plans................................................... 22
3.4. Approval of Revised Project Plans................................................... 23
3.5. Project Management.................................................................. 23
3.6. Use of Partner Resources............................................................ 23
ARTICLE 4 CAPITAL CONTRIBUTIONS, WITHDRAWALS AND CAPITAL
ACCOUNTS.................................................................. 23
4.1. Capital Accounts.................................................................... 23
4.2. Initial Contributions of Capital.................................................... 25
4.3. Additional Contributions by Partners................................................ 25
4.4. Partner Obligations................................................................. 27
4.5. Withdrawals of Capital Accounts..................................................... 27
4.6. Interest on Capital Accounts........................................................ 27
4.7. Revaluation of Partnership Assets................................................... 28
4.8. Redetermination of Percentage Interests............................................. 28
4.9. Determination of Fair Market Value.................................................. 28
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ARTICLE 5 ALLOCATIONS AND DISTRIBUTIONS....................................................... 31
5.1. Profits and Losses.................................................................. 31
5.2. Distributions....................................................................... 34
ARTICLE 6 TAX MATTERS AND REPORTS; ACCOUNTING................................................. 35
6.1. Filing of Tax Returns............................................................... 35
6.2. Tax Matters Partner................................................................. 35
6.3. Tax Reports to Current and Former Partners.......................................... 36
6.4. Accounting Records; Independent Audit............................................... 36
6.5. Fiscal Year......................................................................... 36
6.6. Tax Accounting Method............................................................... 36
6.7. Withholding......................................................................... 36
6.8. Tax Elections....................................................................... 36
6.9. Prior Tax Information............................................................... 37
ARTICLE 7 INDEMNIFICATION AND EXCULPATION; CERTAIN AGREEMENTS................................. 37
7.1. Indemnification of the Partners..................................................... 37
7.2. Exculpation......................................................................... 38
7.3. Restrictions on Partners............................................................ 38
7.4. Outside Activities.................................................................. 39
7.5. Elimination of Conflicts............................................................ 43
7.6. Duties of Partners.................................................................. 44
ARTICLE 8 TERMINATION AND DISSOLUTION......................................................... 45
8.1. Events of Dissolution............................................................... 45
8.2. Bankruptcy of a General Partner..................................................... 45
8.3. Order of Dissolution................................................................ 46
8.4. Orderly Winding Up.................................................................. 47
8.5. Dissolution Election................................................................ 47
8.6. Obligation to Restore Deficit Balance............................................... 49
8.7. Termination of Partnership.......................................................... 49
ARTICLE 9 ADMISSION OF ADDITIONAL PARTNERS.................................................... 49
9.1. Admission Procedures................................................................ 49
ARTICLE 10 TRANSFER OR ENCUMBRANCE OF INTEREST................................................. 49
10.1. Restriction on Transfer or Encumbrance.............................................. 49
10.2. Permitted Transfers................................................................. 49
10.3. Invalid Transfers Void.............................................................. 50
10.4. Change in Ownership................................................................. 50
ARTICLE 11 REGULATORY MATTERS.................................................................. 51
11.1. MFJ Compliance...................................................................... 51
ARTICLE 12 ENHANCED RESALE AGREEMENTS.......................................................... 54
12.1. Agreement on Form................................................................... 54
ARTICLE 13 MISCELLANEOUS....................................................................... 54
13.1. Notices............................................................................. 54
13.2. Governing Law, etc.................................................................. 56
13.3. Amendments.......................................................................... 57
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Section Page
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13.4. Entire Agreement...................................................................... 57
13.5. Waiver of Partition................................................................... 57
13.6. Consents.............................................................................. 57
13.7. Successors............................................................................ 57
13.8. Counterparts.......................................................................... 57
13.9. Severability.......................................................................... 57
13.10. Survival.............................................................................. 57
13.11. Arbitration........................................................................... 58
13.12. No Third Party Beneficiaries.......................................................... 58
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TOMCOM, L.P.
AGREEMENT OF
LIMITED PARTNERSHIP
THIS AGREEMENT OF LIMITED PARTNERSHIP of TOMCOM, L.P. (the "Partnership") is
entered into and effective as of October 20, 1994, by and between WMC Partners,
L.P., a Delaware limited partnership ("WMC"), and Cellco Partnership, a
Delaware general partnership ("Cellco"), each of which shall be both a general
partner and a limited partner as set forth herein (collectively, the
"Partners").
WHEREAS it is becoming increasingly important to increase the scale and
scope of wireless services offered in increasingly competitive wireless
markets and, in furtherance of increasing the scale and scope of their
respective businesses, Cellco and WMC wish to become partners in the
Partnership (as hereinafter defined); and
WHEREAS, the Partners wish to develop PCS, cellular and other
technologically innovative wireless services that provide standardized
features that are easy for customers to use; and
WHEREAS, the Partners wish to offer customers seamless service across local
geographic boundaries;
NOW, THEREFORE, in consideration of the promises, mutual covenants and
agreements herein contained and in order to set forth the respective rights,
obligations and interests of the Partners to one another and to the
Partnership, the Partners hereby agree as follows:
ARTICLE 1
GENERAL PROVISIONS
1.1. Formation of the Partnership. The Partners agree
and hereby form the Partnership as a limited partnership, pursuant to the
Delaware Revised Uniform Limited Partnership Act, as it may be amended from
time to time (the "Act"), and this Agreement. Except as provided in this
Agreement, the rights, duties, liabilities and obligations of the Partners
and the administration, dissolution, winding up and termination of the
Partnership shall be governed by the Act.
1.2. Name. The name of the Partnership shall be: Tomco, L.P. The name
of the Partnership may be changed by the Partnership Committee.
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1.3. Principal Place of Business. The principal place of business of
the Partnership shall be at such place within or outside the State of Delaware
as the Partnership Committee may determine from time to time.
1.4. Registered Office; Agent for Service of Process. The address of
the Partnership's registered office in the State of Delaware is c/o The
Corporation Trust Company, Corporation Trust Center, 1209 Orange Street,
Wilmington, New Castle County, Delaware 19801. The agent for service of
process at such address for the Partnership in the State of Delaware is The
Corporation Trust Company. Agents for service of process of the Partnership
may be changed by the Partnership Committee.
1.5. Business of the Partnership.
(a) The purpose of the Partnership (the "Partnership Business") is:
(i) To set national technical and service standards for the
Systems of the Partners and their respective Affiliates,
with a goal of providing seamless Services on a national
basis;
(ii) To either adopt or create a nationally competitive brand
under which to market on a national basis the Services
provided by the Partners and their respective Affiliates;
(iii) To establish nationwide roaming and resale agreements among
the Systems of the Partners and their respective
Affiliates;
(iv) To improve the research and development capabilities of the
Partners through cooperative or centralized projects;
(v) To coordinate and centralize the management of marketing of
Services to National Accounts; and
(vi) To coordinate and/or centralize and integrate certain
functions relating to Systems to achieve economies and
efficiencies of scale and scope. These functions may
include, without limitation:
(A) national advertising, national marketing, and national
brand management and licensing;
(B) adoption and evolution of common technology platforms;
(C) coordination of product and service research and
development;
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(D) roaming and billing clearinghouse management;
(E) common advanced intelligent network feature development;
(F) coordination of information systems for purposes of
consolidated billing, consistent management of
customer service, and management of the
interconnection of local and regional networks to
form a seamless national network;
(G) joint purchasing of subscriber equipment and network and
other infrastructure;
(H) coordination of national distribution networks; and
(I) consolidation of account servicing and customer care for
National Accounts.
The Partnership may engage in any business other than the Partnership Business
as the Partnership Committee may determine.
(b) Subject to the terms of this Agreement, the Partnership may enter
into, deliver and perform all contracts, agreements and other undertakings and
engage in all activities and transactions as may be necessary or appropriate to
carry out the foregoing purposes. Without limiting the foregoing, the
Partnership may, subject to the terms of this Agreement:
(i) enter into license agreements, service contracts or other
contractual relationships with WMC or Cellco;
(ii) borrow or raise money and secure the payment of any
obligations of the Partnership by mortgage upon, or pledge or
hypothecation of, all or any part of the assets of the Partnership;
(iii) engage personnel, whether part-time or full-time, to do such
acts as are necessary or advisable in connection with the maintenance,
operation and administration of the Partnership (avoiding redundancies
with the staff and operations of WMC and Cellco); and
(iv) engage attorneys, independent accountants, investment
bankers, consultants or such other Persons as are necessary or advisable.
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(c) Notwithstanding the foregoing, the Partnership will not engage in
any act that would put the Partnership, or any Partner, in violation of the
MFJ. Specifically, the Partnership will not engage in any activity that would
constitute the provision of interexchange (interLATA) telecommunications
service, the provision of telecommunications equipment, or the manufacture of a
telecommunications product (all as defined by the MFJ, the Decree Court, or
both), unless any such activity has been the subject of a waiver or other
legislative or court relief, or the MFJ otherwise ceases to apply to the
activities of the Partnership.
1.6. Term of the Partnership. The term of the Partnership shall
commence on the date the Certificate of Limited Partnership of the Partnership
is filed in the office of the Secretary of State of the State of Delaware, and
shall continue through the 99th anniversary thereof, unless earlier dissolved
as provided in Section 8.1. The existence of the Partnership as a separate
legal entity shall continue until the cancellation of the Partnership's
Certificate of Limited Partnership.
1.7. Qualification in Other Jurisdictions. The General Partners shall
cause the Partnership to be qualified, formed, or registered under assumed or
fictitious name statutes or similar laws in any jurisdiction in which the
Partnership owns property or engages in activities if such qualification,
formation or registration is necessary to permit the Partnership lawfully to
own property and engage in the Partnership's business or transact business.
The General Partners shall execute, file and publish all such certificates,
notices, statements or other instruments necessary to permit the Partnership to
engage in the Partnership's business as a limited partnership in all
jurisdictions where the Partnership elects to engage in or do business.
1.8. Definitions. (a) For purposes of this Agreement the following
terms have the following meanings (unless indicated otherwise, all Article and
Section references are to Articles and Sections in this Agreement, and all
Schedule references are to Schedules to this Agreement):
"Additional Partner" means any additional Person admitted to the Partnership
pursuant to Article 9.
"Adjusted Capital Contributions" means, for each Partner, the cumulative
amount of such Partner's contributions to the Partnership which for purposes of
this definition shall be equal to the sum of (i) the amount of cash (other than
Organizational Expenses paid or accrued by such Partner and other than amounts
contributed to the Partnership by WMC pursuant to Section 7.5 hereof) and the
Fair Market Value of any other property (net of liabilities secured by such
property that the Partnership is considered to take subject to or assume
under Section 752 of the
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Code), plus (ii) the cumulative amount of Adjusted Revaluation Gain, and less
(iii) the cumulative amount of Adjusted Revaluation Loss
"Adjusted Revaluation Gain" or "Adjusted Revaluation Loss" means,
respectively, the Revaluation Gain or Revaluation Loss, as the case may be,
with respect to an asset being revalued which would have arisen had the basis
used in computing Revaluation Gain or Revaluation Loss been equal to the
Capital Account book basis of such asset immediately following the later of its
contribution or acquisition or any immediately preceding revaluation under
Section 4.7 hereof.
"Affiliate" means a Person that directly, or indirectly through one or
more intermediaries, controls, is controlled by or is under common control with
the Person specified; provided, however, that (i) the Partnership shall not be
deemed to be an Affiliate of Cellco or WMC or any of their respective
Affiliates, (ii) any wireline cable television company in which a Partner and
its Affiliates do not have an aggregate ownership interest in excess of 50%
shall not be considered an Affiliate of such Partner or any of its Affiliates,
and (iii) Cellular Communications, Inc., a Delaware corporation ("CCI"), shall
not be considered an Affiliate of ATI until such time, if ever, as ATI shall be
entitled to exercise full discretion with respect to voting the shares of
common stock of CCI beneficially owned by ATI (other than shares of common
stock of CCI beneficially owned by ATI by virtue of its ownership of the Class
A Preference Stock of CCI). For purposes of this definition, the term
"control" (including the terms "controlling," "controlled by" and "under common
control with") of a Person means the possession, direct or indirect, of the
power to (i) vote in excess of 50% of the Voting Stock of such Person, or (ii)
direct or cause the direction of the management and policies of such Person,
whether by contract or otherwise. Notwithstanding the preceding sentence, the
parties agree that, solely for purposes of this Agreement, Affiliates of Cellco
shall specifically include BAC and NYN and their respective Affiliates, and
Affiliates of WMC shall specifically include ATI and USW and their respective
Affiliates. Notwithstanding the foregoing, Upstate Cellular Network shall not
be deemed an Affiliate of Cellco and CMT Partners or New Par shall not be
deemed an Affiliate of WMC, so long as Cellco or WMC, respectively, together
with their respective Affiliates own an equity interest of not more than 50%
in Upstate Cellular Network or CMT Partners or New Par, respectively, and
have no greater management authority with respect thereto than they had on
the date of this Agreement.
"Agreement" means this Agreement of Limited Partnership of the
Partnership, as it may be amended, supplemented or restated from time to time.
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"Appraiser" means any of the First Appraiser, the Second Appraiser and the
Third Appraiser as defined in Section 4.9 hereof.
"Appraiser's Certificate" means a certificate prepared by an Appraiser,
executed on behalf of an Appraiser by a duly authorized officer thereof, and
setting forth such Appraiser's opinion as to the Fair Market Value of an asset.
"ATI" means AirTouch Communications, a California corporation.
"Attributed Entity" means, with respect to any Partner, any Person whose
ownership of Systems (or licenses or permits therefor) would be attributable,
in whole or in part, to such Partner under applicable FCC regulations.
"BAC" means Bell Atlantic Corporation, a Delaware corporation.
"Bankruptcy" of a Partner means (i) the filing by such Partner of a
voluntary petition seeking liquidation, reorganization, arrangement or
readjustment, in any form, of its debts under Title 11 of the United States Code
(or corresponding provisions of future laws) or any other bankruptcy or
insolvency law, or such Partner's filing an answer consenting to or acquiescing
in any such petition, (ii) the making by such Partner of any assignment for the
benefit of its creditors or the admission by such Partner in writing of its
inability to pay its debts as they mature or (iii) the expiration of 60 days
after the filing of an involuntary petition under Title 11 of the United States
Code (or corresponding provisions of future laws), an application for the
appointment of a receiver for the assets of such Partner, or an involuntary
petition seeking liquidation, reorganization, arrangements, composition,
dissolution or readjustment of its debts or similar relief under any bankruptcy
or insolvency law; provided that the same shall not have been vacated, set aside
or stayed within such 60-day period.
"Bankruptcy Code" means the United States Bankruptcy Code of 1978, as
amended.
"Business Plan" means a multi-year business plan for the Partnership
based on a compilation of the Project Plans, as it may be amended from time
to time in accordance with the terms of this Agreement, which shall include
(i) an annual operating budget for each year contemplated in the business
plan presenting separately the budget for each Project as well as a budget
for all non- Project costs; (ii) an aggregate multi-year financial plan for
the Partnership including the Partnership's capital structure; and (iii)
a general description of the key
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underlying assumptions (including the scope) and key strategies for each
Project.
"Capital Account" means the capital account maintained by the
Partnership for each Partner as described in Section 4.1.
"Capital Contribution Percentage" means for each Partner, the sum of the
initial General Partner and Limited Partner Percentage Interests of such
Partner as set forth on Schedule 1.
"CECO" means the Civil Enforcement Consent Order entered by the Decree
Court on February 2, 1989.
"CECO Decree Committee" means the committee created by USW pursuant to the
CECO for the review of USW's business activities.
"Cellco" means Cellco Partnership, a Delaware general partnership, or any
successor thereto.
"Cellular Service" means the provision of any commercial mobile radio
service by a Cellular System, including the resale of such service.
"Cellular System" means a radio communications system authorized under the
rules for the domestic public cellular radio telecommunications service
designated as Subpart K of Part 22 of the FCC's rules in effect on the
Effective Date, or any revision thereto or successor thereof which may be in
effect from time to time, including the network, marketing, distribution, sales,
customer interface and operations functions relating thereto.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means all confidential documents and information
(including, without limitation, confidential commercial information and
information with respect to customers and proprietary technologies or processes
and the design and development of new products or services) concerning the
Partnership, WMC, Cellco, the Partners or their Affiliates furnished to a
Partner in connection with the transactions leading up to and contemplated by
this Agreement and the operation of the Partnership, WMC, Cellco, or Systems in
which the Partners or their respective Affiliates have an ownership interest or
their respective businesses, except to the extent that such information can be
shown to have been (a) generally available to the public other than as a result
of a breach of the provisions of Section 2.10 of this Agreement; (b) already in
the possession of the receiving Person or its Representatives (as such term is
defined in Section 2.10 hereof) without restriction and prior to any disclosure
in connection with the Partnership or pursuant to any of the terms of this
Agreement;
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(c) lawfully disclosed to the receiving Person or its Representatives by a third
party who is free lawfully to disclose the same; or (d) independently developed
by the receiving Person without use of any Confidential Information obtained in
connection with the transactions leading up to and contemplated by this
Agreement and the operation of the Partnership, WMC, Cellco, their respective
Affiliates or their respective businesses.
"Decree Court" means the court having original jurisdiction over
MFJ waivers.
"Effective Date" means October 20, 1994.
"Enhanced Resale Agreement" means an agreement relating to the resale of
Services, in the form approved by the Partnership pursuant to Section 12.1 and
incorporating the terms set forth in Schedule 12.1.
"EO" means the Enforcement Order entered by the Decree Court on
February 15, 1991.
"ESMR Service" means the provision of any commercial mobile radio service
by an ESMR System, including the resale of such service.
"ESMR System" means a radio communications system authorized under the rules
for Enhanced Specialized Mobile Radio services designated under Subpart S of
Part 90 of the FCC's rules in effect on the Effective Date, or any revision or
successor thereof which may be in effect from time to time, including the
network, marketing, distribution, sales, customer interface and operations
functions relating thereto.
"Fair Market Value" means, with respect to any asset, as of the date of
determination, the cash price at which a willing seller would sell, and a
willing buyer would buy, each being apprised of all relevant facts and neither
acting under compulsion, such asset in an arm's-length negotiated transaction
with an unaffiliated third party without time constraints.
"FCC" means the Federal Communications Commission or any successor agency or
entity performing substantially the same functions.
"GAAP" means generally accepted accounting principles.
"General Partner" means each of Cellco and WMC, for as long as each remains
a General Partner in accordance with the provisions hereof, and includes any
Person who becomes an Additional General Partner of the Partnership or a
Substitute General Partner of the Partnership pursuant to the provisions of
this Agreement.
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"General Partner Percentage Interest" means, with respect to any Partner,
the Percentage Interest of such Partner as a General Partner of the Partnership.
The initial General Partner Percentage Interest of each Partner is set forth on
Schedule 1.
"Intellectual Property" means all patents, patent applications, trademarks,
trademark applications, trade secrets, service marks, trade names, copyrights,
inventions, customer lists, proprietary information, licenses and other rights
to use computer software and software programs, and any other rights with
respect thereto.
"Limited Partner" means each of Cellco and WMC, and includes any Person
admitted as an Additional Limited Partner of the Partnership or a Substitute
Limited Partner of the Partnership pursuant to the provisions of this Agreement.
"Limited Partner Percentage Interest" means, with respect to any Partner,
the Percentage Interest of such Partner as a limited partner of the Partnership.
The initial Limited Partner Percentage Interest of each Partner is set forth on
Schedule 1.
"MFJ" means the Modification of Final Judgment entered in United States v.
AT&T, 552 F. Supp. 131 (D.D.C. 1982), and as subsequently modified from time to
time, or any legislative scheme embodying substantially similar restrictions.
"MFJ Compliance Committee" means the committee created by USW pursuant to
the EO for the review of USW's business practices.
"MFJ Restricted Activity" means an activity or business the undertaking of
which by the Partnership would cause the Partnership, or any Partner, to be in
violation of the MFJ.
"National Account" means any commercial customer requiring activations of
Services (other than roaming) in markets in which Services are provided by any
two of (i) WMC or its Affiliates, (ii) Cellco or its Affiliates and (iii) PCS
JV; or as otherwise agreed to jointly by the Partners.
"Net Operating Available Cash" means at the time of determination, (a) all
cash and cash equivalents on hand in the Partnership, less (b) the Forecast
Cash Requirements, if any, of the Partnership, as determined by the Partnership
Committee in a manner consistent with an Approved Business Plan. For purposes
of this definition, "Forecast Cash Requirements" means, for the twelve-month
period following the date of determination, the excess, if any, of (a) forecast
capital expenditures, capital contributions to other entities and other
investments, acquisitions, cash income tax payments and debt service
(including principal and interest) requirements and other non-
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cash credits to income, plus forecast cash reserves for future operations or
other requirements, over (b) forecast net income of the Partnership, plus the
sum offorecast depreciation, amortization, interest expenses, income tax
expenses and other non-cash charges to income, in each case to the extent
deducted in determining such net income, plus or minus forecast changes in
working capital, plus the forecast cash proceeds of dispositions of assets
(net of expenses), plus an amount equal to the forecast net proceeds of debt
financings.
"NYN" means NYNEX Corporation, a Delaware corporation.
"Organizational Expenses" shall mean organizational expenses as defined
under Section 709 of the Code.
"Partner" means WMC or Cellco and any Additional or Substitute General
Partner or Limited Partner of the Partnership. WMC and Cellco shall be
admitted as Partners of the Partnership on the date hereof. A Person who is
not admitted on the date hereof as a partner of the Partnership shall be
admitted as a Partner upon satisfaction of the requirements of Section 9.1 of
this Agreement upon execution by or on behalf of such Person of this Agreement
or a counterpart hereof.
"Partner Parent" means (i) with respect to Cellco, BAC and NYN and (ii)
with respect to WMC, ATI and USW, and their respective successors and assigns,
whether by means of merger, spinoff or otherwise.
"Partnership Interest" means, for each Partner separately, all of the
Partner's interest in, and rights and obligations in connection with, the
Partnership whether as a General Partner or Limited Partner.
"PCS" means those commercial mobile radio services offered by a PCS
System.
"PCS JV" means PCS Primeco, L.P., a Delaware limited partnership, and any
successor thereto.
"PCS JV Agreement" means the Agreement of Limited Partnership of PCS
Primeco, L.P., of even date herewith, between PCS Nucleus, L.P. and PCSCO
Partnership.
"PCS Service" means the provision of any commercial mobile radio service
by a PCS System, including the resale of such service.
"PCS System" means a radio communications system authorized under the rules
for broadband personal communications services designated as Subpart E of Part
24 of the FCC's rules in effect on the Effective Date, or any revision thereto
or successor
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thereof which may be in effect from time to time, including the network,
marketing, distribution, sales, customer interface and operations functions
relating thereto.
"Percentage Interest" means, for each Partner, the quotient obtained by
dividing (i) such Partner's Adjusted Capital Contributions by (ii) the
aggregate Adjusted Capital Contributions of all Partners, as adjusted from time
to time pursuant to Section 4.8 hereof. The initial General Partner and
Limited Partner Percentage Interests of each Partner are set forth on Schedule
1.
"Person" means any individual, corporation, partnership, firm, joint
venture, association, joint-stock company, trust, estate, unincorporated
organization, governmental or regulatory body or other entity.
"Prime Rate" means the rate quoted, from time to time, by the Wall Street
Journal as the prime rate.
"Project" means an undertaking of the Partnership with respect to which a
Project Plan has been approved by the Partnership Committee in accordance with
Section 2.3.
"Project Plan" means a work plan with respect to a Project which will
include (i) a definition of the scope and duration of the Project, (ii)
an operational structure for the Project, (iii) an annual budget and
multi-year financial forecast over the Project's duration for the Project
(including an identification of Partnership and other resources required
for the execution and performance of the Project), (iv) a schedule for
the Project (including a timeline and due dates); (v) a list of objectives
and deliverables for the Project; (vi) a Senior Manager and a Project Manager
for the Project; and (vii) the expected financial or strategic benefits (and
the means by which these benefits will be measured) from the Project and the key
assumptions and key strategies utilized in developing the Project Plan.
"Revaluation Gain" means the amount of gain which would have been realized
had there been a disposition of any Partnership asset being revalued under
Section 4.7 for an amount of cash equal to such asset's then Fair Market Value,
determined in accordance with the provisions of Section 4.9 hereof.
"Revaluation Loss" means the amount of loss which would have been realized
had there been a disposition of any Partnership asset being revalued under
Section 4.7 for an amount of cash equal to such asset's then Fair Market Value,
determined in accordance with the provisions of Section 4.9 hereof.
"Services" means Cellular Service, ESMR Service and PCS Service.
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<PAGE> 16
"Substitute Partner" means any Person admitted to the Partnership pursuant
to Article 10.
"System" means a Cellular System, an ESMR System or a PCS System.
"Tax Matters Partner" means the Tax Matters Partner of the Partnership as
referred to in Section 6.2.
"Taxes" means all taxes, charges, fees, levies or other assessments imposed
by any taxing authority, including, but not limited to, income, gross receipts,
excise, property, sales, use, transfer, payroll, license, ad valorem, value
added, withholding, social security, national insurance (or other similar
contributions or payments), franchise, estimated, severance and stamp taxes
(including any interest, fines, penalties or additions attributable to, or
imposed on or with respect to, any such taxes, charges, fees, levies or other
assessments) and "Tax Return" means any return, report, information return or
other document (including any related or supporting information) with respect
to Taxes.
"USW" means U S WEST, Inc., a Colorado corporation.
"Voting Stock" means capital stock issued by a corporation, or comparable
interests in any other Person, the holders of which are ordinarily entitled to
vote for the election of directors (or Persons performing similar functions) of
such Person.
"Wholly Owned Affiliate" means, as to any Person, an Affiliate all of the
equity interests of which are owned, directly or indirectly, by a Partner, by
another Wholly Owned Affiliate, or by one or both of the Partner Parents
thereof.
"WMC" means WMC Partners, L.P., a Delaware limited partnership, or any
successor thereto.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
<TABLE>
<CAPTION>
Term Section
----------------------------------------------------------
<S> <C>
Act 1.1
Affiliate Transferee 10.2(a)
Approved Business Plan 2.8(a)
Indemnified Party 7.1
Initial Project Plan 3.2
LEC Affiliates 2.3(e)
Member 2.1(a)
Partnership Business 1.5(a)
Partnership Committee 2.1(a)
</TABLE>
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<PAGE> 17
<TABLE>
<CAPTION>
Term Section
-----------------------------------------------------------
<S> <C>
Project Development Team 3.2
Project Manager 3.2
Related Party Agreement 2.13
Replacement Pool 2.1(a)
Senior Manager 2.7
</TABLE>
ARTICLE 2
MANAGEMENT
2.1. Partnership Committee.
(a) The partnership committee of the Partnership (the "Partnership
Committee") shall be composed of three individuals appointed by each General
Partner (collectively the "Members" and individually a "Member"), or such
lesser number of Members as may be determined by a vote of the Members
representing each General Partner; provided that any Affiliate Transferee shall
not be entitled separately to designate Members unless it acquires the entire
General Partner interest of the transferor. The Members shall appoint one
additional individual (the "Independent Member") to serve on the Partnership
Committee as set forth in subsection (b) below.
(b) (i) Within 60 days after the Effective Date, each General Partner
shall nominate two individuals to serve as the initial Independent Member. If
the General Partners are unable to agree on the appointment of an Independent
Member from among the four nominees within 15 days after the nomination of such
individuals, the selection of the initial Independent Member shall be
determined in accordance with Section 2.6.
(ii) The Independent Member will serve for an initial term to be
mutually agreed upon by the General Partners, not to exceed three years. Any
subsequent term of an Independent Member shall be mutually agreed upon by the
General Partners, but shall not exceed three years. The General Partners will
agree on five individuals (the "Replacement Pool"), one of whom would replace
the Independent Member (A) upon expiration of his term (unless the Independent
Member is reappointed for another term), (B) his death or resignation, or (C)
his removal by unanimous vote of the General Partners. In any such event, the
General Partners will select an individual from the Replacement Pool to replace
the incumbent Independent Member. If the General Partners are unable to agree
on a replacement, the Independent Member will name his replacement from one of
the five individuals. If the General Partners are unable to agree and if the
Independent Member is unable to name his replacement or has been removed, each
of the General Partners will eliminate two of the five individuals from the
Replacement Pool, with the remaining individual becoming the Independent
Member. If an individual in the Replacement Pool is selected to become the
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<PAGE> 18
Independent Member, or dies, resigns, is removed from the Replacement Pool by
unanimous vote of the Representative Partners or otherwise becomes incapable of
serving as an Independent Member, the General Partners will agree on an
individual to replace such individual in the Replacement Pool. If the Partners
are unable to agree on a replacement, the individuals in the Replacement Pool
will name such replacement.
(c) Effective upon the giving of notice thereof to the other Partners,
any General Partner may, at any time, in its sole discretion, replace any or
all of its appointed Members with other individuals and may designate one or
more alternates for any or all of its Members. Each Member shall serve on the
Partnership Committee until his successor is appointed, or until his earlier
death, resignation or removal. Each Member shall be an officer or employee or
former employee of a Partner or an Affiliate thereof. Effective upon a General
Partner ceasing to be a general partner of the Partnership, the Members
representing such General Partner on the Partnership Committee shall cease to
be Members.
(d) Except as otherwise required by the Act, no vote or approval by any
Limited Partner shall be required under this Agreement for the taking of an
action, including without limitation the amendment of this Agreement, and the
Percentage Interest of any Limited Partner who is not also a General Partner
shall not be included in any calculation of a Partner's Percentage Interest
entitled to vote on any matter.
(e) The Partnership Committee shall cause the Partnership to fulfill the
Partnership's obligations under this Agreement, and to enforce all rights of
the Partnership under this Agreement.
2.2. Partnership Committee Meetings.
(a) The Partnership Committee shall hold regular meetings (at least
quarterly) at such time and place as shall be determined by the Partnership
Committee (or by the Chairman of the Partnership Committee). Special meetings
of the Partnership Committee may be called at any time by any General Partner
by delivering a notice of meeting in accordance with Section 2.2(g) hereof.
Each General Partner shall be limited to calling two special meetings per year.
(b) The initial Chairman of the Partnership Committee shall be appointed
by the Partnership Committee within 90 days after the Effective Date and shall
serve until November 15, 1996. The successor Chairmen shall be appointed by
one of the General Partners, subject to the approval of the other General
Partner (which approval shall not be unreasonably withheld), with the right to
make such appointment alternating between the General Partners every two years.
The first successor Chairman
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<PAGE> 19
shall be appointed by the General Partner who was not represented by the
initial Chairman. The Chairman shall be subject to removal by the
Partnership Committee. The Chairman shall establish the agendas for, and
regulate the proceedings of, meetings of the Partnership Committee, but
must include on such agendas matters requested by any General Partner in
writing received at least five business days in advance of any meeting.
(c) Members may participate in a meeting of the Partnership Committee by
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and such
participation shall constitute presence in person at such meeting.
(d) Any action required or permitted to be taken at any meeting of the
Partnership Committee may be taken without a meeting upon the unanimous written
consent of the Members representing each General Partner.
(e) The Partnership Committee shall appoint a Secretary from time to
time. The Secretary shall keep written minutes of all Partnership Committee
meetings. A duplicate copy of such minutes shall be provided to the Chairman
of the Partnership Committee and to each Member.
(f) A Member shall have the right to designate an alternate to attend
meetings of the Partnership Committee, in stead and in place of such Member,
and to exercise all of the functions of such Member. Any such alternate shall
be an officer or employee or former employee of a Partner or an Affiliate
thereof. Any such alternate shall be deemed to be a Member for all purposes
hereunder until such designation is revoked.
(g) Notice of each regular meeting and each special meeting of the
Partnership Committee shall be given to each Member at least five business days
before such meeting. Notices of special meetings shall contain a description,
in reasonable detail, of the items of business to be conducted at such meeting
and no business other than those items (unless expressly agreed to by Members
representing each of the General Partners whose Members are entitled to vote
thereon) may be conducted at such special meeting. The notice provisions of
this Section 2.2(g) shall be waived upon either the signing of a written waiver
thereof or attendance at a meeting by Members representing each General Partner.
2.3. Voting.
(a) On any matter on which a vote of the Partnership Committee is
taken, the Members representing a General Partner, if more than one Member has
been designated and is present at a
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<PAGE> 20
meeting, shall vote the entire Percentage Interest of such Partner
(whether as a general partner or a limited partner of the Partnership) as a
single bloc. Any action that may be taken by the Partnership Committee shall
require the affirmative vote of Members representing each of the General
Partners entitled to vote thereon; provided that in the event that all Members
representing any General Partner shall abstain from the vote on any matter
(because of a conflict of interest or for any other reason), the outcome of such
vote shall be determined by the affirmative vote of Members representing the
other General Partners entitled to vote on such matter, and such vote shall
constitute the act of the Partnership Committee with respect to such matter. A
quorum of any meeting of the Partnership Committee shall require the presence of
at least one Member representing each General Partner entitled to vote thereon.
(b) The Independent Member, if one has been appointed pursuant to Section
2.1, shall be entitled to attend all meetings of the Partnership Committee and
shall receive all information regarding the Partnership made available to the
Partnership Committee, but shall be entitled to vote only as contemplated by
Section 2.6. The Independent Member shall not be deemed to represent any
General Partner.
(c) Except as otherwise expressly provided herein, without the prior
approval of the Partnership Committee, the Partnership shall take no action
with respect to the following matters:
(i) any amendment of this Agreement;
(ii) a determination to engage in any business other than the
Partnership Business as described in Section 1.5;
(iii) the admission of any Additional General and Limited Partners to
the Partnership;
(iv) the dissolution or liquidation of the Partnership;
(v) a merger or consolidation of the Partnership with or into
another Person, or the sale of all or substantially all of the
Partnership's assets;
(vi) the authorization of an Initial Project Plan to be prepared
and proposed by a Project Development Team with respect to a defined field
of activity;
(vii) the approval of an Initial Project Plan;
(viii) the approval of any amendment or revision to a Project Plan,
other than any such amendment or revision described in clause (ix);
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<PAGE> 21
(ix) the approval of any amendment or revision to a Project Plan
that would result in either: (A) an increase in budgeted expenditures for
the current fiscal year which would exceed 115% of the budgeted expenditures
for such fiscal year in the last Project Plan (or amendment or revision
thereto) which had been approved by the affirmative vote of Members
representing each General Partner or (B) a material change in the scope or
duration of the Project.
(x) the approval of Business Plans and material amendments or
revisions to any Business Plan;
(xi) a determination to require additional capital contributions
within any fiscal year; provided that capital contributions specifically
identified in an Approved Business Plan shall not require a further vote of
the Partnership Committee pursuant to this clause (xi);
(xii) the entering into of any Related Party Agreement;
(xiii) the authorization of the incurrence by the Partnership of
indebtedness for borrowed money not otherwise specifically identified in an
Approved Business Plan;
(xiv) the authorization of any acquisition or disposition
of assets (not otherwise specifically identified in an Approved Business Plan)
having a Fair Market Value in excess of $250,000;
(xv) the appointment and removal of the Executive Manager;
(xvi) the delegation of powers and authority of the Partnership
Committee to the Executive Manager; and
(xvii) any distribution to the Partners of Partnership assets,
other than Net Operating Available Cash, not otherwise contemplated in an
Approved Business Plan.
Each Partner, by execution of this Agreement, agrees to, consents to, and
acknowledges the delegation of powers and authority to the Members of the
Partnership Committee, and to the actions and decisions of such Members within
the scope of such Members' authority as provided herein.
(d) The Partnership Committee shall receive such reports and information
from the Executive Manager as are usually provided to the board of directors of
a publicly held Delaware corporation.
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<PAGE> 22
(e)(i) Each Partner agrees that no Member designated by such Partner shall
participate in decisions regarding the existing or planned wireless
communications operations of a local exchange carrier Affiliate of a Partner
Parent (a "LEC Affiliate"), whether through the furnishing of advice or
information or otherwise, it being understood that certain Members designated
by a Partner may have ultimate responsibility for those who participate in such
decisions (and that such Members shall not be deemed to have participated in
such decision solely by virtue of having such ultimate responsibility).
(ii) Without limitation of the obligations of the Partners under Section
2.10, neither a Partner nor any Member appointed by a Partner shall provide to
any LEC Affiliate operating data or financial or other information with respect
to the Partnership's existing or planned operations in the local exchange
markets of such LEC Affiliate.
2.4. No Compensation. No Member (other than the Independent Member)
shall be compensated for his services as a member of the Partnership Committee
from the assets of the Partnership, nor shall such Member be reimbursed by the
Partnership for out-of-pocket expenses incurred in connection therewith. The
Independent Member shall be entitled to such compensation and reimbursement
of out-of-pocket expenses as may be determined from time to time by the
Partnership Committee.
2.5. Acts by Partners. Other than actions of the Tax Matters Partner
pursuant to Article 6 hereof, no Partner shall take, or commit the Partnership
to take, any action, either in its own name in respect of the Partnership or in
the name of the Partnership, without the prior approval of the Partnership
Committee.
2.6. Procedures in the Event of a Dispute. In cases where the Members
are unable to reach agreement on the matters specified in Section 2.3(c) above
(or the selection from time to time of an Independent Member or individuals in
the Replacement Pool), the matter shall be resolved as follows:
(a) Each General Partner shall first refer the matter to the chief
executive officer of that partner of the General Partner designated by such
General Partner for resolution of the matter.
(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 Chairman of the Partner Parent of such partner for resolution of the
matter.
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<PAGE> 23
(c) Should the designated Chairmen of the respective Partner Parents fail
to resolve the matter within 40 days, the matter shall be considered defeated,
except as provided in (d) below.
(d) If the Chairmen by unanimous agreement are unable to resolve a
disputed matter within 40 days after the referral to them of a dispute (or such
longer period of time as to which the Chairmen unanimously agree in writing),
the dispute shall be (i) in the case of matters specified in Section
2.3(c)(viii) or (c)(x), resolved by the vote of the Independent Member or (ii)
in the case of matters specified in Section 2.3(c)(xv), referred to the Boards
of Directors of such Chairman's Partner Parent for resolution by unanimous
agreement.
2.7. Management.
(a) The Executive Manager of the Partnership shall have authority and
discretion comparable to that of a chief executive officer of a publicly held
Delaware corporation of similar size to direct and control the business and
affairs of the Partnership, including its day-to-day operations, but only in a
manner consistent with the Approved Business Plan. The Executive Manager may,
but need not be, an employee (who may be seconded to the Partnership from
Cellco, WMC or the Partner Parents) of Cellco or WMC or the Partner Parents.
Each Partner, by execution of this Agreement, agrees to, consents to, and
acknowledges the delegation of powers and authority to the Executive Manager
hereunder and to the actions and decisions of the Executive Manager within
the scope of such authority. The General Partners shall unanimously designate
the initial Executive Manager on or before December 31, 1994.
(b) The other officers of the Partnership shall consist of: a
Manager-Marketing, a Manager-Finance, a Manager-Technical and a Manager-
Information Technology (the "Senior Managers"). The Senior Managers shall
be appointed by, and subject to removal by, the Executive Manager. The
Executive Manager shall select individuals to serve as Senior Managers from
among candidates nominated by the General Partners. At all times, two
candidates nominated by each General Partner shall serve as Senior Managers of
the Partnership.
2.8. Business Plan. The Executive Manager shall submit to the
Partnership Committee a Business Plan for the Partnership, not less frequently
than annually, at least 60 days prior to the start of the first fiscal year
covered by such Business Plan. Each such Business Plan shall be considered at
the first meeting of the Partnership Committee following its submission and
shall be subject to the approval of the Partnership Committee. Any such
Business Plan (or any amendment thereto) which is approved by the Partnership
Committee shall be considered approved for
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<PAGE> 24
all purposes of this Agreement until amended or replaced (an "Approved Business
Plan").
2.9. Access to Books of Account. Notwithstanding any other provision of
this Agreement, each Partner shall have the right at all reasonable times
during usual business hours to audit, examine, and make copies or extracts of
or from the complete books of account of the Partnership, including but not
limited to the books and records maintained in accordance with Section 6.4 and
all other books and records of the Partnership. Such right may be exercised
through any agent or employee of such Partner designated by it or by
independent certified public accountants or counsel designated by such Partner.
Each Partner shall bear all expenses incurred in any examination made for such
Partner's account.
2.10. Confidential Information.
(a) The Partnership and each Partner shall, and each Partner shall cause
each of its Affiliates, and its and their respective partners, shareholders,
directors, officers, employees and agents (collectively, "Representatives") to,
keep secret and retain in strictest confidence, except as provided in
subsection (c) hereof, any and all Confidential Information and shall not
distribute, disseminate or disclose such Confidential Information, and shall
cause its Representatives not to distribute, disseminate or disclose such
Confidential Information, except to (i) the Partnership, (ii) if in connection
with a corporate transaction (including, without limitation, any debt or equity
financing, any merger, consolidation, acquisition or disposition of assets, or
formation of any joint venture, partnership or affiliation) relating to the
Partnership or any Partner Parent or Affiliate thereof, any other Person that
agrees in writing to keep in confidence such Confidential Information in
accordance with the terms of this Section 2.10, or (iii) any Partner, or any
Affiliate thereof or other Representatives on a "need to know" basis in
connection with the transactions leading up to and contemplated by this
Agreement and the operation of the Partnership, and such Partner or the
Partnership disclosing Confidential Information pursuant to this Section 2.10
shall use, and shall cause its Affiliates and other Representatives to use,
such Confidential Information only for the benefit of the Partnership in
conducting the Partnership Business or for any other specific purposes referred
to above for which it was disclosed to such party; provided that the disclosure
of financial statements of, or other information relating to, the Partnership
shall not be deemed to be the disclosure of Confidential Information (i) to the
extent that any Partner is required by law or GAAP to disclose such financial
statements or other information or (ii) to the extent that in order to sustain
a position taken for tax purposes, any Partner deems it necessary and
appropriate to disclose such financial statements or other information to any
governmental
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<PAGE> 25
agency or authority. All Confidential Information disclosed in connection with
the Partnership or pursuant to this Agreement shall remain the property of the
Person whose property it was prior to such disclosure.
(b) No Confidential Information regarding the plans or operations of any
Partner, a Partner Parent or any Affiliate thereof received or acquired by or
disclosed to any unaffiliated Partner or Affiliate thereof in the course of the
conduct of Partnership Business, or otherwise as a result of the existence of
the Partnership, may be used by such unaffiliated Partner or Affiliate thereof
for any purpose other than for the benefit of the Partnership in conducting the
Partnership Business. The Partnership and each Partner shall have the
affirmative obligation to take all necessary steps to prevent the disclosure to
any Partner or Affiliate thereof of information regarding the plans or
operations of such Partner and its Affiliates in markets and areas in which any
other Partner and the unaffiliated Partner and their respective Affiliates
compete in the provision of telecommunications services.
(c) In the event that a Partner or anyone to whom a Partner transmits any
Confidential Information becomes legally compelled (by oral questions,
interrogatories, requests for information or documents, subpoena, investigative
demand or similar process) to disclose any of the Confidential Information,
such Partner will use its best efforts to provide the other Partners and the
Partnership with prompt written notice prior to disclosure (not less than 24
hours) so that the other Partners and the Partnership may seek a protective
order or other appropriate remedy and/or waive compliance with the provisions
of this Agreement. In the event that such protective order or other remedy is
not obtained, or that the Partnership and the other Partners waive compliance
with the provisions of this Section 2.10, the Partner or Person who is
compelled to disclose such Confidential Information will furnish only that
portion of the Confidential Information which (based on the advice of counsel)
it is legally required to disclose and will exercise its best efforts to obtain
reliable assurance that protective treatment will be accorded the Confidential
Information.
(d) Each Partner who ceases to be such will, and will cause its
Affiliates and representatives to, maintain the confidentiality required by
this Section 2.10 and immediately to destroy or return upon request, all
documents and other materials, and all copies thereof, obtained by such Partner
or on its behalf from the Partnership or the other Partners or any of their
Affiliates in connection with the transactions leading up to and contemplated
by this Agreement and the operation of the Partnership that are subject to such
confidentiality obligations. The obligations under this Section 2.10 shall
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<PAGE> 26
survive the termination of the Partnership for a period of five years.
(e) To the fullest extent permitted by law, if a Partner or any of its
Affiliates or Representatives breaches, or threatens to commit a breach of,
this Section 2.10, the other Partners and the Partnership shall have the right
and remedy to have this Section 2.10 specifically enforced pursuant to the
provisions of the Arbitration Agreement referred to in Section 13.11, it
being acknowledged and agreed that money damages will not provide an adequate
remedy to such other Partners or the Partnership. Nothing in this Section
2.10 shall be construed to limit the right of any Partner or the Partnership
to collect money damages in the event of breach of this Section 2.10.
2.11. Duty of Partners to Cooperate. Each Partner will, to the extent
permitted by applicable law and consistent with this Agreement, furnish such
information, execute such applications and similar documents as are required
by governmental authorities, and take such other action reasonably requested
by the Partnership Committee and as may be necessary or reasonably desirable
in connection with the business of the Partnership.
2.12. Insurance and Risk Management. The property and casualty insurance
program for the Partnership shall be integrated into the insurance program of a
Partner or Partner Parent providing customary business insurance coverage as of
the Effective Date. Each Partner hereby consents and agrees that the
Partnership shall compensate that Partner or Partner Parent for a proportional
allocation to the Partnership for insurance premiums, casualty loss funding
pools, and related expenses.
2.13. Agreements with Partnership. Any Partner or any Affiliate thereof
may enter into and maintain in effect any contract, agreement, transaction or
relationship between such Partner or Affiliate and the Partnership (a "Related
Party Agreement") on terms and conditions approved by the Partnership Committee
(by vote of Members representing Partners other than any Partner interested in
such Related Party Agreement) or otherwise pursuant to the terms hereof and may
derive and retain profits therefrom.
2.14. Relationship with International Affiliates. Intellectual property
(other than trade names or trademarks developed by the Partnership) shall be
made available on an arm's length basis to Affiliates of the Partners having
international operations.
ARTICLE 3
JOINT VENTURE PROJECTS/DEVELOPMENT AND EXECUTION
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<PAGE> 27
3.1. General. Each Partner and each Affiliate thereof (other than a LEC
Affiliate or a wireline cable television company Affiliate) shall use
reasonable efforts, subject to fiduciary duties, to cause (other than through
LEC Affiliates or wireline cable television company Affiliates) each System in
which it, directly or indirectly has an ownership interest to be operated in a
manner consistent with the approved Projects. The Partners recognize that the
timing of initiation and execution of Projects, in certain circumstances, will
be subject to the elimination of certain conflicts by Cellco (as contemplated
by Section 7.5) and other contractual or regulatory limitations.
3.2. Project Development Teams.
(a) The Partnership Committee shall establish four Project Development
Teams (having the responsibilities set forth on Schedule 3.2(a)) to develop,
when authorized by action of the Partnership Committee pursuant to Section
2.3(c)(vi), Project Plan proposals ("Initial Project Plans") in their
respective areas of expertise--Marketing, Technical, Operations (Information
Technology) and Finance. Initial Project Plans shall be intended to create
common standards and to create scale and scope efficiencies through the
coordination of the Systems of the Partners and their Affiliates.
(b)(i) The Partners agree that on or before December 1, 1994, the Project
Development Teams will recommend to the Partnership Committee Initial Project
Plans relating to, without limitation, the fields of activity set forth on
Schedule 3.2(b)(i) hereto.
(ii) The Partners agree to the principles set forth on Schedule
3.2(b)(ii) hereto with respect to the Partnership's planning and implementation
of a national brand strategy.
(c) Each Project Development Team shall be comprised of two
representatives of each Partner and a Senior Manager who will serve as
chairman thereof (and who shall have no vote with respect to matters
considered by the Project Development Team). On any matter on which
a vote of a Project Development Team is taken, the members (including
the Senior Manager) representing a Partner shall vote as a single bloc.
Initial Project Plans shall be developed as follows:
(i) Any Initial Project Plan proposed by a Project Development
Team shall require the affirmative vote of the members representing each
Partner.
(ii) However, except as provided in (b) above, if a Project
Development Team is unable to recommend an Initial Project Plan to the
Partnership Committee within 60 days after the authorization by the
Partnership Committee of the preparation of an Initial
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<PAGE> 28
Project Plan (or such longer period as may be unanimously agreed by the
members of the Project Development Team), the members representing each
Partner on such Project Development Team, for a period of 30 days, shall
be entitled to make separate Initial Project Plan recommendations to the
Partnership Committee.
3.3. Approval of Initial Project Plans. Initial Project Plan
recommendations by the Project Development Teams shall be subject to the
approval of the Partnership Committee pursuant to Section 2.3(c)(vii).
3.4. Approval of Revised Project Plans. (a) The Senior Manager
responsible for a Project shall submit to the Partnership Committee a revised
Project Plan for such Project, not less frequently than annually, at least 90
days prior to the start of the first fiscal year covered by such Project Plan.
Each such revised Project Plan shall be considered at the first meeting of the
Partnership Committee following its submission and shall be subject to the
approval of the Partnership Committee in accordance with Sections 2.3(c)(viii)
and (ix).
(b) If for any reason, in any fiscal year, no revised Project Plan for a
previously approved Project is agreed upon by the Partnership Committee, then
for such fiscal year the Project shall be managed in a manner consistent with
the forecasts for such fiscal year included in the last approved Project Plan,
as adjusted by the Project Manager to reflect contractual obligations for such
year and other required changes resulting from the passage of time.
3.5. Project Management. A Senior Manager and a Project Manager will be
assigned to execute each Project Plan which has been approved by the Partnership
Committee. The Project Manager shall have general management responsibility for
executing the Project in accordance with the Project Plan and for proposing,
from time to time, amendments or modifications to the Project Plan. The Project
Manager shall be appointed by, report to, and be subject to removal for
reasonable cause by, the Senior Manager responsible for the Project.
3.6. Use of Partner Resources. (a) Each Project Manager may utilize the
services and assets of third-party providers, but shall utilize the services
and assets of the Partners and their respective Affiliates in developing and
executing a Project Plan to the extent such services and assets are of quality
and scope comparable to, and available on terms no less favorable than, those
available from third parties.
(b) Each Partner and its Affiliates shall offer such services and assets
to the Partnership on a direct cost basis, unless the provision of such
services or assets would have an
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adverse effect on the business activities of such Partner or its Affiliates.
(c) The personnel of the Partnership shall, to the extent practicable, be
seconded employees of the Partners or their Affiliates.
ARTICLE 4
CAPITAL CONTRIBUTIONS, WITHDRAWALS AND CAPITAL ACCOUNTS
4.1. Capital Accounts.
(a) The Partnership shall maintain for each Partner a separate capital
account (a "Capital Account") in accordance with the capital accounting rules
of section 704(b) of the Code and the Income Tax Regulations thereunder
(including particularly section 1.704-1(b)(2)(iv) of the Income Tax
Regulations).
(b) In general, under such capital accounting rules (but subject to any
contrary requirements of the Code and the Income Tax Regulations thereunder), a
Partner's Capital Account shall be (i) increased by the amount of money and the
Fair Market Value (determined in accordance with Section 4.9 hereof) of other
property (net of liabilities secured by such contributed property that the
Partnership is considered to take subject to or assume under section 752 of the
Code) contributed by the Partner to the Partnership (including the amount of
any Organizational Expenses of the Partnership paid or accrued by such Partner)
and allocations to the Partner of Partnership income and gain (or items
thereof), including income and gains exempt from tax, and (ii) decreased by the
amount of money and the Fair Market Value (determined in accordance with
Section 4.9 hereof) of other property distributed (net of liabilities secured
by such distributed property that such Partner is considered to take subject to
or assume under section 752 of the Code) to the Partner by the Partnership and
allocations to the Partner of Partnership loss and deduction (or items
thereof), including Partnership expenditures not deductible in computing its
taxable income and not properly chargeable to capital account. Further
appropriate adjustments shall be made as described in Section 4.3(b)(viii).
(c) Where section 704(c) of the Code applies to Partnership property,
each Partner's Capital Account shall be adjusted in accordance with paragraph
(b)(2)(iv)(g) of section 1.704-1 of the Income Tax Regulations as to
allocations to the Partners of depreciation, depletion, amortization and gain
or loss, as computed for book purposes with respect to such property.
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(d) When Partnership property is distributed in kind (whether in
connection with dissolution and liquidation of the Partnership or otherwise),
the Capital Accounts of the Partners first shall be adjusted to reflect the
manner in which the unrealized income, gain, loss or deduction inherent in such
property (that has not previously been charged to Capital Accounts) would be
allocated among the Partners if there were a taxable disposition of such
property for its Fair Market Value (determined in accordance with Section 4.9
hereof and taking into account section 7701(g) of the Code) and such income,
gain, loss or deduction had been recognized for federal income tax purposes
immediately upon such distribution or the event requiring such revaluation.
(e) Upon a revaluation of any Partnership assets pursuant to Section 4.7
hereof, the Capital Accounts of the Partners will be adjusted as provided in
Section 4.7(c).
(f) The Tax Matters Partner shall direct the Partnership's accountant to
make all necessary adjustments in each Partner's Capital Account as required by
the rules of section 704(b) of the Code and the Income Tax Regulations
thereunder.
4.2. Initial Contributions of Capital.
On the Effective Date, each Partner shall make the contributions to the
capital of the Partnership set forth opposite such Partner's name on Schedule 1
hereto.
4.3. Additional Contributions by Partners.
(a) In the event that (i) a capital contribution is required by the terms
of an Approved Business Plan or (ii) the Partnership Committee determines that
an additional capital contribution, payable in cash or other property (or
combination thereof), is necessary or advisable, each Partner will be notified
in writing by the Partnership, at least 60 days prior to the date on which such
capital contribution is payable (the "Due Date"), of the amount of the capital
contribution required from each of them, on a pro rata basis, determined in
ccordance with such Partner's respective Capital Contribution Percentage, and
the Due Date for such capital contribution. Each such capital contribution
shall be payable in cash unless otherwise determined by vote of the Partnership
Committee. Such contributions, when made by a Partner, shall be credited to
such Partner's Capital Account.
(b) In the event that a Partner fails to make a required capital
contribution on or prior to the Due Date thereof (a "Defaulting Partner"), any
one or more of the other Partners, who are not Affiliate Transferees of the
Defaulting Partner (the "Non- Defaulting Partners") may by a vote of the
Members representing General Partners who hold a majority of the
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Percentage Interests of the Non-Defaulting Partners, elect to cause the
Partnership to (x) allow the Non-Defaulting Partners to withdraw their
corresponding additional capital contribution, in which event the Partnership
shall promptly return any such contributions to such Partners and, pending
such return, the amount of such contribution shall be deemed to be a demand
loan from such Partners to the Partnership, or (y) invoke the following
procedure (the "Default Contribution Procedure") to permit the Non-Defaulting
Partners to contribute up to the entire amount required to be contributed
pursuant to Section 4.3(a) by the Defaulting Partner (the "Default Amount").
(i) The Default Contribution Procedure shall be invoked by the
Partnership by giving notice (the "Default Contribution Notice") to the
Non-Defaulting Partners, with a copy to the Defaulting Partners. Within 30
days following the mailing of the Default Contribution Notice (the "Default
Contribution Date"), any one or more of the Non-Defaulting Partners may pay
some or all of the Default Amount.
(ii) In the event that more than one Non-Defaulting Partner elects
to contribute a Default Amount so that the aggregate amount to be contributed
by the Non-Defaulting Partners would exceed the full Default Amount, each of
such Non-Defaulting Partners shall be entitled to contribute a portion of the
Default Amount that is equal to such Non-Defaulting Partner's Percentage
Interest divided by the Percentage Interests of all Non-Defaulting Partners
electing to contribute such Default Amount.
(iii) The amount contributed pursuant to this Default Contribution
Procedure (as determined at the date 30 days after the Default Contribution
Date, the "Default Contribution Procedure Termination Date") shall constitute
an amount (the "Preferred Amount") allocated appropriately among the
Non-Defaulting Partners, effective as of the Default Contribution Procedure
Termination Date.
(iv) The Preferred Amount of the Capital Account of each such
Partner shall thereafter be (A) increased on the first day of each quarter by
the Quarterly Preferred Return (as hereinafter defined) and (B) reduced by
all Distributions (as hereinafter defined) made to each such Partner, and by
capital contributions made as contemplated by paragraph (vii) below. On the
first day of each month, each Non-Defaulting Partner having a positive
Preferred Amount in its Capital Account (a "Preferred Partner") shall be
entitled to receive, out of cash distributions which would otherwise be made
to the Defaulting
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Partners pursuant to Article 5 ("Distributions"), an amount equal to the
balance of such Preferred Amount.
(v) The "Quarterly Preferred Return" shall, for the date of
determination, be equal to the product of (A) five percent, and (B) such
Non-Defaulting Partner's average daily balance in the Preferred Amount for
the quarter preceding the relevant payment date.
(vi) Subject to Section 5.1(b) and the minimum gain provisions of
Section 5.1(c), the Partnership's gross income for any fiscal quarter
otherwise attributable to the Defaulting Partners shall first be allocated to
the Preferred Partners until the cumulative amount allocated to each such
Preferred Partner for all periods under this paragraph is equal to the
cumulative amount of Quarterly Preferred Return of such Preferred Partner for
all periods.
(vii) The Defaulting Partners may, at any time, contribute cash to
the Partnership in an amount equal to all or any part of the aggregate
Preferred Amount, which cash shall be promptly distributed to the Preferred
Partners in full or partial satisfaction of their respective Preferred
Amounts.
(viii) Immediately prior to the date that PCS JV is dissolved in
accordance with Article 10 of the PCS JV Agreement, the balance of the
Preferred Amount of each Partner may at such Partner's option be converted
into capital of PCS JV and such Partner's Preferred Amount shall be reduced
to zero. Such conversion shall be accomplished by increasing the Capital
Accounts of the Preferred Partner in PCS JV and of the Defaulting Partner in
the Partnership; and by decreasing the Capital Accounts of the Preferred
Partner in the Partnership and of the Defaulting Partner in PCS JV, with each
such adjustment being in an amount equal to the Preferred Amount, immediately
before the reduction thereof to zero under the preceding sentence.
(c) If the Defaulting Partner fails to contribute a Default Amount, the
Non-Defaulting Partner or Partners may by a vote of the Members representing a
majority of the Percentage Interests of the Non-Defaulting Partners, elect to
cause the Partnership to initiate and maintain an action against the Defaulting
Partner for such Default Amount (and the amount of any Preferred Returns that
have accrued with respect to Preferred Amounts contributed by the
Non-Defaulting Partners to fund such Default Amount) and to pursue any
available remedy, including but not limited to seeking payment by the
Defaulting
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Partner of such amounts or the unpaid portion thereof and damages incurred by
the Partnership in connection therewith. The Defaulting Partner's Capital
Account shall be increased by an amount equal to that portion of the Default
Amount recovered in any action maintained in accordance with the immediately
preceding sentence. The costs of any action commenced by the Partnership
pursuant to this Section 4.3(c) shall be paid by the Partnership and shall
be reimbursed by the Defaulting Partner to the Partnership and to the extent
not paid will be deducted from the amounts otherwise distributable to
such Defaulting Partner and any amounts so deducted shall be treated as a
distribution to such Partner.
4.4. Partner Obligations. No Partner shall have any obligation
to restore any portion of any deficit balance in such Partner's Capital
Account, whether upon liquidation of its interest in the Partnership,
liquidation of the Partnership or otherwise.
4.5. Withdrawals of Capital Accounts. No Partner shall be
entitled to withdraw any amount from its Capital Account prior to dissolution
of the Partnership.
4.6. Interest on Capital Accounts. No interest or compensation
shall be paid on or with respect to the Capital Account or capital contributions
of any of the Partners, except as otherwise expressly provided herein.
4.7. Revaluation of Partnership Assets.
(a) The assets of the Partnership shall be revalued in
accordance with Section 4.9 to their then Fair Market Values as of the date of
and immediately prior to (i) the acquisition of an additional interest in the
Partnership (including adjustments to Percentage Interests arising as a result
of a failure of any Partner to make a required capital contribution pursuant to
Section 4.3 hereof) by any new or existing Partner in exchange for more than a
de minimis capital contribution to the Partnership, (ii) the distribution by the
Partnership of more than a de minimis amount of property as consideration for
the redemption of a portion (but not all) of a Partner's interest in the
Partnership and (iii) the liquidation of a Partner's entire interest in the
Partnership, or immediately prior to the distribution of Partnership assets in
liquidation of the Partnership within the meaning of Income Tax Regulations
section 1.704-1(b)(2)(ii)(g); provided, however, that no revaluation shall
occur solely by reason of a contribution to the Partnership by WMC pursuant to
Section 7.5; and provided further that no revaluation shall occur if the
Partnership Committee reasonably determines that a revaluation would not
materially affect the Capital Accounts of the Partners or that the cost of such
revaluation would be disproportionate to any benefit to be derived by the
Partners from such revaluation.
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(b) Immediately prior to the distribution of any asset by the
Partnership, the Partnership Committee shall revalue such asset to its then
Fair Market Value.
(c) Any Revaluation Gain or Revaluation Loss arising from a revaluation of
any Partnership asset pursuant to this Section 4.7 shall be taken into account
as gain or loss to be allocated among the Partners pursuant to Section 5.1.
4.8. Redetermination of Percentage Interests. The respective Percentage
Interests of each of the Partners shall be redetermined immediately after any
event giving rise to a change in any Partner's Adjusted Capital Contributions.
If a Partner is both a General Partner and a Limited Partner such adjustment
shall be made to both the General Partner and the Limited Partner Percentage
Interests of such Partner as both a General Partner and a Limited Partner pro
rata in proportion to such interests.
4.9. Determination of Fair Market Value. The Fair Market Value, as of
the date of determination, of any asset shall be determined (a) by mutual
agreement of the General Partners or (b) if no such agreement is reached within
ten days of the relevant date of determination, as follows:
(i) Selection of Appraisers. Each General Partner shall designate
by written notice to the Partnership and each other General Partner a firm
of recognized national standing familiar with appraisal techniques
applicable to assets of the type being evaluated to serve as an Appraiser
pursuant to this Section 4.9 (the firms designated by the General Partners
being referred to herein as the "First Appraiser" and the "Second
Appraiser," respectively) within five business days after the failure to
reach agreement in accordance with the terms of clause (a) above. In the
event that either General Partner fails to designate its or their Appraiser
within the foregoing time period, the other shall have the right to
designate such Appraiser by notifying the failing party or parties in
writing of such designation (and the Appraiser so designated shall be the
First Appraiser or the Second Appraiser, as the case may be).
(ii) Evaluation Procedures. Each Appraiser shall be directed to
determine the Fair Market Value of the asset. Each Appraiser will also be
directed to deliver an Appraiser's Certificate to each General Partner on or
before the 30th day after their respective designation (the "Certificate
Date"), upon the conclusion of its evaluation, and each Appraiser's
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Certificate once delivered may not be retracted or modified in any respect.
Each Appraiser will keep confidential all information disclosed by the
Partnership in the course of conducting its evaluation, and, to that end,
will execute such customary documentation as the Partnership may reasonably
request with respect to such confidentiality obligation. The General
Partners will cooperate in causing the Partnership to provide each Appraiser
with such information within the Partnership's possession that may be
reasonably requested in writing by the Appraiser for purposes of its
evaluation hereunder. The Appraisers shall consult with each other in the
course of conducting their respective evaluations. Each General Partner
shall have full access to each Appraiser's work papers. Each Appraiser will
be directed to comply with the provisions of this Section 4.9, and to that
end each party will provide to its respective Appraiser a complete and
correct copy of this Section 4.9 (and the definitions of capitalized terms
used in this Section 4.9 that are defined elsewhere in this
Agreement).
(iii) Fair Market Determination. The Fair Market Value of any asset
shall be determined on the basis of the Appraisers' Certificates in
accordance with the provisions of this subparagraph (iii). The higher of
the values set forth on the Appraisers' Certificates is hereinafter
referred to as the "Higher Value" and the lower of such values is
hereinafter referred to as the "Lower Value". If the Higher Value is not
more than 110% of the Lower Value, the Fair Market Value will be the
arithmetic average of such two Values. If the Higher Value is more than
110% of the Lower Value, a third appraiser shall be selected in accordance
with the provisions of subparagraph (iv) below, and the Fair Market Value
will be determined in accordance with the provisions of subparagraph (v)
below.
(iv) Selection of and Procedure for Third Appraiser. If the Higher
Value is more than 110% of the Lower Value, within seven days thereafter
the First Appraiser and the Second Appraiser shall agree upon and jointly
designate a third firm of recognized national standing familiar with
appraisal techniques applicable to assets of the type being evaluated to
serve as an appraiser pursuant to this Section 4.9 (the "Third Appraiser"),
by written notice to each General Partner. The General Partners shall
direct the Third Appraiser to determine the Fair Market Value of the asset
(the "Third Value") in accordance with
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the provisions of subparagraph (ii) above, and to deliver to the General
Partners an Appraiser's Certificate on or before the 30th day after the
designation of such Appraiser hereunder. The Third Appraiser will be
directed to comply with the provisions of this Section 4.9, and to that
end the parties will provide to the Third Appraiser a complete and correct
copy of this Section 4.9 (and the definitions of capitalized terms used
in this Section 4.9 that are defined elsewhere in this Agreement).
(v) Alternative Determination of Fair Market. Upon the delivery of
the Appraiser's Certificate of the Third Appraiser, the Fair Market Value
will be determined as provided in this subparagraph (v). The Fair Market
Value will be (w) the Lower Value, if the Third Value is less than the
Lower Value, (x) the Higher Value, if the Third Value is greater than the
Higher Value, (y) the arithmetic average of the Third Value and the other
Value (Lower or Higher) that is closer to the Third Value if the Third
Value falls within the range between (and including) the Lower Value and
the Higher Value and (z) the Third Value, if the Lower Value and the Higher
Value are equally close to the Third Value.
(vi) Costs. Each General Partner will bear the cost of the
Appraiser designated by it or on its behalf. If the Higher Value is not
more than 115% of the Lower Value, or if the Higher Value and the Lower
Value are equally close to the Third Value, each General Partner shall bear
50% of the cost of the Third Appraiser, if any; otherwise, the party whose
Appraiser's determination of Fair Market Value is further away from the
Third Value shall bear the entire cost of the Third Appraiser. The General
Partners agree to pay when due the fees and expenses of the Appraisers in
accordance with the foregoing provisions.
(vii) Conclusive Determination. To the fullest extent provided by
law, the determination of the Fair Market Value made pursuant to this
Section 4.9 shall be final and binding on the Partnership and the Partners
hereto, and such determination shall not be appealable to or reviewable by
any court or arbitrator; provided that the foregoing shall not limit a
Partner's rights to seek arbitration of the obligations of the other
Partners and the Partnership hereunder.
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ARTICLE 5
ALLOCATIONS AND DISTRIBUTIONS
5.1. Profits and Losses. A Partner's distributive share of income,
gain, loss, deduction or credit (or items thereof) as shown on the annual
federal income tax return prepared by the Partnership's accountants or as
finally determined by the Internal Revenue Service or the courts, and as
modified by the capital accounting rules of section 704(b) of the Code and the
Income Tax Regulations thereunder as implemented by Section 4.1 hereof, as
applicable, shall be determined as provided in this Article 5.
(a) Except as otherwise provided in this Section 5.1, profits and losses
of the Partnership shall be allocated among the Partners proportionately in
accordance with their respective Percentage Interests.
(b) Solely for tax purposes, in determining each Partner's allocable
share of the taxable income or loss of the Partnership, depreciation,
depletion, amortization and gain or loss with respect to any contributed
property, or with respect to revalued property where Partnership property is
revalued pursuant to Section 4.7 hereof, shall be allocated to the Partners
under any method allowable under section 704(c) of the Code and the applicable
Income Tax Regulations thereunder.
(c) Minimum Gain Chargeback. Notwithstanding anything to the contrary in
this Article 5, if there is a net decrease in Partnership Minimum Gain or
Partner Nonrecourse Debt Minimum Gain (as such terms are defined in sections
1.704-2(b) and 1.704- 2(i)(2), respectively, of the Income Tax Regulations)
during a Partnership taxable year, then each Partner shall be allocated items
of Partnership income and gain for such year (and, if necessary, for subsequent
years), to the extent required by, and in the manner provided in, section
1.704-2 of the Income Tax Regulations.
This provision is intended to be a "minimum gain chargeback" within the
meaning of sections 1.704-2(f) and 1.704-2(i)(4) of the Income Tax Regulations
and shall be interpreted and implemented as therein provided.
(d) Qualified Income Offset. Subject to the provisions of Section
5.1(c), but otherwise notwithstanding anything to the contrary in this Article
5, if any Partner's capital account has a deficit balance in excess of such
Partner's obligation to restore its capital account balance, computed in
accordance with the rules of paragraph (b)(2)(ii)(d) of section 1.704-1 of the
Income Tax Regulations (including such Partner's share of Partnership Minimum
Gain and Partner Nonrecourse Debt Minimum Gain as provided in section
1.704-2(g) and 2(i)(5) of the Income
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Tax Regulations), then sufficient amounts of income and gain (consisting of a
pro rata portion of each item of Partnership income, including gross income,
and gain for such year) shall be allocated to such Partner in an amount and
manner sufficient to eliminate such deficit as quickly as possible. This
provision is intended to be a "qualified income offset" within the meaning
of section 1.704-1(b)(2)(ii)(d) of the Income Tax Regulations and shall be
interpreted and implemented as therein provided.
(e) Subject to the provisions of section 704(c) of the Code and Sections
5.1(b) through (d) hereof, gain recognized (or deemed recognized under the
provisions hereof) upon the sale or other disposition of Partnership property,
which is treated as depreciation recapture, shall be allocated to the Partner
who was entitled to deduct such depreciation.
(f) Except as otherwise provided in Section 5.1(j), if and to the extent
any Partner is deemed to recognize income as a result of any loans described
herein pursuant to the rules of sections 1272, 1273, 1274, 7872 or 482 of the
Code, or any similar provision now or hereafter in effect, or any other item of
imputed income, any corresponding resulting deduction of the Partnership shall
be allocated to the Partner who is charged with the income. Subject to the
provisions of section 704(c) of the Code and Sections 5.1(b) through (d)
hereof, if and to the extent the Partnership is deemed to recognize income as a
result of any loans described herein pursuant to the rules of sections 1272,
1273, 1274, 7872 or 482 of the Code, or any similar provision now or hereafter
in effect, or any other item of imputed income, such income shall be allocated
to the Partner who is entitled to any corresponding resulting deduction.
(g) The Partnership shall elect to amortize Organizational Expenses over
a 60-month period pursuant to Code section 709. Any such amortization
deductions attributable to Organizational Expenses contributed by a Partner
shall be allocated to such Partner.
(h) Except as otherwise required by law, tax credits shall be allocated
among the Partners pro rata in accordance with the manner in which Partnership
profits are allocated to the Partners under this Article 5, as of the time the
credit property is placed in service or if no property is involved, as of the
time the credit is earned. Recapture of any tax credit required by the Code
shall be allocated to the Partners in the same proportion in which such tax
credit was allocated.
(i) Except as provided in Sections 5.1(e), (f), (g) and (h) hereof or as
otherwise required by law, if the Partnership Interests of the Partners are
changed herein during any taxable year, all items to be allocated to the
Partners for such entire taxable year shall be prorated on the basis of the
portion of such taxable year which precedes each such change and the
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portion of such taxable year on and after each such change according to the
number of days in each such portion, and the items so allocated for each such
portion shall be allocated to the Partners in the manner in which such items
are allocated as provided in this Article 5 during each such portion of the
taxable year in question; provided that, if the transferor and the transferee
of an interest in the Partnership (i) shall both have given the Partnership
written notice within 15 days of the end of such taxable year of the
Partnership stating their agreement that such division and allocation shall be
made on some other basis permitted by Code section 706(d) and (ii) shall have
agreed to reimburse the Partnership for any incremental accounting fees and
other expenses incurred by the Partnership in utilizing such other basis for
such division and allocation, then such other basis permitted by Code section
706(d) shall be used.
(j) Any special allocation of income or gain pursuant to Section 5.1(c)
or 5.1(d) hereof shall be taken into account in computing subsequent
allocations of income and gain pursuant to this Article 5 so that the net
amount of all such allocations to each Partner shall, to the extent possible,
be equal to the net amount that would have been allocated to each such Partner
pursuant to the provisions of this Article 5 if such special allocations of
income or gain under Section 5.1(c) or 5.1(d) hereof had not occurred.
(k) Losses.
(i) Items of deduction and loss attributable to Partner nonrecourse
debt within the meaning of section 1.704-2(b)(4) of the Income Tax
Regulations shall be allocated to the Partners bearing the economic risk
of loss with respect to such debt in accordance with section 1.704-2(i)
of the Income Tax Regulations.
(ii) Items of deduction and loss attributable to Partnership
nonrecourse liabilities within the meaning of section 1.704- 2(b)(1) of
the Income Tax Regulations shall be allocated among the Partners
proportionately in accordance with their respective Percentage Interests.
(iii) All other items of operating net loss ("Net Loss") shall be
allocated among the Partners, proportionately in accordance with their
Percentage Interests, except that Net Loss shall not be allocated to any
Partner to the extent it would create a deficit balance in excess of such
Partner's obligation to restore its Capital Account balance, computed in
accordance with the rules of Section 1.704-1(b)(2)(ii)(d) of the Income
Tax Regulations (including such Partner's share of Partnership Minimum
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Gain and Partner Nonrecourse Debt Minimum Gain as provided in section
1.704-2(g) and 2(i)(5) of the Income Tax Regulations). Any Net Loss
which cannot be allocated to a Partner because of the limitation set
forth in the previous sentence shall be allocated first to the other
Partners to the extent such other Partners would not be subject to
such limitation and second any remaining amount to the Partners in
the manner required by the Code and the Income Tax Regulations.
(l) Subject to the provisions of Sections 5.1(c) through (k), items of
income and gain shall be allocated to the Partners in the following priority:
(i) First, if allocations of Net Loss have been made to the
Partners under the last sentence of Section 5.1(k)(iii), then in the
amount of, and proportionate to, the amount of such Net Loss.
(ii) Second, the balance among the Partners in proportion to their
relative Percentage Interests.
5.2. Distributions.
(a) As promptly as practicable after the end of each fiscal quarter, but
in no event later than the end of the following fiscal quarter, all Net
Operating Available Cash of the Partnership (as determined based on the
Partnership's financial statements for such fiscal quarter) shall be
distributed to the Partners. Other distributions, whether in cash or in kind,
shall be made to the Partners at such times and in such amounts as shall be
determined by the Partnership Committee. The amount of any in-kind
distribution shall be the distributed property's then Fair Market Value.
(b) Except as provided in Sections 4.3(b), 4.3(c), and 5.2(c),
distributions shall be made among the Partners in accordance with their
respective Percentage Interests at the time of such distribution.
(c) Upon liquidation of the Partnership, within the meaning of Income Tax
Regulations section 1.704-1(b)(2)(ii)(g), distributions shall be made among the
Partners as provided in Section 8.3.
(d) Any other provision of this Agreement to the contrary notwithstanding,
no distribution shall be made by the Partnership, or on behalf of the
Partnership which would violate Section 17-607(a) of the Act, which would
render the Partnership insolvent or which is prohibited by the terms of any
Partnership indebtedness.
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(e) All matters not expressly provided for by the terms of Article 5 or
elsewhere in this Agreement concerning the valuation of securities and other
assets of the Partnership, the allocation of profits and losses and items
thereof (including credits) among the Partners and accounting procedures shall
be reasonably determined by the Partnership Committee, whose determination
shall be final and conclusive as to all of the Partners.
ARTICLE 6
TAX MATTERS AND REPORTS; ACCOUNTING
6.1. Filing of Tax Returns. The Tax Matters Partner shall prepare and
file, or cause the accountants of the Partnership to prepare and file, all Tax
Returns for each tax year of the Partnership.
6.2. Tax Matters Partner.
(a) The initial Tax Matters Partner of the Partnership within the meaning
of section 6231(a)(7) of the Code shall be selected by
the Partnership Committee within 90 days after the Effective Date and serve in
that capacity until November 15, 1996. Thereafter the position of Tax Matters
Partner shall rotate between the General Partners every two years. Unless
otherwise expressly provided herein, the Tax Matters Partner is authorized to
take any action that it determines to be necessary or appropriate with respect
to all tax matters.
(b) The Tax Matters Partner shall promptly advise the other Partners of
all audits or other actions by the Internal Revenue Service and shall furnish
to the Partnership and to each Partner a copy of each notice or other
communication received by the Tax Matters Partner from the Internal Revenue
Service except such notice or communication sent directly to the Partners by
the Internal Revenue Service. All expenses incurred by the Tax Matters Partner
in its capacity as such shall be expenses of the Partnership and shall be paid
by the Partnership.
(c) To the fullest extent permitted by law, the Partnership shall
indemnify Partners on an after-tax basis against any liabilities incurred while
acting as the Tax Matters Partner of the Partnership but only to the extent
such Partner acts within the scope of its authority as Tax Matters Partner
under this Agreement. The Tax Matters Partner shall not be indemnified against
any liability regarding Partnership tax matters arising by reason of the
willful misconduct, bad faith, gross negligence or reckless disregard of the
duties of the Tax Matters Partner.
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6.3. Tax Reports to Current and Former Partners. After the end of each
fiscal year, the Tax Matters Partner shall, in a timely manner, prepare and
mail, or cause its accountants to prepare and mail, to each Partner and, to the
extent necessary, to each former Partner (or its legal representatives), a
report setting forth in sufficient detail such information as is required to be
furnished to partners by law (e.g., section 6031(b) of the Code and the Income
Tax Regulations thereunder) and as shall enable such Partner or former Partner
(or its legal representatives) to prepare their respective federal and state
income tax or informational returns in accordance with the laws, rules and
regulations then prevailing.
6.4. Accounting Records; Independent Audit. Complete books and records
accurately reflecting the accounts, business, transactions and partners of the
Partnership shall be maintained and kept by the Partnership at the
Partnership's principal place of business. The accounting records of the
Partnership shall be maintained to assure preparation of the financial
statements in accordance with GAAP. The accounting records of the Partnership
shall be audited by certified public accountants selected by the Partnership
Committee.
6.5. Fiscal Year. Except as may otherwise be required by the federal
tax laws, the fiscal year of the Partnership for both financial and tax
reporting purposes shall end on December 31.
6.6. Tax Accounting Method. The books and accounts of the Partnership
shall be maintained using the accrual method of accounting for tax purposes.
Those documents relating to allocations of items of partnership income, gain,
loss, deduction or credit and Capital Accounts shall be kept under federal
income tax accounting principles as provided herein.
6.7. Withholding. Notwithstanding any other provision of this
Agreement, the Tax Matters Partner is authorized to take any action that it
determines to be necessary or appropriate to cause the Partnership to comply
with any Federal, state and local withholding requirement with respect to any
allocation, payment or distribution by the Partnership to any Partner or other
Person. All amounts withheld to satisfy any Federal, state or local
withholding requirement with respect to a Partner shall be treated as
distributions to such Partner. If any such withholding requirement with
respect to any Partner exceeds the amount distributable to such Partner under
this Agreement, or if any such withholding requirement was not satisfied with
respect to any amount previously allocated or distributed to such Partner, such
Partner and any successor or assignee with respect to such Partner's interest
in the Partnership hereby, to the fullest extent permitted by law, indemnifies
and agrees to hold harmless the Partners and the Partnership for such excess
amount or such withholding requirement, as the case may be.
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6.8. Tax Elections. Upon the request of a transferee of a Partnership
Interest or a distributee of a Partnership distribution, the Partnership will
make the election under section 754 of the Code in accordance with applicable
Income Tax Regulations thereunder for the first fiscal year in which such
election could apply, unless the Tax Matters Partner reasonably determines that
such election is not in the best interest of the Partnership. 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 Partners could have a material adverse economic impact on
any other Partner, the Tax Matters Partner shall notify such other Partners
not less than 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 Partnership Committee.
6.9. Prior Tax Information. Each Partner agrees to deliver to the
Partnership all relevant information regarding Taxes that the Partnership will
require in order to comply with its own tax accounting and reporting
requirements, including without limitation schedules setting forth the fair
market value and tax basis of each asset that may from time to time be
contributed by a Partner to the Partnership; provided, however, that no Partner
shall be required to disclose the income tax returns of itself or any of its
Affiliates.
ARTICLE 7
INDEMNIFICATION AND EXCULPATION; CERTAIN AGREEMENTS
7.1. Indemnification of the Partners. The Partnership shall indemnify
and hold harmless the Members, the Partners and their Affiliates, and their
respective partners, shareholders, directors, officers and/or the legal
representatives of any of them, and each other Person who may incur liability
as a Partner or otherwise in connection with the management or ownership of the
Partnership or any entity in which the Partnership has an interest (each, an
"Indemnified Party"), against all liabilities, and against all expenses
(including counsel fees) reasonably incurred by him or it, in connection with
the investigation, defense or disposition of any action, suit or other
proceeding, whether civil or criminal, in which any Indemnified Party may be
involved or with which he or it may be threatened, while a Partner or serving
in such other capacity or thereafter, by reason of its being or having been a
Partner, or by serving in such other capacity, except with respect to any
matter which constitutes willful misconduct, bad faith, gross negligence or
reckless disregard of the duties of his office. The Partnership shall have the
right to approve any counsel (which approval shall not be unreasonably
withheld) selected by
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any Indemnified Party and to approve the terms of any proposed settlement
(which approval shall not be unreasonably withheld). The Partnership shall
advance to any Indemnified Party or Partner reasonable attorneys' fees and
other costs and expenses incurred in connection with the defense of any such
action or proceeding. Each Partner hereby agrees, and each other Indemnified
Party shall agree in writing prior to any such advancement, that in the event
he or it receives any such advance, such Indemnified Party shall reimburse the
Partnership for such fees, costs and expenses to the extent that it shall be
determined that he or it was not entitled to indemnification under this
Section. The rights accruing to a Partner and each other Indemnified Party
under this Section 7.1 shall not exclude any other right to which it or they
may be lawfully entitled; provided that any right of indemnity or
reimbursement granted in this Section 7.1 or to which any Indemnified Party
may be otherwise entitled may only be satisfied out of the assets of the
Partnership, and no Partner and no withdrawn Partner shall be personally
liable with respect to any such claim for indemnity or reimbursement.
Notwithstanding any of the foregoing to the contrary, the provisions of this
Section 7.1 shall not be construed so as to provide for the indemnification of
a Partner or any other Indemnified Party for any liability to the extent (but
only to the extent) that such indemnification would be in violation of
applicable law or such liability may not be waived, modified or limited under
applicable law, but shall be construed so as to effectuate the provisions of
this Section 7.1 to the fullest extent permitted by law.
7.2. Exculpation. Any Member, any Partnership employee, any Partner
and any Affiliate thereof and their respective partners, shareholders,
directors, officers, employees, or agents and/or the legal representatives of
any of them shall not be liable to any Partner or the Partnership for mistakes
of judgment or for action or inaction which such Member, Partner, Affiliate,
partner, shareholder, director, officer, employee, agent or legal
representative (1) reasonably believed to be in or not opposed to the best
interests of the Partnership unless such action or inaction constitutes willful
misconduct, bad faith, gross negligence or reckless disregard of his or its
duties and, (2) with respect to any criminal action, such party reasonably
believed his conduct was lawful. Each Partner may (on its own behalf or on the
behalf of any Member designated by such Partner, any Affiliates of such Partner
or their respective partners, shareholders, directors, officers, employees or
agents and/or legal representatives of any of them), consult with counsel,
accountants and other experts in respect of the Partnership affairs and such
Person shall be fully protected and justified in any action or inaction which
is taken in accordance with the advice or opinion of such counsel, accountants
or other experts; provided that they shall have been selected with reasonable
care. Notwithstanding any of the foregoing to the contrary, the provisions of
this Section 7.2 shall not be
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construed so as to relieve (or attempt to relieve) a Partner or any other
Person of any liability, to the extent (but only to the extent) that such
liability may not be waived, modified or limited under applicable law, but
shall be construed so as to effectuate the provisions of this Section 7.2 to
the fullest extent permitted by law.
7.3. Restrictions on Partners. No Partner may, without the prior written
consent of all of the other Partners:
(i) confess a judgment against the Partnership;
(ii) make any agreement on behalf of any other Partner;
(iii) except to the extent permitted by Article 8 hereof, withdraw
as a Partner, dissolve, terminate, liquidate or wind up the affairs of the
Partnership; or
(iv) use or possess Partnership property except for a Partnership
purpose, except as provided under contractual arrangement.
7.4. Outside Activities.
(a) Except as otherwise expressly provided in this Section 7.4, any
Partner or Affiliate thereof may engage in or possess any interest in any other
business venture of any nature independently or with others, and neither the
Partnership nor any other Partner shall have any right by virtue of this
Agreement in or to such venture or in or to any income or profits derived
therefrom.
(b) Except for Systems (or licenses or permits therefor) acquired in
accordance with this Section 7.4:
(i) No Partner or any Affiliate thereof may, directly or indirectly,
acquire an ownership interest in any Person whose principal business is the
provision of nationwide Services in competition with the Partnership's
nationwide Services or the Partnership Business.
(ii) In light of current regulatory and legal concerns arising from
partner-competitor overlaps in the same wireless services geographic markets
and in light of the need to avoid financial conflicts that would impair
productive coordination of the Systems of Partners, and in light of the
numerous potential acquirors of wireless properties, no Partner may, directly
or indirectly, acquire any ownership Interest in or lease (as lessee) any
System (or license or permit therefor) the service area of which overlaps,
in any material respect, the service area of a System (or license or permit
therefor) which any
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Partners or Affiliate thereof, directly or indirectly, has an ownership
interest in, or leases (as lessee). If such an overlap occurs as a result of
a larger acquisition made by a Partner or Affiliate thereof, the acquiring
Partner or Affiliate shall divest the overlapping service area no later than
six months after the consummation of such acquisition.
(iii) No Partner or any Affiliate thereof may, directly or indirectly,
acquire an ownership interest in any System or provide Services in any market
if such acquisition or provision of Services would result in any material
restrictions being imposed on the Partnership Business, or on the System
operations of any other Partner or Affiliate thereof by any court, governmental
agency or regulatory or administrative authority. If such restrictions result
as a consequence of an acquisition, the acquiring Partner shall take prompt
action to cause the removal of the restrictions, and shall indemnify the
Partnership and each other Partner or Affiliate thereof for any financial
detriment suffered by the imposition of the restrictions.
(iv) Until December 31, 1995, except as provided in Section 3.1 of the
PCS JV Agreement, no Partner or any Affiliate thereof may, directly or
indirectly, acquire an ownership interest in any System the service area of
which overlaps, in any material respect, the service area of a Designated
MTA/BTA (as defined in the PCS JV Agreement).
(v) Each Partner will promptly notify the Partnership and each other
Partner upon (A) entering into a definitive purchase agreement with respect to
an ownership interest in any System, and (B) the termination of any such
agreement. For purposes of this Section 7.4, a Partner will be deemed to have
an ownership interest in any System which is the subject of an executed
definitive purchase agreement as of the time notice of execution of such
agreement is delivered to the Partnership and each other Partner and until the
termination of such agreement.
(c) Nothing contained in this Section 7.4 shall prohibit or otherwise
restrict:
(i) the ownership of, and provision by, a Partner or its
Affiliates of Cellular Service through Systems which were owned by, or
subject to a definitive purchase agreement to acquire by, such Partner
or its Affiliates on the Effective Date;
(ii) the ownership of an interest in PCS JV by a Partner or its
Affiliates or the ownership of, or the provision of Services by, Systems
acquired by a Partner or its Affiliates in accordance with Section
3.1(b) or Section 10.3 of the PCS JV Agreement;
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(iii) the acquisition by PCS JV of PCS Systems (or licenses or
permits therefor) or the provision of PCS Service by such Systems;
(iv) the acquisition by a Partner Parent of a Partner (or an
Affiliate thereof) from another Partner Parent of such Partner (or an
Affiliate thereof) of direct or indirect ownership interests in
Systems (or licenses or permits therefor) or the provision of Cellular,
ESMR or PCS Services by such Systems;
(v) the acquisition of an ownership interest by a LEC Affiliate
or a wireline cable television company Affiliate of a Partner, if
permitted under applicable law, in a PCS System having 10 MHz of PCS
spectrum (and a 10 MHz license or permit therefor), or the provision
of PCS Service by such PCS System, in each case, substantially within
the service territory of such Affiliate;
(vi) the ownership or other participation of ATI or any Affiliate
thereof in the Globalstar satellite communications venture, or the
ownership or other participation of any Partner or its Affiliates in
any satellite communications venture that would not be competitive with
services provided by Systems, or the provision of wireless
communications services (other than Cellular, PCS or ESMR Services) by
Globalstar or such other ventures; provided that, in either case, the
Partnership shall be entitled to purchase wireless communications
services from Globalstar or such other venture at prices and on terms
no less favorable than those offered to any third party (for like
volumes and types of service);
(vii) the acquisition by ATI or any Affiliate thereof of ownership
interests in CCI or New Par, a Delaware general partnership;
(viii) the acquisition by ATI or any Affiliate thereof of ownership
interests in Systems (or licenses or permits therefor) as a result of
distributions from CMT Partners, a Delaware general partnership;
(ix) the acquisition (through merger, consolidation, purchase of
stock or assets, or otherwise) of an ownership interest of less than 5%
in a Person, which owns or leases Systems, or provides Cellular, ESMR
or PCS Services (directly or indirectly through an Affiliate that is
controlled by such Person); provided that, if the Partnership Committee
(by vote of the Members representing Partners other than the acquiring
Partner) shall determine that the acquired business would be reasonably
expected to
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result in any material restrictions being imposed on such existing or
planned activities or acquisitions by any court, governmental agency or
regulatory or administrative authority, the Partner and its Affiliates
shall promptly, but in any event within 30 days, divest such ownership
interest, or take such other action as is necessary (in the
determination of the Partnership Committee) to remove such
restrictions;
(x) 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;
(xi) any activity of a LEC Affiliate or wireline cable television
company Affiliate in its service territory required in accordance with
all applicable laws, regulations or order, or any agreement with a
regulatory authority which agreement is existing as of the date hereof;
(xii) the limited use of radio spectrum by a LEC Affiliate or
wireline cable television company Affiliate for provision of "wireless
tails" or other similar services ancillary to landline communications
within the service territory of such Affiliate;
(xiii) 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 (A) are not convertible into or
exchangeable for equity securities (or securities convertible into or
exchangeable for equity securities) and (B) 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;
(xiv) the holding of an ownership interest in a Person that has an
ownership interest in a System or provides Services, if the Partner or
its Affiliate has no responsibility for or control over the conduct of
such ownership or activities, does not permit its name to be used in
connection with such ownership or activities, and uses all reasonable
efforts, including voting its equity interest, to cause such Person to
cease such ownership or activities;
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(xv) the purchase by a LEC Affiliate or a wireline cable
television company Affiliate from any Person of Services and the
resale thereof within the service territory of such Affiliate; and
(xvi) the provision and management by a LEC Affiliate or a wireline
cable television company Affiliate in its service territory of network
infrastructure and associated systems for unaffiliated entities
providing Services.
(d) Each Partner and each Affiliate of a Partner that, directly or
indirectly, has an ownership interest in a System shall use its reasonable
efforts, subject to fiduciary duties to third parties, to cause each of its
Attributed Entities to abide by restrictions contained in this Section 7.4 and
to comply with the terms set forth herein.
(e) This Agreement shall not be deemed to create any duties other than
as expressly provided for herein or imposed by applicable law, nor shall its
existence be deemed to alter the legal duties and obligations that any Partner
or any Affiliate thereof has to the other Partners or their Affiliates as to
matters outside the scope of the Agreement, including, without limitation,
those concerning the terms and conditions of interconnection services. Each of
the Partners and its Affiliates acknowledge their respective right to compete
vigorously with the other Partners and their Affiliates in markets or areas in
which they are otherwise competitors in the offering of telecommunications
services.
(f) A Partner shall remain subject to the provisions of this Section 7.4
for a period of one year from earliest of (i) the date of dissolution of the
Partnership, (ii) the withdrawal of such Partner as a General Partner (pursuant
to Section 8.1(a)(iii)), and (iii) the transfer of such Partner's entire
Partnership Interest to a Person other than an Affiliate. If a General Partner
withdraws from the Partnership in violation of Section 8.1, then the Limited
Partner Percentage Interest of such Partner for purposes of this Section 7.4(f)
shall be deemed to be increased by the General Partner Percentage Interest at
the time of such withdrawal.
7.5. Elimination of Conflicts. (a) Cellco and its Affiliates shall
eliminate, as promptly as practicable following the Effective Date, any
ownership or other conflicts with respect to the Systems listed on Schedule
7.5(a) hereto (the "Scheduled Systems") to the extent reasonably necessary to
preclude conflicts that would result in any material restrictions being imposed
on the Partnership Business or the System operations of any other Partner or
Affiliate thereof by any court, governmental agency or regulatory or
administrative authority ("Conflicts").
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(b) Cellco and its Affiliates will use their best efforts (consistent
with obtaining value) to accomplish the elimination of such Conflicts in a
manner that would minimize the amount of Section 7.5 Taxes (as defined below)
incurred by Cellco or its Affiliates as a result of the elimination of such
Conflicts in a taxable transaction. For purposes of this Section 7.5 "Section
7.5 Taxes" means federal and state tax liabilities (exclusive of penalties or
interest) resulting from elimination of such Conflicts, determined using an
assumed combined federal and state tax rate of 40% based on the actual taxable
gain recognized upon the disposition of any relevant Scheduled Systems, without
regard to the availability of net operating loss carry forwards or similar tax
offsets or benefits, and without regard to the tax effect of the contribution
or payment of any amount pursuant to this Section 7.5.
(c) Upon Cellco's written notification to WMC setting forth
Cellco's determination of the amount of Section 7.5 Taxes, Cellco and WMC shall
use their best good faith efforts to reach agreement on a form of payment of 50
percent of the Section 7.5 Taxes (the "Section 7.5 Taxes Payment") which (A)
gives Cellco the full benefit of the Section 7.5 Taxes Payment (but without any
gross-up), (B) minimizes the tax liability of Cellco with respect to such
Payment, and (C) improves the ability of WMC to treat such amount as an
investment under its method of accounting. If Cellco and WMC fail to reach
agreement on the form of such Payment within 30 days of Cellco's notification
to WMC of Cellco's determination of the amount of Section 7.5 Taxes, WMC shall
make such Payment in cash to Cellco upon the later of the expiration of such 30
day period or the conclusion of the process described in Section 7.5(d).
(d) In the event that WMC disagrees with Cellco's calculation of the
amount of Section 7.5 Taxes, WMC may challenge that determination by notifying
Cellco in writing of the grounds for such disagreement within ten (10) days of
WMC's receipt of Cellco's notification. Cellco and WMC shall negotiate in good
faith to resolve such disagreements. If WMC and Cellco fail to resolve such
disagreements, then the matter will be referred to arbitration in accordance
with the Arbitration Agreement of the partners of even date hereof for
resolution.
(e) In the event of a determination that Section 7.5 Taxes may be
different than the amount originally used for purposes of this Section 7.5,
Cellco shall consult with WMC concerning the audit, appeal, amended return or
other process potentially leading to such redetermination provided that such
redetermination shall be calculated using the assumed tax rate, disregarding
net operating loss carryforwards and similar tax offsets and benefits, and
disregarding the tax effect of the contribution or payment of any amount, all
as provided in
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Section 7.5(b); and upon any such redetermination becoming final, appropriate
adjustments shall be made among the parties to reflect such redetermination.
7.6. Duties of Partners. The fiduciary duties of Partners or Members of
the Partnership Committee shall not restrict any Partner or Affiliate or any
Member of the Partnership Committee from:
(i) engaging in conduct permitted by Section 7.4;
(ii) taking any action in any capacity other than that of a
Partner or Member of the Partnership Committee, respectively; or
(iii) acting to prevent the Partnership from engaging in an
activity that is outside the scope of the Partnership Business;
whether or not such Partner, Affiliate or Member of the Partnership Committee
is motivated in whole or in part by a desire to further the interests of a
Person other than the Partnership.
ARTICLE 8
TERMINATION AND DISSOLUTION
8.1. Events of Dissolution.
(a) The Partnership shall be dissolved upon (i) expiration of the term of
the Partnership specified in Section 1.6 hereof, (ii) an election to dissolve
the Partnership pursuant to Section 8.2(b)(i), (iii) the withdrawal of a
General Partner, the filing of a certificate of dissolution, or its equivalent,
for a General Partner or the revocation of its charter and the expiration of 90
days after the date of notice to a General Partner of revocation without a
reinstatement of its charter, or the occurrence of any other event that results
in a General Partner ceasing to be a general partner of the Partnership as
required under the Act; provided, the Partnership shall not be dissolved and
required to be wound up in connection with any of the events specified in this
clause (iii) if (A) at the time of the occurrence of such event there is at
least one remaining General Partner of the Partnership who is hereby authorized
to and does carry on the business of the Partnership without dissolution, or
(B) within 90 days after the occurrence of such event, a majority in interest
of the remaining Partners (or such greater percentage in interest as is
required by the Act) agree in writing to continue the business of the
Partnership and to the appointment, effective as of the date of such event, of
one
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or more additional general partners of the Partnership, (iv) the transfer
or sale of all or substantially all of the assets of the Partnership, (v) the
entry of a decree of judicial dissolution pursuant to Section 17-802 of the
Act, and (vi) the unanimous written consent of the Partners.
(b) Without the unanimous written consent of the Partners, each
Partner agrees not to withdraw as a Partner or do anything that would otherwise
dissolve the Partnership (except as permitted by the terms of Article 10).
Notwithstanding the foregoing, if a General Partner withdraws from the
Partnership, upon such withdrawal, (i) the general partner interests in the
Partnership of such Partner shall automatically be deemed to become limited
partner interests in the Partnership and (ii) such Partner shall have no right
to participate in the management of the Partnership Business and affairs of
the Partnership, including the right to designate Members of the Partnership
Committee.
8.2. Bankruptcy of a General Partner.
(a) If the Bankruptcy of a General Partner occurs and at such time there
is at least one other General Partner, such remaining General Partner or
General Partners are hereby authorized to carry on the business of the
Partnership without dissolution, and the Partnership Interests of the General
Partner in Bankruptcy (the "Bankrupt Partner") shall automatically be deemed to
become limited partner interests in the Partnership, and such Bankrupt Partner
shall cease to be a General Partner and continue to be, or become, a Limited
Partner having (i) no right to participate in the management of the Partnership
Business and affairs of the Partnership, including no right to designate
Members to the Partnership Committee, and (ii) the same interest in all items
of income, gain, loss, deduction or credit of the Partnership to the same
extent as if such Bankruptcy had not occurred. The Partnership shall continue
to be governed by the terms of this Agreement, the Partnership Business and the
property of the Partnership shall continue to be owned by the Partnership, and
the Partnership Business shall otherwise continue unaffected by such
Bankruptcy. Upon the occurrence of the Bankruptcy of any General Partner, (i)
the Bankrupt Partner and the other Partners shall execute such documents as may
be necessary or appropriate to carry out the provisions of this Section 8.2 and
(ii) the other Partners are, without necessity of any further action or
documentation, hereby appointed attorneys-in-fact of the Bankrupt Partner for
the purpose of carrying out the provisions of this Section 8.2 and taking any
action and executing any documents which such Partners may deem necessary or
advisable to accomplish the purposes hereof, such appointment being irrevocable
and coupled with an interest.
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(b) If the Bankruptcy of a General Partner occurs and at such time the
Bankrupt Partner is the only General Partner, the other Partners may (i)
consent in writing to dissolve the Partnership or (ii) within 90 days after
such Bankruptcy occurs, agree in writing to continue the business of the
Partnership and to appoint, effective as of the date of such Bankruptcy, one or
more additional General Partners. In the case of clause (ii), the Partnership
Business shall be carried on by such newly appointed General Partner(s) and
the Bankrupt Partner shall have its general partnership interest in the
Partnership converted into a limited partner interest in the Partnership and
continue to be, or become a Limited Partner subject to the provisions of
Section 8.2. In the event the remaining Partners fail to make any election
pursuant to this subsection (b), the Partnership shall be dissolved.
(c) In the event any General Partner shall become a "debtor" as defined
in the Bankruptcy Code in any case commenced thereunder and at any time during
the pendency of such case there shall be appointed (i) a trustee with respect
to the Bankrupt Partner under section 701, 702 or 1104 of the Bankruptcy Code
(or any successor provisions thereto), or (ii) an examiner having expanded
powers beyond those specifically enumerated in section 1104(b) of the
Bankruptcy Code, then the other Partners may, at any time thereafter, so long
as such condition exists, elect to dissolve the Partnership, in which event the
affairs of the Partnership shall be wound up as provided in this Article 8.
8.3. Order of Dissolution. In settling accounts upon winding up and
liquidation of the Partnership, the assets of the Partnership shall be applied
and distributed as expeditiously as possible in the following order not later
than the end of the taxable year of the liquidation (i.e., the date upon which
the Partnership ceases to be a going concern as provided in Income Tax
Regulation section 1.704-1(b)(2)(ii)(g) or if later, within 90 days after the
date of such liquidation):
(a) to pay (or make reasonable provision for the payment of) all
creditors of the Partnership, including to the extent permitted by law Partners
or their Affiliates who are creditors, in satisfaction of liabilities of the
Partnership in the order of priority provided by law, including expenses
relating to the dissolution and winding up of the affairs of the Partnership
(including, without limitation, expenses of selling assets of the Partnership,
discharging the liabilities of the Partnership, distributing the assets of the
Partnership and terminating the Partnership as a limited partnership in
accordance with this Agreement and the Act); and
(b) to the Partners in proportion to their respective positive Capital
Account balances, as those balances are determined after all adjustments to
such Capital Accounts as
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required by this Agreement for all periods immediately prior to such
distribution.
8.4. Orderly Winding Up. Notwithstanding anything to the contrary in
Sections 8.1, 8.2 and 8.3, but subject to Section 8.5 and the order of priority
in Section 8.3, upon winding up and liquidation, if required to maximize the
proceeds of liquidation, the Partnership Committee may, upon unanimous
approval, transfer the assets of the Partnership to a liquidating trustee or
trustees.
8.5. Dissolution Election. Notwithstanding the terms of any provision
of Section 8.3(b) to the contrary, but subject to Section 17-804(a)(1) of the
Act, any Partner may elect upon the occurrence of any of the events of
dissolution specified in Section 8.1, by written notice to the Partnership any
time prior to actual distribution, to require that the Partnership distribute
the assets of the Partnership upon dissolution and winding up as follows:
(i) First, the Partners shall attempt to reach agreement on the
Fair Market Value and distribution among the Partners of each of the
non-cash assets of the Partnership and liabilities related thereto,
subject always to distributions being made in accordance with Capital
Accounts as provided in Section 8.3(b), with such distributed assets being
valued at their Fair Market Value. To the extent that the Partners are
unable to reach agreement on the Fair Market Value and distribution among
the Partners of certain of such non-cash assets and liabilities, the
Chairman of the Partnership Committee not later than 20 days after an
event of dissolution set forth in Section 8.1 shall implement the
following internal auction procedures. For a period of up to ten days,
the Chairman shall entertain bids by the Partners for such non-cash assets
and related liabilities, either singly (a "Single Bid") or as a whole (an
"Aggregate Bid"). The Chairman will only entertain bids which exceed the
previous Single Bid for any non-cash asset and related liabilities or the
previous Aggregate Bid for all such non-cash assets and related
liabilities by at least one percent (a "Qualifying Bid"). The Chairman
will promptly make each bid submitted by any Partner available to each
other Partner. If during any 24-hour period within the ten-day period
specified above, the Chairman does not receive a Qualifying Single Bid
with respect to any non-cash asset or related liabilities or a Qualifying
Aggregate Bid, the Chairman shall not entertain any further Single Bids
with respect to such non-cash asset or any further Aggregate Bids, as the
case may be. At the conclusion of such bidding period, the highest Single
Bid by any
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Partner for each non-cash asset and related liabilities or, if an
Aggregate Bid for such non-cash assets and related liabilities, which
exceeds the sum of the Single Bids, is received such Aggregate Bid, shall
constitute the Fair Market Value of such non-cash assets and related
liabilities. The Partnership shall thereafter pay any amounts referred to
in Section 8.3(a) (except to the extent any such liabilities are to be
assumed by any Partner), and the non- cash assets and liabilities valued
pursuant to the previous sentence shall be distributed to the Partner who
specified the highest Fair Market Value therefor (and shall be debited
against its Capital Account balance), and the remaining non-cash assets,
if any, 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 a Fair Market
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;
(ii) All other remaining assets shall be distributed to the
Partners in accordance with Section 8.3(b) hereof; and
(iii) Notwithstanding the foregoing, each Partner shall receive a
right to use, without limitation, any Intellectual Property of the
Partnership on substantially equivalent terms as the other Partners.
8.6. Obligation to Restore Deficit Balance. No Partner shall be liable
for the return of the capital contributions of any other Partner, nor shall any
Partner be required to have any obligation to restore a deficit balance in its
Capital Account on winding up, liquidation and termination of the Partnership
except to the extent required by the Act.
8.7. Termination of Partnership. The Partnership shall terminate when
all of the assets of the Partnership, after payment of or due provision for all
debts, liabilities and obligations of the Partnership, shall have been
distributed to the Partners in the manner provided for in Article 8, and the
Certificate of Limited Partnership of the Partnership shall be canceled in the
manner required by the Act.
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<PAGE> 56
ARTICLE 9
ADMISSION OF ADDITIONAL PARTNERS
9.1. Admission Procedures. With the approval of the Partnership
Committee, the Partnership may admit additional Persons as both a General
Partner or a Limited Partner subject to the condition that the proposed
Additional Partner shall execute and deliver to the Partnership an agreement by
which it (i) shall become a party to this Agreement, (ii) shall make
representations and warranties to the Partnership with respect to itself
relating to such matters as the Partnership Committee may request and (iii)
shall execute a Standstill Agreement substantially in the form of Exhibit A
hereto.
ARTICLE 10
TRANSFER OR ENCUMBRANCE OF INTEREST
10.1. Restriction on Transfer or Encumbrance. Without the unanimous
consent of the General Partners, no Partner may assign, sell, transfer or
otherwise dispose of (any such transaction being referred to in this Article 10
as a "transfer"), pledge, hypothecate, grant a security interest in or
otherwise encumber, its Partnership Interest, except in accordance with the
terms of Section 10.2.
10.2. Permitted Transfers.
(a) Any Partner may, without the consent of the other Partners, transfer
ownership of all or any part of its Partnership Interest to a Wholly Owned
Affiliate of a Partner or to a Partner Parent or a person which is a Wholly
Owned Affiliate of a Partner Parent (any Affiliate to which a transfer is
permitted under this Section 10.2 being referred to herein as an "Affiliate
Transferee"). An Affiliate Transferee shall be admitted as both a Substitute
General Partner and a Substitute Limited Partner at the time such (i) Affiliate
Transferee executes this Agreement or a counterpart to this Agreement, which
evidences such Affiliate Transferee's agreement to be bound to the terms and
conditions of this Agreement and (ii) the Partner Parent(s) of such Affiliate
Transferee shall have executed a letter of responsibility in form and substance
reasonably satisfactory to the other Partner. In the event a transfer that is
permitted under this Section 10.2(a) causes a termination of the Partnership
for tax purposes under Section 708 of the Code, the Affiliate Transferee shall
indemnify and hold harmless the other partners from all costs arising from such
termination.
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<PAGE> 57
(b) A transfer of less than all of a Partner's Partnership Interest
pursuant to this Section 10.2 shall be deemed to constitute a transfer of both
the General Partner and Limited Partner Percentage Interests (and the Capital
Contribution Percentage) of such Partner pro rata in proportion to the portion
of such Partner's entire Partnership Interest transferred.
10.3. Invalid Transfers Void. Any purported transfer of any Partnership
Interest or any part thereof not in compliance with this Article 10 shall be
void and of no force or effect and the transferring Partner shall be liable to
the other Partners and the Partnership for all liabilities, obligations,
damages, losses, costs and expenses (including reasonable attorneys' fees and
court costs) arising as a result of such noncomplying transfer.
10.4. Change in Ownership.
(a) For purposes of this Agreement, a "Change in Ownership" of a Partner
shall be deemed to have occurred when (i) any Person, other than a Partner
Parent of such Partner or a Wholly Owned Affiliate of such Partner Parent (an
"Unaffiliated Entity"), shall acquire (whether by merger, consolidation, sale,
assignment, lease, transfer or otherwise, in one transaction or series of
related transactions), or otherwise beneficially own 50% or more of the
outstanding Voting Stock of any Partner (or any entity, other than a Partner
Parent, which, directly or indirectly, through the ownership of one or more
majority-owned successive subsidiary entities, owns more than 50% of the
outstanding voting interests in such Partner (a "Control Entity")) or (ii) the
Partner Parents of such Partner shall otherwise cease to beneficially own a
majority of the outstanding Voting Stock of such Partner or any Control Entity
of such Partner. Notwithstanding the foregoing, none of (i) a broadly
dispersed, underwritten public offering of the equity securities of a Partner
or a Control Entity, (ii) a tax-free spin-off qualifying under Section 355 of
the Code, by a Partner Parent to its shareholders of an entity the assets of
which include all, but not less than all, of such Partner Parent's ownership
interest in the Partnership and WMC or Cellco, as the case may be, or (iii) a
change of control of a Partner Parent shall result in a Change of Ownership of
a Partner hereunder.
(b) Upon any Change in Ownership of a Partner, the Partner not undergoing
the Change in Ownership shall be entitled at any time within a 90-day period
following the Change of Ownership, to elect by notice to the Partner undergoing
a Change of Ownership to purchase all but not less than all of the Partnership
Interest of the Partner undergoing the Change in Ownership at a purchase price
equal to the Fair Market Value of the Partnership Interest determined as
provided in Article 4.9. In the event that a Partnership Interest is not
purchased
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<PAGE> 58
pursuant to the preceding sentence, any Person effecting such Change
of Ownership (i) shall, by binding written instrument which shall be
enforceable by the Partnership and the other Partners, assume all obligations
and liabilities hereunder of the Partner which is the subject of such Change in
Ownership and (ii) in the case of a Change of Ownership of the Cellco
Partnership Interest, shall execute a Standstill Agreement, substantially in
the form of Exhibit A hereto.
(c) In the event that a Partnership Interest is purchased pursuant to
Section 10.5(b), the Partner undergoing the Change of Ownership shall (i)
retain all rights under the Enhanced Resale Agreements, (ii) receive a
royalty-free license to use Partnership Intellectual Property for five years
and (iii) be entitled to purchase for a five-year period services from the
Partnership on terms and conditions substantially similar to those under which
such Partner was receiving such services prior to the Change of Ownership.
ARTICLE 11
REGULATORY MATTERS
11.1. MFJ Compliance.
(a) Each of BAC, NYN and USW (the "BOC Participants") and their
respective BOC affiliates in Cellco and WMC agree that they
will pursue, in conjunction with the Regional Bell Operating Companies ("BOCs")
within the meaning of the MFJ, the "Motion of the Bell Companies for a
Modification of Section II of the Decree to Permit Them to Provide Cellular and
Other Wireless Services Across LATA Boundaries," filed with the Decree Court on
June 20, 1994. If the Decree Court were to deny the BOCs' motion or if the
Decree Court or Department of Justice were to take the position that the relief
requested in the motion does not apply to PCS Service, the BOC Participants
will request a waiver for the benefit of the Partnership that would enable the
Partnership to conduct the Partnership Business free of restrictions on BOCs in
the MFJ. In addition, the BOC Participants will request a waiver for the
benefit of the Partnership if the waiver is: (i) to permit the Partnership to
offer the same services as those set forth in any waiver request which such BOC
Participant or an affiliate has pending or which such BOC Participant ,any of
its affiliates, or any BOC has obtained for its cellular or PCS businesses,
including businesses incidental thereto; (ii) based on the same relevant facts
as those set forth in any such waiver such BOC Participant, an affiliate
thereof or a BOC has pending or has obtained, as the case may be, and (iii)
with respect to the Partnership, within the scope of the Partnership Business.
Except as described above, neither any such BOC Participant nor
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<PAGE> 59
any affiliate shall be obliged to request any waiver for the benefit of the
Partnership.
(b) Unless and until the (1) Decree Court or (2) the Department of
Justice shall issue a written opinion, or (3) USW, BAC and NYN shall
unanimously agree that the MFJ does not apply to the Partnership, the
Partnership will conform to the requirements and prohibitions of the MFJ. As
long as a BOC Participant holds any ownership interest in the Partnership, the
Partnership will not engage in any MFJ Restricted Activities. ATI or any
Affiliate thereof will have the option to engage in MFJ Restricted Activities,
specifically including the provision of interexchange (interLATA)
telecommunications services (it being understood that such services may be
provided by the Partnership if it is thereafter permitted to do so) and engage
in any business practice and enter into any transaction in which the
Partnership does not engage by reason of the MFJ. ATI shall not be deemed to
be engaged in or possessing any interest in a business venture in violation of
Section 7.4 solely as a result of the nature of the business being an MFJ
Restricted Activity. Except as provided in the preceding sentence, the
provisions of this Section 11.1 shall take precedence, in the event of any
conflict, over any other provision of this Agreement.
(c) Unless and until the Decree Court, the Department of Justice, or
USW's CECO Decree Committee shall issue a written opinion that the CECO does
not apply to the Partnership, the Partnership will conform to the requirements
and prohibitions of the CECO. Unless and until the Decree Court, the
Department of Justice, or USW's MFJ Compliance Committee shall issue a written
opinion that the EO does not apply to the Partnership, the Partnership will
conform to the requirements and prohibitions of the EO. In conforming to the
requirements and prohibitions of the CECO and EO, the Partnership will utilize
the procedures established by USW for compliance with them. At the request of
the Partnership, USW will provide training, instruction and assistance to the
Partnership in matters associated with CECO and EO compliance.
(d) If, at any time, a third party raises legitimate concerns regarding
whether as a result of the transactions arising out of this Agreement and the
PCS JV Agreement ATI or Systems in which it has an ownership interest can
lawfully engage in MFJ Restricted Activities, or if a third party or USW's CECO
Decree Committee raises legitimate concerns regarding whether, in light of the
activities of the Partnership and ATI, the BOC Participants are in compliance
with the MFJ (collectively, "MFJ Concerns"), the parties agree:
(i) except in the circumstances set forth in (iii) below, that ATI
and/or the Partnership shall have the right to continue the activities
giving rise to the MFJ Concerns;
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<PAGE> 60
(ii) to restructure the relationships among them and their
respective properties to the minimum extent necessary to satisfy the MFJ
Concerns while preserving, to the fullest extent possible, the intent of
the parties regarding the Partnership. The obligation to restructure
shall arise when (A) counsel for any Partner Parent believes that an MFJ
Concern is well founded, (B) USW's CECO Decree Committee or similar
committee representing another BOC Participant determines that an activity
of the Partnership or ATI has or will put USW or such BOC Participant in
violation of the MFJ, or (C) ATI determines that in light of the
activities of the Partnership that the right of ATI or Systems in which it
has an ownership interest to lawfully engage in MFJ Restricted Activities
is subject to a well founded challenge under the MFJ and (in any such
case) outside counsel for any Partner Parent issues a written opinion that
the MFJ Concern cannot be cured without restructuring. In the event the
obligation to restructure arises pursuant to the preceding sentence, the
Partners shall attempt to determine the manner of restructuring which best
gives effect to the first sentence of this clause (ii). If the Partners
reach agreement on a proposal, they will present it to the Partner Parents
and then, if the Partner Parents approve that proposal, to the Partnership
Committee. If the Partner Parents are unable to agree on a restructuring
proposal, each of them will present its proposal to USW's CECO Decree
Committee; the Partner Parents will then present to the Partnership
Committee any of the proposals the CECO Decree Committee has approved.
The Partners will implement a restructuring proposal only upon the
unanimous vote of the Partnership Committee. If the Partnership Committee
does not unanimously approve any restructuring proposal, the Partner
Parents shall resolve the manner of restructuring by the procedure
described in paragraph 2.6(d)(i) of this Agreement (provided that the
40-day period set forth therein for referral of disputes to the
Independent Member shall be a 30-day period); and
(iii) If despite their best efforts, the Partners fail to reach
agreement on and implement a restructuring proposal pursuant to (ii) above,
and if a Partner Parent has received either:
(A) an opinion from the Decree Court that activities giving
rise to the MFJ Concerns have put a Partner Parent in violation of
the MFJ; or
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<PAGE> 61
(B) a written statement from the Department of Justice that
such activities have put a BOC Partner Parent in violation of the
MFJ, and either counsel for any one of the BOC Participants agrees,
or USW's CECO Decree Committee or any committee established by
another BOC Participant for purposes of reviewing MFJ issues has
determined, that there is a reasonable factual and legal basis for
such an opinion from the Department of Justice;
then, ATI, its Cellular and PCS Systems and/or the Partnership will stop the
activities giving rise to the MFJ Concerns until such time as implementation
of a restructuring proposal pursuant to (ii) above permits the resumption of
such activities.
(e) Subject to compliance with the MFJ by the Partnership in connection
therewith, and subject to the restrictions set forth in Section 7.4 hereof, ATI
or any Affiliate thereof will have the option to engage in MFJ Restricted
Activities, specifically including the provision of interexchange (interLATA)
telecommunications services and engage in any business practice and enter into
any transaction in which the Partnership does not engage by reason of the MFJ.
Except as provided in the preceding sentence, the provisions of this Section
11.1 shall take precedence, in the event of any conflict, over any other
provision of this Agreement.
ARTICLE 12
ENHANCED RESALE AGREEMENTS
12.1. Agreement on Form. On or before March 31, 1995, the Partnership
Committee shall agree upon the form of the Enhanced Resale Agreements which
shall include, without limitation, the terms and conditions set forth on
Schedule 12.1. If the Partnership Committee is unable to agree on a form of
Enhanced Resale Agreement within the above-specified period the Independent
Member shall determine, within 90 days of the submission of the matter to him,
the form of Enhanced Resale Agreement embodying the terms and conditions set
forth in Schedule 12.1. As promptly as practicable after the approval of a
form of Enhanced Resale Agreement by the Partnership, each Partner and its
Affiliates shall use their reasonable efforts, subject to fiduciary
obligations, to cause the Systems they control or in which they have an
ownership interest, to enter into Enhanced Resale Agreements.
ARTICLE 13
MISCELLANEOUS
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<PAGE> 62
13.1. Notices. All notices, requests, demands or other communications
required by or otherwise with respect to this Agreement shall be in writing and
shall be deemed to have been duly given to any party (i) when delivered
personally (by courier service or otherwise), (ii) when delivered by telecopy
and confirmed by return telecopy, (iii) on the business day after the date sent
by a nationally recognized overnight courier service, or (iv) seven days after
being mailed by first-class, registered or certified mail, postage prepaid and
return receipt requested, in each case to the applicable addresses set forth
below:
If to Cellco:
NYNEX Mobile Communications Company
2000 Corporate Drive
Orangeburg, New York 10962
Attn.: Alfred F. Boschulte, President
Telecopy: (914) 365-9046
and
Bell Atlantic Corporation
1717 Arch Street
Philadelphia, Pennsylvania 19103
Attn.: Lawrence T. Babbio, Jr.
Executive Vice President and Chief Operating Officer
Telecopy: (215) 557-7214
With copies to:
NYNEX Network Systems Company
4 West Red Oak Lane
White Plains, New York 10604
Attn.: Senior Vice President and General Counsel
Telecopy: (914) 644-7966
and
Bell Atlantic Corporation
1717 Arch Street
Philadelphia, Pennsylvania 19103
Attn.: Stephen B. Heimann
Telecopy: (215) 561-9568
If to WMC:
AirTouch Communications
2999 Oak Road
Walnut Creek, CA 94596
Attn: C. Lee Cox, President and
Chief Operating Officer
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<PAGE> 63
Telecopy: (510) 210-3599
U S West, Inc.
7800 East Orchard Road
Englewood, CO 80111
Attn: President
Telecopy: (303) 793-6294
With copies to:
AirTouch Communications
425 Market Street
San Francisco, CA 94105
Attn: Senior Vice President-Legal and
External Affairs
Telecopy: (415) 658-2298
and
Pillsbury Madison & Sutro
235 Montgomery Street
San Francisco, CA 94104
Attn: Nathaniel M. Cartmell III, Esq.
Telecopy: (415) 477-4816
U S West, Inc.
7800 East Orchard Road
Englewood, CO 80111
Attn: General Counsel
Telecopy: (303) 793-6294
or to such other address or telecopy number as any party may have furnished to
the other parties in writing in accordance with this Section 13.1.
13.2. Governing Law, etc.
(a) This Agreement has been executed and delivered in the State of
Delaware and shall, in all respects be governed by, interpreted, and construed
in accordance with the laws of the State of Delaware, all rights and remedies
of the Partners in respect thereof being governed by such laws.
(b) Each Partner hereby irrevocably appoints The Corporation
Trust Company, at its office in Wilmington, Delaware, United States of America,
its lawful agent and attorney to accept and acknowledge service of any and all
process against it in any action, suit or proceeding arising in connection with
this Agreement and upon whom such process may be served, with the same effect
as if such party were a resident of the State of Delaware and had been lawfully
served with such process in such jurisdiction, and waives all claim of error by
reason of such service; provided that in the case of any service
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<PAGE> 64
upon such agent and attorney, the party effecting such service shall also
deliver a copy thereof to the other party at the address and in the manner
specified in Section 13.1. In the event that such agent and attorney resigns
or otherwise becomes incapable of acting as such, such party will appoint a
successor agent and attorney in Wilmington, Delaware, reasonably satisfactory
to the other party, with like powers.
(c) The choice of law provisions of this Article 13 have been negotiated
in good faith and agreed upon by the parties hereto and are reasonable
especially considering that this Agreement is subject to and conforms with the
Act. All Partners, by their execution of this Agreement, expressly agree, to
the fullest extent permitted by law, not to challenge the choice of law
provisions contained in this Article 13.
13.3. Amendments. This Agreement may be modified or amended only by an
instrument in writing signed by each Partner, and, as so modified and amended,
shall inure to the benefit of all of the Partners.
13.4. Entire Agreement. Except to the extent other agreements are
specifically referred to herein, this Agreement constitutes the entire
agreement between the Partners with respect to the matters covered hereby and
thereby and supersedes all prior agreements, understandings, offers and
negotiations, oral or written.
13.5. Waiver of Partition. Each Partner hereby irrevocably waives any
and all rights that it may have to maintain an action for partition of any of
the Partnership's property.
13.6. Consents. All consents, agreements and approvals required or
permitted by this Agreement shall be in writing and a signed copy thereof shall
be filed and kept with the books of the Partnership.
13.7. Successors. Subject to Section 10.1, all rights and
duties of the Partners hereunder shall inure to the benefit of and be binding
upon their respective successors and assigns.
13.8. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument.
13.9. Severability. Each provision of this Agreement shall be considered
severable and if for any reason any provision which is not essential to the
effectuation of the basic purposes of the Agreement is determined by a court of
competent jurisdiction to be invalid or unenforceable and contrary to existing
or future applicable law, such invalidity shall not impair the operation of or
affect those provisions of
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<PAGE> 65
this Agreement which are valid. In that case, this Agreement shall be
construed so as to limit any term or provision so as to make it enforceable or
valid within the requirements of any applicable law, and in the event such term
or provision cannot be so limited, this Agreement shall be construed to omit
such invalid or unenforceable provisions.
13.10. Survival. All indemnities and reimbursement obligations made
pursuant to this Agreement shall survive dissolution and liquidation of the
Partnership until expiration of the longest applicable statute of limitations
(including extensions and waivers) with respect to the matter for which a party
would be entitled to be indemnified or reimbursed, as the case may be.
13.11. Arbitration. Each partner hereby acknowledges that this Agreement
is subject to the Arbitration Agreement of the Partners which is being entered
into of even date herewith, and the Arbitration Agreement will govern the
resolution of disputes relating to this Agreement in accordance with its terms.
Each Additional Partner or Substitute Partner shall execute the Arbitration
Agreement or a counterpart to the Arbitration Agreement on or prior to its
admission to the Partnership.
13.12. No Third Party Beneficiaries. Nothing contained in this Agreement
is intended to, or shall, confer upon any Person other than the parties hereto
any rights or remedies hereunder.
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<PAGE> 66
IN WITNESS WHEREOF, the Partners have executed this Partnership Agreement
as of the date first hereinabove written.
CELLCO PARTNERSHIP
By: Cellco Management
Corporation,
General Partner
By: /s/ S. Mark Tuller
-------------------------------
Name: S. Mark Tuller
Title: Vice President
WMC PARTNERS, L.P.
By: AirTouch Communications,
General Partner
By: /s/ Arun Sarin
-------------------------------
Name: Arun Sarin
Title: Executive Vice President
Corporate Strategy/
Development
and
By: U S West, Inc.,
General Partner
By: /s/ Charles M. Lillis
-------------------------------
Name: Charles M. Lillis
Title: Executive Vice President
62
<PAGE> 67
Schedule 1
<TABLE>
<CAPTION>
General Limited
Partner Partner
Percentage Percentage
Interest Interest Total Amount
---------- ---------- ----- ------
<S> <C> <C> <C> <C>
Cellco 20% 30% 50% $5,000
WMC 20% 30% 50% $5,000
</TABLE>
S-1
<PAGE> 68
Schedule 3.2a
Project Development Team Responsibilities
(a) The Marketing Project Development Team will coordinate strategy and
establish standards in the following areas:
National/multi-regional account marketing
Product development
Brand selection and brand management and licensing
Purchasing
National channels
Subscriber equipment purchasing
The Marketing Project Development Team will investigate the merits of
coordinating strategy and functions in the following areas:
Strategy/planning
Direct fulfillment
Telemarketing
(b) The Technical Project Development Team will coordinate strategy and
establish standards in the following areas:
Performance standards (which shall serve as a minimum standard for
each wireless property controlled by Partner)
Purchasing
Technology platforms
Interconnection of local and regional networks to form a seamless
national network
Enhanced resale
The Technical Project Development Team will investigate the merits of
coordinating strategy and functions in the following areas:
Technology development
Interconnect
Network management
Operations centers
(c) The Operations (Information Technology) Project Development
Team will coordinate strategy and establish standards in the following areas:
S-2
<PAGE> 69
Customer service/billing platform
Informations technology
Network management
(d) The Finance Project Development Team will coordinate strategy
and establish standards in the following areas:
Settlements policies
Planning/target setting
Accounting and administration
Revenue assurance
Preparations of the Partnerships annual budget of non-Project costs
S-3
<PAGE> 70
Schedule 3.2(b)(i)
Initial Projects
1. Joint purchasing of subscriber and infrastructure equipment
2. Roamer administration (price and other customer terms and conditions)
3. Network and subscriber equipment interface standards to facilitate
seamless operations
4. Fraud management
5. National Market Development
a. Planning and implementing standards for national products
b. Planning and implementing and directing national strategy and
promotion for agreed-upon brand
c. Planning and implementing strategy for management of national
accounts (accounts with activations in both partners markets)
d. Planning and implementing strategy for information technology
to facilitate management of national accounts (e.g.,
consolidated billing)
e. Planning and implementing strategy for selection and
management of national products
f. Planning and implementing strategy for national distribution
channels
S-4
<PAGE> 71
Schedule 3.2(b) (ii)
Principles relating to National Strategy
Promotion for Brand Developed by the Partners
1. Each Partner will support the development and use (as further
described below) of the Partnership's agreed upon national brand.
2. The Partnership will own the rights to the agreed-upon national brand.
3. Promptly following the selection of a national brand for the
Partnership (in accordance with the provisions hereof), each Partner
will use the Partnership's national brand (and no other national
brand) in its local markets; provided that such use may initially take
the form of dual branding (i.e., the use of the national brand on a
stand alone basis in addition to the use of a Partner's local or
regional brand on a stand alone basis).
4. As soon as practicable following the selection of a national brand for
the Partnership, but in any event within one year from the Effective
Date, each Partner will use the Partnership's brand in its local
markets on a co-branding basis (i.e., use of the national brand in
conjunction with the use of a Partner's local or regional brand). The
applicable guidelines for such co-branding will be determined by the
Partnership.
5. The Partners agree that the Partnership will license each Partner and
Affiliate to use the national brand only in the territory covered by
FCC Cellular, PCS and ESMR licenses held by that Partner Affiliate
("Territory") and that the Partner or Affiliate shall not use the
national brand outside its Territory.
6. Subject to the exceptions in 7.4(c), the Partners further agree that a
Partner or Affiliate shall not use, in the existing Territory (as of
the date hereof) of other Partners or Affiliates, any other brand
name, service mark, or trademark in connection with the sale of
Services if (i) the Partner or Affiliate has the right to use that
other brand or mark in connection with the national brand and (ii) the
Partner or Affiliate has used such other brand or mark in its
Territory.
S-5
<PAGE> 72
Schedule 7.5(a)
Scheduled Systems
Albuquerque
Phoenix
Tucson
Las Cruces
Arizona RSA 2
Arizona RSA 5
S-6
<PAGE> 73
Schedule 12.1
Terms of Enhanced Resale Agreements
The Enhanced Resale Agreements shall include, without limitation, the
following terms and conditions:
1. Pricing
a. Pricing shall be at least equivalent to any other wholesale
pricing arrangements offered by the Partners for similar
volumes of cellular numbers and airtime minutes
b. Pricing shall take into account without limitation:
(1) Exclusivity
(2) Length of agreement
(3) Any commitment to minimum volume levels and/or growth
in volumes
(4) Number of local cellular and PCS markets covered
(5) Technical and operational arrangements between
reseller and facilities provider
(6) Prevalent wireless industry practice for resale
arrangements and existing resale agreements between
similar groups of carriers
2. Term
a. The term of the agreement shall be 10 years
3. Technical and operational considerations
a. The agreement shall include, without limitation, at
least the following conditions enhancing the resale
arrangement
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<PAGE> 74
(1) Interconnection agreements equivalent to prevailing
industry practice for similar agreements between
resellers and facilities carriers.
(2) Coordination of reseller and facility provider billing
systems
b. Defining the technical and operation aspects of the resale
relationship will be included in the technical functions of
the Partnership
4. Conditions to effectiveness
a. The effective date of the Enhanced Resale Agreements shall be
the earlier of (a) the exercise by a Partner of its option to
purchase the Partnership interest of a Partner undergoing a
Change of Ownership pursuant to Section 10.5(b), (b) the
dissolution of the Partnership and (c) the imposition by a
court, governmental agency or regulatory or administrative
authority of restrictions on the operation of the Partnership
that would materially impair the ability of the Partnership to
perform the Partnership Business.
5. Brand considerations
a. The Partners will be permitted to use the national brand for
their resale operations but only on a co-brand basis.
b. The Partners shall retain for their facilities-based
operations the rights to use the national brand on a stand
alone basis.
S-8
<PAGE> 1
Exhibit 10.2
________________________________________________
AGREEMENT OF LIMITED PARTNERSHIP
OF
PCS PRIMECO, L.P.
DATED AS OF OCTOBER 20, 1994
________________________________________________
<PAGE> 2
AGREEMENT OF LIMITED PARTNERSHIP
OF
PCS PRIMECO, L.P.
This Partnership Agreement dated as of October 20, 1994, is made between
PCSCO Partnership, a Delaware general partnership ("PCSCO") and a direct or
indirect wholly-owned partnership of Bell Atlantic Corporation ("BAC") and
NYNEX Corporation ("NYN"), and PCS Nucleus, L.P. a Delaware limited partnership
("PCSN") and a direct or indirect wholly-owned partnership of AirTouch
Communications ("ATI") and U S West, Inc. ("USW"), pursuant to the provisions
of the Delaware Revised Uniform Limited Partnership Act. Each of PCSCO and
PCSN shall be both a general partner and a limited partner as set forth herein
(collectively, the "Partners").
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 Revised Uniform Limited Partnership Act, 6
Del. Tit. Section Section 17-101 et seq., as from time to time amended.
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.
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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. AFFILIATE of a person shall mean any Person directly or indirectly
controlling, controlled by, or under common control with, such other person
provided, however, that (i) the Partnership shall not be deemed to be an
Affiliate of PCSCO or PCSN or any of their respective Affiliates, (ii) any
wireline cable television company in which a Partner and its Affiliates do not
have an aggregate ownership interest in excess of 50% shall not be considered
an Affiliate of such Partner or any of its Affiliates, and (iii) Cellular
Communications, Inc., a Delaware corporation ("CCI"), shall not be considered
an Affiliate of ATI until such time, if ever, as ATI shall be entitled to
exercise full discretion with respect to voting the shares of common stock of
CCI beneficially owned by ATI (other than shares of common stock of CCI
beneficially owned by ATI by virtue of its ownership of the Class A Preference
Stock of CCI); and 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. The term CONTROL (including the terms
"controlling, "controlled by" and "under common control with") of a person
means the possession, direct or indirect of the power to (i) vote 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 such 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. Notwithstanding the
foregoing, the parties agree that solely for purposes of this Agreement,
Affiliates of PCSCO shall specifically include BAC and NYN and their respective
Affiliates, and Affiliates of PCSN shall specifically include ATI and USW and
their respective Affiliates. Notwithstanding the foregoing, Upstate Cellular
Network shall not be deemed an Affiliate of PCSCO and CMT Partners and New Par
shall not be deemed an Affiliate of PCSN, so long as PCSCO or PCSN,
respectively, together with their respective Affiliates own an equity interest
of not more than 50% in Upstate Cellular Network or CMT Partners and New Par,
respectively, and have no greater management authority with respect thereto
than they had on the date of this Agreement.
1.5. AGREED VALUE means, with respect to any asset, the asset's adjusted
basis for federal income tax purposes, except as follows:
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(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); (iv) the dissolution of
the Partnership in accordance with Article 10; and (v) 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; and
provided further that such adjustments shall not be made solely
by reason of a contribution to the Partnership by WMC pursuant to
Section 7.5 of the Tomcom Partnership Agreement;
(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
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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.
1.6. AGREEMENT means this Partnership Agreement, as it may be amended or
restated from time to time.
1.7. 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.
1.8. BUSINESS PLAN has the meaning set forth in Section 5.1.11.
1.9. CAPITAL ACCOUNTS mean the capital accounts maintained with respect
to Partnership Interests pursuant to Section 4.4.
1.10. CAPITAL CALL means a request for additional contributions of
capital to the Partnership.
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1.11. CHANGE OF CONTROL has the meaning set forth in Section 10.1.
1.12. CECO means the Civil Enforcement Consent Order entered by the
Decree Court on February 2, 1989.
1.13. CECO DECREE COMMITTEE means the committee created by USW pursuant
to the CECO for the review of USW's business activities.
1.14. CODE means the Internal Revenue Code of 1986, as amended from time
to time (or any corresponding provisions of succeeding law).
1.15. DECREE COURT means the court having original jurisdiction over MFJ
waivers.
1.16. DEFAULT INTEREST RATE means a rate of interest equal 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%.
1.17. 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 ENTITY means a Person qualifying as a designated entity
for purposes of the FCC's decision in that certain matter entitled
Implementation of Section 309(j) of the Communications Act - Competitive
Bidding, Fifth Report and Order in PP Docket No. 93-253, as modified by
subsequent decisions through the date hereof.
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1.20. DESIGNATED MTAS/BTAS means the MTAs and BTAs designated by the
Executive Committee for development of the PCS Business.
1.21. DISSOLUTION EVENT has the meaning set forth in Section 10.1.
1.22. EO means the Enforcement Order entered by the Decree Court on
February 15, 1991.
1.23. EQUITY INTEREST has the meaning set forth in Section 8.1.
1.24. 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.
1.25. EXECUTIVE COMMITTEE means the Executive Committee of the
Partnership formed and acting pursuant to Section 5.1.
1.26. FCC means the United States Federal Communications Commission and
any successor thereto that has authority to regulate PCS Licenses and the PCS
Business.
1.27. GAAP means the generally accepted accounting principles in the
United States of America in effect from time to time.
1.28. GENERAL PARTNER means each of PCSCO and PCSN, for as long as each
remains a General Partner in accordance with the provisions hereof, in their
capacities as general partners of the
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Partnership, and any person who becomes an additional or substitute General
Partner of the Partnership pursuant to the provisions of this Agreement.
1.29. HOLDING COMPANY has the meaning set forth in Section 8.1.
1.30. LIMITED PARTNER means each of PCSCO and PCSN, in their capacities
as limited partners of the Partnership, and any person who becomes an
additional Limited Partner of the Partnership pursuant to the provisions of
this Agreement.
1.31. LIQUIDATING PARTNER has the meaning set forth in Section 10.3.
1.32. MFJ has the meaning set forth in Section 11.10.
1.33. MFJ COMPLIANCE COMMITTEE means the committee created by USW
pursuant to the EO for the review of USW's business practices.
1.34. MFJ RESTRICTED ACTIVITY means an activity or business the
undertaking of which by the Partnership would cause the Partnership, or any
Partner, to be in violation of the MFJ.
1.35. MTA means a Major Trading Area and BTA means a Basic Trading Area,
each as defined in FCC Rules at 47 C.F.R. Section 24.202.
1.36. NET OPERATING AVAILABLE CASH means at the time of determination,
(a) all cash and cash equivalents on hand in the Partnership, less (b) the
Forecast Cash Requirement, if any, of the Partnership, as determined by the
Partnership Committee in a manner consistent with the then-current Business
Plan. For purposes of this definition, FORECAST CASH REQUIREMENTS means, for
the twelve-month period following the date of determination, the excess, if
any, of (a) forecast capital expenditures, capital contributions to other
entities and other investments, acquisitions, cash contributions to other
entities and other investments, acquisitions, cash income tax payments and debt
service (including principal and interest) requirements and other non-cash
credits to income, plus forecast cash reserves for future operations or other
requirements, over (b) forecast net income of the Partnership, plus the sum of
forecast depreciation, amortization, interest expenses, income tax expenses and
other non-cash charges to income, in each case to the extent deducted in
determining such net income, plus or minus forecast changes in working capital,
plus the forecast cash proceeds of dispositions of assets (net of expenses),
plus an amount equal to the forecast net proceeds of debt financings.
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1.37. NONDEDUCTIBLE EXPENDITURE has the meaning specified under the
definition of Profits below.
1.38. NONDELINQUENT PARTNER means any Partner who is not a Delinquent
Partner.
1.39. 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).
1.40. ORGANIZATIONAL EXPENSES means organizational expenses as defined
under Section 709 of the Code.
1.41. PARTNER means each of PCSCO and PCSN and any other Person admitted
as a Partner pursuant to the terms of this Agreement.
1.42. PARTNER NONRECOURSE DEBT MINIMUM GAIN has the meaning set forth in
Regulations Section 1.704-2(i).
1.43. PARTNER NONRECOURSE DEBT has the meaning set forth in Regulations
Section 1.704-2(b)(4).
1.44. PARTNER NONRECOURSE DEDUCTIONS has the meaning set forth in
Regulations Section 1.704-2(i).
1.45. PARTNER NOTE has the meaning set forth in Section 4.4 hereof.
1.46. PARTNER PARENT means (i) with respect to Cellco, BAC and NYN and
(ii) with respect to WMC, ATI and USW, and their respective successors and
assigns, whether by means of merger, spinoff or otherwise.
1.47. PARTNERSHIP means the partnership established pursuant to this
Agreement.
1.48. PARTNERSHIP INTEREST means the entire ownership interest of a
Partner in the Partnership.
1.49. PARTNERSHIP MINIMUM GAIN has the meaning set forth in Regulations
Sections 1.704-2(b)(2) and 1.704-2(d).
1.50. PCS BUSINESS means the provision of broadband personal
communications services as contemplated by Subpart E of Part 24 of the FCC's
rules, pursuant to one or more PCS Licenses.
1.51. PCS LICENSE means any license issued by the FCC pursuant to Subpart
E of Part 24 of the FCC's rules. A 10 MHZ
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PCS LICENSE shall mean a PCS License with respect to no more than 10 MHz.
1.52. 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. If a Partner
is both a General Partner and a Limited Partner, all adjustments of Percentage
Interests of such Partner shall be made to both the General Partner Percentage
Interests and the Limited Partner Percentage Interests pro rata in proportion
to such interests.
1.53. 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;
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(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.
1.54. 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).
1.55. 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; as reduced by the unamortized amount of Organizational Expenses
contributed by that Partner; and reduced by any amount
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contributed to the Partnership by WMC pursuant to Section 7.5 of the Tomcom
Partnership Agreement.
1.56. TAX MATTERS PARTNER has the meaning set forth in Section 6231 of
the Code.
1.57. 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.
1.58. TOMCOM PARTNERSHIP AGREEMENT means the Tomcom L.P. Agreement of
Limited Partnership, of even date herewith, between Cellco Partnership (CELLCO)
and WMC Partners, L.P. (WMC), without regard to any amendments thereto except
those approved by the Executive Committee.
1.59. TRANSFER has the meaning set forth in Section 8.1.
1.60. WHOLLY OWNED AFFILIATE means as to any Person, an Affiliate all of
the equity interests of which are owned, directly or indirectly, by a Partner,
by another Wholly Owned Affiliate, or by one or both of the Partner Parents
thereof.
ARTICLE 2.
ORGANIZATION
2.1. Formation. The Partners agree to, and hereby do, form a limited
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 PCS PRIMECO, L.P. 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:
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(a) To acquire, hold title to and maintain PCS Licenses and to
acquire PCS Businesses in Designated MTAs/BTAs, and potentially
in other areas, in accordance with the eligibility and other
requirements of FCC rules, directly and by acquisition of equity
interests in entities (including Designated Entities) engaged in
the PCS Business;
(b) To develop and coordinate the process by which the Partnership
shall submit bids in the name of the Partnership to the FCC in
respect of the auction of PCS Licenses;
(c) If the Partnership acquires one or more PCS Licenses or PCS
Businesses, to design, 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; and
(d) To engage in any and all acts necessary, advisable, appropriate
or incidental to any of the foregoing that may lawfully be
conducted by a limited partnership organized under the Act.
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. Registered Office; Agent for Service of Process. The address of the
Partnership's registered office in the State of Delaware is c/o The Corporation
Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, New
Castle County, Delaware 19801. The agent for service of process at such
address for the Partnership in the State of Delaware is The Corporation Trust
Company. Agents for service of process of the Partnership may be changed by
the Executive Committee.
2.6. Term. The term of the Partnership shall commence on the date the
Certificate of Limited Partnership of the Partnership is filed in the office of
the Secretary of State of the State of Delaware, and shall continue through the
99th anniversary thereof, unless earlier dissolved pursuant to Article 10.
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,
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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.
2.9. Qualification in Other Jurisdictions. The General Partners shall
cause the Partnership to be qualified, formed, or registered under assumed or
fictitious name statues or similar laws in any jurisdiction in which the
Partnership owns property or engages in activities if such qualification,
formation or registration is necessary to permit the Partnership lawfully to
own property and engage in the Partnership's business or transact business.
The General Partners shall execute, file and publish all such certificates,
notices, statements or other instruments necessary to permit the Partnership to
engage in the Partnership's business as a limited partnership in all
jurisdictions where the Partnership elects to engage in or do business.
2.10. Relationship with International Affiliates. Intellectual property
(other than trade names or trademarks developed by the Partnership) shall be
made available on an arm's length basis to Affiliates of the Partners having
international operations.
ARTICLE 3.
OUTSIDE ACTIVITIES; ACQUISITION OF LICENSES
3.1. 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 except through the Partnership. If
either (i) the Partnership has not determined to bid on one or
more specified PCS Licenses to use more than 10 MHz in any
license 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, then one or more Partners or
their Affiliates may require the Partnership to bid for such
licenses on their behalf upon the following conditions. In the
circumstances described in clause (i), a Partner or its Affiliate
may require the
<PAGE> 15
Partnership to bid on such License on its behalf 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 require
the Partnership to enter a higher bid on its behalf 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 Partnership shall bid on any License on
behalf of one or more Partners or their Affiliates in accordance
with the foregoing and shall be the winning bidder on such
License, then such Partner(s) shall be obligated to fund any
required payment by the Partnership for such License, and the
Partnership shall immediately transfer to such Partner(s) or
their Affiliate(s) such License or the right to receive such
License (and all remaining obligations to make payment therefor)
and shall duly prosecute all necessary regulatory or other
approvals for such transfer; provided, however, that if, during
the 30-day period immediately following the FCC auctions for such
License, the Partner(s) other than such Partner make an election
in writing to have the Partnership acquire such License, the
Partnership shall retain such License and shall make all required
payments therefor. Following any transfer of a License to a
Partner such Partner and its Affiliates shall have the sole right
and interest in and to such License. Such Partner or Affiliate
shall comply with Section 3.1(c).
(b) If any Partner or any of its Affiliates wishes to acquire any
ownership interest in any PCS Business (excluding the acquisition
of any license to operate a PCS Business pursuant to one or more
10 MHz PCS Licenses), 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 any of such Affiliates to make such
acquisition. If the Executive Committee 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
any of such Affiliates shall be free to make such acquisition on
terms no more favorable to the Partner or its Affiliates 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
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and fulfilling the requisite regulatory waiting periods) 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(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
an ownership interest in any PCS Business that such PCS 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 PCS Businesses in similar
situations (or if no such agreement then exists, such terms and
conditions as are approved by the Executive Committee which terms
and conditions shall include a "most-favored nation" provision),
under which such PCS 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(c) with respect to any
transaction by vote of the Executive Committee.
3.2. 10 MHz PCS Licenses. No Affiliate shall bid on or acquire, in the
FCC auctions for PCS Licenses or otherwise, any PCS License to use a 10 MHz PCS
License, except that an Affiliate that is a landline communications carrier
(including, without limitation, a wireline cable television company) may
acquire a 10 MHz License for regions located substantially in the service
territory of such carrier.
3.3. Restrictions on Acquisitions of System Licenses. The Partners and
their Affiliates shall comply with the provisions of Section 7.4 of the Tomcom
Partnership Agreement, as if they were parties thereto.
3.4. Enforceability and Enforcement.
(a) The Partners acknowledge and agree that the time, scope,
geographic area and other provisions of Sections 3.1, 3.2 and 3.3
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 Sections 3.1, 3.2 or
3.3 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.
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(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, 3.2 and 3.3, which rights shall be cumulative and in
addition to any other rights or remedies to which the Partnership
may be entitled.
3.5. Exceptions to Restrictions. The restrictions set forth in Sections
3.1, 3.2 and 3.3 on the activities described therein shall not be construed to
prohibit the activities of the Partners and their Affiliates of the type
described in Section 7.4(c) of the Tomcom Partnership Agreement.
3.6. Activities of the Partners. Except as expressly restricted by this
Article 3, 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.
3.7. 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, such services provided by its PCS 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 for similar volumes of such services.
3.8. Determination of Designated MTAs/BTAs. On or before December 5,
1994, the Partners shall designate the Designated MTAs/BTAs for which the
Partnership will seek to acquire PCS Licenses, and shall determine the Bid
Prices to be bid for, or other acquisition prices to be paid for, such PCS
Licenses. If the Partners are unable to agree upon such Designated MTA/BTAs
the matter shall be referred for resolution by the chief executive officers of
the respective Partner Parents designated by each Partner.
ARTICLE 4.
CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS
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4.1. Initial Capital Contributions. Contemporaneously with the execution
hereof, each of the Partners have contributed to the capital of the Partnership
the cash amount set forth on Schedule I hereto, 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 in the ratios set forth on Schedule I hereto.
4.2. Additional Capital Calls. Not later than November 18, 1994, each of
the Partners shall contribute to the capital of the Partnership in proportion
to their respective Partnership Interests an amount sufficient to pay all
filing and qualification fees to enable the Partnership to bid on the
Designated MTAs/BTAs identified pursuant to Section 3.8. Each Partner may
contribute to the capital of the Partnership, not necessarily in proportion to
their Percentage Interests, an amount sufficient to fund the bids which such
Partner may desire to make pursuant to Section 3.1(a) hereof. In addition,
upon 30 days prior written notice to the Partners, 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.
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 Nondelinquent
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.
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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 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) such that the Percentage Interest of each Partner
shall equal the ratio of its Specified Account Value to the
aggregate Specified Account Values of all of the Partners
calculated as if the amounts contributed pursuant to Section
4.3(b) were 115% of the amounts actually contributed. Once an
adjustment is made pursuant to this Section 4.3(c), any future
calculations of Percentage Interests in the Partnership shall be
calculated on an aggregate basis using the methodology (including
the 115% weighing) 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.
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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.
(e) Further adjustments shall be made to the extent provided in
Section 4.3(b)(viii) of the Tomcom Partnership Agreement.
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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.
4.5. Conversion to Limited Partner. If at any time the Percentage
Interests of a Partner and its Affiliates who are Partners aggregate less than
35% for a period of more than 90 days (except solely as a result of capital
contributions made in accordance with the second sentence of Section 4.2 to
fund bids in accordance with Section 3.2(a)), then such Partner shall cease to
be a General Partner and shall continue to be, or become, a Limited Partner
having no right to participate in the management of the business and affairs of
the Partnership, including the right to designate members of the Executive
Committee.
ARTICLE 5.
MANAGEMENT OF THE PARTNERSHIP
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
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<PAGE> 22
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. Each Partner, by execution
of this Agreement, agrees to, consents to, and acknowledges the delegation
of powers and authority to the members of the Executive Committee
hereunder and to the actions and decisions of the members of the Executive
Committee within the scope of such authority.
5.1.2. Number and Term of Office. Each of the General Partners
shall have the right to designate three members of the Executive Committee
by written notice to the secretary of the Partnership and to each other
General Partner. Any General Partner may at any time, and from time to
time, remove or replace any or all of the members designated by such
General Partner, and shall give written notice to the secretary of the
Partnership and to each other General Partner of any such removal or
replacement. Each member of the Executive Committee shall be an officer
or employee or former employee of a Partner or an Affiliate thereof.
5.1.3. Resignations; Removals. Any member of the Executive
Committee may resign at any time by giving written notice to the secretary
of the Partnership and the General Partner that appointed such member.
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 General Partner
that appointed a 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 Partnership and to each other General Partner. Effective
upon a General Partner ceasing to be a general partner of the Partnership,
the members of the Executive Committee appointed by such Partner shall
cease to be members.
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
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resolution of the Executive Committee, but such meetings shall be held at
least once each calendar month unless otherwise specified by the Executive
Committee. 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 five days before the time of the meeting) or sent by first-class
mail (in which case notice shall be given at least seven days before the
meeting), unless otherwise specified by the Executive Committee. 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 General 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 be entitled to act on behalf
of such General Partners. If only one member appointed by a given General
Partner is present at a meeting, such member shall be entitled to vote the
entire voting power held by all members appointed by such General Partner.
If more than one member appointed by a given General Partner is present at
a meeting, such members shall vote such General Partner's entire voting
power as a single unit. In the event of a disagreement at a meeting among
members appointed by a single General Partner as to how to vote on any
matter, the vote of the member designated by such General Partner as its
senior representative shall be controlling and the vote of the other
member or members representing such General 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 each of the General Partners, except as
may be otherwise specifically provided by this Agreement. The presence at
a duly called meeting of the Executive Committee of members representing
each General Partner shall constitute a quorum. If a quorum shall not be
present at any meeting of the Executive
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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 Article 5, all General Partners which are Affiliates of
each other shall be deemed to be a single General Partner.
5.1.9. Actions Requiring Vote of the Executive Committee.
Without limitation of the powers and authority of the Executive Committee,
the following actions shall require the affirmative vote of members of the
Executive Committee representing all of the General Partners:
(a) Admission of any Person as a partner in the Partnership;
(b) Engaging, directly or indirectly, in any business other
than the PCS Business;
(c) Any amendment of this Agreement;
(d) Voluntary dissolution or winding-up of the Partnership,
except as specifically provided in this Agreement, 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) of twenty-five percent (25%) or more
of the total fair market value of all the assets of the
Partnership;
(f) Approval of a Business Plan (including the initial
Business Plan and the auction strategy), or a material
modification to a Business Plan;
(g) Making of any Capital Call other than a Capital Call
provided for in any annual budget included in any
Business Plan; and
(h) Appointment, removal, and compensation of the Chief
Executive Officer, the Chief Operating Officer and the
Chief Financial Officer of the Partnership;
(i) Entry into any material transaction outside the scope or
contemplation of the Business Plan, or any other material
deviation from the Business Plan;
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(j) Approval of the terms of the standard Affiliation
Agreement to be entered into between the Partnership and
third-party owners of PCS Businesses; and
(k) Appointment of and any change in the auditors of the
Partnership.
5.1.10. Affiliated Transactions. 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, and any rights of the Partnership
against the other Partner may be exercised upon the affirmative vote of
members of the Executive Committee representing a majority Percentage
Interest of all General Partners other than the Partner against whom or
whose Affiliate the action is brought.
5.1.11. Business Plan. On or before December 5, 1994, the
Executive Committee shall adopt an initial one-year and five-year business
plan for the Partnership. Such business plan, and each subsequent
business plan prepared for the Partnership and approved by the Executive
Committee are referred to herein as a BUSINESS PLAN. Not later than one
month after completion of the initial PCS auctions for Designated
MTA/BTAs, and not later 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 five-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 all of the General Partners or unless specifically provided
for in the financial commitment or financial view portions of the Business
Plan applicable to such period.
5.1.12. Deadlocks. Upon the occurrence of a Deadlock Event (as
detailed below), the General Partners shall first use their good faith
efforts to resolve such matter in a mutually satisfactory manner. If,
after such efforts have continued for 20 days (or, if shorter, until ten
days before the vote or action on such matter must be taken, provided that
the General Partners shall have used their mutual good faith
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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 General Partner shall first refer the matter to the chief
executive officer of that partner of the General Partner
designated by such General Partner for resolution of the matter.
(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 chief executive
officers of the respective Partner Parent of such Partner for
resolution of the matter.
(c) Should the designated chief executive officers of the respective
Partner Parents fail to resolve the matter within 40 days, the
matter shall be considered defeated.
(d) 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) a disagreement that continues for at
least 30 days over the removal of the Chief Executive Officer or
the position of Chief Executive Officer of the Partnership is
vacant for a period of more than 30 days after one of the General
Partners has proposed a candidate to fill such vacancy, or (iii)
a disagreement continues for at least 30 days over the timing or
amount of a Capital Call other than as provided for in a Business
Plan.
5.1.13. 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 written consent of members of the
Executive Committee representing each General Partner then in office and
entitled to vote on such action.
5.1.14. Approval by Limited Partners. Except as otherwise
required by the Act, no vote or approval by any Limited Partner shall be
required under this Agreement for the taking of an action, including
without limitation the amendment of this Agreement, and the Percentage
Interest of any Limited Partner who is not also a General Partner shall
not be included in any calculation of a Partner's Percentage Interest
entitled to vote on any matter.
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5.2. Indemnification of Partners, Executive Committee, Officers and
Others.
5.2.1. 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 on or after the date
hereof (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 seeking indemnification (or any
of its Affiliates). 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 5.2.1. Any repeal or modification of any portion of
the foregoing provisions of this Section 5.2.1 or the adoption of any
provision of this Agreement inconsistent with any portion of the foregoing
provisions of this Section 5.2.1 shall not adversely affect any right or
protection of any person indemnified under this Section 5.2.1 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 all Partners. This Section 5.2.1 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
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specific action of the Executive Committee, any vote of Partners or other
document or arrangement.
5.2.2. 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.
5.2.3. 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 5.2.3 or otherwise.
5.3. 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 5.3 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.
5.4. Taxes and Charges; Governmental Rules. Each Partner shall (i)
promptly pay all applicable Taxes and other governmental charges 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.
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5.5. 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.
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, 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; provided, however, that
amortization deductions attributable to Organizational Expenses paid or
incurred directly by a Partner shall be allocated to such Partner.
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
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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
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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.
6.3. 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.
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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
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taken into account in computing the Partnership's taxable
income or loss 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. Upon the request of a transferee of a
Partnership Interest or of a distributee of a Partnership distribution,
the Partnership shall make the election under Section 754 of the Code in
accordance with applicable Regulations thereunder for the first fiscal
year in which such
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election could apply, unless the Tax Matters Partner reasonably determines
that such election is not in the best interest of the Partnership.
Subject to Section 11.17, any other 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 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 Net Operating
Available Cash.
6.6.2. Partner Loans. For so long as any loans made pursuant to
Section 4.3(a) 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
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7.1. Accounting. Except as may be otherwise agreed to by the Executive
Committee, 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 the Executive
Committee, 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
the Executive Committee, as soon as practicable, but in no event later than 45
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,
(iv) such other statements showing in reasonable detail each Partner's interest
in each of the items described in Section 7.1., and (v) proportional accounting
information with respect to the Partnership's interest in its PCS systems. 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 20 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
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kept at the Partnership's principal place of business. Any General Partner and
its representatives or designees may, during regular business hours, inspect
the books and records of the Partnership, and each General 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 General Partner in the performance of the audits of the
inspecting General Partner. Whenever any such audit is conducted by any
General Partner and its auditors, such General Partner shall advise the other
General Partners and permit the other General 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 approval 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. Within 60 days after the date hereof,
the Executive Committee shall select a General Partner to serve as the
initial Tax Matters Partner and in any other similar capacity under state
or local law for an initial term ending November 15, 1996. Upon
expiration of such term, the other General Partner shall be designated to
act as the Tax Matters Partner and the General Partners shall thereafter
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alternate as Tax Matters Partner for two year periods during the term of
this Agreement. The Tax Matters Partner 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) the expiration of its term, (ii) its resignation
or (iii) a determination by the Executive Committee that a different
Partner should serve as the 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
OWNERSHIP; ADDITIONAL PARTNERS
8.1. Certain Definitions. The following terms when used in this
Agreement will have the respective meanings set forth below:
HOLDING COMPANY means any person of which a 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 (as
determined by 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 Partner whose
Partnership Interest is at issue).
EQUITY INTEREST means any equity interest in a Holding Company.
TRANSFER means any disposition of all or any part of a Partnership
Interest or an Equity Interest, voluntarily, involuntarily or by operation
of law, including, without limitation, any sale, assignment, gift, pledge,
encumbrance, hypothecation, mortgage, exchange or merger; provided,
however, that any transaction involving a transfer both of
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<PAGE> 38
ownership of a Partner's entire Partnership Interest and of other
substantial (in the reasonable judgment of the Executive Committee as
determined by 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 Partner whose
Partnership Interest is at issue) assets of such Partner or its Affiliates
shall not constitute a Transfer.
8.2. Restrictions on Transfer of Interests. Except as otherwise
expressly permitted by this Agreement, no Partner or its Affiliates shall
Transfer all or any part of its Partnership Interest or all or any part of its
Equity Interest, unless (i) such Transfer is permitted pursuant to Section 8.3
hereof and (ii) such Partner has complied with the provisions of Section 8.4
hereof. 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, but shall give rise to the consequences described in Section 8.8
hereof.
8.3. Permitted Transfers. Subject to the conditions and restrictions set
forth in Section 8.4 hereof, (a) a Partner or its Affiliates may at any time
Transfer all or any portion of its Partnership Interest or Equity Interest to a
Wholly Owned Affiliate of the transferor without the consent of the Executive
Committee if such Wholly Owned 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, (b) a Partner or its Affiliates may transfer its
Partnership Interests or Equity Interests in PCSCO or PCSN, as the case may be,
to Cellco and WMC, respectively, (c) a Partner or its Affiliates may make
broadly dispersed, underwritten public offerings of Equity Interests, or (d) a
Partner Parent may make a tax-free spinoff qualifying under section 355 of the
Code, to its shareholders of an entity the assets of which include all, but not
less than all, of such Partner Parent's ownership interest in the Partnership
and PCSCO or PCSN, as the case may be. A Transfer of less than all of a
Partner's Partnership Interest pursuant to this Section 8.3 shall be deemed to
constitute a transfer of both the General Partner and Limited Partner
Percentage Interests of such Partner pro rata in proportion to the portion of
such Partner's entire Partnership Interest transferred. In addition, a Partner
or its Affiliates may effect a spin- off, distribution or dividend of Equity
Interests to the shareholders of the Partner Parents of the Partner or
Affiliate. In the event that a Transfer permitted under this Section 8.3
causes a termination of the Partnership under Section 708 of the Code, the
transferee shall indemnify and hold harmless the other Partners from all costs
or other adverse effects (including, but not limited to, the reduction of tax
benefits attributable to depreciation or amortization) resulting from such
termination.
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<PAGE> 39
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) Prior to the Transfer of any Partnership Interest, the
transferee shall
(i) execute 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"; and
(ii) if the transferee is a corporation, provide 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.
(c) Prior to the Transfer of any Partnership Interest or Equity
Interest, the transferee shall:
(i) provide an opinion of counsel to the Partnership that the
Transfer 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 greater regulation or
restriction under the MFJ than existed immediately prior
to such admission; (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
affect the Partnership's existence or qualification under
the Act; and
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(ii) provide the Partnership with evidence satisfactory to the
Partnership that any necessary prior consents have been
obtained from any regulatory authorities.
8.5. Change of Ownership. Upon any Change of Control of a General
Partner (other than a Change of Control resulting from a change of control of a
Partner Parent) (a CHANGE OF OWNERSHIP), the Partner subject to the Change of
Ownership shall promptly give notice thereof to the other General Partner and
the Partner not undergoing the Change of Ownership shall be entitled, at any
time within a 90-day period following the later of such notice or the Change of
Ownership, to purchase all but not less than all of the Partnership Interest of
the Partner undergoing the Change of Ownership at a purchase price equal to the
Private Market Value of the Partnership Interest determined as described below.
In the event that a Partnership Interest is not purchased pursuant to the
preceding sentence, any Person effecting such Change of Ownership shall, by
binding written instrument which shall be enforceable by the Partnership and
the other Partners, assume all of the obligations and liabilities hereunder of
the Partner which is the subject of such Change of Ownership. PRIVATE MARKET
VALUE means, with respect to any interest in the Partnership, as of the date of
determination, the Fair Market Value of such asset adjusted to include a pro
rata share of any control premium inherent in a sale of the Partnership as a
whole. FAIR MARKET VALUE shall have the meaning ascribed thereto in the Tomcom
Partnership Agreement and the Fair Market Value, as of the date of
determination, of any asset shall be determined (a) by mutual agreement of the
General Partners or (b) if no such agreement is reached within ten days of the
relevant date of determination, as follows:
(i) Selection of Appraisers. Each General Partner shall
designate by written notice to the Partnership and each
General Partner a firm of recognized national standing
familiar with appraisal techniques applicable to assets
of the type being evaluated to serve as an Appraiser
pursuant to this Section 8.5 (the firms designated by the
General Partners being referred to herein FIRST APPRAISER
and the SECOND APPRAISER, respectively) with five
business days after the failure to reach agreement in
accordance with the terms of clause (a) above. In the
event that either General Partner fails to designate its
or their Appraiser within the foregoing time period, the
other shall have the right to designate such Appraiser by
notifying the failing party or parties in writing of such
designation (and the Appraiser so
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designated shall be the First Appraiser or the Second
Appraiser, as the case may be).
(ii) Evaluation Procedures. Each Appraiser shall be directed to
determine the Private Market Value of the asset. Each
Appraiser will also be directed to deliver an Appraiser's
Certificate to each General Partner on or before the 30th day
after their respective designation (the CERTIFICATE DATE),
upon the conclusion of its evaluation, and each Appraiser's
Certificate once delivered may not be retracted or modified
in any respect. Each Appraiser will keep confidential all
information disclosed by the Partnership in the course of
conducting its evaluation, and, to that end, will execute
such customary documentation as the Partnership may
reasonably request with respect to such confidentiality
obligation. The General Partners will cooperate in causing
the Partnership to provide each Appraiser with such
information within the Partnership's possession that may be
reasonably requested in writing by the Appraiser for purposes
of its evaluation hereunder. The Appraisers shall consult
with each other in the course of conducting their respective
evaluations. Each General Partner shall have full access to
each Appraiser's work papers. Each Appraiser will be
directed to comply with the provisions of this Section 8.5,
and to that end each party will provide to its respective
Appraiser a complete and correct copy of this Section 8.5
(and the definitions of capitalized terms used in this
Section 8.5 that are defined elsewhere in this Agreement).
(iii) Private Market Determination. The Private Market Value of any
asset shall be determined on the basis of the Appraisers
Certificates in accordance with the provisions of this
subparagraph (iii). The higher of the values set forth on
the Appraisers' Certificates is hereinafter referred to as
the HIGHER VALUE, and the lower of such values is hereinafter
referred to as the LOWER VALUE. If the Higher Value is not
more than 110% of the Lower Value, the Private Market Value
will be the arithmetic average of such two Values. If the
Higher Value is more than 110% of the Lower Value, a third
appraiser shall be selected in accordance with the provisions
of subparagraph (iv) below, and the Private Market Value will
be determined in
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accordance with the provisions of subparagraph (v) below.
(iv) Selection of and Procedures for Third Appraiser. If the Higher
Value is more than 110% of the Lower Value, within seven days
thereafter the First Appraiser and the Second Appraiser shall
agree upon and jointly designate a third firm of recognized
national standing familiar with appraisal techniques
applicable to assets of the type being evaluated to serve as
an appraiser pursuant to this Section 8.5 (the THIRD
APPRAISER), by written notice to each General Partner. The
General Partners shall direct the Third Appraiser to
determine the Private Market Value of the asset (the THIRD
VALUE) in accordance with the provisions of subparagraph (ii)
above, and Certificate on or before the 30th day after the
designation of such appraiser hereunder. The Third Appraiser
will be directed to comply with the provisions of this
Section 8.5, and to that end of the parties will provide to
the Third Appraiser a complete and correct copy of this
Section 8.5 (and the definitions of capitalized terms used in
this Section 8.5 that are defined elsewhere in this
Agreement).
(v) Alternative Determination of Private Market. Upon the delivery
of the Appraiser's Certificate of the Third Appraiser, the
Private Market Value will be determined as provided in this
subparagraph (v). The Private Market Value will be (w) the
Lower Value, if the Third Value is less than the Lower Value,
(x) the Higher Value, if the Third Value is greater than the
Higher Value, (y) the arithmetic average of the Third Value
and the other Value (Lower or Higher) that is closer to the
Third Value if the Third Value falls within the range between
(and including) the Lower Value and the Higher Value and (z)
the Third Value, if the Lower Value and the Higher Value are
equally close to the Third Value.
(vi) Costs. Each General Partners will bear the cost of the Appraiser
designated by it or on its behalf. If the Higher Value is
not more than 115% of the Lower Value, or if the Higher Value
and the Lower Value are equally close to the Third Value,
each General Partner shall bear 50% of the cost of the Third
Appraiser, if any; otherwise, the party whose Appraiser's
determination of Private Market Value is
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further away from the Third Value shall bear the entire
costs of the Third Appraiser. The General Partners
agree to pay when due the fees and expenses of the
Appraisers in accordance with the foregoing provisions.
(vii) Conclusive Determination. To the fullest extent provided
by law, the determination of the Private Market Value
made pursuant to this Section 8.5 shall be final and
binding on the Partnership and the Partners hereto, and
such determination shall not be appealable to or
reviewable by any court or arbitrator; provided that the
foregoing shall not limit a Partner's rights to seek
arbitration of the obligations of the other Partners and
the Partnership hereunder.
8.6. Additional Partners. Additional partners may be admitted to the
Partnership as General Partners or Limited Partners upon approval by the
Executive Committee.
(a) Any additional partner admitted to the Partnership pursuant to
this Section 8.6 (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) The Additional Partner shall have provided 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
the Partnership; (b) subject the Partnership to greater
regulation or restriction under the MFJ than existed
immediately prior to such admission; (c) subject the
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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 affect the Partnership's
existence or qualification under the Act; and
(iv) Any necessary prior consents shall have been obtained
from any regulatory authorities.
8.7. 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.
8.8. Consequences of Breaches of Covenant. Notwithstanding anything to
the contrary in the Act, if a Partner or its Affiliate (BREACHING PARTNER) (i)
attempts to Transfer its Partnership Interest or Equity Interest in breach of
Section 8.2, (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 8.7, or (iv) suffers an Event of Bankruptcy, the Partnership shall
continue and such Breaching Partner shall be subject to this Section 8.8 and in
such event, the following shall occur:
(a) (i) the Breaching Partner shall immediately cease to be a
General Partner, (ii) the general partnership interests in the
Partnership of such Breaching Partner shall automatically be
deemed to become limited partnership interests, (iii) such
Breaching Partner shall have no right to participate in the
management of the Partnership, including the right to appoint
members at the Executive Committee, and shall have no further
power to act for or bind the Partnership, and (iv) the other
Partners are, without necessity of any further action or
documentation, hereby appointed attorneys-in- fact of the
Breaching Partner for the purpose of carrying out the provisions
of this Section 8.8 and taking any action and executing any
documents which such Partners may deem necessary or advisable to
accomplish the purposes hereof, such appointment being
irrevocable and coupled with an interest;
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(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 its contributions, capital, or profits, but may, by
notice to the Breaching Partner within 30 days of its 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 8.8(d) hereof, the Partnership shall treat
the Breaching Partner as if it 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.
8.8.1. 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
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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.
8.8.2. No Bonding. Notwithstanding anything to the contrary in the Act,
if, under Section 8.8(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.
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9.2. Permitted Disclosures. (a) 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:
(i) becomes publicly available without default hereunder by the
receiving party;
(ii) is lawfully acquired by the receiving party from a source not
under any obligation to the disclosing party regarding disclosure
of such information;
(iii) is in the possession of the receiving party in written or other
recorded form at the time of its disclosure hereunder;
(iv) is non-confidentially disclosed to any third party by or with the
permission of the disclosing party; or
(v) the receiving party believes in good faith to be required to be
disclosed 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.
(b) Nothing contained herein shall prevent the receiving party from
disclosing any Confidential Information in connection with any
corporate transaction (including, without limitation, the
issuance of debt or equity, any merger, consolidation,
acquisition or disposition of assets, or the formation of a joint
venture, partnership or other affiliation) related to the
Partnership or any Partner Parent or Affiliate thereof if the
receiving party agrees in writing to keep in confidence such
Confidential Information in accordance with the terms of this
Section 9.2.
ARTICLE 10.
DISSOLUTION AND LIQUIDATION
10.1. Dissolution Generally.
(a) The Partnership will be dissolved on the earliest of (i) an
affirmative vote of the Executive Committee; (ii) delivery of the
Change of Control Dissolution Notice
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contemplated by Section 10.1(c); or (iii) 12:00 midnight on the
Termination Date (hereinafter defined); 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).
(b) Without the unanimous written consent of the Partners, each
Partner agrees not to withdraw as a Partner or do anything that
would otherwise dissolve the Partnership (except as permitted by
the terms of Article 10). Notwithstanding the foregoing, if a
General Partner withdraws from the Partnership, upon such
withdrawal, (i) the general partner interests in the Partnership
of such Partner shall automatically be deemed to become limited
partner interests in the Partnership and (ii) such Partner shall
have no right to participate in the management of the business
and affairs of the Partnership, including the right to designate
members of the Executive Committee.
(c) Changes of Control. In the event of a Change of Control
(hereinafter defined) of any General Partner (such Partner, the
CHANGE OF CONTROL PARTNER), the other General Partner shall have
the right to elect, by notice in writing to all Partners (the
CHANGE OF CONTROL DISSOLUTION NOTICE), to cause the Partnership
to be dissolved and liquidated in accordance with Section 10.3.
Such Change of Control Dissolution Notice shall be given not
later than 90 days after the Change of Control, and, if not given
within such period, the right to cause a dissolution and
liquidation based on such Change of Control will cease. CHANGE
OF CONTROL shall be deemed to have occurred when (i) any Person,
other than a Partner Parent of such Partner or a Wholly Owned
Affiliate of such Partner Parent (an UNAFFILIATED ENTITY), shall
acquire (whether by merger, consolidation, sale, assignment,
lease, transfer or otherwise, in one transaction or a series of
related transactions), or otherwise beneficially own 50% or more
of the outstanding voting securities of any Partner (or any
entity which, directly or indirectly through the ownership of one
or more majority-owned successive subsidiary entities, owns more
than 50% of the outstanding voting interests in such Partner) (a
CONTROL ENTITY) or (ii) the Partner Parents of such Partner shall
otherwise cease to beneficially own a majority of the outstanding
voting securities of such Partner or any Control Entity of such
Partner. Notwithstanding the foregoing, the transactions
contemplated by Section 8.3 shall not constitute a Change of
Control hereunder.
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(d) The TERMINATION DATE shall mean December 31, 2014, provided that
the Termination Date shall be October 20, 2001 if (i) either
Partner elects in its sole discretion in light of business
circumstances at that time to terminate the Partnership on that
date, and (ii) the Tax Cost (hereinafter defined) associated with
such termination would not exceed $100 million. TAX COST shall
mean the total amount of Taxes which would be recognized by all
Partners as a result of the liquidation of the Partnership in
accordance with Section 10.3 hereof immediately after the
Termination Date.
10.2. Bankruptcy of a General Partner. If a General Partner suffers an
Event of Bankruptcy at such time the bankrupt Partner is the only General
Partner, the other Partners may (i) consent in writing to dissolve the
Partnership or (ii) within 90 days after such Event of Bankruptcy occurs, agree
in writing to continue the business of the Partnership and to appoint,
effective as of the date of such Event of Bankruptcy, one or more additional
General Partners. In the case of clause (ii), the business of the Partnership
shall be carried on by such newly appointed General Partner(s) and the bankrupt
Partner shall have its general partnership interest in the Partnership
converted into a limited partner interest in the Partnership and continue to
be, or become a Limited Partner subject to the provisions of Section 10.2. In
the event the remaining Partners fail to make any election pursuant to this
Section 10.2, the Partnership shall be dissolved. In the event any General
Partner shall become a "debtor" as defined in the United States Bankruptcy Code
of 1978, as amended (the BANKRUPTCY CODE) in any case commenced thereunder and
at any time during the pendency of such case there shall be appointed (i) a
trustee with respect to the bankrupt Partner under Section 701, 702 or 1104 of
the Bankruptcy Code (or any successor provisions thereto), or (ii) an examiner
having expanded powers beyond those specifically enumerated in Section 1104(b)
of the Bankruptcy Code, then the other Partners may, at any time thereafter, so
long as such condition exists, elect to dissolve the Partnership, in which
event the affairs of the Partnership shall be wound up as provided in this
Article 10.
10.3. 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
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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. Prior to any
distribution, the Capital Accounts of the Partners shall be
adjusted pursuant to Article 6 to reflect their respective
distributive shares of the income, gain, loss and deduction of
the Partnership up through and including the date of distribution
(including any income, gain, loss, and deduction that arises by
reason of the adjustment of the Agreed Values of Partnership
assets that occurs by reason of the dissolution). The
Liquidating Partner shall, subject to providing adequate reserves
for the payment of amounts payable under Section 10.3(a)(i)
hereof, implement the definitive liquidation plan described in
Section 10.3(e) and shall distribute assets among the Partners as
contemplated thereby (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
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(ii) Second, to the Partners, in proportion to and to the
extent of the positive balances in their respective
Capital Accounts appropriately adjusted as set forth
above.
(b) On or before December 31, 2013, unless a Partner has elected to
cause the Termination Date to be October 20, 2001, in which case
on or before October 20, 2000, or on or before the 30th day after
an event described in Section 10.1(a)(i) or (ii) or any other
event of dissolution, each General Partner shall submit a
proposed plan of liquidation of the Partnership (a LIQUIDATING
PROPOSAL) to the Executive Committee. The Liquidating Proposals
shall provide for distributions to Partners of the Partnership's
assets, in kind, in proportion to and to the extent of the
respective balances in their Capital Accounts adjusted as
provided in Section 10.3(a)(ii). Subject to the foregoing, a
Liquidating Proposal shall also take into account the following
considerations (with the matters described in clause (i) and
(ii)(E) on the one hand and clauses (ii)(A), (B) and (C) on the
other hand, being given equal weight):
(i) To the extent practicable, the Liquidating Proposal shall
be designed to minimize the imposition of taxes upon the
Partners (and may, to that end, provide for the
continuation of certain operations) and to provide for a
distribution of Section 751 property on a pro rata basis.
(ii) The proposed allocation of PCS Licenses and related
properties (including equity interests in entities owned
by the Partnership) among the Partners shall be developed
with a view to achieving the following objectives:
(A) Each Partner shall receive PCS Licenses covering
geographical areas which, in the aggregate,
contain an approximately equal number of natural
persons in the service area;
(B) Each PCS License shall be distributed to the
Partner, if any, which holds other wireless
telecommunications businesses that are
contiguous to or would otherwise have
geographical synergy with such PCS License;
(C) PCS Licenses concentrated in a particular
geographic area shall be distributed to a
single Partner;
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(D) The indirect joint ownership of a PCS License by
the Partnership and a Designated Entity and the
terms of such relationship shall be taken into
account in determining the relative value of
such interest; and
(E) The amount of any cash payment needed to offset
the receipt by a Partner of PCS Licenses and
related assets and liabilities having a fair
market value greater than such Partner's
proportionate share of the positive Capital
Account balances of the Partners shall be
minimized, and to that end, the proposed
allocation may provide for the continuation of
certain operations in joint venture or
partnership form.
(c) The Executive Committee shall consider each Liquidating Proposal
in good faith and shall adopt a plan of liquidation of the
Partnership by unanimous vote within twenty days of receiving the
Liquidating Proposals. If the Executive Committee is unable to
agree upon a mutually satisfactory plan of liquidation, each of
the General Partners shall first refer the matter to the chief
executive officer of the respective Partner Parent designated by
each such General Partner for resolution by unanimous vote of
such chief executive officers. If such officers are unable to
resolve the dispute within 20 days after the matter has been
referred to them, they shall refer the matter to arbitration in
accordance with paragraph (d) below.
(d) Not later than 10 days following the failure of the designated
chief executive officers of the Partner Parents to agree upon a
plan of liquidation, the issue shall be submitted to arbitration
by a single arbitrator under the direction of the American
Arbitration Association. The situs of the arbitration shall be
Chicago, Illinois. The arbitrator shall be selected by the
General Partners and shall be familiar with the PCS and cellular
industries. If the General Partners cannot agree on the
arbitrator within 10 days of the submission of the dispute to
arbitration, an arbitrator with such qualifications shall be
named by the American Arbitration Association within 10 days
thereafter. Each of the Liquidating Proposals submitted by the
General Partners to the Executive Committee pursuant to Section
10.3(c) above shall be presented to the arbitrator. Within 45
days of the submission of the Liquidating Proposals to
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arbitration, the arbitrator shall select the Liquidating Proposal
that the arbitrator determines best satisfies the criteria set
forth in Sections 10.3(b)(i) and 10.3(b)(ii) above. The
arbitrator must select one such Liquidating Proposal in its
entirety, without incorporating terms from any other Liquidating
Proposal or varying, modifying or otherwise altering the terms of
the Liquidating Proposal in any way. The arbitrator shall have
no right to include or decide issues other than the selection of
a Liquidating Proposal and the Agreed Values of any asset to be
distributed. The decision of the arbitrator shall be final,
unappealable and legally binding and the Partnership shall
promptly implement the Liquidating Proposal selected by the
arbitrator. Except as specified herein, the then existing
Commercial Arbitration Rules of the American Arbitration
Association shall govern the conduct of the arbitration.
(e) After a definitive plan of liquidation pursuant to this Section
10.3 has been approved, the Executive Committee and each Partner
and its Affiliates shall promptly seek all necessary regulatory
and other approvals and shall take all other necessary actions to
effect such plan of liquidation.
10.4. Distribution in Trust. Notwithstanding the provisions of
Section 10.3 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 10.3(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
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shall be distributed to the Partners as soon as practicable.
In exercising its rights under this Section 10.4, the Executive Committee
must comply with the liquidating distribution timing requirements of Section
10.6 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 10.3 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 10.3 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.
10.5. 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.
10.6. 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 10.3
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 its 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).
10.7. 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
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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.
10.8. 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 10.3 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
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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 hereto.
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; provided, however, that
Mandatory Indemnitees shall have the right to enforce the indemnification
provisions of Section 5.2 as such provisions apply to them. 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; Arbitration.
(a) 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.
(b) Each Partner hereby irrevocably appoints The Corporation Trust
Company, at its office in Wilmington, Delaware, United States of
America, its lawful agent and attorney to accept and acknowledge
service of any and all process against it in any action, suit or
proceeding arising in connection with this Agreement and upon
whom such process may be served, with the same effect as if such
party were a resident of the State of Delaware and had been
lawfully served with such process in such jurisdiction, and
waives all claim of error by reason of such service; provided
that in the case of any service upon such agent and
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attorney, the party effecting such service shall also deliver a
copy thereof to the other party at the address and in the manner
specified in Section 11.12. In the event that such agent and
attorney resigns or otherwise becomes incapable of acting as
such, such party will appoint a successor agent and attorney in
Wilmington, Delaware, reasonably satisfactory to the other party,
with like powers.
(c) Each Partner hereby acknowledges that this Agreement is subject
to the Arbitration Agreement of the Partners which is being
entered into of even date herewith, and the Arbitration Agreement
will govern the resolution of disputes relating to this Agreement
in accordance with its terms. Each Additional Partner or
substitute Partner shall execute the Arbitration Agreement or a
counterpart to the Arbitration Agreement on or prior to its
admission to the Partnership.
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. MFJ Compliance.
11.10.1. Each of BAC, NYN and USW (the "BOC Participants") and
their respective BOC affiliates in Cellco and WMC agree that they will pursue,
in conjunction with the Regional Bell Operating Companies ("BOCs") within the
meaning of the MFJ, the "Motion of the Bell Companies for a Modification of
Section II of the Decree to Permit Them to Provide Cellular and Other Wireless
Services Across LATA Boundaries," filed with the Decree Court on June 20, 1994.
If the Decree Court were to deny the BOCs' motion or if the Decree Court or
Department of Justice were to take the position that the relief requested in
the motion does not apply to PCS Service, the BOC Participants will request a
waiver for the benefit of the Partnership that would enable the Partnership to
conduct the Partnership Business free of restrictions on BOCs in the MFJ. In
addition, the BOC Participants will request a waiver for the benefit of the
Partnership if the waiver is: (a) to permit the Partnership to offer the same
services as those set forth in any waiver request which such BOC Participant or
an affiliate has pending or which such BOC Participant ,any of its affiliates,
or any BOC has obtained for its cellular or PCS
- 56 -
<PAGE> 58
businesses, including businesses incidental thereto; (b) based on the same
relevant facts as those set forth in any such waiver such BOC Participant, an
affiliate thereof or a BOC has pending or has obtained, as the case may be, and
(c) with respect to the Partnership, within the scope of the Partnership
Business. Except as described above, neither any such BOC Participant nor any
affiliate shall be obliged to request any waiver for the benefit of the
Partnership.
11.10.2. Unless and until the (1) Decree Court or (2) the Department
of Justice shall issue a written opinion, or (3) USW, BAC and NYN shall
unanimously agree that the MFJ does not apply to the Partnership, the
Partnership will conform to the requirements and prohibitions of the MFJ. As
long as a BOC Participant holds any ownership interest in the Partnership, the
Partnership will not engage in any MFJ Restricted Activities. ATI or any
Affiliate thereof will have the option to engage in MFJ Restricted Activities,
specifically including the provision of interexchange (interLATA)
telecommunications services (it being understood that such services may be
provided by the Partnership if it is thereafter permitted to do so) and engage
in any business practice and enter into any transaction in which the
Partnership does not engage by reason of the MFJ. ATI shall not be deemed to
be engaged in or possessing any interest in a business venture in violation of
Article 3 hereof or Section 7.4 of the Tomcom Partnership Agreement solely as a
result of the nature of the business being an MFJ Restricted Activity. Except
as provided in the preceding sentence, the provisions of this Section 11.10
shall take precedence, in the event of any conflict, over any other provision
of this Agreement.
11.10.3. Unless and until the Decree Court, the Department of
Justice, or USW's CECO Decree Committee shall issue a written opinion that the
CECO does not apply to the Partnership, the Partnership will conform to the
requirements and prohibitions of the CECO. Unless and until the Decree Court,
the Department of Justice, or USW's MFJ Compliance Committee shall issue a
written opinion that the EO does not apply to the Partnership, the Partnership
will conform to the requirements and prohibitions of the EO. In conforming to
the requirements and prohibitions of the CECO and EO, the Partnership will
utilize the procedures established by USW for compliance with them. At the
request of the Partnership, USW will provide training, instruction and
assistance to the Partnership in matters associated with CECO and EO
compliance.
11.10.4. If, at any time, a third party raises legitimate concerns
regarding whether as a result of the transactions arising out of this Agreement
and the Tomcom Partnership Agreement ATI or Systems in which it has an
ownership interest can lawfully engage in MFJ Restricted Activities, or if a
third
- 57 -
<PAGE> 59
party or USW's CECO Decree Committee raises legitimate concerns regarding
whether, in light of the activities of the Partnership and ATI, the BOC
Participants are in compliance with the MFJ (collectively, "MFJ Concerns"), the
parties agree:
(a) except in the circumstances set forth in (iii) below, that ATI
and/or the Partnership shall have the right to continue the
activities giving rise to the MFJ Concerns;
(b) to restructure the relationships among them and their respective
properties to the minimum extent necessary to satisfy the MFJ
Concerns while preserving, to the fullest extent possible, the
intent of the parties regarding the Partnership. The obligation
to restructure shall arise when (A) counsel for any Partner
Parent believes that an MFJ Concern is well founded, (B) USW's
CECO Decree Committee or similar committee representing another
BOC Participant determines that an activity of the Partnership or
ATI has or will put USW or such BOC Participant in violation of
the MFJ, or (C) ATI determines that in light of the activities of
the Partnership that the right of ATI or Systems in which it has
an ownership interest to lawfully engage in MFJ Restricted
Activities is subject to a well founded challenge under the MFJ
and (in any such case) outside counsel for any Partner Parent
issues a written opinion that the MFJ Concern cannot be cured
without restructuring. In the event the obligation to
restructure arises pursuant to the preceding sentence, the
Partners shall attempt to determine the manner of restructuring
which best gives effect to the first sentence of this clause
(ii). If the Partners reach agreement on a proposal, they will
present it to the Partner Parents and then, if the Partner
Parents approve that proposal, to the Partnership Committee. If
the Partner Parents are unable to agree on a restructuring
proposal, each of them will present its proposal to USW's CECO
Decree Committee; the Partner Parents will then present to the
Partnership Committee any of the proposals the CECO Decree
Committee has approved. The Partners will implement a
restructuring proposal only upon the unanimous vote of the
Partnership Committee. If the Partnership Committee does not
unanimously approve any restructuring proposal, the Partner
Parents shall resolve the manner of restructuring by the
procedure described in paragraph 2.6(d)(i) of the Tomcom
Agreement (provided that the 40-day period set forth therein for
referral of disputes to the Independent Member shall be a 30-day
period); and
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<PAGE> 60
(c) If despite their best efforts, the Partners fail to reach
agreement on and implement a restructuring proposal pursuant to
(ii) above, and if a Partner Parent has received either:
(i) an opinion from the Decree Court that activities giving
rise to the MFJ Concerns have put a Partner Parent in
violation of the MFJ; or
(ii) a written statement from the Department of Justice that
such activities have put a BOC Partner Parent in
violation of the MFJ, and either counsel for any one of
the BOC Participants agrees, or USW's CECO Decree
Committee or any committee established by another BOC
Participant for purposes of reviewing MFJ issues has
determined, that there is a reasonable factual and legal
basis for such an opinion from the Department of Justice;
then, ATI, its Cellular and PCS Systems and/or the Partnership will stop the
activities giving rise to the MFJ Concerns until such time as implementation of
a restructuring proposal pursuant to (ii) above permits the resumption of such
activities.
11.10.5. Subject to compliance with the MFJ by the Partnership in
connection therewith, and subject to the restrictions set forth in Section 7.4
of the Tomcom Partnership Agreement, ATI or any Affiliate thereof will have the
option to engage in MFJ Restricted Activities, specifically including the
provision of interexchange (interLATA) telecommunications services and engage
in any business practice and enter into any transaction in which the
Partnership does not engage by reason of the MFJ. Except as provided in the
preceding sentence, the provisions of this Section 11.10 shall take precedence,
in the event of any conflict, over any other provision of this Agreement.
11.11. Availability of Documents. The Partners and their Affiliates 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
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<PAGE> 61
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 PCSCO:
NYNEX Mobile Communications Company
2000 Corporate Drive
Orangeburg, New York 10962
Attn.: Alfred F. Boschulte, President
Telecopy No.: (914) 365-9046
and
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 copies 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
and
Bell Atlantic Corporation
1717 Arch Street
Philadelphia, Pennsylvania 19103
Attn.: Stephen B. Heimann
Telecopy No.: (215) 561-9568
If to PCSN:
Airtouch Communications
2999 Oak Road
Walnut Creek, California 94596
Attn.: C. Lee Cox, President and Chief
- 60 -
<PAGE> 62
Operating Officer
Telecopy No.: (510) 210-3599
and
U S West, Inc.
7800 East Orchard Road
Englewood, Colorado 80111
Attn.: President
Telecopy No.: (303) 793-6294
With copies to:
Airtouch Communications
425 Market Street
San Francisco, California 94105
Attn.: Senior Vice President-Legal and
External Affairs
Telecopy No. (415) 658-2298
and
Pillsbury Madison & Sutro
235 Montgomery Street
San Francisco, California 94104
Attn.: Nathaniel M. Cartmell III, Esq.
Telecopy No.: (415) 477-4816
and
U S West, Inc.
7800 East Orchard Road
Englewood, Colorado 80111
Attn.: General Counsel
Telecopy No.: (303) 793-6294
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
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<PAGE> 63
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 or Partner Parent 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. Except as provided in Section 6.5.4 with
respect to elections under Section 754 of the Code, 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.
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<PAGE> 64
IN WITNESS WHEREOF, the Partners have executed this Agreement the date and
year first above written.
PCSCO PARTNERSHIP PCSCO PARTNERSHIP
By: /s/ Alfred F. Boschulte By: /s/Lawrence T. Babbio, Jr.
--------------------------- --------------------------------
Name: Alfred F. Boschulte Name: Lawrence T. Babbio, Jr.
Title: Chairman, NYNEX Bell Atlantic
PCS, Inc. Personal Communications,
Inc.
PCS NUCLEUS, L.P.
By: AirTouch Communications,
General Partner
By: /s/ Arun Sarin
--------------------------------
Name: Arun Sarin
Title: Executive Vice President
Corporate Development/Strategy
and
By: U S West, Inc.
General Partner
By: /s/ Charles M. Lillis
--------------------------------
Name: Charles M. Lillis
Title: Executive Vice President
63
<PAGE> 65
SCHEDULE I
<TABLE>
<CAPTION>
CASH CONTRIBUTION TYPE OF PERCENTAGE
NAME OF AND SPECIFIED PARTNERSHIP INTEREST
PARTNER ACCOUNT VALUE INTEREST
<S> <C> <C> <C>
PCSCO Partnership $2,000.00 General 20%
$3,000.00 Limited 30%
PCS Nucleus, L.P. $2,000.00 General 20%
$3,000.00 Limited 30%
</TABLE>
S-1
<PAGE> 1
Exhibit 10.3
________________________________________
STANDSTILL AGREEMENT
dated as of October 20, 1994
between
AIRTOUCH COMMUNICATIONS
and
BELL ATLANTIC CORPORATION
________________________________________
-1-
<PAGE> 2
STANDSTILL AGREEMENT
THIS AGREEMENT is entered into and effective as of October 20, 1994, by
and among AIRTOUCH COMMUNICATIONS ("ATI") and BELL ATLANTIC CORPORATION
("Tomcom Parent Partner") (ATI and Tomcom Parent Partner, collectively the
"Parties").
WHEREAS, WMC Partners, L.P., a Delaware limited partnership in which
ATI holds a beneficial interest ("WMC"), and Cellco Partnership, a Delaware
general partnership in which Tomcom Parent Partner holds a beneficial interest
("Cellco"), have executed the Agreement of Limited Partnership of Tomcom, L.P.
("Tomcom"), of even date herewith (the "Tomcom Agreement"); and
WHEREAS, PCS Nucleus, L.P., a Delaware limited partnership in which
ATI holds a beneficial interest ("PCS Nucleus") and PCSCO Partnership, a
Delaware general partnership in which Tomcom Parent Partner holds a beneficial
interest ("PCSCO Partnership") have executed the Agreement of Limited
Partnership of PCS Primeco, L.P. ("PCS Primeco"), of even date herewith (the
"PCS Primeco Agreement"); and
WHEREAS, the Parties desire to set forth herein certain terms
regarding their relationship;
NOW, THEREFORE, ATI and Tomcom Parent Partner agree as follows:
ARTICLE I
DEFINITIONS
1.1. Defined Terms. (a) As used in this Agreement, the following
terms shall have the following meanings (unless indicated otherwise, all
Article and Section references are to Articles and Sections of this Agreement):
"Affiliate" shall have the meaning specified in Rule 12b-2 under the
Exchange Act, as such rule is currently in effect, and shall specifically
include, with respect to Tomcom Parent Partner, Cellco and PCSCO Partnership,
and with respect to ATI, WMC and PCS Nucleus.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations
thereunder, all as the same shall be in effect from time to time.
"Related Agreements" shall mean the Tomcom Agreement and the PCS
Primeco Agreement.
"Rights Agreement" shall mean that certain Rights Agreement between
ATI and the Bank of New York, as Rights Agent, dated as of July 22, 1993, as it
may be amended from time to time, or any successor agreement.
"SEC" shall mean the Securities and Exchange Commission or its
successor.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any similar federal statute, and the rules and regulations thereunder, all as
the same shall be in effect from time to time.
"Strategic Partner" shall mean any Person (i) owning, directly or
indirectly, a beneficial interest in Tomcom or PCS Primeco, provided that the
foregoing shall not be deemed to include NYNEX Corporation, a Delaware
corporation, and its wholly owned Affiliates and successors, or (ii) owning or
who is a party to an agreement with ATI obligating ATI to transfer to such
Person Voting Securities (or securities convertible or exchangeable by such
Person for Voting Securities) representing 10% or more of the sum of (x) the
then outstanding Voting Securities and (y) Voting Securities to be transferred
in connection with such agreement (or issuable upon the conversion or exchange
of securities to be so purchased).
"Transfer" shall mean, with respect to any Voting Security, a sale,
exchange, transfer or other disposition, whether or not for value, of such
Voting Security or any interest therein, or of any direct or indirect right or
option to acquire beneficial ownership of the same.
-2-
<PAGE> 3
"Voting Securities" shall mean any securities of ATI (unless the
context specifically contemplates another issuer) having the ordinary power to
vote, in the absence of contingencies, in the election of directors of ATI.
ARTICLE II
STANDSTILL PROVISIONS
2.1. Standstill Provisions. (a) Tomcom Parent Partner covenants to
and agrees with ATI that, except as it may be specifically permitted by this
Agreement or the Related Agreements or unless it is specifically invited in
writing to do so by ATI, it will not, and will cause each of its Affiliates not
to, directly or indirectly:
(i) in any way acquire or agree to acquire beneficial
ownership of any securities or any direct or indirect rights or
options to acquire beneficial ownership of any securities of ATI;
(ii) make any public announcement with respect to, or submit
to ATI or any of its directors, officers, representatives, employees,
attorneys, advisers, agents or Affiliates (whether publicly or
otherwise) any proposal for, the acquisition of Voting Securities with
respect to any merger, consolidation or business combination involving
ATI or its Affiliates or for or with respect to any purchase of a
substantial portion of the assets of ATI or its Affiliates, whether or
not any parties other than Tomcom Parent Partner and its Affiliates
are involved and whether or not such proposal might require the making
of a public announcement by ATI;
(iii) make, or in any way participate in, any "solicitation"
of "proxies" to vote any Voting Securities or become a "participant"
in any "election contest" (as such terms are defined or used in
Regulation 14A under the Exchange Act, as such Regulation is currently
in effect);
(iv) propose any matter for submission to a vote of
shareholders of ATI;
(v) form, join or in any way participate in a "group" (within
the meaning of Section 13(d)(3) of the Exchange Act) with respect to
any Voting Securities of ATI;
(vi) grant any proxy with respect to any Voting Securities to
any Person not approved by ATI;
(vii) deposit any Voting Securities in a voting trust or
subject any Voting Securities to any arrangement or agreement with
respect to the voting of such Voting Securities or other agreement
having similar effect;
(viii) take any action which would be reasonably likely to
require ATI to make a public announcement regarding any of the matters
specified in this Section 2.1(a)(i)-(xii); or
(ix) enter into any negotiations, arrangements or
understandings with any third party with respect to any of the
foregoing, or any discussions designed to advise, assist or encourage
any third party in connection with any of the foregoing;
(x) disclose publicly any intention, plan or arrangement
inconsistent with the foregoing;
(xi) request ATI (or any of its officers, directors,
representatives, employees, attorneys, advisors, agents or Affiliates)
to waive, amend or modify any provisions of Section 5.1(a)(i)-(xii);
or
(xii) otherwise act, alone or in concert with others, to seek
to control or influence the management, Board of Directors or policies
of ATI.
-3-
<PAGE> 4
(b) Notwithstanding any provision of this Section 2.1 to the
contrary, in the event that (i) ATI and any Person or "group" (within the
meaning of Section 13(d)(3) of the Exchange Act) enter into an agreement
pursuant to which (A) such Person or group would acquire a majority (calculated
by voting power) of the then outstanding Voting Securities of ATI or the right
to appoint a majority of the directors of ATI, or (B) a majority (calculated by
voting power) of the then outstanding Voting Securities of ATI is to be
acquired by any Person or group (within the meaning of Section 13(d)(3) of the
Exchange Act) in a merger, consolidation, or other business combination (any
such event being an "Acquisition Proposal"), (ii) a bona fide tender or
exchange offer by any Person or group (within the meaning of Section 13(d)(3)
of the Exchange Act) (other than ATI or any wholly-owned Affiliate thereof)
which would result, if consummated in accordance with its terms, in the
beneficial ownership by such Person or group of in excess of 50% (calculated by
voting power) of the then outstanding Voting Securities is approved or
recommended by the Board of Directors of ATI, (iii) in connection with the
matters discussed in clause (i) or (ii), or a tender or exchange offer for
greater than 40% of the outstanding Voting Securities which the Board of
Directors of ATI has not approved or recommended, the Board of Directors of ATI
has terminated or amended (or agreed to terminate or amend) the Rights
Agreement or has redeemed (or agreed to redeem) the Rights issued thereunder,
and such action has permitted or will have permitted the consummation of such
Acquisition Proposal or offer, or a final, non-appealable court order has
declared the Rights Agreement invalid or otherwise required the redemption of
the Rights issued thereunder or (iv) ATI and any Person enter into an agreement
providing for a transaction or series of related transactions that results in
the transfer, sale or other disposition by ATI of assets (A) that represent
more than 80% of the total fair market value of its assets on a proportionate
basis immediately prior to such disposition, (B) that generated more than 80%
of its total operating revenues on a proportionate basis in the preceding
fiscal year and (C) that generated more than 80% of its total net income from
operations on a proportionate basis during the preceding fiscal year (excepting
any such transaction or series of related transactions in which a majority of
the value of the consideration received in exchange for the assets transferred,
sold or otherwise disposed of consists of assets (or interests in assets) of a
like kind or nature), this Section 2.1 shall not prohibit Tomcom Parent Partner
(unless acting in concert with such Person) from making either a competing
Acquisition Proposal or a tender or exchange offer pursuant to which Tomcom
Parent Partner or its Affiliates would acquire at least the same percentage
(calculated by voting power) of ATI's then outstanding Voting Securities as
would be acquired in such non-Tomcom Parent Partner Acquisition Proposal or
such non-Tomcom Parent Partner tender or exchange offer (a "Tomcom Parent
Partner Response"). Tomcom Parent Partner agrees that any Tomcom Parent
Partner Response (including amendments thereto) will provide for consideration
that is no less favorable to ATI's shareholders than that being offered
pursuant to such non-Tomcom Parent Partner Acquisition Proposal or such non-
Tomcom Parent Partner tender or exchange offer (taking into account the form of
consideration and the number of shares to be acquired pursuant to such Tomcom
Parent Partner Response). In the event that the transactions contemplated by
clauses (i), (ii), (iii) or (iv) shall have been terminated or abandoned after
the Tomcom Parent Partner Response, Tomcom Parent Partner shall have the
ability, subject to the requirements of the preceding sentence, to amend or
modify its response, and to consummate the transaction contemplated by the
Tomcom Parent Partner Response or such amendment or modification, so long as
Tomcom Parent Partner shall not have terminated or abandoned their initial
response other than as a result of such amendment or modification. In the
event that the transactions contemplated by clauses (i), (ii), (iii) or (iv)
shall have been terminated or abandoned prior to the Tomcom Parent Partner
Response, or, if not so terminated or abandoned, in the event thereafter that
such transactions and those contemplated by such Tomcom Parent Partner Response
shall have been terminated or abandoned, all of the restrictions contained in
this Section 2.1 shall again be applicable.
(c) Until the second anniversary of the earlier of (x) the
dissolution of Tomcom and (y) the cessation of any direct or indirect
beneficial interest in each (but not just in one) of Tomcom or PCS Primeco by
Tomcom Parent Partner, neither Tomcom Parent Partner nor its Affiliates may (i)
act in concert with any Strategic Partner with respect to any of the activities
set forth in this Section 2.1 or (ii) transfer any Voting Securities of ATI to
any Strategic Partner.
ARTICLE III
TERM OF AGREEMENT
-4-
<PAGE> 5
3.1. Term of Agreement. The term of this Agreement shall be until the
earlier of (a) the second anniversary of (i) the later of (A) dissolution of
Tomcom and (B) dissolution of PCS Primeco, or (ii) the cessation of any direct
or indirect beneficial interest in each (but not just in one) of Tomcom or PCS
Primeco by Tomcom Parent Partner, and (b) October 20, 2001.
Upon the expiration of the term of this Agreement, all further
obligations of the parties hereunder shall terminate, except that (i) the
agreement set forth in Section 2.1(c) shall survive indefinitely and (ii)
nothing herein shall relieve any party from liability for any breach hereof.
ARTICLE IV
MISCELLANEOUS
4.1. Severability. If any term, provision, covenant or restriction of
this Agreement is determined to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect, unless such action would
substantially impair the benefits to either party of the remaining provisions
of this Agreement.
4.2. Specific Enforcement. The Parties hereto acknowledge and agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent or cure breaches of the
provisions of this Agreement and to enforce specifically the terms and
provisions of this Agreement, this being in addition to any other remedy to
which they may be entitled by law or equity.
4.3. Entire Agreement; Amendments. Except to the extent that other
agreements are specifically referred to herein, this Agreement between ATI and
Tomcom Parent Partner contains the entire understanding of the Parties with
respect to the matters covered hereby and thereby and, except as specifically
set forth herein or therein, neither ATI nor Tomcom Parent Partner make any
representation, warranty, covenant or undertaking with respect to such matters.
This Agreement may be amended only by an agreement in writing executed by the
Parties hereto. The Parties hereto may amend this Agreement without notice to
or the consent of any third party.
4.4. Notices. Any notice or other communication required or permitted
to be given hereunder shall be in writing and shall be effective (a) when
personally delivered or transmitted by telecopier on a business day during
normal business hours where such notice is to be received at the address or
number designated below or (b) on the business day following the date of
mailing by overnight courier, fully prepaid, addressed to such address,
whichever shall first occur. The addresses for such communications shall be:
If to ATI: AirTouch Communications
425 Market Street
San Francisco, CA 94105
Telecopier: (415) 658-2298
Attention: Margaret G. Gill, Esq.
Senior Vice President, Legal and
External Affairs
With a copy to: Pillsbury Madison & Sutro
235 Montgomery Street
San Francisco, CA 94104
Telecopier: (415) 983-1200
Attention: Nathaniel M. Cartmell III
If to Tomcom
Parent Partner: Bell Atlantic Corporation
1717 Arch Street
Philadelphia, Pennsylvania 19103
Telecopier: (215) 561-9568
Attention: Stephen B. Heimann
-5-
<PAGE> 6
Any party hereto may from time to time change its address for notices under
this Section 4.4 by giving at least 10 days' notice of such changed address to
the other party hereto.
4.5. Waivers. No waiver by either party of any default with respect
to any provision, condition or requirement of this Agreement shall be deemed to
be a continuing waiver in the future thereof or a waiver of any other
provision, condition or requirement of this Agreement; nor shall any delay or
omission of either party to exercise any right hereunder in any manner impair
the exercise of any such right accruing to it thereafter.
4.6. Headings. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions of this Agreement.
4.7. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties and their successors and legal
representatives. The parties hereto may amend this Agreement without notice to
or the consent of any third party. Tomcom Parent Partner shall not transfer any
direct or indirect interest in Tomcom or PCS Primeco (other than to a Wholly
Owned Subsidiary) unless the transferee shall have agreed in writing to become
bound by the terms of this Agreement (with all references to Tomcom Parent
Partner instead referring to such transferee). No Party shall be permitted to
assign this Agreement; provided, however, that ATI may assign its rights and
delegate its obligations under this Agreement to any corporation which becomes
the owner of all of the outstanding Voting Securities in connection with any
reincorporation of ATI and which agrees in writing to become bound by the terms
of this Agreement, and thereafter all references to ATI hereunder shall become
references to such assignee.
4.8. No Third Party Beneficiaries. This Agreement is intended for
the benefit of the parties hereto and their respective permitted successors and
assigns and is not for the benefit of, nor may any provision of this Agreement
be enforced by, any other person.
4.9. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware
without regard to the principles of conflicts of laws.
4.10. Counterparts. This Agreement may be executed in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts shall together constitute one and the same
instrument.
4.11. Arbitration. The parties agree to submit their disputes to
arbitration.
4.12. Possible Reincorporation of ATI. ATI is considering
reincorporating in the State of Delaware. Such reincorporation may be effected
by a merger in which ATI would become a wholly owned subsidiary of a Delaware
corporation ("ATI Delaware") and the shareholders of ATI would become
stockholders of ATI Delaware. Effective upon any such reincorporation, ATI
would assign its rights and delegate its obligations under this Agreement to
ATI Delaware as provided in Section 4.7 hereof. Tomcom Parent Partner agrees
that any such reincorporation shall not constitute a Change of Control as such
term is defined herein.
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<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the date hereof.
AIRTOUCH COMMUNICATIONS
By /s/ Arun Sarin
----------------------------------------
Name: Arun Sarin
Title: Senior Vice President
Corporate Strategy/Development
BELL ATLANTIC CORPORATION
By /s/ Lawrence T. Babbio, Jr.
----------------------------------------
Name: Lawrence T. Babbio, Jr.
Title: Executive Vice President & C.O.O.
-7-
<PAGE> 1
Exhibit 10.4
________________________________________
STANDSTILL AGREEMENT
dated as of October 20, 1994
between
AIRTOUCH COMMUNICATIONS
and
NYNEX CORPORATION
________________________________________
-1-
<PAGE> 2
STANDSTILL AGREEMENT
THIS AGREEMENT is entered into and effective as of October 20, 1994,
by and among AIRTOUCH COMMUNICATIONS ("ATI") and NYNEX CORPORATION ("Tomcom
Parent Partner") (ATI and Tomcom Parent Partner, collectively the "Parties").
WHEREAS, WMC Partners, L.P., a Delaware limited partnership in which
ATI holds a beneficial interest ("WMC"), and Cellco Partnership, a Delaware
general partnership in which Tomcom Parent Partner holds a beneficial interest
("Cellco"), have executed the Agreement of Limited Partnership of Tomcom, L.P.
("Tomcom"), of even date herewith (the "Tomcom Agreement"); and
WHEREAS, PCS Nucleus, L.P., a Delaware limited partnership in which
ATI holds a beneficial interest ("PCS Nucleus") and PCSCO Partnership, a
Delaware general partnership in which Tomcom Parent Partner holds a beneficial
interest ("PCSCO Partnership") have executed the Agreement of Limited
Partnership of PCS Primeco, L.P. ("PCS Primeco"), of even date herewith (the
"PCS Primeco Agreement"); and
WHEREAS, the Parties desire to set forth herein certain terms
regarding their relationship;
NOW, THEREFORE, ATI and Tomcom Parent Partner agree as follows:
ARTICLE I
DEFINITIONS
1.1. Defined Terms. (a) As used in this Agreement, the following
terms shall have the following meanings (unless indicated otherwise, all
Article and Section references are to Articles and Sections of this Agreement):
"Affiliate" shall have the meaning specified in Rule 12b-2 under the
Exchange Act, as such rule is currently in effect, and shall specifically
include, with respect to Tomcom Parent Partner, Cellco and PCSCO Partnership,
and with respect to ATI, WMC and PCS Nucleus.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations
thereunder, all as the same shall be in effect from time to time.
"Related Agreements" shall mean the Tomcom Agreement and the PCS
Primeco Agreement.
"Rights Agreement" shall mean that certain Rights Agreement between
ATI and the Bank of New York, as Rights Agent, dated as of July 22, 1993, as it
may be amended from time to time, or any successor agreement.
"SEC" shall mean the Securities and Exchange Commission or its
successor.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any similar federal statute, and the rules and regulations thereunder, all as
the same shall be in effect from time to time.
"Strategic Partner" shall mean any Person (i) owning, directly or
indirectly, a beneficial interest in Tomcom or PCS Primeco, provided that the
foregoing shall not be deemed to include Bell Atlantic Corporation, a Delaware
corporation, and its wholly owned Affiliates and successors, or (ii) owning or
who is a party to an agreement with ATI obligating ATI to transfer to such
Person Voting Securities (or securities convertible or exchangeable by such
Person for Voting Securities) representing 10% or more of the sum of (x) the
then outstanding Voting Securities and (y) Voting Securities to be transferred
in connection with such agreement (or issuable upon the conversion or exchange
of securities to be so purchased).
"Transfer" shall mean, with respect to any Voting Security, a sale,
exchange, transfer or other disposition, whether or not for value, of such
Voting Security or any interest therein, or of any direct or indirect right or
option to acquire beneficial ownership of the same.
-2-
<PAGE> 3
"Voting Securities" shall mean any securities of ATI (unless the
context specifically contemplates another issuer) having the ordinary power to
vote, in the absence of contingencies, in the election of directors of ATI.
ARTICLE II
STANDSTILL PROVISIONS
2.1. Standstill Provisions. (a) Tomcom Parent Partner covenants to
and agrees with ATI that, except as it may be specifically permitted by this
Agreement or the Related Agreements or unless it is specifically invited in
writing to do so by ATI, it will not, and will cause each of its Affiliates not
to, directly or indirectly:
(i) in any way acquire or agree to acquire beneficial ownership
of any securities or any direct or indirect rights or options to
acquire beneficial ownership of any securities of ATI;
(ii) make any public announcement with respect to, or submit to
ATI or any of its directors, officers, representatives, employees,
attorneys, advisers, agents or Affiliates (whether publicly or
otherwise) any proposal for, the acquisition of Voting Securities with
respect to any merger, consolidation or business combination involving
ATI or its Affiliates or for or with respect to any purchase of a
substantial portion of the assets of ATI or its Affiliates, whether or
not any parties other than Tomcom Parent Partner and its Affiliates are
involved and whether or not such proposal might require the making of a
public announcement by ATI;
(iii) make, or in any way participate in, any "solicitation" of
"proxies" to vote any Voting Securities or become a "participant" in
any "election contest" (as such terms are defined or used in Regulation
14A under the Exchange Act, as such Regulation is currently in effect);
(iv) propose any matter for submission to a vote of
shareholders of ATI;
(v) form, join or in any way participate in a "group" (within
the meaning of Section 13(d)(3) of the Exchange Act) with respect to
any Voting Securities of ATI;
(vi) grant any proxy with respect to any Voting Securities to
any Person not approved by ATI;
(vii) deposit any Voting Securities in a voting trust or
subject any Voting Securities to any arrangement or agreement with
respect to the voting of such Voting Securities or other agreement
having similar effect;
(viii) take any action which would be reasonably likely to
require ATI to make a public announcement regarding any of the matters
specified in this Section 2.1(a)(i)-(xii); or
(ix) enter into any negotiations, arrangements or
understandings with any third party with respect to any of the
foregoing, or any discussions designed to advise, assist or encourage
any third party in connection with any of the foregoing;
(x) disclose publicly any intention, plan or arrangement
inconsistent with the foregoing;
(xi) request ATI (or any of its officers, directors,
representatives, employees, attorneys, advisors, agents or Affiliates)
to waive, amend or modify any provisions of Section 5.1(a)(i)-(xii);
or
(xii) otherwise act, alone or in concert with others, to seek
to control or influence the management, Board of Directors or policies
of ATI.
-3-
<PAGE> 4
(b) Notwithstanding any provision of this Section 2.1 to the
contrary, in the event that (i) ATI and any Person or "group" (within the
meaning of Section 13(d)(3) of the Exchange Act) enter into an agreement
pursuant to which (A) such Person or group would acquire a majority (calculated
by voting power) of the then outstanding Voting Securities of ATI or the right
to appoint a majority of the directors of ATI, or (B) a majority (calculated by
voting power) of the then outstanding Voting Securities of ATI is to be
acquired by any Person or group (within the meaning of Section 13(d)(3) of the
Exchange Act) in a merger, consolidation, or other business combination (any
such event being an "Acquisition Proposal"), (ii) a bona fide tender or
exchange offer by any Person or group (within the meaning of Section 13(d)(3)
of the Exchange Act) (other than ATI or any wholly-owned Affiliate thereof)
which would result, if consummated in accordance with its terms, in the
beneficial ownership by such Person or group of in excess of 50% (calculated by
voting power) of the then outstanding Voting Securities is approved or
recommended by the Board of Directors of ATI, (iii) in connection with the
matters discussed in clause (i) or (ii), or a tender or exchange offer for
greater than 40% of the outstanding Voting Securities which the Board of
Directors of ATI has not approved or recommended, the Board of Directors of ATI
has terminated or amended (or agreed to terminate or amend) the Rights
Agreement or has redeemed (or agreed to redeem) the Rights issued thereunder,
and such action has permitted or will have permitted the consummation of such
Acquisition Proposal or offer, or a final, non-appealable court order has
declared the Rights Agreement invalid or otherwise required the redemption of
the Rights issued thereunder or (iv) ATI and any Person enter into an agreement
providing for a transaction or series of related transactions that results in
the transfer, sale or other disposition by ATI of assets (A) that represent
more than 80% of the total fair market value of its assets on a proportionate
basis immediately prior to such disposition, (B) that generated more than 80%
of its total operating revenues on a proportionate basis in the preceding
fiscal year and (C) that generated more than 80% of its total net income from
operations on a proportionate basis during the preceding fiscal year (excepting
any such transaction or series of related transactions in which a majority of
the value of the consideration received in exchange for the assets transferred,
sold or otherwise disposed of consists of assets (or interests in assets) of a
like kind or nature), this Section 2.1 shall not prohibit Tomcom Parent Partner
(unless acting in concert with such Person) from making either a competing
Acquisition Proposal or a tender or exchange offer pursuant to which Tomcom
Parent Partner or its Affiliates would acquire at least the same percentage
(calculated by voting power) of ATI's then outstanding Voting Securities as
would be acquired in such non-Tomcom Parent Partner Acquisition Proposal or
such non-Tomcom Parent Partner tender or exchange offer (a "Tomcom Parent
Partner Response"). Tomcom Parent Partner agrees that any Tomcom Parent
Partner Response (including amendments thereto) will provide for consideration
that is no less favorable to ATI's shareholders than that being offered
pursuant to such non-Tomcom Parent Partner Acquisition Proposal or such non-
Tomcom Parent Partner tender or exchange offer (taking into account the form of
consideration and the number of shares to be acquired pursuant to such Tomcom
Parent Partner Response). In the event that the transactions contemplated by
clauses (i), (ii), (iii) or (iv) shall have been terminated or abandoned after
the Tomcom Parent Partner Response, Tomcom Parent Partner shall have the
ability, subject to the requirements of the preceding sentence, to amend or
modify its response, and to consummate the transaction contemplated by the
Tomcom Parent Partner Response or such amendment or modification, so long as
Tomcom Parent Partner shall not have terminated or abandoned their initial
response other than as a result of such amendment or modification. In the
event that the transactions contemplated by clauses (i), (ii), (iii) or (iv)
shall have been terminated or abandoned prior to the Tomcom Parent Partner
Response, or, if not so terminated or abandoned, in the event thereafter that
such transactions and those contemplated by such Tomcom Parent Partner Response
shall have been terminated or abandoned, all of the restrictions contained in
this Section 2.1 shall again be applicable.
(c) Until the second anniversary of the earlier of (x) the
dissolution of Tomcom and (y) the cessation of any direct or indirect
beneficial interest in each (but not just in one) of Tomcom or PCS Primeco by
Tomcom Parent Partner, neither Tomcom Parent Partner nor its Affiliates may (i)
act in concert with any Strategic Partner with respect to any of the activities
set forth in this Section 2.1 or (ii) transfer any Voting Securities of ATI to
any Strategic Partner.
ARTICLE III
TERM OF AGREEMENT
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<PAGE> 5
3.1. Term of Agreement. The term of this Agreement shall be until the
earlier of (a) the second anniversary of (i) the later of (A) dissolution of
Tomcom and (B) dissolution of PCS Primeco, or (ii) the cessation of any direct
or indirect beneficial interest in each (but not just in one) of Tomcom or PCS
Primeco by Tomcom Parent Partner, and (b) October 20, 2001.
Upon the expiration of the term of this Agreement, all further
obligations of the parties hereunder shall terminate, except that (i) the
agreement set forth in Section 2.1(c) shall survive indefinitely and (ii)
nothing herein shall relieve any party from liability for any breach hereof.
ARTICLE IV
MISCELLANEOUS
4.1. Severability. If any term, provision, covenant or restriction of
this Agreement is determined to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect, unless such action would
substantially impair the benefits to either party of the remaining provisions
of this Agreement.
4.2. Specific Enforcement. The Parties hereto acknowledge and agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent or cure breaches of the
provisions of this Agreement and to enforce specifically the terms and
provisions of this Agreement, this being in addition to any other remedy to
which they may be entitled by law or equity.
4.3. Entire Agreement; Amendments. Except to the extent that other
agreements are specifically referred to herein, this Agreement between ATI and
Tomcom Parent Partner contains the entire understanding of the Parties with
respect to the matters covered hereby and thereby and, except as specifically
set forth herein or therein, neither ATI nor Tomcom Parent Partner make any
representation, warranty, covenant or undertaking with respect to such matters.
This Agreement may be amended only by an agreement in writing executed by the
Parties hereto. The Parties hereto may amend this Agreement without notice to
or the consent of any third party.
4.4. Notices. Any notice or other communication required or permitted
to be given hereunder shall be in writing and shall be effective (a) when
personally delivered or transmitted by telecopier on a business day during
normal business hours where such notice is to be received at the address or
number designated below or (b) on the business day following the date of
mailing by overnight courier, fully prepaid, addressed to such address,
whichever shall first occur. The addresses for such communications shall be:
If to ATI: AirTouch Communications
425 Market Street
San Francisco, CA 94105
Telecopier: (415) 658-2298
Attention: Margaret G. Gill, Esq.
Senior Vice President, Legal and
External Affairs
With a copy to: Pillsbury Madison & Sutro
235 Montgomery Street
San Francisco, CA 94104
Telecopier: (415) 983-1200
Attention: Nathaniel M. Cartmell III
If to Tomcom
Parent Partner: NYNEX Corporation
4 West Red Oak Lane
White Plains, New York 10604
Telecopier: (914) 644-7966
Attention: Senior Vice President and
General Counsel
-5-
<PAGE> 6
Any party hereto may from time to time change its address for notices under
this Section 4.4 by giving at least 10 days' notice of such changed address to
the other party hereto.
4.5. Waivers. No waiver by either party of any default with respect
to any provision, condition or requirement of this Agreement shall be deemed to
be a continuing waiver in the future thereof or a waiver of any other
provision, condition or requirement of this Agreement; nor shall any delay or
omission of either party to exercise any right hereunder in any manner impair
the exercise of any such right accruing to it thereafter.
4.6. Headings. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions of this Agreement.
4.7. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties and their successors and legal
representatives. The parties hereto may amend this Agreement without notice to
or the consent of any third party. Tomcom Parent Partner shall not transfer any
direct or indirect interest in Tomcom or PCS Primeco (other than to a Wholly
Owned Subsidiary) unless the transferee shall have agreed in writing to become
bound by the terms of this Agreement (with all references to Tomcom Parent
Partner instead referring to such transferee). No Party shall be permitted to
assign this Agreement; provided, however, that ATI may assign its rights and
delegate its obligations under this Agreement to any corporation which becomes
the owner of all of the outstanding Voting Securities in connection with any
reincorporation of ATI and which agrees in writing to become bound by the terms
of this Agreement, and thereafter all references to ATI hereunder shall become
references to such assignee.
4.8. No Third Party Beneficiaries. This Agreement is intended for
the benefit of the parties hereto and their respective permitted successors and
assigns and is not for the benefit of, nor may any provision of this Agreement
be enforced by, any other person.
4.9. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware
without regard to the principles of conflicts of laws.
4.10. Counterparts. This Agreement may be executed in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts shall together constitute one and the same
instrument.
4.11. Arbitration. The parties agree to submit their disputes to
arbitration.
4.12. Possible Reincorporation of ATI. ATI is considering
reincorporating in the State of Delaware. Such reincorporation may be effected
by a merger in which ATI would become a wholly owned subsidiary of a Delaware
corporation ("ATI Delaware") and the shareholders of ATI would become
stockholders of ATI Delaware. Effective upon any such reincorporation, ATI
would assign its rights and delegate its obligations under this Agreement to
ATI Delaware as provided in Section 4.7 hereof. Tomcom Parent Partner agrees
that any such reincorporation shall not constitute a Change of Control as such
term is defined herein.
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<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the date hereof.
AIRTOUCH COMMUNICATIONS
By /s/ Arun Sarin
-------------------------------------
Name: Arun Sarin
Title: Senior Vice President,
Corporate Strategy/Development
NYNEX CORPORATION
By /s/ Frederic V. Salerno
-------------------------------------
Name: Frederic V. Salerno
Title: Vice Chairman
-7-
<PAGE> 1
Exhibit 10.5
________________________________________
STANDSTILL AGREEMENT
dated as of October 20, 1994
between
AIRTOUCH COMMUNICATIONS
and
CELLCO PARTNERSHIP
________________________________________
-1-
<PAGE> 2
STANDSTILL AGREEMENT
THIS AGREEMENT is entered into and effective as of October 20, 1994,
by and among AIRTOUCH COMMUNICATIONS ("ATI") and CELLCO PARTNERSHIP ("Tomcom
Partner") (ATI and Tomcom Partner, collectively the "Parties").
WHEREAS, WMC Partners, L.P., a Delaware limited partnership in which
ATI holds a beneficial interest ("WMC"), and Tomcom Partner have executed the
Agreement of Limited Partnership of Tomcom, L.P. ("Tomcom"), of even date
herewith (the "Tomcom Agreement"); and
WHEREAS, PCS Nucleus, L.P., a Delaware limited partnership in which
ATI holds a beneficial interest ("PCS Nucleus"), and PCSCO Partnership, a
Delaware general partnership in which each of NYNEX Corporation ("NYNEX") and
Bell Atlantic Corporation ("BAC"), a Delaware corporation and beneficial owners
of Tomcom Partner, holds a beneficial interest ("PCSCO Partnership"), have
executed the Agreement of Limited Partnership of PCS Primeco, L.P. ("PCS
Primeco"), of even date herewith (the "PCS Primeco Agreement"); and
WHEREAS, the Parties desire to set forth herein certain terms
regarding their relationship;
NOW, THEREFORE, ATI and Tomcom Partner agree as follows:
ARTICLE I
DEFINITIONS
1.1. Defined Terms. (a) As used in this Agreement, the following
terms shall have the following meanings (unless indicated otherwise, all
Article and Section references are to Articles and Sections of this Agreement):
"Affiliate" shall have the meaning specified in Rule 12b-2 under the
Exchange Act, as such rule is currently in effect, and shall specifically
include, with respect to Tomcom Partner, NYNEX and BAC, and with respect to
ATI, WMC and PCS Nucleus.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations
thereunder, all as the same shall be in effect from time to time.
"Related Agreements" shall mean the Tomcom Agreement and the PCS
Primeco Agreement.
"Rights Agreement" shall mean that certain Rights Agreement between
ATI and the Bank of New York, as Rights Agent, dated as of July 22, 1993, as it
may be amended from time to time, or any successor agreement.
"SEC" shall mean the Securities and Exchange Commission or its
successor.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any similar federal statute, and the rules and regulations thereunder, all as
the same shall be in effect from time to time.
"Strategic Partner" shall mean any Person (i) owning, directly or
indirectly, a beneficial interest in Tomcom or PCS Primeco, provided that the
foregoing shall not be deemed to include NYNEX or BAC or their respective
wholly owned Affiliates or successors, or (ii) owning or who is a party to an
agreement with ATI obligating ATI to transfer to such Person Voting Securities
(or securities convertible or exchangeable by such Person for Voting
Securities) representing 10% or more of the sum of (x) the then outstanding
Voting Securities and (y) Voting Securities to be transferred in connection
with such agreement (or issuable upon the conversion or exchange of securities
to be so purchased).
"Transfer" shall mean, with respect to any Voting Security, a sale,
exchange, transfer or other disposition, whether or not for value, of such
Voting Security or any interest therein, or of any direct or indirect right or
option to acquire beneficial ownership of the same.
-2-
<PAGE> 3
"Voting Securities" shall mean any securities of ATI (unless the
context specifically contemplates another issuer) having the ordinary power to
vote, in the absence of contingencies, in the election of directors of ATI.
ARTICLE II
STANDSTILL PROVISIONS
2.1. Standstill Provisions. (a) Tomcom Partner covenants to and
agrees with ATI that, except as it may be specifically permitted by this
Agreement or the Related Agreements or unless it is specifically invited in
writing to do so by ATI, it will not, and will cause each of its Affiliates not
to, directly or indirectly:
(i) in any way acquire or agree to acquire beneficial
ownership of any securities or any direct or indirect rights or
options to acquire beneficial ownership of any securities of ATI;
(ii) make any public announcement with respect to, or submit
to ATI or any of its directors, officers, representatives, employees,
attorneys, advisers, agents or Affiliates (whether publicly or
otherwise) any proposal for, the acquisition of Voting Securities with
respect to any merger, consolidation or business combination involving
ATI or its Affiliates or for or with respect to any purchase of a
substantial portion of the assets of ATI or its Affiliates, whether or
not any parties other than Tomcom Partner and its Affiliates are
involved and whether or not such proposal might require the making of
a public announcement by ATI;
(iii) make, or in any way participate in, any "solicitation"
of "proxies" to vote any Voting Securities or become a "participant"
in any "election contest" (as such terms are defined or used in
Regulation 14A under the Exchange Act, as such Regulation is currently
in effect);
(iv) propose any matter for submission to a vote of
shareholders of ATI;
(v) form, join or in any way participate in a "group" (within
the meaning of Section 13(d)(3) of the Exchange Act) with respect to
any Voting Securities of ATI;
(vi) grant any proxy with respect to any Voting Securities to
any Person not approved by ATI;
(vii) deposit any Voting Securities in a voting trust or
subject any Voting Securities to any arrangement or agreement with
respect to the voting of such Voting Securities or other agreement
having similar effect;
(viii) take any action which would be reasonably likely to
require ATI to make a public announcement regarding any of the matters
specified in this Section 2.1(a)(i)-(xii); or
(ix) enter into any negotiations, arrangements or
understandings with any third party with respect to any of the
foregoing, or any discussions designed to advise, assist or encourage
any third party in connection with any of the foregoing;
(x) disclose publicly any intention, plan or arrangement
inconsistent with the foregoing;
(xi) request ATI (or any of its officers, directors,
representatives, employees, attorneys, advisors, agents or Affiliates)
to waive, amend or modify any provisions of Section 5.1(a)(i)-(xii);
or
(xii) otherwise act, alone or in concert with others, to seek
to control or influence the management, Board of Directors or policies
of ATI.
(b) Notwithstanding any provision of this Section 2.1 to the
contrary, in the event that (i) ATI and any Person or "group" (within the
meaning of Section 13(d)(3)
-3-
<PAGE> 4
of the Exchange Act) enter into an agreement pursuant to which (A) such Person
or group would acquire a majority (calculated by voting power) of the then
outstanding Voting Securities of ATI or the right to appoint a majority of the
directors of ATI, or (B) a majority (calculated by voting power) of the then
outstanding Voting Securities of ATI is to be acquired by any Person or group
(within the meaning of Section 13(d)(3) of the Exchange Act) in a merger,
consolidation, or other business combination (any such event being an
"Acquisition Proposal"), (ii) a bona fide tender or exchange offer by any
Person or group (within the meaning of Section 13(d)(3) of the Exchange Act)
(other than ATI or any wholly-owned Affiliate thereof) which would result, if
consummated in accordance with its terms, in the beneficial ownership by such
Person or group of in excess of 50% (calculated by voting power) of the then
outstanding Voting Securities is approved or recommended by the Board of
Directors of ATI, (iii) in connection with the matters discussed in clause (i)
or (ii), or a tender or exchange offer for greater than 40% of the outstanding
Voting Securities which the Board of Directors of ATI has not approved or
recommended, the Board of Directors of ATI has terminated or amended (or agreed
to terminate or amend) the Rights Agreement or has redeemed (or agreed to
redeem) the Rights issued thereunder, and such action has permitted or will
have permitted the consummation of such Acquisition Proposal or offer, or a
final, non-appealable court order has declared the Rights Agreement invalid or
otherwise required the redemption of the Rights issued thereunder or (iv) ATI
and any Person enter into an agreement providing for a transaction or series of
related transactions that results in the transfer, sale or other disposition by
ATI of assets (A) that represent more than 80% of the total fair market value
of its assets on a proportionate basis immediately prior to such disposition,
(B) that generated more than 80% of its total operating revenues on a
proportionate basis in the preceding fiscal year and (C) that generated more
than 80% of its total net income from operations on a proportionate basis
during the preceding fiscal year (excepting any such transaction or series of
related transactions in which a majority of the value of the consideration
received in exchange for the assets transferred, sold or otherwise disposed of
consists of assets (or interests in assets) of a like kind or nature), this
Section 2.1 shall not prohibit Tomcom Partner (unless acting in concert with
such Person) from making either a competing Acquisition Proposal or a tender or
exchange offer pursuant to which Tomcom Partner or its Affiliates would acquire
at least the same percentage (calculated by voting power) of ATI's then
outstanding Voting Securities as would be acquired in such non-Tomcom Partner
Acquisition Proposal or such non-Tomcom Partner tender or exchange offer (a
"Tomcom Partner Response"). Tomcom Partner agrees that any Tomcom Partner
Response (including amendments thereto) will provide for consideration that is
no less favorable to ATI's shareholders than that being offered pursuant to
such non-Tomcom Partner Acquisition Proposal or such non-Tomcom Partner tender
or exchange offer (taking into account the form of consideration and the number
of shares to be acquired pursuant to such Tomcom Partner Response). In the
event that the transactions contemplated by clauses (i), (ii), (iii) or (iv)
shall have been terminated or abandoned after the Tomcom Partner Response,
Tomcom Partner shall have the ability, subject to the requirements of the
preceding sentence, to amend or modify its response, and to consummate the
transaction contemplated by the Tomcom Partner Response or such amendment or
modification, so long as Tomcom Partner shall not have terminated or abandoned
their initial response other than as a result of such amendment or
modification. In the event that the transactions contemplated by clauses (i),
(ii), (iii) or (iv) shall have been terminated or abandoned prior to the Tomcom
Partner Response, or, if not so terminated or abandoned, in the event
thereafter that such transactions and those contemplated by such Tomcom Partner
Response shall have been terminated or abandoned, all of the restrictions
contained in this Section 2.1 shall again be applicable.
(c) Until the second anniversary of the earlier of (x) the
dissolution of Tomcom and (y) the cessation of any direct or indirect
beneficial interest in each (but not just in one) of Tomcom or PCS Primeco by
Tomcom Partner, neither Tomcom Partner nor its Affiliates may (i) act in
concert with any Strategic Partner with respect to any of the activities set
forth in this Section 2.1 or (ii) transfer any Voting Securities of ATI to any
Strategic Partner.
ARTICLE III
TERM OF AGREEMENT
3.1. Term of Agreement. The term of this Agreement shall be until the
earlier of (a) the second anniversary of (i) the later of (A) dissolution of
Tomcom and (B) dissolution of PCS Primeco, or (ii) the cessation of any direct
or indirect
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<PAGE> 5
beneficial interest in each (but not just in one) of Tomcom or PCS Primeco by
Tomcom Partner, and (b) October 20, 2001.
Upon the expiration of the term of this Agreement, all further
obligations of the parties hereunder shall terminate, except that (i) the
agreement set forth in Section 2.1(c) shall survive indefinitely and (ii)
nothing herein shall relieve any party from liability for any breach hereof.
ARTICLE IV
MISCELLANEOUS
4.1. Severability. If any term, provision, covenant or restriction of
this Agreement is determined to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect, unless such action would
substantially impair the benefits to either party of the remaining provisions
of this Agreement.
4.2. Specific Enforcement. The Parties hereto acknowledge and agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent or cure breaches of the
provisions of this Agreement and to enforce specifically the terms and
provisions of this Agreement, this being in addition to any other remedy to
which they may be entitled by law or equity.
4.3. Entire Agreement; Amendments. Except to the extent that other
agreements are specifically referred to herein, this Agreement between ATI and
Tomcom Partner contains the entire understanding of the Parties with respect to
the matters covered hereby and thereby and, except as specifically set forth
herein or therein, neither ATI nor Tomcom Partner make any representation,
warranty, covenant or undertaking with respect to such matters. This Agreement
may be amended only by an agreement in writing executed by the Parties hereto.
The Parties hereto may amend this Agreement without notice to or the consent of
any third party.
4.4. Notices. Any notice or other communication required or permitted
to be given hereunder shall be in writing and shall be effective (a) when
personally delivered or transmitted by telecopier on a business day during
normal business hours where such notice is to be received at the address or
number designated below or (b) on the business day following the date of
mailing by overnight courier, fully prepaid, addressed to such address,
whichever shall first occur. The addresses for such communications shall be:
If to ATI: AirTouch Communications
425 Market Street
San Francisco, CA 94105
Telecopier: (415) 658-2298
Attention: Margaret G. Gill, Esq.
Senior Vice President, Legal and
External Affairs
With a copy to: Pillsbury Madison & Sutro
235 Montgomery Street
San Francisco, CA 94104
Telecopier: (415) 983-1200
Attention: Nathaniel M. Cartmell III
If to Tomcom
Parent Partner: Cellco Partnership
1717 Arch Street
32nd Floor
Philadelphia, PA 19103
Attention: Stephen B. Heimann
Any party hereto may from time to time change its address for notices under
this Section 4.4 by giving at least 10 days' notice of such changed address to
the other party hereto.
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<PAGE> 6
4.5. Waivers. No waiver by either party of any default with respect
to any provision, condition or requirement of this Agreement shall be deemed to
be a continuing waiver in the future thereof or a waiver of any other
provision, condition or requirement of this Agreement; nor shall any delay or
omission of either party to exercise any right hereunder in any manner impair
the exercise of any such right accruing to it thereafter.
4.6. Headings. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions of this Agreement.
4.7. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties and their successors and legal
representatives. The parties hereto may amend this Agreement without notice to
or the consent of any third party. Tomcom Partner shall not transfer any direct
or indirect interest in Tomcom or PCS Primeco (other than to a Wholly Owned
Subsidiary) unless the transferee shall have agreed in writing to become bound
by the terms of this Agreement (with all references to Tomcom Partner instead
referring to such transferee). No Party shall be permitted to assign this
Agreement; provided, however, that ATI may assign its rights and delegate its
obligations under this Agreement to any corporation which becomes the owner of
all of the outstanding Voting Securities in connection with any reincorporation
of ATI and which agrees in writing to become bound by the terms of this
Agreement, and thereafter all references to ATI hereunder shall become
references to such assignee.
4.8. No Third Party Beneficiaries. This Agreement is intended for
the benefit of the parties hereto and their respective permitted successors and
assigns and is not for the benefit of, nor may any provision of this Agreement
be enforced by, any other person.
4.9. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware
without regard to the principles of conflicts of laws.
4.10. Counterparts. This Agreement may be executed in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts shall together constitute one and the same
instrument.
4.11. Arbitration. The parties agree to submit their disputes to
arbitration.
4.12. Possible Reincorporation of ATI. ATI is considering
reincorporating in the State of Delaware. Such reincorporation may be effected
by a merger in which ATI would become a wholly owned subsidiary of a Delaware
corporation ("ATI Delaware") and the shareholders of ATI would become
stockholders of ATI Delaware. Effective upon any such reincorporation, ATI
would assign its rights and delegate its obligations under this Agreement to
ATI Delaware as provided in Section 4.7 hereof. Tomcom Partner agrees that any
such reincorporation shall not constitute a Change of Control as such term is
defined herein.
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<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the date hereof.
AIRTOUCH COMMUNICATIONS
By /s/ Arun Sarin
-------------------------------------
Name: Arun Sarin
Title: Senior Vice President,
Corporate Strategy/Development
CELLCO PARTNERSHIP
By /s/ Lawrence T. Babbio, Jr.
-------------------------------------
Name: Lawrence T. Babbio, Jr.
Title: On Behalf of CELLCO MANAGEMENT
Corporation, A General Partner
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<PAGE> 1
Exhibit 99
FOR IMMEDIATE RELEASE AT 4:30 P.M., EDT
A call-in press conference on the following release will be held at 5 P.M. EDT.
The dial-in number is 800-633-8364.
BELL ATLANTIC, NYNEX, AIRTOUCH AND U S WEST FORM
STRATEGIC NATIONAL WIRELESS PARTNERSHIP
Venture to Speed New Level of Wireless Services to American Consumers
NEW YORK, Oct. 20, 1994 - Bell Atlantic, NYNEX, AirTouch and U S WEST
today announced that they have signed a definitive agreement to form a premier
wireless partnership to provide nationally branded, innovative and easy-to-use
wireless communications services.
The venture has two elements. The first is a partnership formed to
bid for licenses in the Federal Communications Commission's (FCC) upcoming PCS
(personal communications services) auction and to roll out PCS services
rapidly. A second partnership will develop a national branding and marketing
strategy and a common "look and feel" for services for both cellular and PCS
customers.
The venture will provide the seamless service and standardized
features customers want in their hometowns and as they travel around the
country. In addition, the companies will be open to affiliations with other
wireless providers throughout the U.S., making it easier for those providers to
offer their customers the standardized services developed by the partnership.
The new partnership will be a major player in the rapidly evolving
wireless industry. Together, the four companies own cellular licenses in 15 of
the top 20 cities, covering more than 100 million people. The four companies
serve nearly four million cellular customers across the country.
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<PAGE> 2
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"Our strategy from the beginning has been to make it simple for
customers to decide how, when and where to communicate," said William C.
Ferguson, chairman and CEO of NYNEX. "The structure of this new competitive
business enables us to move quickly to provide customers with innovative
wireless services and to adapt rapidly as regulation changes to allow NYNEX,
Bell Atlantic and U S WEST to offer other new services."
"This partnership will enable us to bring the benefits of wireless
communications to customers throughout the U.S. faster and more efficiently,"
said Sam Ginn, chairman and CEO of AirTouch Communications. "The partners'
existing cellular companies already have developed a strong set of skills.
Through the new PCS partnership, we can build upon this impressive experience
and create a truly nationwide capability."
"We all believe that the information industry of the future will be
driven by companies with a national and global presence that can speed services
to customers anytime, anywhere," said Raymond W. Smith, chairman and CEO of
Bell Atlantic. "We will create the highest quality seamless service available
and bring a new level of competition to the wireless market."
"All of us share a similar vision of the 'wireless future.' Our
companies have strong track records in product innovation, customer focus and
wireless technology. That adds up to a very effective vehicle to give customers
across the country new and expanded customer-friendly wireless features and
services. It also reflects our philosophy of joining with strategic partners
where it makes sense and best meets customer needs," said Richard D. McCormick,
chairman and chief executive officer, U S WEST, Inc.
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<PAGE> 3
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Under the partnership, the PCS entity intends to bid vigorously for
radio spectrum in upcoming FCC PCS auctions. These PCS licenses will
complement the existing cellular franchises of Bell Atlantic, NYNEX, AirTouch,
and U S WEST to build a national "footprint." This entity will be governed by
a board made up of three members from the Bell Atlantic/NYNEX partnership and
three from the AirTouch/U S WEST joint venture.
The second element of the partnership will provide services for the
existing cellular businesses of the four partners and for the newly acquired
PCS properties owned by the partnership. This organization will develop
technical and service standards for its wireless properties, adopt a national
brand and marketing strategy, develop information technology and create a
national distribution strategy. In addition, it will make these standards
available to other PCS providers across the country.
This entity will be governed by a board made up of three members from
the Bell Atlantic/NYNEX partnership, three from the AirTouch/U S WEST joint
venture and one independent board member.
The cellular properties of Bell Atlantic/NYNEX will not be merged with
AirTouch/U S West. These properties will be managed and owned as separate
entities. AirTouch will continue to have the freedom to provide interLATA
wireless services, free of the constraints of the Consent Decree that broke up
the Bell system. Bell Atlantic, NYNEX and U S WEST remain subject to these
constraints and cannot offer wireless interLATA services.
In June, Bell Atlantic and NYNEX announced that they would merge their
cellular wireless businesses, covering 55 million potential customers
along the East Coast and in the Southwest. This territory includes New
York City, which has the single largest concentration of wireless customers
in the country.
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<PAGE> 4
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In July, AirTouch and U S WEST announced that they would coordinate
their domestic cellular assets to achieve economies of scale and create a
regional footprint. They intend to merge their businesses in the next several
years. This cellular partnership will be 70 percent owned by AirTouch and 30
percent owned by U S WEST. Their PCS partnership will be equally owned by
AirTouch and U S WEST. Their cellular properties cover more than 53 million
potential customers in the western half of the U.S. The joint venture also
includes the Atlanta area and several Midwest markets in Michigan and Ohio.
###
Contacts:
AirTouch (NYSE: ATI) (510) 210-3910
Bell Atlantic (NYSE: BEL) (703) 974-1720
NYNEX (NYSE: NYN) (800) 871-2424
U S WEST (NYSE: USW) (303) 793-6355
A video news release will be available.
Feed times: 4:300-5p.m. EDT and 5-5:30 p.m. EDT
Satellite: C-Band Galaxy - 7 Transponder/Channel 18, Downlink frequency
4060 megahertz, Audio Standard 6.2-6.8 megahertz
